On November 16, 1949, the General Assembly of the United Nations unanimously approved a resolution providing for an expanded programme of technical assistance for the economic development of under-developed countries. For the information of Cabinet, the attached memorandum has been prepared describing the purposes and mode of operation of the proposed Technical Assistance Programme, together with some of the reasons why a financial contribution from Canada may be recommended for your consideration at a later date.

2. The General Assembly resolution requests that all member governments make voluntary contributions to the Technical Assistance Fund. No objective has been set but the Canadian delegation estimates that the total amount of contributions will be about $30 million. The Technical Assistance Conference is to be convened by the Secretary-General of the United Nations, probably in mid-March 1950, to receive statements concerning contributions and to discuss the manner in which amounts from the Technical Assistance Fund are to be allocated to various specialized agencies, and to consider financial arrangements generally.

3. At the Conference, delegates will be invited to indicate as definitely as possible whether their governments will contribute and in what amount. Australia, New Zealand and a few other delegations have indicated that definite amounts have already been approved for contribution by their governments. The United Kingdom and France have stated that they will make substantial contributions in services and in non-transferable funds. President Truman, in his inaugural speech of January 20, 1949, and on several subsequent occasions, has stated that the United States will strongly support a programme of technical assistance for economic development.

4. Contributions may be in forms other than convertible currency. Consideration might be given to a Canadian contribution which would consist of a deposit in an account in Canada to the credit of the United Nations, withdrawals to be made from time to time for such purposes as may be agreed upon by the Secretary-General and the Canadian Government.

5. General instructions are now being drafted for the guidance of the Canadian delegation to the Economic and Social Council which begins February 7, 1950. Furthermore, the participating Specialized Agencies are beginning to make plans preparatory to the implementation of the Technical Assistance Programme. Accordingly, I have felt that it would be desirable to bring the subject before you at this time in order that Cabinet may be fully informed on this subject and may indicate its general support of the Expanded Programme for Technical Assistance.⁷³

>L.B.PEARSON

[PIÉCE JOINT/ENCLOSURE]

SECRET

>MEMORANDUM ON EXPANDED TECHNICAL ASSISTANCE PROGRAMME

1. The primary purpose of the Expanded Technical Assistance Programme is to improve general economic and social conditions in under-developed countries. The proposal is not to provide relief, but to help these people help themselves.

2. Under-developed countries may be defined as countries in which the economy is generally of low productivity and where an extremely low standard of living prevails amongst the mass of the population. In particular, three countries of the Commonwealth, India, Pakistan and Ceylon, can be considered to be among the under-developed countries.

3. The methods of providing Technical Assistance include the following:

     (a) Training both in technologically advanced countries and at home in agricultural and industrial techniques, and in such basic administrative techniques as public finance and compilation of statistics;

     (b) Survey missions to recommend what economic development can usefully be undertaken in an area;

     (c) Setting up, when appropriate, pilot projects-

4. The Technical Assistance Programme is designed to recommend the type and degree of economic development which would be most suitable for the countries which may apply for assistance in increasing their economic productivity. In addition, the Programme would provide training personnel from the advanced countries and would also undertake to provide for the training of personnel from backward countries.

5. The country concerned must, however, make its own arrangements for obtaining the capital required to carry out the recommendations. The country being assisted must determine whether domestic capital, foreign private capital, foreign government loans or loans from the Inter-Bank for Reconstruction and Development are to be used. Some assurance that such funds will be available will normally be required before an extensive project of technical assistance is approved.

6. Applications for assistance originate with the government of the country concerned and are directed to any of the Specialized Agencies or the United Nations. Technical Assistance which involves more than one Specialized Agency is considered by the Technical Assistance Board (TAB) which is composed of the DirectorsGeneral of all participating Specialized Agencies.

7. The participating Specialized Agencies are:
Food and Agriculture Organization International Civil Aviation Organization International Labour Organization United Nations Educational, Scientific and Cultural Organization World Health Organization Other Specialized Agencies of the United Nations have indicated their unanimous agreement to participate in the Programme should their services be requested.

