You will recall that a couple of weeks ago the President announced a series of measures would be taken in an effort to improve the United States balance of payments position.¹³¹ One of these was a decision to generally restrict procurement under the ICA aid programme to United States sources of supply. This morning a further announcement was made by the State Department to the effect that procurement under the ICA would be precluded in a group of 19 countries, including Canada, which “are highly industrialized countries with strong currencies, some of which have rising gold reserves.” ¹³²

Our Ambassador in Washington and his staff have on numerous occasions in recent weeks discussed the new United States measures with the State Department and have drawn their attention to the problems which we ourselves are experiencing in respect to our balance of payments, particularly in the deficit on current account. We were, in fact, told by an official in the State Department that they endeavoured to secure an exemption for Canada from the ICA ruling. It is still possible, in fact, that there may be some administrative leeway that would be helpful to Canada. Since our own aid programme is almost exclusively tied to Canadian sources of supply, it may be difficult for us to press the United States too hard on this point, but this is conceivably one of several matters that could be usefully discussed at an early meeting of the Joint United States-Canada Cabinet Committee on Trade and Economic Affairs.

If a question should be asked in the House, you might wish to reply along the following lines:

The Government has been following the United States measures to protect their balance of payments very closely. The measure announced this morning to implement the President’s earlier decision relates only to off-shore purchases made by the International Co-operation Administration in the State Department. While Canada was listed amongst those countries which may not be eligible as a source of supply, the announcement also provided for certain exceptions. Our Ambassador in Washington and his Embassy staff have on several occasions drawn to the attention of the United States authorities, including Mr. Herter, the Secretary of State, the distinction between the Canadian balance of payments position and that of other countries, and we have indicated that we would expect the United States Administration to take this [distinction] into account in the administration of their new regulations related to the President’s directive. The measures announced this morning relate only to purchases by the ICA and do not extend to the field of defence procurement.¹³³

N.A. R[OBERTSON]