Memorandum of Conversation, by C. Tyler Wood, Deputy to the Assistant Secretary of State for Economic Affairs

top secret

Subject: Removal of Trade Barriers between the United States and Canada

Mr. C. D. Howe, Canadian Minister of Trade and Commerce, and Ambassador Hume Wrong came in to discuss with Mr. Lovett the project for removal of trade barriers between the United States and Canada to which considerable study has been given during recent months. After stating that discussion of the project in terms of a [Page 412] customs union was unfortunate and would make difficulties on the Canadian side because of the connotation of the word “union” and that it should rather be put as a project to remove duties on a reciprocal basis between the two countries, Mr. Howe went on to say that he felt it would be impossible from their standpoint to proceed immediately with this project. The Prime Minister would be retiring in August and there would be an election in the spring of 1949. The best procedure, Mr. Howe felt, would be to put a plank in the party platform advocating not merely the reduction, but the complete removal of import duties on trade with other countries, provided this could be accomplished on a reciprocal basis in each case. This proposal would not be confined to trade with the United States. This subject would then be discussed and debated in the electoral campaign and, depending upon the reaction of public opinion, the plan could be pressed forward thereafter. For one thing, he said, it would be clear under the plan proposed that the United Kingdom would be included in the proposal, which would silence those who might criticize the proposal as an attempt at destruction of the ties that bound the empire together.

Mr. Lovett referred to the coming election in this country and stated he felt the time-table proposed by Mr. Howe would fit in quite well with our situation. In January, he said, we would have a new Congress and perhaps the political situation would be somewhat clearer and more settled. All agreed that an additional reason why the proposed timetable might be a good one was that it might follow naturally from any progress made in arranging for support of the Western European Union in that it would be a natural extension of such closer cooperation into the economic sphere.

It was pointed out that there had been a considerable amount of work done in studying the implications and probable results of such a move, as they would affect the main items of trade between the two countries, and that it seemed possible to the experts on both sides that the project could be successfully worked out. It was concluded that the time-tables suggested by Mr. Howe seemed reasonable and right.

[Here follows a closing paragraph on possible withdrawal of subpoenas issued by the United States Attorney General’s Office against certain Canadian newsprint companies.]