I attach for your signature, if you agree, a memorandum to the Prime Minister concerning the preparatory meeting of Commonwealth officials that is to be held in London on February 11. Isuggest that, in present circumstances, it would be satisfactory to have the approval of the Prime Minister and the Ministers directly concerned in a matter of this kind. The memorandum has already been shown to Mr.Fleming and Mr.Churchill and carries their concurrence.³²

2. As you will note, it is note anticipated that this first meeting of officials will be called upon to decide on matters of substance. What we envisage is that officials will put in hand the preparation of material on the basis of which an agenda for the Conference can in due course be formulated.

3. A general framework for such an agenda was, of course, agreed upon by Commonwealth Finance Ministers at Mont Tremblant last autumn. On the other hand, it has always been understood that, as Mr.Fleming put it in the House on January 4, any proposal that any Commonwealth country wishes to bring forward in relation to trade within the Commonwealth, or to economic questions arising within the Commonwealth, or economic policies, will have full opportunity of putting them before the Trade and Economic Conference.

4. Because this has been the position from the outset and because any meaningful review of Commonwealth relations in the economic field will necessarily have to take account of the interests of all participating Governments, the attached memorandum recommends that our delegation be authorized to consider any proposals put forward by other Commonwealth Governments for discussion at the proposed Conference. You will note that some of these proposals and particularly those put forward by the under-developed members of the Commonwealth may be fairly ambitious in scope. Nevertheless, it is our feeling that due weight should be given to all such proposals even though there can, of course, be no commitment before the Conference itself regarding action based on proposals submitted by individual Commonwealth countries.

5. You will note that, in the attached memorandum, the view is also put forward that it may not be expedient for us to seek the inclusion in the final Conference agenda of all of the fourteen points proposed by Mr.Fleming at Mont Tremblant. Our reservations, which are shared by other departments, relate among others to the subject of communications. If this were taken to include civil aviation it would almost certainly raise difficult issues for the United Kingdom and others; if it were extended to cover telecommunications, there might be a tendency to duplicate the work of the Commonwealth Telecommunications Network Conference that it is proposed to hold in London at the end of May. Reservations also attach to the subject of uranium for which a Commonwealth Conference is not considered to be the most appropriate forum and which, indeed, might give rise to some bitterness as between India on the one hand and Canada and the United Kingdom on the other.

6. There is one broader consideration of which, Ithink, you would wish to be aware. This is that there has over the years been some loosening of the economic ties linking Commonwealth countries. Partly this is due to the emergence of new Commonwealth countries in Asia and Africa, partly to the increasing extent to which industrialization has spread in Commonwealth countries other than the United Kingdom, and partly to the very great change in the economic position of the United Kingdom itself. No doubt, recent moves toward closer economic integration in Western Europe and the need of Commonwealth countries to take account of these developments have served to reinforce this general trend.

7. Most of the under-developed Commonwealth countries of Asia and Africa depend heavily on world market prices for one or two primarily commodities. There is not much that can be done by the Commonwealth alone to prevent severe fluctuations in these prices and thus to assure some degree of stability to the export incomes of the under-developed members of the Commonwealth. These countries have also found that the United Kingdom is no longer able to supply all the external capital which they require to expand their economies.

8. Australia and New Zealand are in a not dissimilar position. They have in the past relied upon the United Kingdom for investment capital and upon the United Kingdom market to absorb the exportable surpluses of their primary commodities. These surpluses have grown while the United Kingdom market for them has contracted, largely owing to domestic subsidization of agricultural production in the United Kingdom. These developments have compelled Australia and NewZealand to look for alternative markets in Europe and in the Far East. To negotiate their way into these markets, Australia has sought and NewZealand is about to seek releases from their preferential commitments in favour of the United Kingdom. Moreover, both countries and possibly other Commonwealth countries in a similar position may well wish eventually to negotiate some form of association with or limited participation in the proposed European free trade area if this were the only way of safeguarding access for their primary commodities to the markets of Europe.

