Dear Sir:

Your letter of January 10, 1952,^? drew attention to the opportunity provided at the forthcoming meeting of the ICAO Council for raising again the question of increasing the maximum contribution to ICAO above its present level of 25 per cent. You enclosed a letter from Mr. Booth in which he stated that he expects Portugal, supported by Brazil, to introduce a proposal to the Council aimed at achieving an increase.

I am pleased to know that some of the other members of ICAO, besides ourselves, are at last showing concern over the unduly low level of the maximum contribution. As you know, we have consistently held that an equitable scale of assessment for any of the United Nations organizations must bear a close relationship to the capacity to pay of the member countries. Although we have accepted the United States argument that no one member should pay too high a proportion of the costs, we have held that a contribution of less than 33 1/3 per cent by the United States negates the principle of capacity to pay, and places an unduly heavy financial burden upon the other member countries. At the Fifth ICAO Assembly, Mr. Booth stated the Canadian views on this matter, but lack of interest by other delegations discouraged the Canadian Delegation from formally proposing an increase in the maximum contribution. In his statement Mr. Booth also referred to another unsatisfactory feature of the present ICAO scale, namely, the unduly high per capita contributions of Canada and some other countries in comparison with the per capita contribution of the United States.

An increase in the proportion paid by the United States is now even more justified than at the time of the last ICAO Assembly. Since then, the United States has obtained a reduction in its contribution to the United Nations from 38.92 per cent to 36.90 per cent. This reduction amounts to about $850,000, since annual United Nations assessments total about $42,000,000. (It may be expected that the United States will seek further reductions in its United Nations assessment next year, to bring it down to the 331/3 per cent level which Congress has recently established as the maximum to be paid by the United States to the budget of any of the United Nations organizations. In WHO and UNESCO the United States has already succeeded in reducing its assessment to the level of 331/3 per cent; in ILO, as in ICAO, the United States pays only 25 per cent; the United States contribution to FAO was raised this year from 25 per cent to 30 percent.)

The Council appears to be fully competent to increase the maximum, if the majority agrees that this should be done. It is probable, however, that the United States will strongly oppose any increase, and particularly an immediate increase to 331/3 per cent. I believe, nevertheless, that the initial proposal should be for an increase in the maximum to the 331/3 per cent level. If subsequent discussion reveals that the Council is unable to agree upon an increase to this level at once, the Council might be asked to adopt a smaller increase (say to 30%) as an interim arrangement, provided that a maximum contribution of 331/3 per cent were accepted as a principle to be implemented in the near future.

An increase in the maximum contribution would make it easier for the Council to agree to the other principle of assessment for which Canada has been pressing in other United Nations bodies, namely, that no member should contribute, on a per capita basis, more than the largest contributor. It would be desirable if the proposal for an increase in the maximum contribution were also to include a proposal to limit the per capita contributions of member countries and to apply all, or part, of the increase in the maximum contribution toward the relief of countries paying unduly high per capita contributions.

We have in the past refrained from urging the acceptance of the per capita principle by ICAO. As long as the United States contribution is at its present low level, the adoption of this principle would require the transfer of relatively heavy burdens to other countries with lower per capita contributions, such as India and Pakistan. With an increase in United States contribution, however, the "per capita adjustments" would be smaller, and the principle could be implemented without causing hardship for any single member country.

I should like to emphasize the importance which this Department attaches to the acceptance of the per capita principle by United Nations organizations. It is difficult to justify the payment by Canada of a higher per capita contribution than the per capita contribution of the United States, whose citizens enjoy the highest per capita income in the world. United States representatives have themselves recognized the justice of making appropriate "per capita" adjustments to assessments, and have supported the adoption of the per capita principle in the United Nations, WHO and UNESCO. Mr. Booth should feel free to ask the United States representative for his support in gaining the adoption of this principle, and should also seek the support of representatives of the other countries with unduly high per capita contributions (see Annex).^?

To sum up, it would be desirable if a proposal were put before the Council providing for the following adjustment in the 1953 scale of contributions:

(1) An increase in the level of the maximum contribution from 25 per cent to 331/3 percent. If it is impossible to obtain agreement for an immediate increase of this amount, Council should be asked to approve a partial increase (say to 30 per cent), with the adoption of a 331/3 per cent maximum as a principle to be implemented in the near future.

(2) The limitation of per capita contributions so that no member country is required to pay, on a per capita basis, more than the country that pays the largest contribution. In the event that the maximum is not increased fully to 331/3 per cent, this per capita principle might be accepted as a principle to be partially implemented now, and fully implemented when the maximum contribution reaches the 331/3 per cent level.

Mr. Booth has suggested that since Portugal intends to introduce a proposal to increase the maximum contribution, it would suffice for Canada to support Portugal's proposal. If Portugal could be persuaded to include in its proposal a request for the adoption of the per capita principle, we can see certain advantages in having Portugal take the lead. However, if Portugal is not willing to include in its proposal the per capita feature, Mr. Booth should not hesitate to put forward this proposal in the name of Canada.

Yours very truly,

W.C. CLARK