You will perhaps recall that at the time of the campaign conducted largely by the Council of Canadian South Slays for the repatriation to Yugoslavia of immigrants to Canada, there was publicized a scheme whereby funds were to be collected from sympathetic Canadian South Slays, to be used to purchase relief and rehabilitation equipment for despatch to Yugoslavia, in order to assist in the rehabilitation of that country.

The drive for funds, a large portion of which were obtained from the departing repatriates, resulted in a substantial collection, from which some $280,000 has been used to purchase a miscellany of commodities for shipment to Yugoslavia. Of this total about $130,000 has been expended in the purchase of new machines and equipment, and about $150,000 for the purchase of articles from War Surplus through War Assets Corporation.

Permission to export these commodities has been withheld for sometime, for the following reasons:

(a) There was a suspicion that duress had been applied to individual Canadians in order to persuade them to subscribe.

(b) It was felt that, while during the period of collection the collectors stated that the purpose of the fund was partly to set up the repatriates in their new life, that in fact the repatriates as individuals would receive practically no benefit from the import of the articles in question.

(c) The activities of the Council of South Slays and of the Yugoslav representatives in Canada were objectionable to the Canadian Government from many points of view.

Up to the present, permission to export has been withheld on the grounds that the regulations of the Foreign Exchange Control Board require that the value of all exports must be received in hard currency from the recipient, except in the case of gifts to a value of less than $100. Gifts to a value of more than $100 may be exported, but only with the specific consent of the Foreign Exchange Control Board.

Last week it was drawn to Mr. Howe's attention that the Council of South Slays, some two years ago, had reached an understanding with the Foreign Exchange Control Board to the effect that the proceeds of such a collection could be used for the purchase of goods for export to Yugoslavia. In the light of this, Mr. Howe has come to the conclusion that we should not any longer withhold permission to export.

The Department of Trade and Commerce, however, intends to withhold permission for war-like materials such as parachutes and parachute cords, which have been purchased, and new equipment of United States origin, such as a Diesel engine which is also now in the hands of the representative of the Council.

The Department has not held very strong views on this subject. We have not opposed the sale of non-war-like goods to Yugoslavia in general, but we did, however, concur in the recommendation of the Interdepartmental Committee on External Trade Policy that permission to export in this particular instance should he withheld. As matters now stand, however, the prior agreement with the Foreign Exchange Control Board removes any argument we might advance to the Council of South Slays for refusing permission to ship except for the categories mentioned above.

I would propose, if you agree, to instruct our Minister in Belgrade to inform the Yugoslav Government that the Canadian Government, in order to clean up this particular arrangement, has now granted permission to export, but add a word of caution so as to make it clear that the Canadian Government is not encouraging further exports to Yugoslavia of this nature.³⁴

Last Friday the Interdepartmental Committee on External Trade Policy, after reviewing the facts, agreed that permission to export should now be granted.

³⁴Ces instructions ont été envoyées le 24 juin. This instruction was sent on June 24.