Mr dear Premier:

On June 22nd, 1948, Mr. St. Laurent, then Secretary of State for External Affairs, wrote to the Honourable Colin Gibson, then Secretary of State, asking him to draw the attention of the Lieutenant Governor of Ontario to the desirability of altering certain regulations of the Ontario Government so as to permit transit truck­ing in bond across Southern Ontario. I understand that at that time your Govern­ment considered this question, but that the regulations were not altered so as to permit this traffic.

The interest of the Federal Government in the question of transit trucking in bond arises from two sources. Firstly, Canada is a contracting Party to the General Agreement on Tariffs and Trade. Article V of this Agreement (copy attached'') requires Contracting Parties to permit freedom of transit through their territories. The fact that the provisions of this article have not been fulfilled has presented some difficulties for the Federal Government. Secondly, as pointed out by the United States authorities, Canadian trucks from all provinces have transit privileges through United States territory, even though some provinces have not granted reciprocal rights. An example of this traffic is the transport by Canadian trucking companies of automobiles manufactured in Ontario to markets in Western Canada. It has been reported that the monthly average number of trucks engaging in this traffic alone very nearly equals the monthly average number of United States trucks which engaged in the transport of goods in bond across Southern Ontario during the war. This represents a substantial change in the trucking situation from that which existed in the pre-war period. It is reasonable to assume that the freedom of operation which Canadian trucks now enjoy in the United States will not be contin­ued indefinitely if we are not prepared to grant United States trucks reciprocal priv­ileges in Canada.

The question of transit trucking through Southern Ontario is of considerable importance to United States trucking firms as the use of the Canadian route would save a substantial amount of driving time. For example, traffic moving between Detroit and Buffalo via the 261 mile route through the Niagara Peninsula saves 104 miles or 6 hours driving time.

Recently, the United States Embassy approached us again and asked that we take the matter up once more with the Ontario Government. We are also informed that the Canadian section of the Joint Canada-United States Chambers of Com­merce Committee is intending to request an interview with you during this month to urge that the provincial regulations be altered to permit transit trucking.

In the past objections to trucking in bond across Southern Ontario have been raised primarily by the United States and Canadian railway companies and by the Railway Brotherhood. It appears, however, that the bulk of the bonded freight through Southern Ontario is carried by United States railways, and consequently the interest of the Canadian railways in the transit trucking issue is relatively small. The real dispute seems to lie between the United States trucking companies and the United States railways.

The United States Government has expressed a strong interest in the solution to the trucking in bond issue. Besides creating difficulties between the United States and Canadian Governments, the fact that the terms of Article V of GATT have not been implemented tends to interfere from time to time when we are seeking the assistance of the United States Government on various matters - including mat­ters in which the Ontario Government has an interest.

In view of all these considerations, I should be grateful if your Government would review its previous decision on this question and give favourable considera­tion to altering present regulations and practices so as to permit transit trucking.

We should also welcome any information on the Ontario Government's views on transit trucking and would greatly appreciate being kept informed of future developments.

Yours sincerely,
L.B. PEARSON