SECRET [Ottawa], April 20, 1950

UNITED STATES NEWFOUNDLAND BASES
RECOMMENDATION OF THE PERMANENT JOINT BOARD ON DEFENCE

There is given below an explanation of the Board's Recommendation which appears on pages 12 14 of the P.J.B.D. Minutes of March 28 30; 1950:1

Income Tax

The Canadian U.S. Double Taxation Convention of 1942 exempts, on a reciprocal basis, U.S. Service and civilian personnel in Canada of the U.S. Government from Canadian taxation on remuneration paid by that Government.

Under the P.J.B.D. Recommendation, as already agreed by the taxation authorities of the two countries, this exemption would be extended to cover, on a reciprocal basis, U.S. Service and civilian personnel in Canada of the U.S. Government and their wives and minor children, with respect to all their income derived from outside Canada. These persons enjoy such an exemption at present under Article XVll of the Newfoundland Bases Agreement 3a

Also, the income tax provisions of the Bases Agreement would be cancelled and U.S. civilian employees of contractors at the bases, their wives and minor children and contractors ordinarily resident in the U.S. (in respect of their profits from work at the bases) would lose the exemption from Canadian taxation accorded by the Bases Agreement. The foregoing would meet in full the Canadian request for modification of the income tax provisions of the Bases Agreement.

Customs/Excise

The P.J.B.D. Recommendation envisages:

33 Le 25 avril 1950, le Comité du Cabinet sur la défense a approuvé les grandes lignes des recommandations de la Commission permanente canado américaine de défense sur l'accord des bases à Terre Neuve. Le gouvernement a décidé de reporter son examen final des recommandations jusqu'à ce qu'il sache mieux quelle loi serait nécessaire.

On April 25, 1950, the Cabinet Defence Committee endorsed in general terms the P.J.B.D.'s recommendations on the Newfoundland Bases Agreement. The government decided to withhold final con sideration of the recommendations until it had a better idea of the legislation that would be required.

(1) Cancellation of the customs/excise exemptions accorded to contractor owned equipment under Article XIV.

(2) Cancellation of any customs/excise exemptions accorded by Article XIV to personal belongings and household effects of contractors and their U.S. employees (after first arrival), and to purchases in Canada, outside the leased areas, by individual U.S. military and civilian personnel, or their families.

(3) Continuation of customs/excise free PX's and canteens, for reasons of morale and as a high proportion of supplies for such institutions will be procured in Canada and special steps (e.g., cigarette rationing) are being taken to prevent abuse.

With the exception of the PX's, this portion of the Recommendation meets the original Canadian request.

Post Offices

For a variety of technical and morale reasons, the U.S. Service post offices at the Newfoundland bases (Article XVI permits normal U.S. post offices) would be retained on the understanding that (a) they will henceforth be used only for the purposes authorized by Article XVI (i.e., mail to post offices in U.S. territory and to U.S. Service post offices), and (b) date stamps used at the bases will (as at present) only show the Service post office number not the location of the office.

Originally, Canada asked for replacement of military postal facilities by Canadian post offices. It appears clear that no U.S. civilian post offices will be established. As a result of (a) above, some increase in present Canadian postal facilities at the bases may prove necessary. Washington would be agreeable to Canadian Service postal facilities being established in the U.S. in an emergency.

Jurisdiction

The P.J.B.D. Recommendation envisages the following:

(1) Waiver for all time of U.S. rights of jurisdiction, under Article IV, over Canadian citizens, other British subjects and aliens who are not U.S. citizens connected with the bases.

(2) Suspension for five years, and thereafter subject to revival on six months notice, or in the event of war or other emergency, of U.S. rights of jurisdiction over U.S. civilians.

(3) Before extending the Visiting Forces Act to the Province of Newfoundland, Canada to make administrative arrangements with Newfoundland similar to those with the other provinces under which Canadian courts do not normally exercise jurisdiction over U.S. Service personnel, particularly in cases in which Canadian persons or properly are not affected.

(4) The Canadian Government to seek amendment of the Visiting Forces Act to provide for the compulsory attendance of witnesses before U.S. Service courts in Canada.

(5) The Canadian Government to seek legislation penalizing offences against the security of U.S. forces in Canada committed in Canada by any person other than U.S. Service personnel.

