FW 611.422/10–2649

The Canadian Ambassador (Wrong) to the Director of the Office of European Affairs (Hickerson)

top secret and personal

Dear Jack: I told you yesterday morning that the Ministers concerned in Ottawa had decided that the Canadian Government was not in a position to take immediately a favourable decision on the economic proposals which have been developed in the exploratory and informal talks between Hector MacKinnon and John Deutsch1 on our side and Willoughby2 and some others on yours. They, therefore, consider that the official talks should be suspended for the time being. I have now received a fuller report of the views of the Ministers, which I am passing to you in this personal and informal way because of the extreme secrecy which surrounds the economic talks and the other discussions in which we have been engaged.

The Ministers did not make the decision to suspend the talks without a full understanding of the economic and general importance to Canada of the proposed arrangements. Trade arrangements between the two countries along the lines that had been discussed had, in their view, great attractions and many advantages, especially in the light of the delays and difficulties encountered in the restoration of the trade between Canada and Europe to anything like the pre-war pattern. There is no disposition to underestimate the importance of the United States market for Canada and the desirability of removing as fully as possible barriers in the way of trade between Canada and the United States. Indeed, the fullest development of this trade may be the only firm foundation for Canadian economic stability and prosperity. Nevertheless, to decide in such a short space of time a matter of such fundamental importance would be difficult in any circumstance, and is especially difficult in present circumstances. There must, of course, be adequate time for the preparatory educational work which would be required, since otherwise uncertainty, confusion and misunderstanding of the real purpose of the proposals would follow.

There is another reason why it would be difficult to meet the timetable involved if a decision to go ahead were now made. It is probable that the proposal for a security pact for the North Atlantic area3 may be made public within a few weeks. This is a matter of such great [Page 411] importance in relation to the present international situation, which will arouse so much attention and discussion in Canada as well as in the United States, that to confront the Canadian people at the same time with this issue and with the problems involved in the proposed economic arrangements would be of doubtful wisdom from the point of view of obtaining both objectives with a minimum of controversy. It is believed, therefore, that at the moment the energy and attention of the Canadian Government should be concentrated on the problems involved in the security pact and on the necessity of rallying Parliament and the public wholeheartedly around that pact and the policy which it embodies.

There is no disposition in Ottawa, however, to forget for a moment the importance of the trade relationships between Canada and the United States and the necessity for continuing to work towards the freest possible trade between the two countries along the lines already begun. In this connection it is thought that trade discussions might begin again if and when a satisfactory North Atlantic Security Pact is signed. It would be natural for the trade discussions to be related to the pact, since they are concerned with measures for economic defence against aggression. It might also turn out to be desirable later to add the United Kingdom to such discussions. If, in fact, the discussions could be somewhat widened in this way, it would remove one of the political obstacles to bi-lateral arrangements at the present time for free trade between the two countries.

I should like to emphasize to you that they are very much aware in Ottawa of the importance of the work that has been done and of the desirability of continuing that work at the earliest possible opportunity. That opportunity might be provided by the signature of the North Atlantic Pact.

Yours sincerely,

  1. Hector MacKinnon, Canadian Tariff Board Chairman, and John Deutsch, Director of Economic Relations in the Canadian Department of Finance.
  2. Woodbury Willoughby.
  3. For documentation on development of a North Atlantic Treaty Organization, see vol. iii, pp. 1 ff.