Foreign Relations of the United States: Diplomatic Papers, 1944, General: Economic and Social Matters, Volume II

800.796/4–144

Memorandum by the Assistant Chief of the Aviation Division (Walstrom)^73a

[Washington,] April 1, 1944.

Subject: U.S.-Canadian exploratory discussions on post-war air transport.

Mr. A. A. Berle, Jr., Assistant Secretary of State, and Mr. Edward P. Warner, Vice Chairman of the Civil Aeronautics Board, accompanied by the undersigned, conferred in Montreal on March 29 and 30 with the following Canadian representatives: Mr. C. D. Howe, Minister of Munitions and Supply; Mr. Norman Robertson, Under Secretary of State for External Affairs; Mr. H. J. Symington, President of Trans-Canada Airways; and Mr. John Baldwin, Secretary in the Privy Council’s Office. The discussions were exploratory in character, and centered around the Canadian draft proposal for an international air transport convention^73b and the United States summary of objectives^73c desired with respect to post-war commercial aviation.

The American representatives pointed out that while the Canadian draft proposal was an excellent model for an international convention, it was doubtful whether this could be adopted in full measure within the immediate future, and that it would probably be more desirable to have a transition period during which time experience would be gained which would be of great benefit to the eventual international body. The Canadians appeared to recognize the validity of this point, and after a day and a half’s discussion on various points of common interest, the attached statement was drafted by the American representatives (with the main wording of the first paragraph suggested by Mr. Baldwin).

The statement is meant to be a summary of the U.S. general suggestions for setting up the transitional procedure, but it was not intended to be a formal joint statement of conclusions reached. In other words, while the Canadians were given a rough draft copy on an unofficial basis, and they expressed no disapproval thereof, the statement would not be suitable for transmittal to other governments as a formal statement of U.S.-Canadian views. It was agreed that further discussions between our two countries might be in order after Messrs. Berle and Warner had returned from London.

The following is a more detailed chronological account of some of the points covered in the discussions, leading up to the drafting of the statement referred to above.

In reference to the difference of opinion in each of several countries as to whether or not there should be a “chosen instrument”, Mr. Howe said the Canadian position was a little simpler in that their views were “spread on the record.” He added parenthetically that C.P.R.^73d had worked themselves into an impossible position, but no great difficulty was anticipated in correcting it.

Mr. Howe said that as a beginning they had very little to add to the document they had already submitted. Since our own document was “rather sketchy”, he suggested we proceed by discussing it further.

Mr. Berle said we agreed there would have to be a world aviation organization, which would have to be geared to whatever world organization was evolved. However, it may take some time to work out the world organization, and in the meantime there will be other subjects which cannot wait. One difficulty with the Canadian proposal is that it ties in more with the world organization; also, its “double-layer” mechanism setting up an international mechanism in each area. We had felt it premature to commit on a definite form of organization until the other world organization is worked out. In the meantime the aviation set-up should stand on its own feet.

Mr. Robertson admitted that the Canadian scheme was long-range, and was meant to be self-contained. Mr. Howe thought some central organization would be needed to apply sanctions on the “freedoms.”

Mr. Symington asked if the ultimate world authority should set up the air authority. Mr. Berle said the procedure we had contemplated was a United Nations convention, to be presented generally. Mr. Symington said it might be putting the cart before the horse, but thought that if we could offer something (we might call it a trial balloon) beforehand it would remove the danger of difference of opinion at a United Nations conference. If the leading nations were satisfied with this (Canadian) convention, which is only for five years, it would be a big step forward.

Mr. Berle said we had already had a protest from the Australians, who felt they were being left out of things, and other countries might also protest if they did not have a chance to express their views.

Mr. Symington said he didn’t mean that we should actually sign the convention at this time, but our general adherence would be an indication to other countries that a forward step had been taken. He naturally assumed that any arrangement offered would be acceptable and fair to the other countries. For instance, there would be no thought of shutting out the smaller nations from the North Atlantic operation.

Mr. Robertson suggested the UNRRA procedure might serve as a precedent, up to a point. However, whereas the UNRRA ratification meeting was held first and the details worked out later, this procedure probably should be reversed, with each country feeling it had had a fair opportunity.

In discussing item 2 (right of commercial entry) of the U.S. summary, Mr. Berle said there were a number of economic aspects involved. Some people have argued that 80% of the pre-war trans-Atlantic traffic was originated by the U.S. On the other hand, some countries are looking forward to “internationalization” to help them get a part of this business. We feel that all sides to this problem are not yet apparent. Any economic arrangements would have to be temporary, and would need consistent re-examination. Any international body should begin by collecting traffic facts, and determining how much this traffic stands on its own feet. These should be continuous exchange of data relating to this subject.

