Reference: Our Telegram No. 41 of February 28, 1953.?

I am enclosing two copies of the commentary article on ILO Scale of Assessments for use by the Canadian representatives at the 121st Session of the ILO Governing Body. The main points of this article were sent to you in Telegram 41 of February 28, 1953. These instructions have been agreed upon by ourselves, the Department of Labour and the Department of Finance.

G.B. SUMMERS
for the Under-Secretary of State
for External Affairs

Background

In previous years Canadian delegations have repeatedly stressed the need for re-examination of the principles of assessment of the International Labour Organization with a view to recommending modifications which would achieve a more equitable distribution of the burdens of membership.

In particular Canadian spokesmen have pointed out that the United States contribution of 25% is considerably below the United States "relative capacity to pay" with the result that other members like Canada are required to pay a disproportionate share of the costs of maintaining the organization. Under the present ILO scale Canada's assessment is almost one-sixth of that of the United States, although Canada's national income is only one-sixteenth of the U.S. national income.

As long as the United States contribution remains at its present low level it will be difficult to develop a scale under which all member states pay their fair share of the expenses of the organization. This fact is clearly demonstrated in document GR 121. AC/Dl submitted by the Director-General to the Governing Body.? Under illustrative scale X appended to this document the rate of Canadian contribution to the ILO for 1954 could be increased to 4.14% by contrast with the present (1953) rate of 3.8[?]5% and the assessment of 3.3% which Canada pays to the United Nations.

Adoption of this scale would widen the disparity between United States and Canadian contributions to the ILO and is clearly unacceptable to the Canadian Government.

A United States contribution of 33.33% would bring the policies and practices of ILO into line with the policies and practices of the United Nations and the larger affiliated agencies such as the World Health Organization and UNESCO. In these organizations United States contributions were originally above the one-third level. United States representatives, in urging reductions in their assessments, indicated that the United States regarded 33.33% as an appropriate contribution. They also stated that the United States directly relates its contribution to any one United Nations organization to the contributions it makes to the others. Since the reductions achieved by the United States in its contributions to the United Nations, WHO and UNESCO during the past few years have considerably exceeded increases in the United States contributions to ILO, FAO and ICAO it would have been reasonable to expect that the United States would be prepared to accept increased assessments in organizations like the ILO. United States Delegates have rationalized their unwillingness to accept adjustments in their contributions to the ILO, FAO and ICAO by contending that the United States has contributed large sums to United Nations operational programmes such as the International Refugee Organization, International Children's Emergency Fund, Expanded Programme of Technical Assistance, the Relief and Works Agency for Palestine Refugees and the Korean Reconstruction Agency. While Canada recognizes the generous support the United States has given to these programmes, in most cases the United States contributions have been no greater than might have been expected from a country with United States interests, responsibilities, and "capacity to pay". Furthermore, other countries like Canada have never hesitated to carry their full weight in these fields and has generally matched, and in some cases surpassed, the American contributions both in terms of percentage of national income and per capita income.

United States Delegates have also justified their stand in ILO by stressing the difficulty in securing Congressional approval for increased assessments. Other member states also have legislatures that must be satisfied that their national contributions are not excessive. It will be extremely difficult to convince the Canadian Parliament that the people of Canada should contribute almost twice as much, on a per capita basis, as United States citizens who have the highest per capita income in the world.

In an effort to remedy this unsatisfactory situation the Canadian Government planned to make a determined effort to induce the November 1953 meeting of the Governing Body to endorse a resolution calling for a substantial increase in the United States contribution. However, prior to the November 1952 meeting of the Governing Body, State Department officials approached Canadian representatives in Washington and New York and proposed that final action on the scale of contributions for 1954 be postponed until the March 1953 meeting. The State Department officials indicated that the presidential and congressional elections and discussions on contributions at the United Nations General Assembly would make it difficult for them to accept an increase in their ILO assessment at that time. Canada agreed to support a move to defer consideration of the matter until the March meeting, provided that State Department officials gave informal assurances that they would sympathetically consider the problem when it was discussed in March. These assurances were subsequently given and the Canadian Delegation cooperated with the United States Delegation to postpone action on contributions.

Despite these assurances, officials of the State Department recently informed the Canadian Ambassador in Washington that the United States Delegation to the forthcoming meeting of the Governing Body would not accept an increase in the United States contribution. The State Department justifies this position on the ground "that the new Administration is attempting to reduce the budget by $19 billion. Any proposals for increases in contributions to international organizations, regardless of their reasonableness and historical basis, can not be accepted at this time".

Canada's position

Acceptance of United States views will, of course, prevent the ILO from effecting improvements in the scale of assessments. As indicated above Canada is strongly opposed to the continuation of the present scale which departs so widely from the equitable sharing of expenses on the basis of "relative capacity to pay". The Delegation should make a determined effort to induce the Governing Body to recommend a policy designed to remove existing inequities quickly and systematically.

The most effective way to achieve this objective would be to develop an ILO scale based directly on the United Nations scale. The United Nations scale recognizes the United States desire to limit its contribution to 33.33 per cent and has been derived from the most accurate and up-to-date information regarding capacity to pay. Only amendments that are required to take account of differences in membership should be required.

If the Allocations Committee is not prepared to recommend removal of all inequities from the 1954 scale, the Delegation should suggest that the necessary adjustments be achieved over a period of two or three years. The United States representatives will undoubtedly draw attention to a ceiling of $1,750,000 placed by Congress on the United States contribution to the ILO. However, the United States share of the 1953 budget is $1,558,842. If the 1954 budget is stabilized at the 1953 level, this would allow an increase in the United States percentage contribution of 3 per cent without breaching the Congressional ceiling. In the event that a higher budget is adopted, the United States assessment should be increased to the level permitted by the Congressional ceiling.

Furthermore, the Delegation should seek support, including that of the United States, for a resolution offering the prospect of further early increases in the United States contribution. This might require United States efforts to induce Congress to remove the absolute ceiling on its contribution. In urging United States cooperation in this matter the Delegation should not hesitate to stress the difficulties that would arise if each government were to decide to determine the level of its own contribution unilaterally.