Attention: Mr. Louis Couillard

Dear Sir:

We take pleasure in enclosing copy of Observations of Governments on the Draft International Sugar Agreement S.C.455 text of 20th July, 1950 (Paper S.C.465/1 and 465/2) of the International Sugar Council dated 12th October, 1950.

>Yours very truly,
E.B. PAGET
Beverages and Grocery Products,
Import Division

[PIÈCE JOINTE/ENCLOSURE]

Énoncé de la position du Canada

Statement of Canada's Position

[Ottawa], October 12, 1950

The Canadian Government fully appreciates the difficulties at this time facing members of the International Sugar Council in preparing a satisfactory draft of an international sugar agreement. Before the war, when the 1937 Agreement was signed, most currencies were mutually convertible and there was still a relatively large free market for sugar. Unfortunately these conditions have been greatly modified. The existence of inconvertible currencies inevitably creates serious obstacles in the way of an economic flow of sugar from many of the low cost producers to certain importing countries. Uncertainty in various countries regarding a continuing availability of supply under present world conditions is another complication facing those who are searching for a reasonable degree of stability in production and prices. These conditions have resulted in wide fluctuations in sugar prices a situation undesirable both for producers and consumers.

In all the circumstances the principal problems confronting the International Sugar Council appear to arise mainly from factors which are not directly associated with the world production and marketing of sugar.

Canada is sympathetic to the basic objectives stated in the draft agreement, and is anxious as one of the main importing countries to obtain adequate supplies of sugar at reasonable prices. It is also recognised that the prosperity of the sugar exporting areas is of importance to a healthy international trade. Moreover, Canadian opinion is generally in favour of searching for the required solutions to sugar problems 'within the orbit of an international agreement rather than through the medium of inter governmental contracts.

The Canadian attitude to specific points in the Agreement can best be understood against the background of the Canadian sugar position in general. The Council will be aware from statements made on previous occasions that the Canadian Government is not in favour of encouraging the uneconomic production of sugar from domestic resources. On the contrary, imports of sugar have long been regarded as a very important item among the purchases abroad which enable our foreign customers to accept increasing quantities of Canadian exports. This is clearly reflected in the fact that the tariff has been stable over a period of many years.

The Canadian market for sugar is not subject to regulations or restrictions. The purchase of raws on government account and the control of imports which were instituted during the war years and immediate post war period have now been discontinued. Partly as a result of this policy of minimizing restrictions Canada constitutes the world's third largest importer of raw cane sugar, and stands high among other major importing countries in terms of consumption per head. Indeed, Canadians consume more sugar today than at any time previously both on a gross total and on a per capita basis.

In the light of the above facts, without prejudice to any later need to review the Draft as a whole, specific objections must be made to two of the Articles. The provisions of Article 8, obligating non exporting countries to control production, presuppose the existence of a government programme determining the quantity of domestic sugar to be produced and of raw cane sugar to be imported.

The production and marketing of sugar in Canada is a matter left to free commercial competition so that a commitment to limit production would represent a major change in well established Canadian policy. The Canadian Government could perhaps assure the Council of a continuation of its policy not to encourage the uneconomic production of domestic sugar by special measures.

Article 9 is textually incomplete but contains a vague provision regarding steps which each importing country should take to prevent non participating countries from gaining advantage at the expense of participating countries. This would appear to imply import discrimination in favour of signatories. The difficulty of defining ways and means of achieving the desired results is fully appreciated. From the Canadian viewpoint there is need for caution lest any action under this Article should have effects more serious than the condition it is designed to remedy.

Should the Council find that there is a threat of a burden some surplus, Canada would be prepared to attend a conference called by the United Nations for the purpose of considering appropriate measures. In the meanwhile, it would seem desirable to continue studies of the terms of the draft agreement.