On November 17, 1949, the Cabinet agreed that officials of the Departments of External Affairs, Mines and Resources and Transport, together with experts from Ontario, should engage in discussions with United States officials to try to reach agreement on a draft Niagara Diversion Treaty for submission to the Governments concerned. The Treaty would supplement the Boundary Waters Treaty of 1909 and amend Article V of that Treaty with respect to the diversion of water from Niagara Falls, and the division of diverted water between the two Governments. At appendix A attached*sword* is a statement of provisions that the Cabinet agreed the Canadian group should seek to have embodied in the draft treaty. The Premier of Ontario concurred in this statement.

2. At Appendix B attached^† is the draft Niagara Diversion Treaty which has been agreed upon, and which is concurred in by the Departments of Transport and Resources and Development. This draft treaty embodies the substance of most of the desiderata set out in Appendix A. However, the Canadian group were unable to obtain United States agreement to the provision regarding the diversion at DeCew Falls (Appendix A, paragraph 2). This proved to be entirely unacceptable to the United States authorities. Since the amount of water involved is small, the Canadian group, with the full consent of the Ontario Hydro representatives, finally yielded this point.

3. Since 1909 Canada has had authority to divert 16,000 cubic feet per second more water than the United States. Both countries, however, have had the use of power produced by approximately equal amounts of water because of the export from Canada to the United States of the power produced by about 3600 cubic feet of water per second. The attached draft Niagara Diversion Treaty provides for an equal division of water between the two countries, with the exception provided in Article V111 that "until such time as there are facilities in the territory of one party to use its full share of the diversions of water for power purposes agreed upon in this Treaty, the other party may use the portion of that share for the use of which facilities are not available". No provision is made in the draft treaty for termination of the existing export contracts. The meaning of Article V111 is essentially the same as the formula the Canadian group were instructed to seek (Appendix A, paragraph 6) and to which the Ontario Hydro representatives and the Premier of Ontario had agreed.

4. During the discussions in Washington, however, the Ontario Hydro representatives came to the conclusion that this formula would be inadequate, since it makes no provision for termination of the existing export contracts. Their fear is that once the United States has facilities to use the full United States share of the water, the export of power may continue, using Canadian water. Despite the equal division of water, there would be an unequal division of power. The Canadian group then tried to obtain a provision to the effect that while exports of power under contract continued, the water used in Canada to produce that power would be regarded as water diverted by the United States. The United States officials refused to accept this, arguing that it would be improper to recognize private contracts in a treaty, and that this wording would mean that a private United States company, by entering into a contract to import power from Canada, could reduce the amount of water available on the United States side.

5. The suggestion was then made that a letter might be sent from the Canadian Embassy to the United States Department of State, pointing out that when the United States has facilities to use its full share of water the Canadian Government might not renew existing permits for the export of firm power at Niagara if that power is needed in Canada. The United States group agreed that this was a reasonable "method of dealing with this problem, and indicated that the State Department would be willing to give a favourable acknowledgement to such a letter. To strengthen the hand of the Canadian Government the following phrase was inserted in the Preamble to the Treaty: "Desiring ... to make it possible for the United States of America and Canada to develop, for the benefit of their respective peoples, equal shares of the water of the Niagara River available for power purposes ..." The Chairman of the Hydro Electric Power Commission of Ontario has indicated that in his opinion the Ontario Government will not concur in the Niagara Diversion Treaty, unless it is accompanied by the sending of such a letter to the Department of State. A draft letter which might be suitable for this purpose is attached at Appendix C. This draft has been concurred in by the Department of Trade and Commerce.

6. The Prime Minister, in his letter of November 24, 1949, to the Premier of Ontario,⁷⁸ pointed out that an Agreement between Canada and Ontario would need to be concluded in connection with this Treaty. A draft Agreement is attached at Appendix D.^† The Departments of Transport, Resources and Development, Justice, Finance, Public Works and Secretary of State have concurred in this draft.

7. The Chairman of the Hydro Electric Power Commission of Ontario, after consulting with the Premier of Ontario and the Chairman of the Niagara Parks Commission, has stated that the draft Treaty, draft letter regarding the export of power, and draft Canada Ontario Agreement are satisfactory to Ontario.

8. If the Cabinet approves the draft Treaty and the draft Canada Ontario Agreement, I think it would be appropriate to seek the formal approval of the Premier of Ontario to these drafts. However, the Canadian Ambassador has indicated that if the Treaty can be signed before February 27, there is a good prospect of approval by the United States Senate at this session. He has stressed the desirability of early action to take advantage of this prospect. The Cabinet might therefore wish to authorize signature of the Treaty while awaiting formal notification of Mr. Frost's approval.

9. The United States authorities have suggested that, to save time, the Treaty be signed in Washington. I suggest that the Canadian Ambassador might be authorized to sign the Treaty for Canada. I think it would be appropriate that the CanadaOntario Agreement be signed by the Prime Minister and the Minister of Resources and Development."

L.B. PEARSON

[APPENDICE C/APPENDIX C]

Projet d'une lettre de l'ambassadeur aux États Unis
au départment d'État des États Unis

Draft letter from Ambassador in United States
to Department of State of United States

CONFIDENTIAL [n.d.]

EXPORT OF POWER AT NIAGARA

Article V of the Boundary Waters Treaty of 1909 allocated to Canada 36,000 cubic feet per second, and to the United States 20,000 cubic feet per second, of the water of the Niagara River for power purposes. It seems to be evident that one reason why a differential of 16,000 cubic feet per second was established in Canada's favour was that some of the power plants in existence and under construction at Niagara at that time were designed to produce power for export to the United States.

2. Although the power produced on the Canadian side at Niagara by approximately 8600 cubic feet per second of the Canadian share of water is still being exported to the United States, the differential of 16,000 cubic feet per second in Canada's favour will be eliminated by the Niagara Diversion Treaty now under consideration. Article VI provides that:

"The waters made available for power purposes by the provisions of this Treaty shall be divided equally between the United States of America and Canada."

3. At the same time, however, Article VIII of the new Treaty reads:

"Until such time as there are facilities in the territory of one party to use its full share of the diversions of water for power purposes agreed upon in this Treaty, the other party may use the portion of that share for the use of which facilities are not available."

4. 1 should like you to know that, when the United States has the facilities to use the full United States share of the water made available by the Treaty, Canadian export licenses then in effect would not be renewed unless circumstances existing in Canada at that time make such a course desirable.

5. This would be in accordance with the intention expressed in the fourth paragraph of the Preamble to the Niagara Diversion Treaty, which reads in part as follows:

"Desiring ... to make it possible for the United States of America and Canada to develop, for the benefit of their respective peoples, equal shares of the waters of the Niagara River available for power purposes."

⁷⁸ Voir DREC, volume 15, document 978./See DCER, Volume 15, Document 978.

⁷⁹ Voir Canada, Recueil des traités, 1950, N° 3. Le Cabinet a approuvé le projet de traité, le projet de lettre sur l'exportation d'hydro électricité et le projet d'accord Canada Ontario lors de sa réunion du 21 février 1950. II a également résolu de solliciter l'approbation du premier ministre de l'Ontario pour ces projets. L'ambassadeur du Canada aux États Unis a reçu l'autorisation par décret de signer le traité.
See Canada, Treaty Series, 1950, No. 3. Cabinet approved the draft treaty, the draft letter on the export of power and the draft Canada Ontario Agreement at its meeting on February 21, 1950. It also agreed to seek formal approval of these drafts from the Premier of Ontario. An Order in Council was passed authorizing the Canadian Ambassador in the United States to sign the treaty.