The Export and Import Permits Act, 1947, confers on the Minister of Trade and Commerce authority to issue export permits. In accordance with precedents that have become established and pursuant to a number of Cabinet decisions made between 1946 and 1949, the Secretary of State for External Affairs, and in some cases, the Minister of National Defence, is consulted with respect to proposed exports of military equipment. Where the phrase "military equipment" occurs in this memorandum it should be taken to refer to the equipment defined in Group 8, Schedule 2 of the Export and Import Permits Act.

2. Experience over the past years has shown that, in carrying out the procedures for interdepartmental consultation, certain routine delays are unavoidable. At times, however, these delays have led to undesirable results, such as the cancellation of orders. Prompt service is vital to legitimate commercial interests, especially in the case of exports of equipment having civilian as well as military uses (e.g. civilian aircraft and parts, vehicle, train, and radio parts, used military apparel) consigned to civilian consumers in friendly countries. Moreover, in contrast with conditions obtaining just after the war, it would no longer appear necessary for the Department of External Affairs to be consulted about the political implications of proposed shipments of military equipment to the Governments of Commonwealth countries (except India, Pakistan and Ceylon) or to our NATO allies and their dependent territories (with the exceptions listed in sub-paragraph 3 (f)) if the Departments of Trade and Commerce and National Defence are satisfied about considerations of supply and security (i.e. degree of classification of the military equipment, etc.) and about safeguards against unauthorized diversions. There would normally be no reason on political grounds for refusing export permits for shipments of military equipment to those countries.

3. In the present circumstances, it is considered desirable to consolidate the various Cabinet decisions taken in the past, and to revise and simply the procedures for interdepartmental consultation on arms exports. Accordingly, the Minister of Trade and Commerce, with the concurrence of the Secretary of State for External Affairs and the Minister of National Defence, has the honour to recommend as follows:

(a) Whenever the Security Council (or the General Assembly) declares an embargo on shipments of military equipment to any country, export permits will not be granted for such shipments to that country until the embargo is lifted;

(b) Export permits are not required under the Act for shipments to the United States if that is the country of final destination. Similarly the United States does not require export permits for shipments to Canada when this is the country of ultimate destination. It is, therefore, in Canada's interest to preserve our freedom to import military equipment from the United States without permits, and this implies a need on our part to bear in mind the United States Government's policy on arms exports when considering proposed shipments of military equipment, especially when it is of United States type or origin;

(c) The Secretary of State for External Affairs should always refuse permits for shipments of military equipment to communist controlled areas other than Yugoslavia;

(d) In general, export permits will not normally be granted except with Cabinet's approval;

(i) for shipments of military equipment to areas (other than Indo-China and Malaya) of political unrest or local conflict. Under this heading would be included areas where hostilities are in progress or appear to be imminent, or where shipments of military equipment might contribute to an increase in local unrest and tension;

(ii) for shipments of military equipment, or significant quantities of strategic goods used in producing or maintaining such equipment, consigned to the Chinese Nationalist Armed Forces;

(e) Export permits will not normally be granted for shipments to any countries of equipment intended for military use unless the recipient country's Government has approved the transaction and has, if requested to do so, given appropriate assurances that the military equipment will not be re-exported without permission from the Canadian Government;

(f) The Minister of Trade and Commerce will not normally consult the Secretary of State for External Affairs about exports of military equipment to

(i) the United States, the United Kingdom, Australia, New Zealand, the Union of South Africa and their dependent territories (except Hong Kong and Malaya);

(ii) member countries of NATO not included in 3 (f)(i) and their dependent territories (except Indo-China, Macao, Morocco and Tunisia);

(iii) NATO commands;

(iv) Canadian forces outside Canada;

(v) Canadian airlines for use at their bases abroad, such as the TCA base at Shannon, Ireland;

(g) The Minister of Trade and Commerce will normally consult the Secretary of State for External Affairs and the Minister of National Defence concerning applications to export to any destination other than those listed in (f) above items in Group 8 Schedule 2 of the Act when they appear to be intended for military uses in the importing country.

(h) The Minister of Trade and Commerce will normally consult with the Secretary of State for External Affairs and with the Minister of National Defence concerning applications for permits to export military equipment to destinations in areas that are, by agreement between the three Ministers, regarded as politically sensitive. For example, the following areas would at the present time come under this heading:

This list would be kept under constant review and would be modified as often as necessary by agreement between the three Ministers.

(i) The Minister of Trade and Commerce may at his discretion consult with the Secretary of State for External Affairs and the Minister of National Defence about proposed shipments to any destinations of strategic materials not listed in Group 8 Schedule 2 of the Act;

(j) Within the framework of the policy outlined above, the Secretary of State for External Affairs shall, at his discretion, deal with the export permit applications referred to him without further reference to Cabinet except where new questions of policy or important political considerations are involved. ⁵⁶

C.D. HOWE
Concurred in:
L.B. PEARSON
Secretary of State for External Affairs
BROOKE CLAXTON
Minister of National Defence