I attach a copy† of the briefs prepared interdepartmentally for the meeting of the above-mentioned Committee to be held on July 12 and 13. As you know, Canadian Ministers and officials participating in the Canada-U.S. discussions will meet to discuss these briefs at 9:45 a.m., July 11th. Mr. Plumptre plans to be on hand for that meeting. I plan to discuss the papers with him sometime on Sunday, July 10th. The attached material is largely self-explanatory, but I consider it would be useful to call to your attention several points which are of particular interest to this department.

The paper on Continental Air Defence,† Item 3 of the agenda, discusses a number of current problems in this field. In most cases, however, the discussions between U.S. and Canadian Ministers will be more or less to note progress. For example, on the replacement of the CF 100, following preliminary consideration by Canadian Ministers last week, discussions between U.S. and Canadian officials on detailed matters are now taking place. It is not likely that these will have progressed sufficiently by next week to enable any substantive decisions by the Ministerial group. Similarly, further action on the formal cost-sharing arrangements covering BOMARC, SAGE and radar installations will be deferred until after final Congressional action on the U.S. Defence Budget.

It is likely that the paper on nuclear weapons policy, ¹¹² Item 4 of the agenda, will be placed before the Cabinet on the morning of July 12th, before the start of the Canada-U.S. meetings. One aspect of this problem which is of particular interest to this department is the choice of alternatives for the negotiations with the U.S. on acquisition of nuclear weapons for Canadian forces. You will recall that a general agreement was drafted by Canadian officials last fall setting out the conditions of acquisition of these weapons for Canadian troops both in Canada and in Europe. Another alternative now being considered is the negotiation of separate general agreements, one covering nuclear weapons in Canada for Bomarc (and possibly for any F101B’s acquired by the R.C.A.F.) and another covering deployment of such weapons for our troops in Europe, that is, for the “Honest John” rocket and the CF104 armament. I might point out that apart from any other advantages of the second alternative the negotiation of two general agreements would simplify working out the financial provisions. The financial arrangements must be different for Canadian forces in Canada and those in Europe because of the involvement of NATO common infrastructure in the Canadian bases in Europe.

With regard to Item 6, NATO long-range studies, you will note that an annex to the paper on this subject† deals with the deployment of MRBM’s in Europe, probably the Polaris missile. There are obvious political problems involved here, in particular the timing proposed for a NATO decision on these weapons. Because of production plans for this missile, the U.S. has requested an answer from NATO by September of this year. External Affairs is somewhat concerned over the international repercussions should it become known that a decision had been made by NATO at this junction to build up rocket forces in Europe. In addition, however, deployment on MRBM’s in Europe raises financial problems. SACEUR has proposed the inclusion of L50 million somewhere in the next three-year infrastructure programme, for the base facilities for 150 MRBM’s. We have very little detail so far on this proposal, but since the Polaris is designed for mobile launching, this raises an obvious conflict with the usual definition of fixed infrastructure facilities.

Finally, on Item 7, defence production sharing, you will have received a memorandum† from Mr. Steel outlining the background of the present situation in this field. You will note that the main point of the brief prepared for Ministers on production sharing is the proposal to suggest to United States Secretaries that some of the F104 aircraft which may be offered to European countries by the United States under MDAP be manufactured in Canada. The paper states the relative advantages and disadvantages of such a proposal, namely, that while it presents considerable possibility for improving the situation in the Canadian aircraft industry it may bear a price in the form of a request for increased Canadian Mutual Aid. It should be recalled that we have been tailing off the equipment side of the Mutual Aid programme, particularly equipment from new production. In explaining this to NATO we have used the argument that little or none of the equipment we are producing corresponds to the present needs of our European partners.

A.B. HOCKIN