Up to the present, Canada, in a hope that a satisfactory multilateral civil aviation agreement might be achieved, has not concluded any bilateral aviation agreements providing for the exchange of so-called Fifth Freedom rights. However, in view of the failure of the recent Conference of International Civil Aviation Organization in Geneva to agree on a satisfactory multilateral document, the Canadian Government has now embarked upon the negotiation of a number of bilateral agreements, including Fifth Freedom rights. In these circumstances, Canada desires to conclude, as a first step, agreements with those countries in which Trans-Canada Airlines plans to make use of Fifth Freedom rights. Until the majority of these agreements have been concluded, the Canadian Government is reluctant to enter into agreements covering Fifth Freedom rights with countries in which Trans-Canada Airlines does not wish to make use of Fifth Freedom rights in the immediate future. For the present at least, agreements, with countries in the second category must normally be limited to an exchange of Third and Fourth Freedom rights.

2. This has been the general policy which has governed the discussions on the various agreements currently under negotiation. These may be reviewed in two groups;

1. Those countries with whom Canada is willing to conclude Fifth Freedom Agreements. These include:

(a) Argentina-In November, 1947, the Argentine Government approached the Canadian Government on the question of an air agreement. It was indicated that Canada was willing to negotiate an agreement, and that a draft might be forwarded by Argentina for study. However, as yet, no draft has been forthcoming. If there is any urgency on this Agreement, it might be advisable to submit one of our draft Bilateral Agreements to the Argentine Government.

(b) Belgium-In December, 1947, a note was forwarded to the Belgian Ambassador, suggesting that negotiations might open on an Agreement. This proposal was forwarded by the Belgian Ambassador to his home Government. It has been leaned, through the Canadian Ambassador in Brussels, that this draft is under consideration. However, Belgian air policy is in the process of being re-formulated, and it may be some time before any concrete action is recommended.

(c) Brazil-The Brazilian authorities have been studying a draft Agreement submitted by Canada since October, 1947. Several informal enquiries have been made at the Brazilian Embassy in Ottawa, but as yet no comments have been received: on this draft.

(d) Cuba-The Cuban authorities have also been studying a draft submitted by Canada for some months. It has been learned indirectly that a number of modifications to this draft will be required before Cuba could agree. However, a direct request has now been made to the Cuban Government that their comments be forwarded as soon as possible on this draft. When these have been received, it is planned that a Canadian negotiator, presumably Mr. McKim of T.C.A., will visit Havana to conclude discussions.II

. Those nations with whom Canada, for the present, can conclude only a Four Freedoms Agreement:

(a) Iceland-A draft Agreement was originally forwarded to Iceland through the United Kingdom in February, 1947. For nearly a year there was a negative interest evidenced by Iceland in any discussions on this Agreement. However, at the beginning of 1948, it was learned that this attitude was attributable to the state of air relations between the United States and Iceland. and that these relations were now being improved. On this basis, a new draft was prepared and forwarded to Iceland through their Minister in Canada.

(b) Norway and Denmark-In the latter part of 1947 both of these countries submitted draft Five Freedoms Agreements to the Canadian authorities for study. On the receipt of these drafts it was indicated that for the time being Canada could grant only Four Freedoms in their particular cases. This was modified to the extent that Fifth Freedom would be granted at points in other Scandinavian countries to facilitate the operation of Scandinavian air services, a pooled airline made up of companies representing each of the three Scandinavian countries. There has, as yet, been no indication by Norway and Denmark that they would desire to negotiate on this basis.

(c) Netherlands-In the Spring of 1947, discussions were held between Canadian and Netherlands authorities, and it was indicated at this time that Canada could only grant a Four Freedoms Agreement. On that occasion, it was very clear that the Netherlands were only interested in a Five Freedoms Agreement. How- ever, it has now been indicated that they are willing to proceed on the discussion of a Four Freedoms Agreement, and desire to arrange, in the near future, discussions between a visiting Netherlands delegation, currently in the United States, and. Canadian authorities. It is expected that these discussions may take place in the last week of March or the early part of April, and it would be useful to decide immediately who will represent Canada in these discussions.

(d) Peru-In September a draft Agreement was forwarded by the Peruvian Government, which embodied what they termed Four and One-Half Freedoms. This, in reality, granted Peruvian carriers one way Fifth Freedom traffic, that is, the right to pick up in the United States and put down in Canada. There were a number of other disagreeable clauses in their draft, and we forwarded our comments through our Ambassador in Lima. Although our whole tone in these discussions has been pessimistic, the Peruvian authorities still eagerly pursue the Agreement, and they have now requested that oral discussions be held in Ottawa, It is planned that these discussions will be held this month. Mr, Baldwin of the Cabinet Secretariat and members of External Affairs will represent Canada.

3. In addition to the Agreements outlined above, a note has been forwarded to the French Government granting Third and Fourth Freedoms to an airline owned and operated by the islands of St. Pierre and Miquelon to fly on a route between St. Pierre and Sydney, Nova Scotia, and St. Pierre and Halifax, Nova Scotia. The reply of the French Government to this note will thereby constitute the Agreement.

4. Attached to this memorandum are copies of the types of bilateral Air Agreements presently in use by Canada in these negotiations.†