Mr. Symington thought that unless some formula were adopted, and if free competition lacked some sort of control, the result might be too many frequencies which in turn would mean empty seats. Under the Canadian plan, and in such a situation, the body would tell Canada, for instance, to reduce one frequency and would give another one to the U. S. provided traffic originating in the U. S. justified it.

Mr. Berle observed that the Canadian proposal perhaps was at fault in not spelling out that origin of traffic would be a criterion in assigning frequencies.

Mr. Robertson observed that placing it on the basis of “traffic origin” would remove one means of balancing international payments, but Mr. Berle thought it would be difficult to sell this thought to the American people.

Mr. Symington said the problem was whether each country was to say how many frequencies it would run, or whether this would be determined by an international body. “If you leave it to each nation you are in for a very difficult time.” Mr. Berle said the heart of the problem is what principles will determine the assignment of frequencies.

Mr. Warner said our thought was not to restrict frequencies, but to establish them under certain broad principles. He questioned whether there would actually be “chaotic consequences” under such an arrangement. He also raised the question whether Canadian “freedoms” 1 and 2 (innocent passage and non-traffic landings—Article II, 2) should be “licensed” by the international body or whether they should not be provided for multilaterally. Freedoms 3 and 4 (right to carry traffic from the home state to any other member state, and the right to bring back traffic to the home state from any other member state) might also be made a general right if it proves possible to define the origin of traffic, together with provision for traffic “originating” in smaller countries.

Hr. Howe said that freedoms 1 and 2 were basic rights which would be automatic and not contingent on licensing by the international body. Mr. Symington said that everyone would have freedoms 3 and 4 as minimum rights, and any amplification of these could be done bilaterally. [Discussions revealed that the Canadian proposal made inadequate provision for intermediate traffic; their freedoms 3 and 4 refer to traffic only when it originates or terminates in the home country.]⁷⁴

Again referring to Canadian freedoms 3 and 4, Mr. Warner said we did not necessarily hold that every nation had the inherent right to fly into the U. S.

The Canadians said the idea of “weighting” the board of directors was to prevent each and every nation from endeavoring to divide things up on an equal basis, to the detriment of those primarily interested.

It was generally agreed that each country should have the right to designate its own international airports, subject to reasonable conditions. The Canada–U.S. situation, however, would indicate that such designation should not be on a most-favored-nation basis. That was one reason the Canadian draft provided for special arrangements for contiguous countries.

Mr. Robertson said the origin of traffic idea might be carried so far as to become quite restrictive. Mr. Symington said, assuming there was a Canadian line to Latin America, it would be difficult for them to try to prevent a Canadian national from buying a ticket from Montreal to New York, and then buying a ticket on an American line for the rest of the way.

It was agreed that the problem of a Canadian airline picking up an American passenger in the U.S. for South America would be a matter for bilateral arrangement, and could not be covered in a convention.

Mr. Howe asked if there would have to be rate differentials depending on types of services. Mr. Warner said we had not solved this problem in the U.S., where the tradition favored uniformity. The tendency will be to compete on the basis of speed, and this will raise the question as to whether rates on a slower service should be reduced. Rate reductions should be particularly justified if there is an accompanying economy in operation.

The Canadians expressed agreement with item 3 (non-exclusivity) of our summary.

As to our point 4 (cabotage), the Canadians said they would like to see this restricted as much as possible. Mr. Howe said that at the Dominion Air Conference in London no claim had been set up for cabotage between members of the Commonwealth. He added parenthetically that the Indian delegates demonstrated a very nationalistic attitude with respect to international airlines transiting their country.

Our point 5 (control of rates and competitive practices) was covered in the earlier part of the discussion.

Regarding subsidies, our point 6, Mr. Berle said there would probably be routes which we might have to subsidize, e.g., in the Pacific. Mr. Howe ventured the suggestion that a subsidized service should be a continuous service from the home country. In a discussion proceeding from this point, Mr. Warner suggested some device be set up to protect against sale of end-to-end tickets. (Example: Ostensible sale of two tickets, one for a route sector which was an extension of the other route sector, but actually amounting to one through ticket.)

With regard to our point 7, uniform operating and safety standards, it was agreed that the need for uniformity was generally recognized.

It was decided that the question of surplus aircraft would merit further investigation, looking to a possible understanding between the U.S., Britain and Canada on this subject.

In a discussion on isolated airports, it was agreed that there would not be much interest in Greenland, although we might want one or two fields there for standby use. Iceland, however, will be important, particularly from a communications standpoint. It is likely that some isolated bases may have great military importance, and may be kept up primarily on that basis, but available for commercial use.

On the second day’s discussion with the Canadians, Mr. Berle reiterated that we would come a cropper if we endeavored to adopt the Canadian proposal in full measure. There would have to be something worked out as to frequencies, etc., to fill in until something more definite could be arranged. To this end an informal committee could be constituted (perhaps in Washington) for the purpose of establishing the preliminary set-up.

