EXPORT OP STRATEGIC MATERIALS TO IRON CURTAIN COUNTRIES Repeat (for information only) Washington EX 3065; London No. 2242.

1. We have been approached by State Department in Washington and by United Kingdom High Commissioner here in regard to a meeting in Paris on January 9th. We have said that we would be glad to have Canadian representatives participate fully in the meeting if this is agreeable to the others. In discussing the matter State Department officials have said that they will seek the approval of the United Kingdom, France, Italy, the Netherlands, Belgium, Denmark and Norway to our participation; on the other hand the United Kingdom has indicated that they are sponsoring us jointly with the United States.

2. Throughout the war and postwar period we have worked very closely with the United States in matters of export control, whether these controls have been designed to conserve scarce materials on the North American continent, or to prevent war material and supplies from reaching possibly hostile destinations. There are no border controls between Canada and the United States; the imposition of such controls might involve serious impediments to trade; hence our controls on overseas exports must be closely in line with American controls.

3. Officials of the Department of Trade and Commerce in Washington are in frequent contact with officials in the Department of Commerce and State Department who are concerned with United States export controls. In addition policy meetings have been held from time to time and members of this Department have attended.

4. Over the past year or two the United States has been putting increasing pressure on E.R.P. countries to bring their export controls into line with United States (and Canadian) policy. This has become more necessary as wartime scarcities have disappeared; as long as strategic materials, machinery, etc., were in very short supply there was little likelihood that Western European countries would ship them to Eastern Europe.

5. At the beginning of this month the United States asked us if we would participate in an ad hoc international group to coordinate export policy to Eastern Europe. We agreed to do so. The wider the group of Western countries participating and the more fully they keep each other informed of their actions, the more effective will their joint policy be. We warned the United States, however, that while we were anxious to coordinate policies as far as possible, we could not agree to any system which would involve us in getting approvals from them or from some international body in advance of individual shipments.

6. In agreeing to participate in the ad hoc group we expected that it would meet in Washington. However, it is meeting in Paris. This is satisfactory from our point of view as long as our specially close relations with the United States (for geographical reasons) are understood by the other participants. We have emphasized this point to the United Kingdom High Commissioner here.

7. When the United States first proposed that we should join in an international group it was in connection with arrangements under the North Atlantic Treaty. We agreed with them that this was not (repeat not) desirable. It would limit the membership of the group; it would make secrecy more difficult; and if news of the arrangement leaked out, it might be used by the Eastern countries as evidence that the North Atlantic Treaty was offensive rather than defensive. The fact that meetings are to take place in Paris raises the question whether the group might become associated with O.E.E.C. We would regard this as objectionable for the reasons already given;. in addition any formal association with O.E.E.C. might have wider implications for Canada which would make our continuing association with the group impossible.

8. If we had understood that meetings were to take place in Paris we should, of course, have been in touch with you earlier. We are sending by air mail copies of relevant documents.

9. We understand that the meeting, beginning on January 9th, is likely to last about a week and that six experts are going from the United States and four each from France arid the United Kingdom. The Department primarily concerned here is Trade and Commerce and we trust it will be possible for Manion to attend. In addition, however, we would like to have a member of this Department closely associated with the meetings to report to us on policy matters. It is probable that Mr. Bull of the Department of Trade and Commerce, or one of his associates in Ottawa, will go to Paris for the meeting; we will give you further word on this. In any case Trade and Commerce will be briefing Manion.