On August 31, 1950, the Secretary General of the United Nations invited Canada to participate in an inter governmental Tin Conference in Geneva on October 25, 1950. The purpose of this Conference is to consider a proposal to regulate the tin market by an international commodity agreement, a draft of which was prepared by the International Tin Study Group in March 1950. Canada has participated from the beginning in the work of the Tin Study Group which was created after the war to keep under review developments in the production, marketing and consumption of tin.

The pressure for a tin agreement comes primarily from the producing countries. Pre war experience indicated that in a free market the price of tin was liable to very wide fluctuations. Most of the countries producing tin such as Bolivia and Malaya are very heavily dependent upon it and price fluctuations severely upset their economic and political stability. The private interests concerned are of course also anxious to attain greater stability.

The advantages of a tin agreement to consuming countries are not so obvious. Under normal conditions Canada's needs are small and price fluctuations are not serious for Canadian users. Even the United States which imports something like

60% of available supplies has been lukewarm about an agreement; at the last meeting of the Tin Study Group in March 1950, the United States voted against the proposal to call a formal tin conference. and proceed towards an agreement. No tin conference could be successful without the United States. However, it is now understood that the United States authorities will participate in a conference if it is held this month as proposed. The general arguments in favour are:

(a) Importing countries such as the United States (and Canada) have a concern in the economic and political stability of under developed countries such as Bolivia and Malaya.

(b) The promise of stability in tin producing areas should, over the long run, result in conservation of ore reserves, stabilized production and possibly lower prices on the average.

(c) The promise of long run stability is particularly important just at present when tin is in short supply solely because of stockpiling requirements; production will not be increased unless there is protection against over supply and depressed prices in the future.

The important characteristics of the present draft tin agreement are as follows: (a) It does not become operative until depressing surpluses are in evidence.

(b) Export quota restrictions which are the main instrument cannot be put into effect until supported by two thirds majority of the votes of producing and consuming countries counted separately.

(c) Importing countries may be expected to prevent this occurring until tin is in surplus supply.

(d) Export quotas set by the Council annually will provide for adjustment of total production to total consumption, at the same time ensuring availability of adequate stocks.

(e) As a hedge against a short supply position developing and also for price stabilization purposes, there is to be a buffer stock which a simple majority of votes in the Council can call into operation.

(f) Contribution of tin metal or money to establish the buffer stock and to support it is obligatory for the producing countries but only voluntary (and unlikely) for the consuming countries.

(g) Members, through the Council, will set annually the upper and lower price limits at which the buffer stock will sell or buy respectively but it will be optional for the buffer stock to trade in between these limits.

(h) The Agreement is limited to five years duration from commencement of operation.

Two special points should be noted from the Canadian point of view:

(a) There are no financial commitments involved for the Canadian Government beyond contribution to the expenses of Administration of The Agreement (but not of the buffer stock trading operation) and, of course, the direct expenses of attendance and representation at Tin Council meetings.

(b) If an agreement is reached it is likely that, in the future, any emergency allocating machinery for tin would be set up under the auspices of the agreement. During the last war tin was allocated by the Combined Raw Materials Board with which Canada was very closely associated. Hence, Canadian emergency needs were looked after. It is important that Canada should be associated with any organization that is likely to allocate tin in the future.

Canada's participation in the proposed tin conference was discussed by the Interdepartmental Committee on External Trade Policy on September 25th and it was thought desirable that a Canadian delegation should attend but undesirable for the Canadian delegation to take the lead in pressing for a tin agreement. It was noted that the draft agreement does not involve Canada in any financial obligations except for membership fees and that there are no commitments to impose domestic controls. In view of these limited obligations, the positive advantages of membership on the council if tin should again be allocated, and our interest in encouraging economic stability in the tin producing countries, it was considered desirable that Canada should participate.

It is proposed that the Canadian delegation should be headed by Dr. G.C. Monture, who has previously been chief delegate to the International Tin Study Group, and that he be assisted by Mr. Yves Lamontagne, Commercial Counsellor at Berne, and also by Mr. V.L. Chapin, Assistant Commercial Secretary at The Hague, who has been the continuing liaison with the Secretariat of the Tin Study Group at The Hague.²⁸

BROOKE CLAXTON

²⁸Approuvé par le Cabinet, le 18 octobre 1960./Approved by Cabinet, October 18, 1950.