Brief History

1. In April, 1950, Cabinet Defence Committee and Cabinet considered the PJBD's Recommendations of March 30, 1950.¹⁴The question of revision of the Leased Bases Agreement had been referred to the PJBD following the sending of a request by the Canadian Government to the United States Government for modifi­cation of the Bases Agreement. In particular the Canadian request referred to income tax exemptions, customs and excise exemptions, postal privileges, and jurisdictional rights enjoyed by the U.S. under the Bases Agreement. It was the desire of Canada that the rights enjoyed by the U.S. at the Bases should be brought as nearly as possible into line with the Joint Defence Statement issued by the two governments on February 12, 1947 (Treaty Series, 1947, No. 43).

2. Cabinet Defence Committee on April 25, 1950, noted the Board's Recommen­dations with approval. Cabinet on April 27 indicated that the necessary legislation should be drafted before formal approval was considered.

3. The President of the United States approved the Recommendations on August 1, 1950.

Brief Summary of the Recommendations (fuller summary in Cabinet Document D243) ?

Income Taxes

4. On June 12, 1950, a new Double Taxation Convention between Canada and the

U.S. was signed. When it comes into force it will replace certain exemption provi­sions now in the Bases Agreement. In addition the Board recommends that the U.S. waive exemptions on contractor's profits, U.S. civilian employees and their families.

COMMENT-This will place income tax exemptions of U.S. personnel in New­foundland on the same basis as in the rest of Canada.

Customs and Excise

5. The U.S. to waive duty and tax exemptions on:

(a) contractor-owned equipment,

(b) personal belongings and household effects of contractors and their U.S. employees other than on first arrival,

(c) individual purchases in Canada by U.S. personnel.

6. Customs and excise exemptions for Post Exchanges and Service clubs to con­tinue, it being understood that the U.S. authorities will endeavour to increase purchases for these institutions in Canada and will take special steps to prevent abuse of privileges.

COMMENT-With the exception of privileges for PX's and Service clubs, this recommendation in effect meets the Canadian Government's request.

Postal Privileges

7. Originally Canada asked for replacement of U.S. military postal facilities by Canadian Post Offices. This request was not met, but under the Board's Recom­mendations the U.S. will not establish normal civilian postal offices and will limit the use of the APO system strictly to mail destined to U.S. territory or to other U.S. APO's.

Jurisdiction

8. (i) The U.S. to waive all rights of jurisdiction, permitted under the Bases Agreement, over British subjects and over aliens other than U.S. personnel;

(ii) The U.S. to suspend for five years exercise of rights of jurisdiction over U.S. civilian personnel, subject to revival on notice thereafter or in event of war or other emergency;

(iii) The Canadian Government to seek to amend the Visiting Forces (USA) Act to permit of compulsory attendance of witnesses;

(iv) The Canadian Government to seek legislation to protect security interests of the U.S. forces in Canada, as required under the Bases Agreement.

COMMENT-The Board's Recommendation will permit of the extension of the Visiting Forces (USA) Act as revised to Newfoundland and will remove probably the most objectionable feature of the Bases Agreement, namely, the right of juris­diction by U.S. courts over Canadian citizens. Revival of the rights of jurisdiction by U.S. Service courts over "followers of the camp" who are U.S. citizens can probably be met when the time comes, if ever.

Outline of Legislation Required to Carry out the PJBD's Recommendations

9. Following Cabinet's consideration in April, 1950, the Departments of External Affairs and National Defence have been engaged in working out draft legislation, in consultation with the other interested Departments. The drafts were shown infor-mally to the U.S. Section of the PJBD in February, 1951. The texts of the draft amendments'? are annexed to this memorandum, although they have not yet been officially cleared with the Department of Justice and will no doubt undergo further drafting changes. Following is an outline:

Customs

(In consultation with Department of National Revenue; not yet approved by Department of Finance)

10. Item No. 708 of the Customs Tariff (which gives free entry to military sup­plies of the "Imperial Government") would be replaced by a new Item No. 708 applicable to any government, on condition of reciprocal treatment and subject to authorization by the Governor in Council. This is, it is submitted, a desirable amendment quite apart from the PJBD Recommendations.

