You asked for the Department's views on the attached editorial⁵⁶³ from Canadian Printer and Publisher, in which a statement by the United States Postmaster General is strongly criticized. It appears that in announcing a revision of United States postal rates for printed material, Mr. Summerfield indicated that the change in postal rates was not inconsistent with the United States policy of encouraging the "continued growth in the world market for printed material which spread American ideals, culture and facts abroad." While most postal rates were raised, the rates on newspapers and other printed matter coming into Canada were reduced for the time being; they will be increased in 1960.

As you know, the Canadian periodical press has held the view for some time (since 1926 at least) that the unrestricted access to the Canadian market enjoyed by American publishers creates competition which Canadian publishers find hard to meet. Until the post-war period, this competition took the form of the overflow of American magazines in precisely the same form as they circulated in the United States. In the post-war period, a number of American publishers have produced special Canadian editions. These contain largely, although not entirely, the same editorial matter as their American parents but they are labelled as being Canadian and they contain advertising directed at the Canadian market. We understand that, with the exception of Reader's Digest, these special Canadian editions are all printed in the United States.

The special magazine tax introduced by Mr. Harris⁵⁶⁴ was an attempt to relieve the magazine industry from competition from only this particular group of American periodicals. You will recall that the United States very vigorously protested against this Canadian tax; one of the main arguments put forward by the State Department was that this tax impeded the transmis-sion to other countries of knowledge of the American way of life. The United States authorities do not appear to distinguish between the countries of Latin-America, where the circulation of American periodicals may well serve a very useful purpose, and Canada, to which some 60% of the exports of United States periodicals are directed. Since the magazine tax was repealed,⁵⁶⁵ a number of new so-called Canadian editions have made their appearance (e.g., the Canadian editions of Argosy and True) and the overflow circulation of the regular editions of American periodicals in Canada has continued to increase. With the possible exception of Macleans, the financial position of the Canadian periodicals has not significantly improved.

If you agree, we will suggest to the other Departments concerned (Finance, Post Office) that there should be a review of this problem, with particular attention being directed to the question of whether it is desirable for Canada to continue to carry free the very substantial number of American periodicals for which postal revenues accrue only, of course, to the United States Government. As you know, the international postal arrangements provide that the country from which mail is despatched keeps the resulting postal revenue on the assumption that there is a roughly equal volume of mail moving in the opposite direction. We should very closely examine the question of whether it is reasonable to operate our postal arrangements on this basis much longer.

In the meantime, I would propose, if you agree, to ask our Embassy in Washington to advise the State Department informally that Mr. Summerfield's statement and any similar statements cannot but give offence to Canada. In the circumstances, I do not think a formal protest would be either useful or desirable, but we should nonetheless make our views quite clear.

SIDNEY SMITH

⁵⁶³Voir Canadian Publisher and Printer (December 1958), p. 92. La citation attribuée au ministre des postes des États-Unis, Arthur Summerfield, est tirée du même numéro de ce journal, page 39.
See Canadian Publisher and Printer (December 1958), p. 92. The quotation in this document attributed to U.S. Postmaster General Arthur Summerfield is found in the same issue of this journal on page 39.

⁵⁶⁴Voir volume 23, les documents 157 à 173./See Volume 23, Documents 157-173.

⁵⁶⁵La taxe sur les magazines a été annulée en août 1958 au moyen d'une modification à la Loi sur la taxe d'accise.
The magazine tax had been repealed in August 1958 by an amendment to the Excise Tax Act.