Present:

Mr. N.A. Robertson, Secretary to the Cabinet (Chairman),
Mr. A.D.P. Heeney, UnderSecretary of State for External Affairs,
Dr. W.C. Clark, Deputy Minister of Finance,
Mr. J.G. Taggart, Deputy Minister of Agriculture,
Mr. D. Sim, Deputy Minister of National Revenue,
Mr. Graham Towers, Governor of the Bank of Canada,
Mr. W.F. Bull, Deputy Minister of Trade and Commerce,
Mr. H.B. McKinnon, Chairman of the Tariff Board.
Mr. R.G. Robertson, Privy Council Office, (Secretary).

Also present:

The Deputy Minister of Citizenship and Immigration, (Col. Fortier),
Mr. J.J. Deutsch, Department of Finance,
Mr. A.F.W. Plumptre, Department of External Affairs,
Mr. G.B. Urquhart, Department of National Revenue,
Mr. C.M. Isbister, Department of Trade and Commerce.

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III. TORQUAY DISCUSSIONS; REPORT

9.The Chairman of the Tariff Board said the discussions at Torquay had differed substantially from those at Geneva and Annecy in three respects: the Geneva Schedules had been due to expire in January 1951 and their extension had to be discussed; there were a number of countries wishing to accede, of which the most important was Western Germany, and the total number of countries involved was considerably greater.

So far as the Geneva Schedules were concerned, the position before January was that it was permissible for any country to withdraw a concession if it had found it too onerous. It had been agreed in advance that Canada would not withdraw any but it was found that a very large number of items were being withdrawn by many countries, including the United Kingdom and France. Several items were of sub­stantial importance to Canada although in the end the only item of any real concern was the South African concession of silk stockings. In general it proved possible to renegotiate the schedules and adequate compensation had been secured for the items withdrawn. In some instances, the compensation had been better than the original concession.

Of the 38 countries that accepted invitations to Torquay, two did not turn up and two took no part in tariff negotiations. With another 14 it was felt that no substan­tial basis for negotiation by Canada existed. As a result, Canada carried on negotia­tions with 20 countries. An earnest effort was made to get an agreement with the Benelux countries, which negotiated as a unit. The Canadian offer included as its principal item a reduction on window glass. At Geneva, the MEN. rate had been cut from 15% to 10% and the offer was 7 1/2%. The principal items on which compensation was sought in return were flour and salmon. Benelux, however, wanted to get the rate cut to 5% on window glass and were not prepared to make an offer that appeared to be adequate. As a result, it was not possible to conclude a new agreement.

With Cuba, it had been hoped to negotiate on quite a broad scale and the initial move was made on September 28. Nothing was, however, heard from Cuba until February. Their indication then was that unless Canada withdrew its preference margins on sugar, molasses, rum, cigars and other items they would withdraw their concessions. When the delegation declined to negotiate on that basis, Cuba next suggested a tariff quota on raw sugar and finally a bulk purchase. In discussions on an allocated bulk purchase, Cuba offered no real concessions, and negotiations were broken off. It was felt in Ottawa that the consequences of a failure to reach any understanding with Cuba would be so serious that a new effort was made on the basis of an allocated purchase of 75,000 tons. Cuba accepted, giving compensation for four items they were going to withdraw, and the schedule was renewed for a 3year period. The agreement for the allocated purchase was outside the GATT arrangements. It seemed probable that there would be renewed difficulties with Cuba at the end of the 3year period and that it would be hard for the government to extricate itself from bulls purchasing.²⁵

With 16 countries, negotiations were successfully concluded. The countries were: Austria, Denmark, the Dominican Republic, France, Germany, Haiti, Indone­sia, India, Italy, Korea, the Philippines, Peru, Sweden, Turkey and the United States. Of the agreements the most interesting were those with the United States, France, Germany, the Dominican Republic and Peru.