9. The United Kingdom continues, of course, to be committed to the closest possible economic co-operation with the Commonwealth. Nevertheless, a realistic assessment over recent years has made it clear to the United Kingdom that the prospect of expanding export opportunities lies pre-eminently in Europe and North America and that the United Kingdom could not, therefore, afford to allow European economic integration to go forward without their participation. It is fair to say that, in their negotiations with Europe, the United Kingdom have throughout laid stress on their determination that nothing would be done to impair Commonwealth interests. The possibility is not to be excluded, however, that the United Kingdom may yet be compelled to modify their position (e.g. with respect to agriculture) if the coming into being of a European free trade area hinged on such a concession on their part.

10. In these circumstances, it was perhaps inevitable that some skepticism should have developed with respect to the Commonwealth as an economic framework. And it is because this skepticism does exist and because it does have a basis in fact that Commonwealth Governments regard it as all the more important that any Conference along the lines proposed by us at Mont Tremblant should be such as to yield results. This is a matter of particular relevance to the position of Commonwealth Governments in Asia, some of which are under continuing pressure to justify the Commonwealth association in terms of national self-interest.

11. It is difficult, of course, to be sure what different Commonwealth Governments have in mind when they speak of a Conference that will yield results. Presumably, however, they are thinking in terms of a Conference that would not merely discuss Commonwealth trade and economic relations as they are and as they are developing but would consider some new initiatives. These might be initiatives designed to strengthen economic relations within the Commonwealth. They might also be initiatives which, like the Colombo Plan, would be formulated in a Commonwealth context but capable of extension over a wider area.

12. We have touched upon these matters in the memorandum to the Prime Minister. No doubt, some of the points at issue will require to be developed further as the shape of the Commonwealth Trade and Economic Conference emerges more clearly and in the light of developments generally over the next few months.

J.W. HOLMES
for Under-Secretary of State
for External Affairs

[PIÈCE JOINTE 1/ENCLOSURE 1]

Note du secrétaire d'État aux Affaires extérieures pour le premier ministre³³

Memorandum from Secretary of State for External Affairs to Prime Minister³³

CONFIDENTIAL [Ottawa], February 5, 1958

COMMONWEALTH TRADE AND ECONOMIC CONFERENCE

The Finance Ministers of the Commonwealth who met at Mont Tremblant in the autumn of 1957 approved the proposal of the Canadian Government that a Commonwealth Trade and Economic Conference be held at a convenient place and time in 1958 and agreed to recommend the proposal to their Governments.

On the basis of the indications which we have already received from Commonwealth Governments it can be assumed that the Conference will be held and that, in response to the invitation of the Canadian Government, it will be held in Canada. There has been some difficulty in securing agreement on a date that would suit the convenience of all concerned. In an effort to take into account the difficulties of individual Commonwealth Governments it has now been proposed that the Conference should open on September 15, 1958, and it is hoped that Commonwealth Governments will see their way clear to accepting this compromise proposal.

In the meantime Commonwealth officials are due to meet for a few days in London beginning on February 11 to set in train the preparatory work for the Conference. This will be the first such meeting and it is unlikely to involve the consideration of substantive issues. A second meeting of officials is projected for May at which time the shape of an agenda for the Conference will probably be determined. It is possible that officials may have to meet again immediately before the Conference to make a final review of the material which is to be put before Ministers.

It is clear that all Commonwealth Governments attach importance to the success of the forthcoming Conference. This is one of the reasons why considerable stress was laid at Mont Tremblant on the need for adequate and careful preparation. Public opinion in the Commonwealth will likewise look to the Conference to produce results that go beyond a mere review of Commonwealth trade and economic relations. To the extent that the Conference flows from a Canadian initiative it may be assumed that other Commonwealth Governments will expect Canada to take an active part in the preparatory work with a view to ensuring that the Conference will serve to strengthen the existing framework of economic relations within the Commonwealth and thereby the Commonwealth association as such.

