711.4227/9–949

Memorandum by the Assistant Secretary of State for European Affairs ( Perkins ) and the Director of the Office of Transport and Communications ( Radius ) to the Secretary of State

confidential

Subject: U.S.-Canadian Air Transport Agreement

In response to the Secretary’s views on the attached memorandum of September 3, 1949,1 the following more complete details and revised recommendations are submitted.

Background:

On June 4, 1949, the U.S. signed a new air transport agreement with Canada. The agreement reaffirmed certain air routes for both countries which had been established by the earlier agreement of 1945, amended in 1947, as well as creating a number of new routes for each country.

The agreement specifically provided for qualification by any airline through established administrative procedures as a condition precedent to commencing operations, except with respect to routes for which permits had previously been granted.

With respect to only one of the new routes for Canada, an unforeseen delay may now be anticipated before Canadian service can be started. Prior to the 1949 agreement, a U.S. carrier, Colonial Airlines, had operated the route New York–Montreal without competition. The new agreement established a parallel route for a Canadian line.

Colonial Airlines has filed suit for injunction in the Federal Court against the members of the CAB individually, seeking to enjoin them from proceeding with the hearing on Trans Canada’s application for a foreign air carrier permit for the Montreal-New York route established [Page 408] by the agreement. On motion for preliminary injunction, a decree was entered by the District Judge enjoining the defendants from forwarding their recommendations to the President, but authorizing them to hold hearings pending determination of the substantive issues by the statutory three-judge court. The principal issue is the constitutionality and effect of the power of the President to enter into executive agreements in the field of air transport. The legal staff of the Department is cooperating with the legal staff of the CAB in preparing the defense of the case.

Colonial’s complaint has been given serious consideration by certain members of Congress. The Senate Committee on Interstate and Foreign Commerce has received testimony from the Chairman of the CAB, the Chairman of the U.S. Delegation and the Deputy Director of the Department’s Office of Transport and Communications. Thereafter, the same Committee favorably reported out S.12, a bill requiring all such aviation agreements to be negotiated as treaties. No vote has been taken on the bill in the Senate.

In addition, forty-nine senators presented a letter to the President asking him to refrain from implementing the agreement. We are advised that the President stated he was familiar with the agreement, that he was satisfied it was a good agreement, that he did not intend to refrain from implementing it, and that he did not intend to reply to the Senator’s letter. The attitude of the Senate toward the agreement at the present still cannot be termed favorable.

Canada has indicated that the delay with regard to the one Canadian route involved in the Colonial case may cause Canada to question the extension of rights of U.S. airlines at Gander called for by the agreement. The U.S. airlines had interim traffic rights at Gander from Newfoundland, which Canada terminated on the union of Newfoundland with Canada.2 Canada later granted interim rights at Gander to the U.S. lines, pending negotiation of the 1949 agreement. These permits expire September 30, 1949.

On September 2, the Canadian Ambassador left the attached aide-mémoire 3 with Mr. Rusk,4 which states that “in the absence of effective U.S. action to implement the agreement” with respect to permitting Canadian lines “to operate the new routes”, Canada “will find it necessary to review the whole position with respect to extending the traffic rights at Gander beyond September 30 when the present temporary permits expire.” It is also stated that the situation at Stephenville [Page 409] (established by the agreement as an operational alternate for Gander) may also have to be reviewed.

The attitude of the Canadian Ambassador on delivering this aide-mémoire indicates a possibility that it may perhaps have been only a formal gesture for the record, but this is not certain.

The Canadian Agreement encompasses the exchange of so many routes that it is clearly not possible to say that rights at Gander balance rights on the Montreal-New York route. The agreement was intended to deal with an exchange of routes in toto rather than on a separable basis.

Unfavorable action by Canada with respect to extending traffic rights at Gander would go to the essence of the consideration which led the U.S. into this agreement, would probably evoke strong reaction by industry and Congress to reconsider the whole agreement, and would lend comfort to those who oppose the use of executive agreements.

Applications of certain other U.S. airlines to start service over other routes established by the agreement are still pending in Canada. The U.S. does not at this time contemplate complaining because of normal or unavoidable delays in the absence of any indication that the Canadian Government is not doing all that it can to implement the agreement. As the U.S. Government is doing all that it can to implement the agreement, a similar attitude on Canada’s part would appear to be indicated.

Recommendations:

It is recommended that you informally mention the aide-mémoire to Mr. Pearson,5 and state that you hope he appreciates that this Government is taking every possible “effective U.S. action to implement the agreement”. He should be further advised that, however, certain unavoidable delays with respect to one part only of the agreement are occurring by reason of (a) administrative procedures contemplated by the agreement and (b) unavoidable delays incident to the judicial process which this Government is powerless to shorten, although it is taking a firm position in the Colonial case.

You might then express to Mr. Pearson that you hope that we can assume that Canada will not take any action which would result in the impairment of U.S. rights at Gander or Stephenville,6 in view of the inherent peril to the whole agreement involved therein.

It is suggested that this approach be most informal, and be supported with the argument that a few months delay should not be the [Page 410] cause of jeopardizing the long-term pattern established by the agreement.

  1. Memorandum by Joseph J. Wolf, Assistant Chief of the Aviation Division, to the Secretary of State, and handwritten, undated comment on the memorandum by the Secretary, neither printed (711.4227/9–949). In this earlier memorandum, Wolf provided a less detailed background summary than that which follows, and then presented a list of six “recommendations”, three of which pertained to the manner in which the action threatened in the Canadian aide-mémoire of September 1 might prejudice a just conclusion of the judicial review presently delaying the Agreement’s implementation, slow the process of granting a permit to the affected Canadian airline, and endanger both the Agreement and other relations between the two Governments. Secretary of State Acheson commented that these three paragraphs, in particular, seemed high handed, arbitrary and unreasonable to him, appearing to require performance by the Canadians on their part of the Agreement while the United States was trying and failing to carry out its part of the Agreement.
  2. Newfoundland formally entered the Dominion as Canada’s tenth province on March 31, 1949.
  3. Supra.
  4. Dean Rusk, Deputy Under Secretary of State.
  5. Lester B. Pearson, Canadian Secretary of State for External Affairs.
  6. See information on agreement concerning these two military air bases in Newfoundland, p. 417.