8. The Economic and Social Council meets only twice a year. Therefore, a Technical Assistance Committee, consisting of representatives of each of the eighteen countries comprising the Council, has been approved. Since Canada will be a member of the Council for three years beginning January I, 1950, it may be expected that Canada will have a strong voice in determining the nature of the Programme and in ensuring its success. The terms of reference of the Technical Assistance Committee as set out in the resolutions of the Economic and Social Council include:-

     (a) To make for the Council critical examinations of activities undertaken and results achieved under the expanded programme of technical assistance;

     (b) To examine each year's programme presented to it by the TAB and report to the Council concerning it, making such recommendations as it may deem necessary;

     (c) To interpret this resolution in cases of conflicts or questions submitted to it by the TAB, through its Chairman, and decide any such conflicts or questions;

     (d) To receive reports from the TAB on progress and implementation of, and disbursements of funds under the expanded programme;

     (e) To review the working relationships between the participating organizations and the effectiveness of the methods of coordination in connection with their technical assistance programmes, making recommendations when appropriate;

     (f) To perform such other relevant functions as the Council may assign to it from time to time.

9. In addition, governments will have control over the expenditure of funds through their representatives both at the annual conferences and at meetings of the governing bodies of the Specialized Agencies.

10. Governments requesting assistance are, wherever possible, to meet all expenditures of local currency required. The Technical Assistance Fund is needed for payment of salaries of experts, costs of training in technologically advanced countries, and other items payable in foreign funds. For this reason, the estimated total amount required for the Technical Assistance Fund is comparatively small. The most important contributions, as one delegate to the United Nations expressed it, are `The know how and show how".

11. A number of cogent reasons for a Canadian contribution to the Technical Assistance Fund are included below.

(1) Canadian Support for the Technical Aid Programme at the General Assem- bly The resolution on technical assistance has been approved unanimously by the General Assembly and was supported by the Canadian delegation.

(2) To Encourage Investment in Under-Developed Countries One of the early effects of a successful programme should be to create in under-developed countries a suitable investment climate, particularly for United States private capital. At present those conditions do not exist and private capital is unwilling to take the risk. If, as a result of the Programme, United States investments abroad are substantially increased, the resulting circulation of United States exchange should be to the advantage of Canada.

In addition, the increase of United States investments abroad would do much to redress the chronic dollar deficit of the Sterling Area. Such a development would be in keeping with the resolution made at the Tripartite Financial Conference in Washington to encourage dollar investment in the Sterling Area.

(3) To Discourage the Growth of Economic Nationalism The successful development of this Programme would discourage the rise of economic nationalism and lead toward a more extended multilateral system in international trade. Technical experts, retained on the international level, would presumably not encourage the establishment of industries producing commodities which would not compete in price or quality with those produced in other parts of the world. Thus, the establishment of un-economic "infant" industries requiring to be protected behind high tariff walls would be discouraged. In consequence, international action in directing the development of new industry in backward countries, would serve as an additional step toward the evolution of a multilateral world trading system.

(4) To Develop New Markets for Canadian Products An increasing total volume of world trade is important to Canada. At present most under-developed countries are unable to buy from us. The era of extensive expansion of world trade by opening up new geographical regions is now drawing to a close; world trade must now look toward intensive expansion by increasing consumer demands. Improved economic and social conditions in under-developed countries should provide an important outlet for the products of Canadian agriculture and industry.

(5) To Develop Goodwill for Canada There is an advantage to Canada in having Canadian experts and businessmen assist in the development of other countries and in having persons from other countries visit Canada to learn techniques. Those who are being trained as leaders in the under-developed countries will presumably thereby he influenced in favour of Canadian-produced farm implements, machinery, etc., and furthermore future students, will likely follow earlier ones to Canada for training at their own expense. There should also be advantage to Canada from sending experts to under-developed countries who can in turn make recommendations to Canadian producers with respect to the sort of goods which are likely to prove most attractive to the foreign market.

(6) To Encourage Political Stability in Backward Countries There is an evident surge of peoples, particularly in Asia, seeking a more advanced state of economic and social well-being. This surge parallels the recent successful demands of countries in that area for complete political independence. The Technical Assistance Programme, from the point of view of the advanced countries of the west, is an opportunity to channel this new demand so that the under-developed countries will gradually achieve their purpose by evolution instead of revolution. If the latter should occur, world Communism would be quick to take advantage of it.

⁷²Le Cabinet approuva en principe cette recommendation, le 3 mai 1949.
Cabinet approved this recommendation in principle on May 3, 1949.

⁷³Le Cabinet notes ce rapport et approuva la participation du Canada à la conférence des Nations Unies sur l'aide technique.
The Cabinet noted this report and approved Canada's participation in the U.N. Technical Assistance Conference.