Dear Mr. Rewinkel:

You will recall that the Canadian Government, in statements on September 23, 1958⁴⁶⁸ and February 20, 1959 ⁴⁶⁹ indicated its decision to extend and strengthen the continental air defence system. The facilities which were mentioned in these statements included BOMARC missile bases, additional main radar stations, gap-filler radars, and semi-automatic ground environment (SAGE) electronic control and computing equipment.

There has been a good deal of discussion over the past few months between officials of our two Governments with respect to the establishment of these facilities. In particular, the question of the sharing of costs of the installations was dealt with in letters? of December 23, 1958 and February 5, 1959 between the Deputy Minister of National Defence, and the Assist-ant Secretary of the United States Air Force (Materiel). It was noted in this correspondence that arrangements with respect to the planned facilities should eventually be confirmed in an appropriate inter-governmental agreement.

There is attached, therefore, for consideration by your authorities, three copies of a first draft of a possible Canadian Note on cost-sharing and related arrangements with respect to planned improvements in the continental air defence system. This Canadian draft has been prepared by the Canadian officials concerned and is, of course, subject to further Ministerial consideration. We thought it desirable at this stage, however, to seek United States comments on the draft.

I should be most grateful if you could transmit the attachment to your authorities for their comments. I should be grateful, as well, if you could indicate that we attach some urgency to the conclusion of a suitable exchange of Notes on this matter. It is our hope that work connec-ted with the installation of these facilities can proceed with the least possible delay.

Yours sincerely,
J.J. MCCARDLE
for Under-Secretary of State
for External Affairs

[PIÈCE JOINTE 1/ENCLOSURE 1]

Projet de note

Draft Note

CONFIDENTIAL

[Ottawa], April 28, 1959

CANADIAN NOTE ON COST SHARING AND RELATED ARRANGEMENTS WITH RESPECT TO PLANNED IMPROVEMENTS IN THE CONTINENTAL AIR DEFENCE SYSTEM

I have the honour to refer to discussions in the Canada-United States Ministerial Committee on Joint Defence and to the recommendations of the Commander-in-Chief, North American Air Defence Command, concerning the extension and strengthening of the continental air de-fence system, including the establishment of long range surface to air missile sites in Canada. The Canadian Government, in statements of September 23, 1958 and February 20, 1959, indicated that BOMARC missile bases would be established in Canada, that the Pine Tree radar system would be strengthened by the addition of a number of main radar stations and gap filler radars; and that semi-automatic ground environment (SAGE) electronic control and computing equipment would be installed in Canada.

In the discussions between representatives of our two Governments, the importance of satisfactory cost-sharing arrangements for these new programmes was recognized. Discussions of cost-sharing arrangements were conducted against the background of past understandings between our two Governments, particularly, the "Statement of Principles for Economic Cooperation" of October 1950,⁴⁷⁰ and the continuing discussions between our two Governments designed to give effect to their joint determination to assure the most economical and effective use of the defence production capabilities of both countries. Due weight was given to the fact that these new and costly undertakings are designed to enhance the joint security of Canada and the United States.

It was recognized as well that further consideration would have to be given to the operational procedures involved in the use of certain of the new facilities when established, in the light of the joint responsibility exercised by the two Governments for the operations of the North American Air Defence Command. Arrangements in this respect will be dealt with in a separate agreement between our two Governments.

My Government now proposes that the conditions set out in the attached Annex should govern the financing, installation and operation of the facilities in Canada now required to strengthen and extend the continental air defence system. If these conditions are acceptable to your Government, I propose that this Note and Annex, and your reply, should constitute an agreement between our two Governments, effective from the date of your reply.

Accept, Excellency, the renewed assurances of my highest consideration.

[PIÈCE JOINTE 2/ENCLOSURE 2]

Annexe

Annex

STATEMENT OF CONDITIONS GOVERNING THE FINANCING, INSTALLATION AND OPERATION
AND OPERATION OF FACILITIES IN CANADA REQUIRED TO STRENGTHEN AND EXTEND
THE CONTINENTAL AIR DEFENCE SYSTEM

(Hereafter, unless the context otherwise requires, "Canada" means the Government of Canada, "United States" means the Government of the United States of America, and "facili-ties" means the facilities defined in paragraph 1 of this Annex.)

1. Facilities. The arrangements set out below will apply to the construction and installation of (a) seven new heavy radars; (b) forty-five gap filler radars; (c) one SAGE Direction Centre; (d) certain modifications to existing Pine Tree radars made necessary by SAGE; (e) two BOMARC missile units.

2. Consultation. Appropriate Canadian and United States authorities shall consult in connection with the implementation of these facilities and related arrangements. Appropriate representatives of the two Governments shall participate in the development of the facilities from design to installation and decisions affecting the programmes shall be mutually agreed, including the assignment of responsibilities for undertaking the various aspects of the programme.

3. Surveys. Canadian and United States agencies will cooperate in making engineering and other technical surveys to determine suitable sites for the facilities, and may make plans for the facilities to be constructed and the equipment to be installed at the sites. In the conduct of the surveys, special care will be taken to avoid any infringement of rights over lands which are not owned by Canada; any arrangements involving private properties will be made only through the appropriate Canadian Government agency.

