Volume #15 - 625.|
INTERNATIONAL ECONOMIC RELATIONS
ANGLO-CANADIAN FINANCE AND TRADE
July 11th, 1949|
DISCUSSION UNDER THE AEGIS OF THE UNITED KINGDOM-CANADA CONTINUING|
COMMITTEE ON TRADE AND ECONOMIC AFFAIRS, JULY 11, 1949, 3.45 P.M., AT THE
UNITED KINGDOM TREASURY
Yesterday afternoon the group of Canadian officials met with Wilson Smith and Shillito of the Treasury, Liesching of the C.R.O., and Lee49 of the Ministry of Food. Holmes of the Board of Trade was unable to be present as he was attending a meeting of the Exports Committee which was discussing methods of expanding U.K. exports to Canada.
2. The discussion (which necessarily was of a preliminary character) related to the following subjects:
(a) Plans for the discussions among the U.K., U.S. and Canada, which are expected to be held in Washington early in September. It was considered desirable to have such preparatory talks as might be possible at this stage before the departure of the Canadian officials from London. Wilson Smith reported that Snyder had indicated that Hebbard, the Financial Attache at the U.S. Embassy would represent the U.S. in any such preparatory talks on the agenda and general arrangements for the September discussions. Wilson Smith suggested that U.K. and Canadian officials might have some preliminary talks, after which they might meet together with Hebbard. These preliminary talks will be arranged as soon as possible.
(b) Consultation with Canada on the revision of the U.K. dollar import programme. It appeared that except for a few commodities on which decisions would have to be taken almost immediately (e.g. tobacco and cotton), the revisions to be made in the import programme could not be known before the Canadian officials leave London. Wilson Smith and Lee thought that the revised programme would probably not really begin to take shape until late July or early August. Before the programme could be modified with any confidence it would be necessary to know at least what funds the U.S. Congress had appropriated and what share the O.E.E.C. was likely to recommend for the U.K. Wilson Smith and the other U.K. officials undertook to consult in advance with Ottawa, either through Earnscliffe or Canada House, on changes proposed in the programme affecting Canada. In addition, Dr. Barton and Frank Lee intend to have an informal talk on the general food import programme within the next few days.
(c) West Indies token import scheme. Wilson Smith was not sure to what extent the arrangements for allowing token imports into the B.W.I, from Canada should be regarded as affected by the "standstill" decision of mid-June regarding "new" dollar purchases. According to Wilson Smith, the Treasury had been inclined to consider this token import arrangement as coming within "existing contracts and commitments" which were to remain in force. However, recent announcements from Jamaica suggested that the local authorities were prohibiting dollar expenditures on such imports. Quite apart from any interpretation of the standstill decision, Wilson Smith thought that U.K. and Canadian officials should discuss as soon as possible whether the sterling area could afford the continuation of such imports into the West Indies. He suggested that before the Canadian group leaves London frank discussions should take place on this question.
(d) Availability of sterling area supplies. It was noted that detailed discussions had recently taken place in London between Harvey of Trade and Commerce and the U.K. officials concerned on the possibility of increasing sales of a variety of sterling area commodities (e.g. petroleum, rubber, cocoa hops, etc.) to Canada, and that discussions had also recently taken place concerning sugar. It was felt that the Continuing Committee could not carry this subject further at the present time. It was noted that during the forthcoming Commonwealth talks much attention would probably be given to the possible expansion of sterling area exports to Canada and the U.S. (including not only the traditional exports but also possible diversions of meat, butter, etc.) The U.K. officials recognized the desirability of establishing some central mechanism for coordinating the promotion of such sterling area sales, but at the same time they emphasized the political difficulties involved in any such arrangement. Liesching undertook to look into the possibility of extending and improving the present sales promotion arrangements (which are now largely confined to products from the Dependent Territories).
(e) Tourism. Rasminsky reported on the steps which the Canadian authorities had taken in encouraging Canadian travel within the sterling area (e.g. clarification and liberalization of the currency allowance, and the inclusion of certain proposed Cunard cruises). Wilson Smith indicated that the personal export scheme in the U.K. was being reviewed and he was hopeful that some improvements could be introduced. There was some discussion of other steps which might be taken to stimulate tourist traffic to the U.K., including the possibility of shipping companies and airlines offering reduced "off season" rates. Liesching and Wilson Smith indicated that they would prod the Tourist Board to explore these and other methods of increasing earnings from tourism.
(f) Preliminary consideration of the topics listed in our telegram No. 1410 of July 9th†
(i) It was agreed that the question of the encouragement of imports (particularly of capital goods) and of problems relating to article 5 of the loan agreement should be discussed later with the Board of Trade.
(ii) Wilson Smith indicated that he was not inclined to press at this stage for permission to increase drawings on the Canadian credit. He thought that this question might be reviewed in September in the light of the situation at that time. Dr. Clark explained that, even before allowing for the effects of import reductions which the U.K. might make, the present rate of drawings was likely to be more than could be financed without reducing Canadian reserves of U.S. dollars. He did not see how an increase in that rate could be justified. In any case the whole balance of the loan would not be sufficient to make much difference in the desperate circumstances in which the U.K. would be likely to press for increased drawings. If, in such circumstances, Canada were to allow increased drawings, the probable result would be that Canada would injure herself without really helping the U.K. Wilson Smith enquired whether any formal action was needed in order to permit the continuation of drawings at the present rate. Dr. Clark indicated that the decision last January had not implied any time limit on the continuation of drawings at the rate of $10 million a month, but had merely provided that the arrangement concerning the rate of drawings would be reviewed "from time to time". Accordingly he did not consider any formal action necessary at this stage.
(iii) Mr. Mackenzie described the present limitations on the Canadian stockpiling programme. He undertook to look into the possibility of increased stockpiling, but he was not hopeful that much could be done.
(iv) On the Newfoundland interest free loan, it was concluded that Wilson Smith should examine during the next few days the possibility of some arrangement whereby the U.K. would pay Newfoundland (or the Federal Government) the Canadian rate of interest (possibly accompanied by an undertaking that the repayment of the loan would not be called for within a specified period of time).
(v) Concerning the arrangements regarding the 1942 interest free loan, there was some discussion on the extent to which there would in practice be any considerable margin in the future between proceeds from the sales or redemptions of securities held by the U.K. and the volume of direct investment in Canada which the U.K. would wish to undertake. Wilson Smith undertook to assemble up-to-date information and forecasts as soon as possible in order that this subject might be discussed further before the departure of the Canadian group.
(vi) On the question of immigrants' remittances there was some discussion on the extent to which it was intended to include not only the initial withdrawals by persons emigrating to Canada, but also subsequent transfers of income from the U.K. after the immigrants secure non-resident status, and even the transfers of legacies. Wilson Smith indicated that his present concern was with the transfers accounting for the annual drain of some $36 million to U.S. and Canada (of which about $29 million went to Canada), but he was not sure exactly which types of transfers were included in this figure. Rasminsky undertook to get from Ottawa as soon as possible an analysis of the Canadian statistics on the various types of transfers. It was noted that the transfers of income after the acquisition of non-resident status might be expected to increase after the lapse of 4 years from the commencement of the immigration movement.
3. At the conclusion of the meeting, Dr. Clark emphasized the relationship between anything which Canada might be able to do on these various matters and the action which the U.K. might take to reduce costs and generally to provide evidence that there was some hope of the U.K. returning to multilateral trading.
49F.G. Lee, secrétaire permanent, ministere de falimenlalion. E.G. Lee, Permanent Secretary, Ministry of Food.