611.4231/2461½

Memorandum by Mr. Jacques J. Reinstein of the Division of Trade Agreements of a Conversation With the First Secretary of the Canadian Department of External Affairs (Robertson)

Mr. Robertson remarked at the outset of the discussion that, aside from the question of the applicability of the most-favored-nation clause to the provisions regarding tourist purchases in the recent Customs Administration Act, he knew of no issues which had arisen between the two Governments under the present trade agreement which had shown the necessity for clarification or expansion of the general provisions. Mr. Reinstein said that while he had not been able to review the operation of the Agreement fully, his understanding was the same.

Mr. Robertson said that while, from the viewpoint of the Canadian Government, the present general provisions are entirely satisfactory, [Page 172] the fact that the United States–United Kingdom and United States–Canada agreements are being negotiated simultaneously and will be signed simultaneously will lead people to look for differences in wording which might have some significance. The Canadian Government wishes, therefore, to make the general provisions of the two agreements as nearly parallel as may be practicable, in order to avoid, for example, the possibility of discussion of the effect of the Agreement upon Canada’s status in the British Commonwealth.

Mr. Robertson’s concern seemed to be primarily over questions of form and I gathered the impression that the Canadians were not entirely pleased with the use of the term “High Contracting Party” in the draft of the United States–United Kingdom agreement. It was explained to him that the term had been used at the suggestion of the British negotiators in order to avoid difficulty in referring to the commitments by the colonies.

The following discussion took place with regard to particular Articles (the numbers refer to the articles in the present Agreement):

Preamble: It was agreed that the preamble should refer to the fact that the present Agreement is to be superseded. Mr. Robertson said that Canada would wish to follow the United States–United Kingdom draft agreement in regard to the handling of exchange control, i. e., to omit the Article on exchange control in the present Agreement and to refer in the preamble to the absence of exchange restrictions on the settlement of commercial payments between the two countries. (During the course of an informal conversation earlier in the day, Mr. Hickerson had informed Mr. Robertson that this would be satisfactory).

A draft of a preamble which was tentatively worked out in the course of the conversations is attached.

Mr. Robertson felt that the draft preamble which has been tentatively agreed to with the United Kingdom Delegation is incorrect in its reference to the King. He said that the preamble in the United Kingdom agreement should state that the King is acting “in respect of Great Britain and Northern Ireland”. He was told that, according to the statement of Mr. Fitzmaurice,11 the preamble in the United States–United Kingdom draft was in the form customarily used by the British in bilateral agreements applying only to the Government of the United Kingdom. It was suggested that, if the Canadians object to the wording of the United. States–United Kingdom draft in this respect, they should take the matter up directly with the British Delegation. Mr. Robertson said that he probably would do so.

[Page 173]

Article XIII (Territorial application and preferences). Mr. Robertson said that he felt the language of this Article was needlessly complicated. Mr. Reinstein said that he would attempt to work out a simplified version along the lines of the territorial application Article in the United States–United Kingdom draft.

Mandates. Mr. Robertson said that Canada would wish to have a note on preferences to B and C mandates identical with that agreed upon with the United Kingdom. Canada does not wish to grant preferences to Palestine. Mr. Robertson remarked in this connection that it had been the understanding of the Canadian Government that the United States note of November 15, 1935, regarding Canadian preferences to mandates would not be made public, but that it had been published by the United States with the text of the Trade Agreement.

Article I (Most-favored-nation treatment). Mr. Robertson indicated that he had not decided whether he would prefer the draft United States–United Kingdom article or the Article in the present Canadian agreement. He felt that the first paragraph of Article I (Canadian agreement), which contains a promise of most-favored-nation treatment in general terms (i. e., not restricted to goods originating in the other country) applied more clearly to the provisions of Customs Administrative Act relating to tourist purchases than the provisions of the United States–United Kingdom draft. Mr. Reinstein remarked that, while he could not undertake to comment on the point, the matter of the tourist purchase exemption would undoubtedly be discussed in detail in the general negotiations.

Article VI (National treatment in respect of internal taxes). Mr. Robertson asked why the phrase “in connection with” had been included in the United States–United Kingdom draft. He was told that the British had requested its inclusion because of concern that license fees might not be covered by the standard United States language.

Mr. Robertson also asked what the significance was of the reservation in the United States–United Kingdom draft regarding “constitutional limitations on the authority of the Federal Government”. The legal complications which have arisen from the wording of the 21st Amendment were briefly explained to him. He said that there were important questions outstanding in Canada regarding the scope of authority of the Dominion and of the provinces and that, if the United States made such a reservation, Canada would be compelled to do so also, which he felt would be undesirable. Mr. Reinstein asked whether a provision for national treatment in an agreement which is formally ratified would be construed to override inconsistent provincial legislation. Mr. Robertson said that this point had never [Page 174] been passed on, but that the inclusion of any reservation would be taken to mean that there was considerable doubt as to whether authority existed in the Dominion Government to bind the provinces in this respect. He felt that it would be undesirable to raise such a question and asked that the United States give consideration to the possibility of stating the reservation in specific terms (i. e., relating it only to liquor).

[Annex]

Draft Preamble

The President of the United States of America and His Majesty the King of Great Britain, Ireland and the British dominions beyond the Seas, Emperor of India, in respect to Canada;

Desiring to facilitate and extend still further the commercial relations existing between the United States of America and Canada by granting mutual and reciprocal concessions and advantages for the promotion of trade;

Taking into account the absence of any restriction upon the settlement of commercial obligations arising out of such relations;

Have resolved to replace the Trade Agreement concluded between them on November 15, 1935, at Washington by the present Agreement and have appointed for this purpose as their Plenipotentiaries:

The President of the United States of America:

. . . . . . .

His Majesty the King of Great Britain, Ireland and the British dominions beyond the Seas, Emperor of India:

For Canada:

. . . . . . .

Who, having communicated to each other their full powers, found in good and due form, have agreed on the following Articles:

  1. Gerald Gray Fitzmaurice, Third Legal Adviser in the British Foreign Office.