Memorandum of Conversation, by the Associate Chief of the Division of Commercial Policy (Willoughby)

Participants: Mr. Hector B. McKinnon, Chairman of the Canadian Tariff Board
Mr. John D. Deutsch, Director of Economic Relations, Canadian Department of Finance
Mr. Wilcox,1 Mr. Nitze—ITP
Mr. Foster—BC
Mr. Willoughby—CP

United States—Canada Trade Relations

Mr. McKinnon and Mr. Deutsch prefaced their remarks with a brief review of the statement they had made the day before in Mr. Wood’s office concerning the balance-of-payments situation of Canada. Mr. McKinnon then said that Program B (less drastic restriction of imports)2 could be adopted if there were some likelihood of assistance under the Marshall Plan and of substantial further relaxation of trade barriers between the two countries. The Canadian Cabinet authorized him to explore with United States officials the possibility of concluding a comprehensive agreement involving, wherever possible, the complete elimination of duties. It would be necessary to obtain Congressional approval. Mr. McKinnon indicated that the Canadian Government would be willing to enter into an agreement even if it necessitated a major readjustment and reorientation of Canada’s international economic relations. They feel that Canada must either integrate her economy more closely with that of the United States or be forced into discriminatory restrictive policies involving greater self sufficiency, bilateral trade bargaining and an orientation toward Europe with corresponding danger of friction with the United States, if not economic warfare.

Mr. Wilcox explained some of the difficulties of obtaining at the coming regular session of Congress approval for tariff cuts beyond those authorized by the Trade Agreements Act but said that he did not want to close the door to the possibility of negotiating a new comprehensive agreement. He said that he would take the matter up with the higher officers of the Department.

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(Mr. McKinnon and Mr. Deutsch later discussed this proposal further with officers of the Department and representatives of the Departments of Commerce and Agriculture. CP will make a quick survey of the possibilities for further tariff negotiations.)

The Canadian representatives urged the utmost caution to avoid leaks, which would lead to heavy imports and probably necessitate quicker imposition of restrictions.

  1. Clair Wilcox, Acting Deputy to the Assistant Secretary of State for Economic Affairs, and Director of the Office of International Trade Policy.
  2. The alternative programs, A and B, are outlined in a memorandum of conversation dated October 29, 1947 by Constant Southworth of the Division of Commercial Policy (642.116/10–2947).