Postal Privileges

(In consultation with the Post Office Department)

11. In order to legalize the U.S. military post offices in Newfoundland, it is pro­posed to add a new item (y) to Section 7 of the Post Office Act. This would author­ize the Postmaster General to make regulations governing postal services of Allied Forces in Canada.

Jurisdiction

(In consultation with officials of the Department of Justice)

12. Almost every Section of the Official Secrets Act would be amended in order to extend its protection (limited at present to Canadian Government and Provincial Government secrets) to secrets belonging to other Commonwealth Governments or to an "associated state". The phrase "associated state" means any state that enters into an agreement with Canada relating to security and that is designated by the Governor in Council (e.g., any North Atlantic Treaty country). It is submitted that these amendments are desirable quite apart from the PJBD Recommendations.

13. A new Section 541A would be added to the Criminal Code to protect the property of "His Majesty's forces, or any forces co-operating therewith". This Sec­tion is desired for the benefit of Canadian forces, quite apart from the PJBD Recommendations.

14. A new section would be added to the Visiting Forces (USA) Act to provide for compulsory attendance of witnesses before U.S. courts-martial, under regula­tions to be made by the Governor in Council, in the same manner as now applies to courts-martial of the Canadian forces.

General Observation re Legislation

15. It is not necessary to decide now how many Bills will be necessary. The amendment to the Criminal Code, for example, could be included in the usual annual Criminal Code Amendment Bill.

Exchange of Notes

16. If Cabinet approves the Recommendations and agrees in principle to the introduction of the necessary legislation, the Secretary of State for External Affairs proposes to enter into an Exchange of Notes with the U.S., as contemplated in the Recommendations, to record officially what the U.S. is giving up and what the Canadian Government will do. A draft of the Notes will be submitted to Cabinet in due course.

Letter to Newfoundland Government

17. An important condition of the Recommendations is the following:

"That the Canadian Government, as a condition precedent to the waiver and sus­pension of the exercise of rights under Article IV and to the extension to New­foundland of an amended Visiting Forces (USA) Act, give satisfactory assurances that the U.S. officials in Newfoundland will have a degree of juris­diction comparable to that which they now in fact exercise. In this connection, the U.S. Section would regard the proposed letter from the Government of Can­ada to the Government of Newfoundland, with a reply from the Newfoundland Government that jurisdictional conditions would remain substantially as now exercised, as the basis for satisfactory assurances to be given by the Canadian Government."

18. The draft letter referred to reads as follows:

"It is contemplated extending the Visiting Forces (USA) Act to the Province of Newfoundland, including the U.S. Leased Bases. Although the present Act does not interfere with the jurisdiction of Canadian courts and law enforcement authorities, it is the hope of the Government of Canada that those charged with law enforcement may rarely find it necessary to bring members of United States forces before Canadian courts. In particular, it is hoped that, when an offence is by its nature essentially prejudicial to the discipline of the United States Armed Forces, when an offence is committed within the Leased Areas, or when an offence involves only members of United States forces or only the property of the Government of the United States, the Canadian authorities will find it desira­ble to leave the wrong-doer to be dealt with by United States Service courts and authorities.

"I hope that your Government will bring the Act to the attention of law enforce­ment authorities. I should be glad to learn the views of your Government on the question discussed in the preceding paragraph."

The wording of the letter is similar to the wording of a communication sent to all provincial governments in July, 1947 when the Visiting Forces (USA) Act was passed.

19. The Attorney General of Newfoundland indicated informally some time ago that such a letter would receive a satisfactory reply.

Recommendations for Decisions by Cabinet

20. (1) To approve the PJBD Recommendations and to authorize the notification of this approval to the U.S. Government;

(2) To approve the proposals for introduction of legislation as set forth in this memorandum, subject, of course, to official consideration of the drafts by the Department of Justice;

(3) To authorize the Secretary of State for External Affairs to enter into an Exchange of Notes with the U.S., subject to submission of the draft Notes to Cabinet;

(4) To authorize the Minister of Justice to send the suggested letter to the Attor­ney General of Newfoundland, at a time to be settled by the Ministers of Justice, National Defence, and External Affairs; this exchange of letters to be followed by a Note to the U.S. Government giving the required assurances."

L.B. PEARSON
BROOKE CLAXTON

¹⁵ Approuvé par le Cabinet, le 21 mars 1951./Approved by Cabinet, March 21, 1951.