5. The Minister of Finance, referring to discussion at the meeting of March 8th, 1955, recalled that proposals to assist the export of coal from eastern Canada had not been accepted because of objections in principle to subsidizing exports pending the out come of discussions on the General Agreement on Tariffs and Trade taking place at Geneva.

The Dominion Coal Company had now received a firm offer from the National Coal Board in the U.K. to purchase 100,000 tons of slack coal for delivery from July to October 1955. The purchase price offered would work out to $14.12 per net ton delivered C.I.F. Rotterdam. The total cost of such coal, as calculated by the chairman of the Coal Board would be $17.02. The Coal Board recommended that assistance to the extent of this difference of $2.90 be provided in the form of a subvention. There was only a limited market available in central Canada for Nova Scotia coal under the present subvention limits of $4.75 a ton, and it was probable that the present market would decline further. Production per man day was beginning to show some of the increase expected from the mechanization programme, but this increase, together with the limitations of the market, would reduce the number of men employed. It was important that such a reduction be made gradually, and the proposed export would help to cushion the decline. If the movement were successful in creating future business, it was possible that the laid down cost of N.S. coal and the rate of assistance required might decline due to lower freight and productions costs. The additional expenditure required could be met within the present item in the estimates.

(Memorandum, Minister of Mines and Technical Surveys from Chairman Dominion Coal Board, May 31, 1955).?

6. Mr. Harris added that the company's large 1B colliery was to have been closed the end of May. It was now to be kept open during June. It was an inefficient mine, and the subsidy on exports to the U.K. should not be tied in with keeping it in operation. The slack coal should come from other collieries. The government would be paying $8 million this year to the company. A subsidy of $300,000 for the sale was a small proportion of the total payments to the company. If no assistance were given, the possibilities of the U.K. market might not be adequately tested.

7. Mr. Winters said that, some days before, he, the Minister of Mines and Technical Surveys, provincial authorities and officers of the company had attended a meeting on the Nova Scotia coal problem. These talks had been inconclusive with neither the union nor the company having anything to suggest. While the discussions were being held, an accident had occurred at one of the company's mines which would lead to some suspension of its production. He had asked officers of the company if they could keep the 1B colliery open to help the immediate employment problem caused by the closing of this other mine. He thought the proposed export subsidy worthwhile on experimental grounds so that the British might learn to use this type of coal. This was the only basis on which he would agree to the suggestion and he would not wish to assist exports in this manner as a regular practice in the future. The unemployment situation in eastern Nova Scotia was worrying and it was desirable to maintain, somehow, the confidence in the future of the people in that area.

8. In the course of discussion the following points emerged:

(a) It was doubtful if this scale would make much, if any, difference to the employment situation in Nova Scotia. There would be a market in the U.S. for imported coal for some time. It was not economical at the moment for that U.K. to use low grade oils in plants for the production of electrical energy and, until atomic energy was available in some quantity, coal would be used in increasing quantities. Assisting this sale to the U.K. was a gamble to demonstrate that N.S. coal, with its sulphur content, could be used for the purpose.

(b) A readjustment appeared to be inevitable with more production per man and reduced employment levels. The time might come when the coal would be used as a chemical rather than a fuel and its value increase. But that was a long way off. Meanwhile, the only return for the subsidies being paid was the maintenance of employment.

(c) The G.A.T.T. discussions did not have as much bearing on subsidized export sales as expected earlier. There were provisions in the G.A.T.T. relating to the use of export subsidies but they would not prevent Canada entering into this subsidy. Except for a small subsidy on western coal, this would be the first time there had been a direct subsidy on a Canadian export. The U.S. subsidized export sales of coal and some other products indirectly.

(d) If assistance were to be given, the largest amount should be $2.00 a ton; it should not cover such things as administrative costs, interest, selling expenses and profit. The company should itself contribute, in part, towards making the experimental sale possible.

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