We were delighted to have your telegram TC.2477 of October 8 and as soon as we had it
deciphered we arranged for a conference with Maynier in order that we could determine the best
manner of proceeding to implement the British offer of greater liberalization made in Montreal.
There are two general comments concerning your message which it is important to make at
the start. The first point is that the original British proposal that was outlined in the restricted
savingram sent from the Secretary of State for the Colonies, which Earl Maynier showed you,
does not contemplate any retention of the Trade Liberalization Plan although it admits that the
Canadian Government might not consider the amount of liberalization sufficiently attractive and
might therefore wish to retain the present token import scheme. The savingram does not,
however, make any reference to changing the administration of the scheme if there is to be any
remnant. The second point that we should emphasize is that there is little that can be done in the
West Indies in regard to the extension of the O.G.L. list in the first instance. This must be
negotiated in London.
We are of course aware of the short time at our disposal in order to re-arrange these matters
and it was in the hope of saving a few days that we sent off yesterday to External Affairs our en
clair telegram No.96. Our thought was that you could immediately start discussing possibilities
of the extension of the O.G.L. list with the British as a first step in bringing forward a general
movement for liberalization. This letter will attempt to give you our ideas on how we might
proceed and we are sending it by safe hand of T.C.A. so that you will have it a day or so before I
reach Ottawa. Ibelieve that Williams will stay on in Ottawa for Monday or Tuesday or for as
long as necessary. Although he is not the official immediately concerned, he has a watching brief
over all of these matters and is deeply interested in them.
Earl Maynier was kind enough to let me borrow the copy of the savingram and we are
enclosing a copy of it. Maynier did not suggest that Imake a copy although Iimagine he is
sufficiently intelligent to believe that Iwould do so. The point is that the British will not know
we have a copy of the savingram and, while Isee no reason why they should object to our having
it, we should be very careful not to let them know that it is actually in our possession.
Unfortunately we have had no time to copy the lists which are extensive, but since you are
getting a copy from London Ihope that this will not be too serious an omission.
We think that you may be under a wrong impression when you say in paragraph 2 of your
telegram that the United Kingdom proposals involve a change in the administration of the Plan.
They suggest an abolition of the Plan as the first objective. Nor are we satisfied that the West
Indies have a strong desire for the transfer of administration of the Plan into their own hands as
you suggest in paragraph 6. This was a proposal made by Jamaica some time ago but we are not
aware that the Jamaicans have pushed this question recently and certainly there has been no
suggestion in Trinidad or in the other islands that they would like to take over the administration
of the Plan. We would make a mistake therefore, Ithink, if we conclude that the West Indies
would place heavy emphasis on taking over control if we ended up by having any Plan left to
It seems to us that our first step in this problem is to decide just what we want to do. Clearly
we are not going to reach all at one jump a complete abolition of exchange control or of dollar
discrimination. The next objective presumably is to extend the O.G.L. list as far as possible.
Until we know how far we can go in that respect it would be difficult to make decisions
concerning what we should do with the Plan or how far we can push for a greater exchange
availability on the commodities not freed.
As far as the abolition of the Plan is concerned, as you point out in your paragraph 6, this will
depend on the extent to which we can obtain guarantees that commodities previously shipped
under the Plan and not liberalized would continue to have access to these markets to a degree not
smaller than that which they have at the present time. If the West Indies do raise the question of
administering a remnant of the Plan then we must similarly exact some kind of guarantees, again
as you suggest in your paragraph 6, that exchange control will not be used for protection
purposes. Even without a Plan we will need to have some kind of general statement guaranteeing
that the iniquitous habit which seems to commend itself to Jamaica will not be pursued.
Insofar as the retention of the Plan is concerned, it seems to us that we should aim towards its
abolition. As you say in your paragraph 6, such a move might run into considerable opposition by
certain companies who have benefitted greatly by the Plan. In some cases at least the benefits
have not been confined to giving the companies access to exchange but they have in recent years
given such companies protection in the market considerably beyond that provided in the
Canada-West Indies Trade Agreement. Sooner or later these companies are going to have to come out
into the open and to meet competition without protection provided by the token import scheme.
Provided, therefore, that we can succeed in extending the O.G.L. list and obtaining suitable
guarantees concerning the treatment of the remaining non-freed items, then it is our view that we
should agree with the British and abolish the Plan. We acknowledge, however, that the
provisions just stated may not be easy to achieve.
