2. The space occupied by ICAO in the International Aviation Building in Montreal is rented by the Department of Public Works from Canadian National Railways who own the building, and is re-let by Public Works to ICAO. Public Works pay Canadian National Railways a rent amounting in all to about $3.44 per square foot of space, and re-let to ICAO at a rate of $2.66 per square foot. The Canadian Government is therefore at present subsidizing ICAO's rent at a rate of 78 cents per square foot. This comes to approximately $67,800.00 per annum. The rent paid by ICAO amounts to $231,473.00 per annum, which constitutes a large item in the Organization's annual budgets of around $3 million. The grounds for ICAO's request for further aid is that other specialized agencies of the United Nations have arrangements with their host governments which keep their rental rates for comparable accommodation far below the rate paid by ICAO.

3. A survey conducted this year by the ICAO Secretariat shows that other specialized agencies are paying rents at the following rates for accommodation comparable to that occupied by ICAO:

FAO in Rome - 32 cents per square foot;
ITU in Geneva - 52 cents per square foot;
UNESCO in Paris - 60 cents per square foot;

WHO in Geneva - 77 cents per square foot.

Certain specialized agencies own their headquarters buildings. The annual cost to some of them is as follows:

WHO in Geneva - $2.35 per square foot (including charges for the use of meeting rooms in the Palais des Nations);

ILO in Geneva - 58 cents per square foot;

UNESCO in Paris - (Place Fontenoy) 92 cents per square foot.

For further comparison, the new United Nations Manhattan Building is costing the U.N. $4.25 per square foot per annum. This figure and the figures for the WHO and ILO buildings and the UNESCO Place Fontenoy Building include amortization charges.

4. The ICAO Council's request for a reduction in rent is directly related to a desire on the part of a number of the Council members that the ICAO headquarters should be transferred from Montreal. Some Latin American member States led by Mexico have been aiming at this since the headquarters was established in Montreal in 1946. Since 1948 they have been joined by a number of the European members who find Montreal an expensive place in which to maintain their offices. I attach a memorandum of April 1st, 1952, prepared by Mr. Booth, our Representative to ICAO, which summarizes briefly previous developments on this question and which lists the present grounds for complaint against Montreal.^? Mr. Booth has heard that the Governments of Mexico, Portugal and Switzerland are prepared to make offers of accommodation for ICAO. He believes that during the forthcoming ICAO Assembly, which will be limited to administrative and financial matters, a number of complaints will be registered concerning the high cost of operation in Montreal; that at the next main Assembly, which is due for 1953, these complaints will be followed up by a concerted attempt to transfer the headquarters.

5. There have also been indications under Dr. Roper's³ régime of dissatisfaction over the privileges enjoyed by the Organization and its personnel since the signature of the Headquarters Agreement; and this dissatisfaction might contribute to the support of a movement to transfer the headquarters.

6. You will recall that the Government, at an early stage of the negotiations, volunteered its good offices to assist ICAO in negotiating an agreement with the Province of Quebec on provincial and municipal privileges, and that the Prime Minister did intervene personally with the Quebec Government on behalf of ICAO. No agreement regarding privileges has however been reached between ICAO and the Province of Quebec, and the Organization last December presented the Quebec Government with a "claim" for some $24,000 representing the refund of provincial and municipal taxes paid by the Organization since its establishment in Montreal. In notifying us of this demand, the Secretary-General suggested that if the province declined to meet the claim, it should be paid by the federal government. Apparently it is not based on any undertaking given by the province but merely on the assumption by ICAO that it should enjoy a general exemption from all taxes, federal, provincial and municipal. Some further intercession with Quebec on our part may prove desirable, although the difficulty of such an approach has been increased by the somewhat arbitrary claim in question.

7. ICAO has also renewed the proposals which we declined in 1948 for postal franking privileges and a partial sharing of revenue from the sale of a special issue of stamps. The Deputy Postmaster General is vigorously opposed but has consented to defer a final refusal.

8. In addition, there have been minor difficulties; over the question of customs privileges for subordinate personnel. It came to the attention of the Department of National Revenue last year that a considerable number of ICAO minor officials and employees had imported automobiles under New York registration and tourist permits, and were operating permanently on this basis. On our recommendation, National Revenue extended an amnesty to all of these car owners and granted free entry on a "first arrival" basis. Taking this as a precedent, ICAO then proposed that all of its personnel should be granted the free entry of one automobile, with subsequent replacement, although there is no provision for this in the Headquarters Agreement. The initial reaction of the Department of National Revenue is that it has no statutory authority for any customs privileges not covered by the Headquarters Agreement.

9. The Headquarters Agreement could possibly be made more generous with respect to privileges for officials of the Organization. The extension of extraordinary privileges to employees would involve problems vis-à-vis diplomatic missions and consular offices.

10. Currently, the Protocol Division is endeavouring to avoid or at least defer flat refusals of requests for privileges and any consequent pretext for further dissatisfaction over the location of the headquarters at Montreal.

E. R[EID]