The jurisdiction portion of the Recommendation gives Canada substantially what it sought originally. The P.J.B.D. Journal makes it clear that it is desired that the U.S. seek reciprocal security legislation. As a result of Article V of the Bases Agreement, Canada is, in any case, under obligation to seek necessary legislation to ensure the security of U.S. operations in Newfoundland. (Further comment on the jurisdiction question is made in the attached paper).

Legislation to Implement Recommendation

Legislation will be required to implement the revised Double Taxation Convention referred to in the Recommendation. No legislation would appear to be required to cover the customs/excise privileges that would remain to the U.S. under the Recommendation since the customs/excise privileges accorded by the Bases Agreement were protected by recent legislation which authorized their continuation by regulations of the Governor in Council. It at present appears probable that continuation of U.S. Service post offices at the bases would not require new legislation. The question of the legislation that would be required to implement the jurisdiction portion of the Recommendation is dealt with in the attached paper.

OTHER RELEVANT RECOMMENDATIONS

Goose Bay

While the U.S. has been given no express undertaking permitting continued use of Goose for a specific period, U.S. forces have been there since 1941 and have not been asked to move out. In practice, the U.S. forces enjoy the same privileges as at the leased bases", although there appears to be no express legal authority for this except with respect to customs (the Newfoundland Government agreed to grant customs privileges as under the Bases Agreement up to the signature of a peace treaty with Germany). On the other hand, Article XIX of the Bases Agreement provides that "U.S. forces stationed or operating outside the Leased Areas under separate agreement ... shall be entitled to the same rights and enjoy the same status as U.S. forces stationed within the Leased Areas." Although neither the Canadian nor the Newfoundland Government appears to have admitted that this Article applies to Goose, although the U.S. has not formally argued that it does apply, and although there is no formal agreement permitting use of Goose for a specific period, the U.S. would obviously have some grounds for arguing that, in the absence of â clear declaration to the contrary, the Article does apply to Goose.

This situation is clearly unsatisfactory to both parties. Continuance of the U.S. forces at Goose without any agreement as to cut off date and other matters will tend to create a vested interest there. Enjoyment of, the privileges of the Bases Agreement without protest on our part tends to create a presumption that the Bases Agreement applies in this respect. From the U.S. point of view, uncertainty of tenure restricts U.S. expenditure there on permanent type construction that is needed, and especially housing, since a U.S. Treasury ruling apparently precludes expenditure on new construction unless there is reasonable security of tenure.

With a view to clearing up the U.S. position at Goose and, in the expectation that an offer of a reasonable settlement regarding Goose might be some inducement to the U.S. Section to modify its previous firm stand against any modification of the jurisdictional provisions of the Bases Agreement, the Canadian Section, after discussion with Mr. Pearson, Mr. Claxton and Mr. Bradley,³⁵ indicated at the last meeting of the Board that, provided a mutually satisfactory solution of the leased bases issue could be found, it would be prepared to recommend to the Canadian government a lease arrangement for a portion of Goose Air Base along the following lines:

(1) A lease to the U.S. for a period of twenty years, with an option for renewal, of a portion of the present base area large enough to accommodate U.S. military installations and housing;

(2) Continuation of customs/excise and postal privileges comparable to those enjoyed at U.S. Newfoundland bases;

(3) Jurisdiction at Goose to be covered by the Visiting Forces (USA) Act;

(4) The base to remain under the overall command and administrative control of the R.C.A.F.;

(5) All proposed U.S. construction to have the prior approval of the C.O., R.C.A.F. Station, Goose Bay;

(6) All proposed U.S. Service projects in Canada based in the U.S. area to have the prior approval of the Canadian Government.

The U.S. Section agreed to refer the proposal about Goose to the U.S. authorities with the suggestion that the two Air Forces explore it and make recommendations to the two Governments for a satisfactory agreement.

There would appear to be no doubt that the proposals about Goose were regarded by the U.S. Section as an important quid pro quo in return for concessions on jurisdiction.

U.S. Activities Outside the Leased Bases

At the P.J.B.D. meeting the U.S. Section undertook, at the request of the Canadian Section, to recommend that the Canadian Government be consulted regarding any U.S. Service activities of significance that it is proposed to conduct outside the island bases in line with the principle that all such activities should be under the control of the Canadian Government.

