Present
The Minister of Public Works (Mr. Green) in the Chair,
The Minister of Finance (Mr. Fleming),
The Minister of Veterans Affairs (Mr. Brooks),
The Minister of Transport (Mr. Hees),
The Solicitor General (Mr. Balcer),
The Minister of National Defence (Mr. Pearkes),
The Minister of National Revenue (Mr. Nowlan),
The Minister of Agriculture (Mr. Harkness),
The Minister of Citizenship and Immigration (Mrs. Fairclough),
The Minister of Fisheries (Mr. MacLean),
The Minister of Labour (Mr. Starr),
The Postmaster General (Mr. William Hamilton),
The Minister without Portfolio (Mr. Macdonnell),
The Minister without Portfolio (Mr. Browne),
The Minister of Mines and Technical Surveys (Mr. Comtois),
The Minister of National Health and Welfare (Mr. Monteith),
The Minister of Defence Production (Mr. O'Hurley),
The Secretary of State (Mr. Courtemanche).
The Secretary to the Cabinet (Mr. Bryce),
The Assistant Secretary to the Cabinet (Mr. Martin).

RESTRICTIONS ON IMPORTS OF TURKEYS AND FROZEN PEAS; U.S. COMPLAINTS
(PREVIOUS REFERENCE MAY 19)

1. The Minister of Agriculture said that the delegation at the G.A.T.T. meeting in Geneva had reported that the efforts they had been instructed to make to prevent the U.S. from inscribing on the conference's agenda complaints against Canadian restrictions on imports of frozen peas and turkeys had not been successful. The U.S. intended to place such an item on the agenda tomorrow unless they received an acceptable proposal from Canada before that time. Inscription would mean that the matter would be referred to a conciliation panel, which would then decide on the compensation to which the U.S. was entitled for the impairment of rights under the Treaty.

The delegation in Geneva felt that, if the U.S. were informed that Canada was prepared to agree to an annual import quota of four million pounds and to the removal of the special duty on frozen peas, then the U.S. might not make a formal complaint. Thus far the U.S. had only been offered a quota of two million pounds, although the delegation had been authorized to go to four. He and the Minister of Trade and Commerce agreed that a final effort be made to settle the problem on this basis adding, as well, that Canada would be willing to review from time to time the turkey quota. If the U.S. did not agree to this, then the offer should be withdrawn and the matter should be allowed to go to the conciliation panel where the package could be used as a bargaining lever. It was unlikely in the face of this that the panel would make a heavy award in favour of the U.S.

2. The Minister of Finance agreed with this proposal. It was unfortunate that the U.S. had raised these matters in the G.A.T.T., without notice, after the matter had been discussed in the Canada-U.S. Committee of Ministers on Trade and Economic Affairs. Nevertheless, a formal charge would weaken Canada's position at a time when it wished to register different and more serious complaints against other countries. The matter was insignificant. Perhaps the U.S. felt by raising it that they might be able to improve their position with regard to lead and zinc. He was to be in Washington on Wednesday attending the funeral of Mr. Dulles and, if there were an opportunity, he would try to discuss the problem with Secretary Anderson and Mr. Dillon, and perhaps others.

3. The Minister of National Revenue said that the current price of frozen peas in the United States was above the fixed value, and it was therefore unlikely that removing the special duty would result in an immediate increase in imports. Stocks were down in the U.S., and the acreage sown to peas in Ontario was much less this year than the average of the past four or five years. However, Members of Parliament from rural areas in Ontario had told him that, if the special duty were taken off, processors would not negotiate a reasonable price with producers on this year's crop, and had therefore urged him to maintain it.

4. During the discussion the following points emerged:

(a) The U.S. was not damaged at all seriously by the restrictions on turkeys and peas, but the issue was a matter of principle with them. Perhaps they felt they could not distinguish between Canada and other countries against whom they wished to make complaints.

(b) It was embarrassing to be put "in court," as it were, after so much had been said about bilateral consultation.

(c) Some argued that the matter should be allowed to be put on the agenda and the full conciliation procedure followed. It was stressed, on the other hand, that, even though this could not be very harmful in practice, it would make it more difficult to deal with trading aberrations of other countries against whom Canada had legitimate complaints.

(d) If the proposal suggested were accepted and became known publicly before election day in Ontario,⁵⁶² it would be unfortunate and the provincial government would be upset. No publicity should be given to the offer, or, if it were accepted, no announcement made before June 15th.

(e) If nothing were done and the U.S. obtained compensation in such important fields as oil or fish, even though it was small, the domestic reaction would be severe.

5. The Cabinet,

(a) agreed that the Canadian delegation attending the meeting of the General Agreement on Tariffs and Trade in Geneva be authorized to inform the United States delegation,

(i) that fixed values on frozen peas would be dropped, effective June 15th;

(ii) that an import quota for turkeys of 4 million pounds per annum, at a quarterly rate of 1 million pounds, would be established; and

(iii) that the Canadian government was prepared to give further consideration to the problem of turkey imports and would be prepared to have the matter discussed with U.S. representatives at any time; and

(b) agreed that there be no announcement on these matters until after June 15th.

R.B. BRYCE
Secretary to the Cabinet

⁵⁶²L'élection provinciale en Ontario était fixée au 11 juin 1959.
The provincial election in Ontario was scheduled for June 11, 1959.