In October, 1945 and February, 1946, the Cabinet agreed to nationalize external cable and wireless services and to participate with other Commonwealth countries in a general re-organization of the Commonwealth system. The financial part of the scheme involved pooling of the net revenues of the various "national corporations" in a. central fund administered by a Commonwealth Telecommunications Board. Funds so pooled would be used to defray the cost of operating the Board and to meet deficiencies in the operation and maintenance of the cable system. Surpluses, after these charges had been met on a pro rate basis, would be returnable to the "national corporations".

2. In approving Canadian participation in this scheme, the Cabinet stipulated:

(a) that this decision involved no commitment regarding payment of an overall deficit; and

(b) that any action to nationalize communication services in Canada be delayed until the re-organization was further advanced in the United Kingdom and elsewhere.

3. The general principles which form the basis of the re-organization are contained in an "Overall Agreement" which was drawn up by the Commonwealth Communications Conference, 1945, and steps are being taken to have this document signed by the participating governments. In preparation for this, the Commonwealth Communications Council, at their meeting last March, reviewed the terms of the Agreement and recommended certain amendments thereto.

4. These amendments provide for:

(a) admission of additional partner governments and for withdrawal from partnership of any government due to secession from the British Commonwealth or any other reason. (The clause proposed to cover this provides that any country desiring to withdraw may do so by giving a two-year notice any time after a period of six years from the date on which the Agreement comes into force. Accordingly, Canada on signing would he obligated to abide by the terms of the "Overall Agreement" for a minimum period of eight years.)

(b) modification of the terms and principles of the financial arrangements on the recommendations of the Commonwealth Telecommunications Board from time to time, and in such manner as the partner governments may agree to be equitable and convenient. (At the Council meeting the United Kingdom representative expressed the view that the financial arrangements as embodied in the "Overall Agreement" placed an inequitable burden on their national corporation. It was accordingly agreed that a meeting of financial experts be held in the autumn so that they could examine the subject in some detail and report to the Commonwealth Communications Council. There is a possibility, therefore, that the Commonwealth Communications Council will in due course submit recommendations to their governments for modification of the financial arrangements. It is understood that Canadian participation in these discussions has been given ministerial approval and that appropriate officials from the Department of Finance and the Department of Transport will be appointed to attend.)

5. The Commonwealth Telecommunications Conference took the opportunity at their recent meeting to review the progress that had been made in the various Commonwealth countries to nationalize their external telecommunications services. It was noted that Cable and Wireless Limited in the United Kingdom was now operated by the government, although the value of the shares for purposes of the transfer from private to public ownership had not yet been fixed. In the other countries, target dates have been set on which the operation of their external telecommunications services will pass to the respective governments.

6. In recent months some preparations have been made for signing the "Overall Agreement". An examination of the clauses covering the financial arrangements revealed the need for some clarification to make it clear that Canada's commitment was limited to the net revenues of the Canadian corporation. As a result, the other Commonwealth governments are being asked to interpret the financial clauses in such a manner as to protect fully the Canadian reservation, and it is expected that this will be cleared quite soon.

7. These matters have been considered by the Interdepartmental Committee on Telecommunications Policy, who recommend:

(a) that the amendments to the "Overall Agreement" proposed by the Commonwealth Communications Council be accepted and that the Canadian government authorize the signing of the document as amended, provided that the negotiations described in the preceding paragraph are successfully concluded;

(b) that action now he taken to plan the nationalization of Canada's external telecommunications services and that the Interdepartmental Committee on Telecommunications Policy he directed to undertake this task and to report.²⁵

E.W.T. GILL

²⁵Le Cabinet approuva les recommandations le 26 juin.
The recommendations were approved by Cabinet on June 26.