Collection of Income Taxes

At the P.J.B.D. meeting, the U.S. Section agreed to take up with its. Government the possibility of the U.S. authorities in Newfoundland making tax deductions at the source and providing payroll information with respect to employees taxable in Canada.

U.S. Contribution to Newfoundland Roads

While being exempt from registration and license fees and the gasoline tax, the U.S. operates twenty per cent of the motor vehicles in Newfoundland and the heavier vehicles are hard on the roads. At the P.J.B.D. meeting, at the request of the Newfoundland Attorney General who was present, the U.S. Section agreed to take up with its Government the possibility of its contributing, in some form or other, a reasonable share of the cost of road maintenance in Newfoundland. Contributions, if any, will probably be in kind rather than cash.

Unemployment Insurance at the Leased Bases

At the request of the Canadian Embassy, Washington has arranged for contractors at the bases to participate in the Canadian unemployment insurance scheme and plans to introduce legislation to permit the U.S. Government to bring all its own local employees in Canada under that scheme.

A.D.P. HEENEY

[PIÈCE JOINTE 2/ENCLOSURE 21

Note supplémentaire

Supplementary Memorandum

SECRET [Ottawa], April 20, 1950

LEGISLATION TO CARRY OUT P.J.B.D. RECOMMENDATION ON U.S.
JURISDICTIONAL RIGHTS IN NEWFOUNDLAND

1. This memorandum on the problems involved in implementing the P.J.B.D. Recommendation on U.S. jurisdiction in Newfoundland was prepared following a meeting attended by Mr. Claxton, Mr. Bradley and Mr. Pearson on April 18. The matter had previously been discussed at a meeting of officials of the Departments concerned.

(a) Security Legislation

2. The Recommendation includes the following:

"(c) That the Canadian Government undertake to seek legislation to protect United States interests in security offences as envisaged by Article V of the Leased Bases Agreement".

The intention of the Board was that the Canadian Government seek legislation to provide for the prosecution in the Canadian courts of offences committed by any persons not members of the U.S. Forces in connection with the secrets of these . Forces.

3. The Recommendation also called for the waiver for all time of the U.S. rights of jurisdiction over Canadian citizens, other British subjects and aliens who are not U.S. citizens connected with the bases and the suspension for an initial period of five years of U.S. rights of jurisdiction over U.S. civilians connected with the bases.

4. It is not clear whether the U.S. authorities would be willing to suspend their jurisdictional rights over security offences conunitted by U.S. civilians until our security legislation comes into force. They would probably state that the suspension of these rights could only become operative when Canadian legislation takes effect.

5. Article V of the Bases Agreement requires that Canada take such steps "as may from time to time be agreed to be necessary with a view to the enactment of legislation to ensure the adequate security and protection" of the U.S. Forces, their property and operations in Newfoundland. With the proposed reduction of U.S. jurisdictional rights in Newfoundland, the need for Canadian security legislation is increased as the U.S. Forces would be abandoning, in peacetime at least, their right to try even U.S. civilian nationals employed at the bases for security.offences committed by them.

6. Any new security legislation, while primarily designed to meet the substantial security problems of the leased bases in Newfoundland, should perhaps apply uniformly throughout Canada and would thus afford protection to U.S. forces stationed elsewhere in Canada with the consent of the Canadian Government. Although the Recommendation mentions Article V of the Bases Agreement, which applies only to Newfoundland, this should probably be looked upon only as an illustration of the kind of legislation contemplated. It seems clear from the PJBD Journal that the Board had in mind legislation to cover security offences against the U.S. Forces committed anywhere in Canada. The Canadian Section of the Board also expressed the hope that the U.S. Government would seek reciprocal legislation with respect to security offences committed in the U.S. against Canadian forces.

7. It is considered that the new security legislation should not be proposed to Parliament as a bill to amend the Visiting Forces (U.S.A.) Act but should be submitted as a bill for a new Act, or for a new part to the Official Secrets Act. It might be introduced with an amendment to the Official Secrets Act (which appears to be called for to give it extra territorial effect so that it will cover security offences committed by Canadian citizens at offices abroad) and perhaps made a part of general security legislation to cover the forces of North Atlantic Treaty countries stationed in Canada.