At Mont Tremblant the Minister of Finance put forward fourteen points in the field of Commonwealth trade and economic relations generally that might be suitable for discussion at a Commonwealth Trade and Economic Conference (attached as Appendix A). While the fourteen points will continue to represent the basic Canadian proposals, it is not considered that Canadian representatives at the preparatory meeting of officials need to regard themselves as committed to the inclusion of all the fourteen points in a draft agenda for the Conference. Indeed, it has already become clear that some of the points in question may raise difficult issues for other Commonwealth countries.

It was understood from the outset that the proposals put forward by Canada as a basis for discussion at a Commonwealth Trade and Economic Conference were not to be regarded as exhaustive and that other Commonwealth Governments would be free to propose for inclusion in the agenda for the Conference any issues to which they attached importance and which they regarded as suitable for consideration in a Commonwealth forum of this kind. It is, therefore, probable that additional proposals will be put forward between now and the drawing up of a final agenda. This might include proposals on such matters as the creation of a Commonwealth investment bank and a possible Commonwealth initiative designed to stabilize prices of primary commodities. Whatever the nature of the proposals that may emerge in this way, there is much to be said at this stage for encouraging other Commonwealth countries to participate actively in the preparatory work for the Conference and for making it clear that any points to which they attach importance will receive due consideration when the time comes to formulate a Conference agenda. The broad general framework of an agenda was agreed to by Commonwealth Finance Ministers and was set out in the final communiqué issued at Mont Tremblant (relevant extract attached as Appendix B).

In the light of these considerations and with the concurrence of the Minister of Finance and the Minister of Trade and Commerce, Iwould propose for your approval:

1. that Canada be represented at the preparatory meeting of officials that is due to open in London on February 11 by a delegation headed by Mr.A.F.W. Plumptre, Assistant Deputy Minister of Finance, and including the following members:
   
   M. Schwarzmann, Department of Trade and Commerce
   
   J.F. Grandy, Canada House, London
   
   K. Goldschlag, Department of External Affairs
   
   G.S. Watts, Bank of Canada
   
   J.M. Harrington, Canada House, London;

2. that the delegation be empowered to discuss administrative issues relating to the holding of the Commonwealth Trade and Economic Conference on the assumption that the Conference will be held in Canada in response to the invitation of the Canadian Government and that the Canadian Government will be prepared to meet the cost of the Conference, including that of visiting delegations;

3. that the delegation be authorized to participate in a preliminary consideration of a Conference agenda in terms of the general framework agreed to at Mont Tremblant and including

   1. the fourteen points proposed by the Minister of Finance on the understanding that, on further examination, it may not prove expedient to seek the inclusion of each and every one of these points in the final Conference agenda; and

   2. proposals put forward by other Commonwealth countries on the understanding that the final Conference agenda will remain to be determined by reference to the views of Governments;

4. that the delegation seek further instructions in the event that any unforeseen issues requiring immediate decisions should arise at the preparatory meeting of officials.

SIDNEY SMITH

[PIÈCE JOINTE 2/ENCLOSURE 2]

Appendice A / Appendix A

LIST OF POINTS PUT FORWARD BY THE MINISTER OF FINANCE AT MONT TREMBLANT AS SUITABLE FOR DISCUSSION AT A COMMONWEALTH TRADE AND ECONOMIC CONFERENCE

Economic Relations

1. Improved Methods of Consultation

2. Communications

3. Direct Aid and Technical Assistance

4. Investment

5. Fiscal and Monetary Policies

6. Uranium

7. Ocean Freight Rates
   
   Trade

8. Tariffs

9. Quotas and Import Restrictions within the Commonwealth

10. Agricultural Policy, Other than Wheat

11. Tourism

12. Procurement and Government Purchasing

13. The Common Market and Free Trade Area

14. Collective Approach to Free Trade and Payments

³² Note marginale:/Marginal note:
Memo sent to P.M. 6.2.58 H.B. Robinson

³³ Cet original du mémoire est tiré des
documents du premier ministre Diefenbaker. Voir J.G.D./VI/814.
This original of the memorandum is taken from Prime Minister Diefenbaker's papers. See J.G.D./VI/814.

³⁴ Voir/See Document 361, note 31.