In September 1948 Canada completed a most-favoured-nation agreement with the areas of Western Germany under military occupation. It is to be emphasized that for Canada to extend most-favoured-nation treatment is to grant a valuable concession. Most-favoured-nation tariffs open up definite opportunities of entering the Canadian market, which is one of the largest import markets in the world for all types of goods. Canada has received from Western Germany in return the nominal advantage of most-favoured-nation tariff treatment, but our trading opportunities in that country have been seriously impaired by the discriminatory trade practices which arise from the bilateral trade agreements between Western Germany and other countries. When the Import Advisory Committee of the Joint Export-Import Agency publishes authorizations to import goods from abroad, it stipulates the countries from which the goods may be obtained. Not being a party to a bilateral trade agreement with Western Germany, Canada is in practice hardly ever mentioned in the lists of countries from which purchases may be made. When Canadian exporters attempt to do business in Germany, they are often told that, lacking a bilateral agreement, they must not expect to do business unless the Canadian price is substantially less than other prices. Even where the Canadian price is, apparently, below the world price, Canadians still find it almost impossible to sell Canadian goods in Western Germany. JEIA officials have more than once proposed that Canada enter into some form of bilateral trade arrangement with Western Germany. They have told Canadian officials that their policy is to encourage importers to acquire their goods from countries with which bilateral agreements exist rather than from other countries, even though the latter might offer better prices or terms on specific commodities. JEIA officials have intimated that "non-agreement" countries, such as Canada, would have to quote prices at least 5% below those quoted by "agreement" countries in order to compete.

On the specific question of selling Canadian flax seed to Western Germany, JEIA officials told our officials that JEIA would consider an offer even in the absence of a bilateral agreement if the price was significantly lower than that offered by any country with which they had such an agreement. Subsequently it proved impossible for Canadian flax to be sold in Western Germany. It may be that good reasons can be adduced to explain why the whole structure of bilateral trade arrangements has been set up, but what concerns us is that the administrative procedures involved constitute the very essence of discrimination against us. This is in sharp contrast with the favourable consideration which is rendered German imports into Canada. It will be recalled that the United States govermnent strongly pressed the Canadian government to enter into its present mostfavoured-nation Treaty with Western Germany.

The United States along with Canada has supported principles and proposals designed to re-establish world trade on a multilateral basis. The policies followed by the Joint Export-Import Agency at present appear to contradict these principles of commercial policy in their unqualified adherence to doctrines of the strictest bilateralism.

¹⁶ Ce mémorandum fat rédigé, suggestion de ambassadeur aux États-Unis, en vue de présenter le point de vue canadien au Secrétariat d'État américain. Il fut dépêchè á Washington le 17 juin 1949.
This memorandum was prepared, at the suggestion of the Ambassador in the United States, for presentation of Canadian views to the Department of State. It was forwarded to Washington on June 17, 1949.