8. The new legislation would be confined to the security interests of Atlantic Treaty forces in Canada and would not be so wide as to cover all the security interests of these countries in Canada, such as the operations of their diplomatic missions.

9. It is desirable that the proposed legislation should, if possible, be made on a reciprocal basis so that when the measure is introduced in Parliament it could be announced that the U.S. Government had agreed to seek similar legislation to protect the security interests of Canadian forces stationed in the U.S. Should the U.S. Government be unwilling to seek reciprocal legislation we could not, of course, insist on reciprocity and expect the U.S. to implement the jurisdiction recommendation.

10. The acts which might be deigned as offences should, it is considered, include the act of spying, which could be described somewhat along the lines of Section 3(1) of the Official Secrets Act; the act of wrongful communication of information by persons employed by or performing contracts for the U.S. Forces in Canada, along the lines of Section 4 of the Official Secrets Act; and the acts of unauthorized use of uniforms, forgery, personation, etc., as defined in Section 5. The phrase "useful to a foreign power" would have to be altered to read "useful to a foreign power other than the United States". Some of the definitions and procedural clauses of the Official Secrets Act might have to be adapted and incorporated in the bill for a new Act, or referred to if the legislation is to form a new Part to the Official Secrets Act.

11. Instead of the phrase "for any purpose prejudicial to the safety or interests of the State", of the Official Secrets Act, a term such as "for any purpose prejudicial to the safety or interests of the United States forces" would have to be used. The burden of proof as to what constitutes â purpose prejudicial to the interests of the U.S. Forces should, it is thought, be left on the U.S. authorities, which would have to establish a case to the satisfaction of our courts.

12. It is suggested that the. legal officers of the Departments concerned be instructed to prepare a draft of a Bill, bearing in mind the above paragraphs, which after approval by the Canadian authorities, should be shown to the U.S. authorities before being submitted to Parliament.

(b) Compulsory Attendance of Witnesses

13. The Recommendation contains the following paragraph:

"(d) That the Canadian Government seek amendment to the Visiting Forces (U.S.A.) Act to provide for the compulsory attendance of witnesses required by U.S. Service courts."

The implementation of this should not present serious difficulty. Order in Council P.C. 9694 of December 20, 1943, on the legal position of U.S. forces in Canada in wartime, contained in Regulations 9 and 10 provisions for the compulsory attendance of witnesses at U.S. courts martial by subpoenas issued' by competent U.S. service officers. It is considered that subpoenas for this purpose should be issued by competent Canadian authorities, and not by U.S. officers, as well as served by peace officers. Provisions to this effect might suitably be inserted before the present Section 5 of the Visiting Forces Act.

(c) Priority of Jurisdiction in Newfoundland

14. The PJBD considered the form of a letter to be sent to the Government of Newfoundland to provide for priority of jurisdiction in practice for U.S. Service courts in the case of certain offences, as referred to in paragraph (b)(2) of the Recommendation on jurisdiction. The draft letter is as follows:

"It is contemplated extending the Visiting Forces (U.S.A.) Act to the Province of Newfoundland, including the U.S. Leased Bases. Although the present Act does not interfere with the jurisdiction of Canadian courts and law enforcement authorities, it is the hope of the Government of Canada that those charged with law enforcement may rarely find it necessary to bring members of United States forces before Canadian courts. In particular, it is hoped that, when an offence is by its nature essentially prejudicial to the discipline of the United States Armed Forces, when an offence is committed within the Leased Areas, or when an offence involves only members of United States forces or only the property of the Government of the United States, the Canadian authorities will find it desirable to leave the wrong doer to be dealt with by United States Service courts and authorities.

"I hope that your Government will bring the Act to the attention of law enforcement authorities. I should be glad to learn the views of your Government on the question discussed in the preceding paragraph."

This letter is based substantially on the communication sent to the LieutenantGovernors of the nine provinces in July 1947 and should present no difficulty. At the PJBD meeting, the Attorney General of Newfoundland indicated informally that its form was acceptable to him.

³¹ Voir DREC, volume 13, document 868./See DCER, Volume 13, Document 868.

³⁴ Voir Canada, Recueil des traits, 1941, N° 2./See Canada, Treaty Series, 1941, No. 2.

³⁵ F. Gordon Bradley, secrétaire d'État.

F. Gordon Bradley, Secretary of State.