4. Sites. The location and extent of all sites required for the facilities shall be agreed upon by appropriate agencies of the two Governments. Canada, without charge to the United States, shall acquire and retain title to any lands required for the sites.

5. Financing

(a) The costs of the initial construction and equipment required for these facilities will be shared in the ratio of Canada being responsible for approximately 1/3 of the cost and the United States being responsible for approximately 2/3 of the cost, and this will be achieved by:

(i) Canada assuming full financial responsibility for all initial construction and unit equipment;

(ii) United States assuming full financial responsibility for all initial technical equipment required, including its transportation, installation, testing, and the provision of initial spare parts.

(b) The sharing of costs not specifically provided for in this agreement will be a matter for agreement between the two Governments or their appropriate agencies.

(c) This agreement relates to the particular projects enumerated in paragraph 1 above and is not to be considered as establishing a precedent for future joint defence projects.

(d) Any action taken under this agreement shall be subject to the availability of appropriated funds.

6. Construction. Canada will assume responsibility for the construction of the facilities, and the provision of the unit equipment.

7. Technical Equipment. Every effort will be made to ensure that Canadian industry is given a fair and reasonable opportunity to share in the production of the required technical equipment, within the objectives of the programme for the sharing of defence production tasks as agreed to by the two Governments.

8. Manning. All the new facilities will be manned by Canadian personnel. Canadian military personnel costs will be borne by Canada.

9. Period of Operation. The facilities will be operated for a period of ten years or such shorter period as may be agreed upon by the two Governments in the light of their mutual defence interests. After the ten year period, in the event that either Government concludes that the facil-ities are no longer required and the other Government does not agree, the question of continu-ing need will be referred to the Permanent Joint Board on Defence. In considering the question of need, the Permanent Joint Board on Defence will take into account the relationship of the facilities to any other similar installation established in the mutual defence interest of the two countries. Following consideration by the Permanent Joint Board on Defence, as provided above, either Government may decide that the facilities in question may be disposed of, in which case the arrangements shown in paragraph 10 below regarding ownership and disposi-tion of the installations shall apply.

10. Ownership and Disposal of Removable Property. Ownership of all removable property brought into or purchased in Canada by the United States and placed on the sites, including readily demountable structures, shall remain in the United States. The United States shall have the unrestricted right of removing or disposing of all such property, PROVIDED that the removal or disposition shall not impair the operation of any installation whose discontinuance had not been determined in accordance with the provisions of paragraph 9 above, and PROVIDED further that removal or disposition takes place within a reasonable time after the date on which the operation of the installation has been discontinued. The disposal of United States excess property in Canada shall be carried out in accordance with the provisions of the Exchange of Notes of April 11 and 18, 1951, between the Secretary of State for External Affairs and the United States Ambassador in Ottawa, concerning the disposal of excess property.

11. Immigration and Customs Regulations

(a) Except as otherwise agreed, the direct entry of United States personnel from outside Canada shall be in accordance with Canadian customs and immigration procedures which will be administered by local Canadian officials designated by Canada.

(b) Canada will take the necessary steps to facilitate the admission into the territory of Canada of such United States citizens as may be employed on the construction or operation of the facilities, it being understood that the United States will undertake to repatriate without expense to Canada any such persons if the contractors fail to do so.

12. Taxes. Canada shall grant remission of customs duties and excise taxes on goods imported and of federal sales and excise taxes on goods purchased in Canada, which are or are to become the property of the United States and are to be used in the establishment, mainte-nance or operation of the facilities. Canada shall also grant refunds by way of drawback of the customs duty paid on goods imported by Canadian manufacturers and used in the manufacture or production of goods purchases by or on behalf of the United States and to become the property of the United States in connection with the establishment, maintenance or operation of the facilities.

13. Canadian Law. Nothing in this agreement shall derogate from the application of Canadian law in Canada, provided that, if in unusual circumstances, its application may lead to unreason-ably delay or difficulty in construction or operation, the United States authorities concerned may request the assistance of Canadian authorities in seeking appropriate alleviation. In order to facilitate the rapid and efficient construction of the facilities, Canadian authorities will give sympathetic consideration to any such request submitted by United States Government authorities.

14. Status of Forces. The "Agreement between the Parties to the North Atlantic Treaty Regarding the Status of their Forces," signed in London on June 19, 1951, shall apply.⁴⁷¹

15. Supplementary Arrangements and Administrative Agreements. Supplementary arrange-ments and administrative agreements between appropriate agencies of the two Governments may be made from time to time for the purpose of carrying out the intent of this agreement.

⁴⁶⁸Voir volume 25, document 89, note 136./See Volume 25, Document 89, Footnote 136.

⁴⁶⁹Voir Canada, Chambre des Communes, Débats, 1959,Vol. II, pp. 1279 à 1282.
See Canada, Chamber of Commons, Debates, 1959, Vol. II, pp. 1221-1224.

⁴⁷⁰Voir le volume 16, les documents 775 à 795./See Volume 16, Documents 775-795.

⁴⁷¹Voir le volume 17, les documents 441 à 445./See Volume 17, Documents 441-445.