Concerning the possibility of extending the list of items on O.G.L. you may recall that, during
our conversations with Sir Hilton Poynton in Montreal, we raised the question of where we
would stand in the event that an examination was made of the lists of goods liberalized for the
United Kingdom (and therefore offered for liberalization in the Colonies). We asked him
specifically if it were to be found that the lists benefitted the United States more than us whether
we would have the opportunity of negotiating with the British to add more of our commodities
that had been specified in London to the O.G.L. List for the West Indies. Hestated that most
certainly the question would be subject to further discussion. The way is therefore open to us to
go to the British to negotiate an extended list. You say in your paragraph 3 that we should make
some counter proposals to the West Indies. The West Indies cannot at this stage come into the
question. They can only operate within the limits established from London. It is true that the
savingram does give the West Indies the authority to add fresh and frozen fish and eggs to the list
but beyond that they cannot go without authority from London. You ask us in paragraph 4 to
press for O.G.L. treatment for a number of items specified in your paragraph. Unfortunately,
while we have no doubt that the West Indies would give us full support, the first step must be
taken in London.
As far as our original list submitted to the British in London is concerned, there seems to be
some confusion between the interpretation of the new liberalized list as far as its coverage of our
list is concerned. You will note that paragraph 14 in the savingram includes malt, non-insulated
copper wire and cable, building board, paper board, pharmaceutical products except for certain
anti-biotics, etc., primary steel, flour and polyethylene film and tubing. In your telegram you say
that in addition to the above mentioned items you think that outboard motors, files and rasps and
electrical equipment are also on the free list. We think that there is no doubt that outboard motors
and power lawn mowers are included. Outboard motors are listed in paragraph 71.105 and power
lawn mowers under 71.202, both items being clearly free in the list attached to the savingram.
Similarly files and rasps are included under paragraph 69.912.
On the other hand electric meters, etc. seem to be excluded since these come under tariff
paragraph 72.101 and it is only items specifically mentioned in that item that are to be
liberalized. These items do not include the electric meters or other items included in our list
except for generators and transformers.
We should, we think, request London to add the items included in your paragraph 4 to the
lists of O.G.L. for the West Indies. We think, however, that permission has already been given
for fish and eggs and we suggest that we should add to our demands electric meters,
communications equipment, and the anti-biotics, etc., provided that Canadian companies think
they can compete. These items so nearly complete the list of our demands that we wonder why
you have left out macaroni and spaghetti, roofing papers, tires and tubes. We assume that it will
not be possible to obtain all our requirements and the fact that the British have specifically
exempted certain pharmaceuticals might suggest that it might be particularly difficult to have
such items included. There is also the small matter of malt extract which we have already
suggested to the Canadian suppliers we should negotiate with the British when this matter comes
up for consideration. It is such a small item that there would seem to be no reason why we should
not push for its inclusion, particularly since the Barbadian officials seem quite content to include
it if the British would agree.
By way of argument for an extension to the lists we would think that you could make quite a
strong case on the grounds that the present lists do in fact help the United States considerably
more than Canada. We have not had the time to make a detailed study of the new lists and to
analyse the recently freed items in relation to imports from Canada or the United States. A quick
survey of the lists, however, and we have not the full S.I.T.C. list to enable us to check on each
item, does seem to suggest that the United States is going to benefit from this move more than
are we. Since we are all agreed that it is desirable to increase Commonwealth trade we would
imagine that this argument would carry considerable weight.
In your paragraph 4 you point out that the U.K. list does not contain a number of products
that are now on most West Indian O.G.L. lists. This was a point which we cleared repeatedly
with the British in Montreal and they quite categorically assured us that any items now on the
free list would continue to be so regarded.