The delegation had been particularly anxious to make a new agreement with the U.S.A., partly because it was felt that this would be the last opportunity under the Reciprocal Trade Agreements Act. After some preliminary skirmishes and six weeks of informal discussions, formal talks began of a fairly substantial character. In all previous tariff arrangements between Canada and the United States, four items had figured: potatoes, cattle, timber and base metals. It had been felt that there was no chance of getting any new concession on potatoes. So far as cattle were concerned, no particular effort was made on the advice of the Department of Agriculture. In the case of base metals, it was thought that something might be secured but not aluminum. It had been doubted whether anything would be possible on dairy products and they had felt there was no real prospect in connection with filleted fish. The delegation considered, however, that it was worth while making a good effort and it was indicated that very substantial concessions would be offered if the United States made new provisions for potatoes, cheese, douglas fir plywood, birch plywood and aluminum. After reference to Washington, the United States delegation indicated that potatoes, cheese and aluminum were out; that something might be possible on douglas fir plywood but not on birch plywood. It was also indicated that substantial concessions would have to be forthcoming from Canada. After protracted discussion, and without having to concede much more than had been intended, the arrangement with the United States finally included a conces­sion on fish, a full 50% reduction on douglas fir plywood, and a reduction on birch plywood that was greater than had originally been sought. Both Canada and the United States came down to 15% on canned salmon, which would operate on bal­ance to the advantage of Canada. Altogether a very large schedule resulted. On a number of chemicals the full 50% reduction was arranged and in the entire indus­trial list there were many cuts. It had not been possible to reach any arrangement on paper. For fruit and vegetables, the only arrangement of interest applied to apples. Our duty was dropped from 37 1/2¢ to 18 3/4¢ and the United States duty to 12 1/2¢. Altogether it was felt that the U.S. barrel had been scraped pretty well clean of items of consequence to Canada.

Of the agreements with other countries, particularly good ones had been made with France and Germany. The whole range of the fifteen agreements affected farm products, processed farm products, fishery products, forest products and metals.

10. Mr. McKinnon said that, on British preferences, the United Kingdom had been more rigid at Torquay than at Geneva. The President of the Board of Trade had gone to Torquay twice and had urged that no margins of preference be given up, either de facto margins or bound margins. The Commonwealth countries other than Canada had tried to maintain a solid front on this. Mr. Wilson had made efforts to have the Canadian delegation instructed to take a similar position but the delegation remained out of the Commonwealth meetings. It was indicated that Can­ada would not refuse to give up any margin of preference if it would help in the conclusion of an agreement. In substance the line was that the delegation had gone to Torquay to negotiate with other countries and that the negotiations had to con­template the possibility of impairing the British margins. The United States had offered Australia the full 50% reduction on wool and it had been thought that Aus­tralia would not be able to resist the attraction of an agreement with such an item included. However, in the event no agreements were negotiated with the United States by the United Kingdom, Australia or South Africa. The old schedules were simply continued. In the case of the United Kingdom, the United States had presented a list of concessions that was so sweeping that the United Kingdom had decided there was no possibility that they could give adequate compensation. It had to be recognized that the Labour Party in the United Kingdom was in many ways quite as strongly attached to protection as was the Conservative Party. Importance was attached not only to protection in the U.K. market but also to protection of the preferred position of British producers in other Commonwealth markets.

In the discussions at Torquay, one of the limiting factors had been the U.S. method of operation. The U.S. Trade Agreements Committee was present at Tor­quay but it did not enter into any negotiations or discussions. The U.S. negotiating teams carried on the discussions with the interested countries and then took the proposals to the Trade Agreements Committee. In not a few instances this meant that, while the Canadian negotiators might be able to convince the U.S. negotiating team and conceivably might have been able to convince the Trade Agreements Committee, the U.S. negotiating team was the one that had to attempt to persuade the Committee to acceptance of the Canadian proposal. Arrangements that might have been quite acceptable and advantageous often fell at this hurdle. The Trade Agreements Committee was established by statute and consisted of about 12 per­sons representing various departments of the U.S. government. The members voted as representatives of their departments and acted more or less as a jury or a judicial board.

The agreements would be open for signature at the U.N. Headquarters on May 7 and would be published on May 9. They would become operative on June 6.

It seemed probable that this represented the last round of multilateral discussions under GATT. From this point forward, it was probable that discussions would be bilateral. The accomplishment of the sessions under GATT had been quite substan­tical. Very great reductions had been effected in the tariffs of countries which repre­sented about 95% of world trade. Moreover, the reductions were bound for three years.

11.The Committee, after considerable discussion, noted the report of the Chair­man of the Tariff Board concerning trade discussions at Torquay.

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²⁵Voir le document 978./See Document 978