611.4131/1857

The British Ambassador (Lindsay) to the Secretary of State

Dear Mr. Secretary: I have communicated to my Government your letter of October 6th, on the subject of waivers of United Kingdom preferences in Canada, and I can assure you that they have given it the most careful consideration. They recognise and appreciate the spirit in which you have examined the position and have modified your original request and also the political reasons which obliged you to press for further consideration. They regret, however, that, with the best will in the world, they cannot see their way to meet you.

On the United Kingdom side, too, the main consideration is political. More than 80% of the export trade in anthracite to Canada comes from South Wales which is, as you may be aware, perhaps the most depressed of our depressed areas. It is probably not too much to say that in any trade negotiations of less importance than this my Government could not have considered for one moment making any concession at all at the expense of this district. Yet they have agreed already to a very considerable waiver of our preference in Canada on tinplate, which also is produced mainly in South Wales. They could not possibly contemplate a further concession at the expense of South Wales, even had the case been a good one.

But I venture to suggest that the case is not a good one on merits. The United Kingdom trade with Canada in anthracite is a development of the last 15 years and even with the preference has been declining steadily since 1934, largely owing to the competition of United States anthracite, particularly in the last year or two. In these circumstances, you will, I am sure, realise how impossible it would be for the United Kingdom Government to justify agreeing to the removal of the preference. My Government fully recognise that your Government have advanced some way to meet them by limiting their request for free entry to the months of December to April. This, however, would not prevent the concession from being a serious blow to South Wales, since their trade to Canada in the summer months, much of which is for stock for the winter, would inevitably be reduced if imports were admitted from the United States free of duty in the winter months.

I think, however, that you may be inclined to agree with me on merits. Your case, the force of which, believe me, I fully appreciate, is mainly that it is politically important to you to include in this Agreement something for the anthracite trade. I can only say against this that my Government for their part feel that the political objections [Page 177] to a concession, particularly in view of the fact that your industry is gaining on ours in spite of the preference, far outweigh the political advantages which you could obtain from a concession and make it quite impossible for them to contemplate giving their consent.

Yours sincerely,

R. C. Lindsay

[For text of the Reciprocal Trade Agreement between the United States and Canada, signed at Washington November 17, 1938, see Department of State Executive Agreement Series No. 149, or 53 Stat. 2348.]