While you are making your approaches to the British we should at the same time set out for
the Federal Government the kind of guarantees that we would hope they could give us
concerning the treatment of the commodities that remain off the O.G.L. list, whether or not there
is to be a continuing token import scheme. If we will do this the Federal Government will
undertake to send such criteria to the different island governments and ask them to comment on
them, at the same time giving our proposals their blessing provided of course that they are in
agreement with them. Assuming first of all that we agree to abolish the scheme then we suggest
that we should propose that we should obtain written assurances that (a) the administration of
future dollar allocations should not be designed to provide protection to local industry but should
be on the basis of need and that items should be discriminated against only for balance of
payments reasons. (b) we should ask that items which were previously on the token import
scheme should not be denied access to the allocations by virtue of any decision that they are not
considered essential, or for any other reason. It should be understood that in giving up the token
import scheme we do so with the undertaking that the unit governments will set aside a quota at
least equal to the dollar exchange expended on imports of those commodities in 1957, as long as
the importers of those commodities are interested in continuing to import the commodities in
On the other hand if it is agreed that the Plan must be continued in truncated form, then we
do not think we should raise the question of handing the scheme over for the administration by
unit territories. If the islands or the Federation press us on that point we should give way, but
until they do we think we should assume that we will continue to administer any remaining
scheme. Doing so, however, we should insist that the eligible list should be abolished. We might
also ask for a slight increase in the total amount of exchange available for the goods remaining
on the scheme. We say a small amount simply because we do not think an outright increase in the
total amount has any chance of being accepted and we are not at all sure that it would be
desirable since we might have trouble in using up all of the exchange.
If we are forced to hand over the scheme for local administration then we must do so with
even firmer guarantees. However, we are somewhat afraid that if we were to follow the proposals
contained in your paragraph 8 without any quotas for commodities, Canadian companies might
find themselves in the position of being unable to ship because their importers or agents might
prefer to use their exchange for other commodities with a higher profit margin. Let us hope,
however, that this question will not arise and that first the schemes will be done away with, or,
failing that, that we will continue to administer a very much truncated remnant with complete
freedom of action as to commodities.
It is going to be difficult to endeavour to tie up all these loose ends in time to have this new
régime in operation by the first of next year. Nevertheless, provided we can talk to the British at
once, we think that it could be done. Clearly it is most desirable that it should be done. It should
tend to increase the interest in our Trade Fairs, but the main point is that it would give concrete
evidence that we are pushing ahead with the results of the Commonwealth Trade and Economic
Conference and also add stature to the Federal Government.
You will understand, of course, that in sending these lists to the Colonies the United
Kingdom is not imposing its will on local government, all they are doing is seeing that the
Colonies may liberalize to the extent indicated. We think that insofar as the West Indies are
concerned there will be very little problem in having practically all of the items included in a
wider O.G.L. list. Jamaica is perhaps the only Colony that will give trouble.
I hope that this letter will reach you before Iarrive but mails being such as they are Imay
find myself talking to you about these things without giving you an opportunity to digest all of
this spinach. Ithought you might also like to have a copy of the note which SirHilton Poynton
sent to me in Montreal before Ileft. It is his interpretation of the message that they received from
London dealing with the liberalization programme and which is spelled out in more detail in the
P.S. You will observe that throughout this we have used a small the in writing about the
Federation of The West Indies. There is some confusion here arising from the fact that an
announcement has just been made that the official title is now to be West Indies.
La section des Colonies de la délégation du Royaume-Uni à la conférence commerciale et économique du Commonwealth au commissaire en Trinité
Colonies Section, Delegation of United Kingdom to Commonwealth Trade and Economic Conference, to Commissioner in Trinidad
CONFIDENTIAL Montreal, September 24, 1958
Dear Guy [Smith],
As promised at our discussion this morning, Isend you herewith the gist of the telegram from
London about our dollar liberalization proposals as regards the Colonial territories:
All goods on U.K. Dollar O.G.L. list (including additions of machinery items) could be put
on O.G.L. in the Colonies. The broad effect would be to put on dollar O.G.L. almost all items
other than consumer goods, certain food stuffs and certain special items.
Colonies would be free to spend outside their dollar allocation any dollars required for (a)
Dollar allocations for 1959 would be at rate of 1957 expenditure on items other than (a)
above, plus provision for items at (d) below in the case of Caribbean Territories only.
On token imports scheme some items would be absorbed by (a) above. This should represent
a clear gain for Canada. We are proposing to the Caribbean Territories that 1957 expenditure on
remaining items should be added to dollar allocations under (c) above and token imports scheme
as such wound up.
Not all the items proposed by the Canadians for liberalization are included in (a) above, but
our hope is that benefit to the Canadians arising out of (a) will more than make up for any
expectations they may have had in the more limited field of token imports, which in any case
apply only to the Caribbean Territories.
Full circular with our proposals is not likely to be despatched to Colonial Governments
before Wednesday (24 ). Proposed liberalization date is 1st January, 1959.
We must await views of Colonial Governments before announcing publicly what
liberalization they each propose to adopt, but Canadians may be informed of the full details of
our proposals including full liberalization list, subject to Restricted security classification