Mr. Howe said a possible danger to this plan was that there might be “deals outside the orbit.” Mr. Berle thought that anyone who challenged the recommendations of the preliminary or transitional body would thereby probably prejudice themselves when the formal body was set up.

Mr. Robertson asked if the U.S. would not have control of most of the available aircraft during the first eighteen months. Mr. Warner said that everyone would have difficulty obtaining commercial planes during a period of, say, six months required for conversion, but thereafter planes should be quite plentiful. Mr. Warner also suggested that for an initial six-months period it might be provided that carriers should not be allowed to increase their frequencies.

In a discussion of possible international services, Mr. Howe said they planned a route to England, which they did not plan at present to extend to the Continent; also a Pacific route via the north, down the China coast, and to Australia, an operation in which they might ask Australia to participate [Hawaii as a staging point was not mentioned],⁷⁵ and a third route to the West Indies, probably via Bermuda, and possibly extending to South America as far as Rio.

In connection with the conversation on routes, Mr. Symington admitted that Canada’s importance from a strategic geographic standpoint had been exaggerated.

In summing up the conversations, Mr. Howe said: “What you have in mind is to let the international authority develop gradually, and I see nothing wrong with that.” Mr. Symington again remarked that the basic difficulty was whether assignment of routes and frequencies was to be done by an impartial body or by the several interested countries.

Mr. Robertson thought they should recognize the advantage of a transitional period. He raised the question, however, as to whether blocs would not develop during the 18-month interim period. An empire bloc would be a definite possibility, even though Canada would not welcome it.

Mr. Berle asked if this danger could not be minimized by agreeing not to enter into discriminatory arrangements.

The problem of differentiating between military and commercial services (particularly as refers to BOAC) was also discussed. In deciding the number of frequencies over the North Atlantic, for instance, it was assumed that air transport command services would not necessarily close down immediately at termination of hostilities; that such services would probably continue to carry traffic for military and relief purposes; and that allocation of frequencies mentioned above would apply solely to commercial traffic.

Mr. Symington finally suggested an informal statement of principles (which is attached) to cover the transitional period.

J. D. Walstrom

[Annex]

American Statement of Principles, Montreal, Canada, March 30, 1944

After discussion between the United States and Canadian representatives of the proposals contained in the Canadian draft convention, the United States representatives put forward the following suggestions for arriving at the general objectives of the Canadian convention. The Canadian representatives recognized that these proposals represented a possible method of attempting to achieve the objectives in question and as such should be the object of further study.

1. The United States point No. 1 is virtually equivalent to Canadian “freedoms” 1 and 2, and there would appear to be agreement in principle on the desirability of establishing these freedoms.

2. There should be established a preliminary committee which will endeavor to arrange for provisional routes, frequencies and commercial outlets, to take effect when the military situation permits. There will be an endeavor to obtain general agreement on this as a starting point within the next few months.

3. There shall be proposed to an air conference the plan for provisional commercial services to remain in effect for a transitional period to be agreed upon, but presently conceived to be eighteen months or possibly two years.

4. There shall be proposed to the air conference the establishment of a commission, which, during the transitional period, shall have the following duties:

(a) to receive and collect reports, data, et cetera;

(b) to observe the operation of the provisional plan for commercial services and to report thereon at frequent intervals;

(c) to stimulate remedial action by the governments concerned when friction or controversy or failure of service may appear or may be threatened.

5. The following general principles shall be proposed to the air conference, for adoption and inclusion in a draft convention:

(a) non-exclusivity;

(b) reservation of cabotage;

(c) curtailment of subsidies;

(d) right of countries to pool operations;

(e) use of airports and facilities on a non-discriminatory basis;

(f) cooperative handling of isolated airports;

(g) non-discriminatory handling of prohibited areas, customs regulations, et cetera.

6. The conference would assign to the commission duties in respect to navigational aids, safety regulations and other technical matters which at present appear to be of common interest.

7. There will be a review of the entire situation by a further air conference at the close of the transitional period contemplated. On the basis of experience and data then at hand, the problem of increasing the functions allocated to the commission can be considered in the light of the circumstances and experience then prevailing.

8. The foregoing is to be embodied in a suitable convention which it is hoped the air conference would accept. The convention should by its terms come up for review, along with the powers and duties or the commission, at the close of the transitional period; perhaps power to withdraw at that time may be given if full agreement is not yet reached.

1. Addressed to Mr. Stokeley W. Morgan, Chief of the Aviation Division, and Mr. Joseph C. Grew, Special Assistant to the Secretary of State.
2. For text of the draft convention, see Canada, House of Commons Debates, vol. 82, No. 33, pp. 1626–1633.
3. Ante, p. 422.
4. Presumably the Canadian Pacific Railway Company.
74. Brackets appear in the original.
75. Brackets appear in the original.