Two Canadian firms have recently been in contact with Colombian authorities in connection with possible contracts. One firm is Canadair, which hopes to sell F-86 aircraft; the other is Canadian Aviation Electronics, which hopes to obtain a contract to direct the installation and operation of an air navigation and control system. The CAE proposal would not involve classified information or material, is regarded by Defence Production as a satisfactory plan, and would not appear to involve the Government in any way. This information was given informally to the General Manager of CAE, who called last week to find out why government departments appeared to see a connection between his Company's proposal and the Canadair scheme.

2. The reason for the connection is that the first word received by this Department of either of these matters came in the form of a letter? followed by telegrams? from our Embassy in Bogota, and as far as the Embassy was concerned the two matters were related. The relationship arose because both firms are seeking to arrange a visit to Canada by a technical team to discuss their plans further. It is, apparently, a possibility that a single team might wish to come to Canada to look into both matters. The Embassy, with a view to the substantial contracts which might result, has recommended that the Government should issue or endorse an invitation for a Colombian Air Force team to make such a visit.

3. The Department of Defence Production would welcome a sale of F-86 aircraft to the Colombian Air Force. It would appear that perhaps one squadron might be involved; this would presumably mean about two dozen aircraft worth perhaps $8 million. The Department of Trade and Commerce in general endorses Defence Production's view, but points out that the Government should give no encouragement to a visit by a technical team which might discuss the purchase of F-86 aircraft unless the Government has previously determined that it will probably be willing to release such aircraft. The Department of National Defence is also involved, since Canadair's plan calls for the team to visit RCAF installations in order to see demonstrations of the aircraft in operation. National Defence's position is that they would be quite willing to have a technical team visit some of their installations in order to see F-86 aircraft on the ground and in flight, but that they would not be willing, at least without careful consideration, to have a Colombian Air Force team visit air defence headquarters and learn any details of RCAF arrangements for the operation of an air defence system using these aircraft.

4. Some indication of these views was given to the representative of CAE who called last week, and he drew the obvious conclusion that his firm might be well advised to invite a Colombian team to come to Canada for the sole purpose of discussing the possible CAE contract without reference to the possible purchase of F-86's or to any visit to Government establishments.

5. We understand that Mr. Howe wishes to have an official invitation issued for a Colombian Air Force team to come to Canada to discuss the purchase of F-86 aircraft with Canadair and, at the same time, to see whatever demonstrations of these aircraft the RCAF is prepared to provide. He would wish to see this done because he believes that the Government should be prepared to release the aircraft if the Colombians are willing to purchase. We understand he is likely to speak to you about this matter in the near future.

6. For our own part, we are doubtful whether it would be advisable to release such aircraft to Colombia at the present time and therefore whether it would be appropriate for the Government to take any part in arranging for a visit which might lead to such a result. Canada has not yet provided swept-wing jet aircraft to any country other than members of NATO or the Commonwealth. In addition, the size of the proposed sale would be out of all proportion to the volume of business in military items which Canada has carried on with Latin American countries in the past. The deal would thus constitute a precedent, both in terms of the type of item supplied and in terms of the dollar value. We are seeking to obtain information from the Joint Intelligence Bureau on the availability of similar aircraft to Latin American countries in general and, if it should appear that such aircraft are in fact available from the United States, United Kingdom or other sources to a number of Latin American countries, it might be that the matter should be reconsidered. At least until such information is forthcoming, however, we would recommend that such aircraft be not released to Colombia and that the Government should not endorse an invitation to the Colombian Air Force to send a technical team to Canada to investigate the possibility of buying. It would follow that we should discourage Canadair from inviting such a visit on their own responsibility, since a visit of this nature, even under Canadair's private auspices, would probably be taken to imply that the Government would not object to a sale.¹

J. L[ÉGER]