711.4227/12–1049: Telegram
The Ambassador in Canada (Steinhardt) to the Secretary of State
priority
187. For Vass.1 Following full text from External today.
“1. I have the honour to refer to your note Number 294 of December 6,2 in which you advise me that your government had requested you to bring to the Canadian Government’s attention order Number 530 of the Air Transport Board issued to Colonial Airlines December [Page 415] 1, 1949. In this note you indicated that your government felt that the above mentioned order was not in accordance with the Air Transport Agreement between the United States and Canada which became effective on June 4, 1949, and that there appeared to exist a difference between the two governments with regard to the interpretation of certain sections of this agreement.
2. I regret that difference between the two governments in regard to the interpretation of sections of the agreement should have become apparent only at this time, and I am not convinced that these differences are substantial. Nor can I agree that, in the case of administrative advice which may be undertaken by the licensing agency in either country, prior consultation between our two governments would be necessary or practicable. Where a carrier is in default in Canada under Canadian law, the appropriate Canadian authorities must be in a position to exercise effectively the powers granted to them by Canadian law. Nevertheless, in view of the friendly and cooperative spirit in which relations between our two governments are conducted in this as in other matters, my government is prepared to engage in the consultations proposed in your note.
3. During these proposed discussions the Canadian representatives will indicate in detail the attitude of the Canadian Government concerning the matters covered in your note Number 294. I should point out however, that there are certain statements of substance in the note with which the Canadian Government is not able to agree.
4. Your note states that there appears to exist a difference between our two governments with regard to interpretation of certain sections of the agreement and that no provision of the Air Transport Agreement of 1949 contemplates suspension of a license for reasons given in the order sent to Colonial Airlines. You also state that your government holds the view that any action taken by the government of Canada should be directed against the United States Government and not against a citizen of the United States. In this connection, I should point out that the Air Transport Board is empowered by statute to suspend licenses either on grounds of public convenience and necessity or on grounds of violation of a condition of a license. Further, the license granted to Colonial Airlines provides that “This license should be subject to all applicable provisions of any treaty convention or agreement affecting international air transport to which the United States and Canada shall be parties, now in effect or that may become effective during the period this license remains in effect.” These are matters which the Air Transport Board is entitled to explore and proposes to explore directly with the carrier concerned.
5. In your note you refer to Article 9 of the agreement which states that existing rights and privileges relating to air transport services which may have been granted previously by either of the contracting parties to an airline of the other contracting party shall continue in force in accordance with the terms under which such rights and privileges were granted. I should again draw your attention to the provision of the license granted to Colonial Airlines by which the license itself is made subject to all applicable provisions of any effective treaty, convention or agreement affecting international air transport between the United States and Canada. This provision of the license [Page 416] clearly indicates that Colonial Airlines must abide by the terms and the spirit of the air transport agreement signed between our two governments on June 4, 1949.
6. The Canadian Government fully appreciates that the United States authorities have proceeded in good faith in relation to the Air Transport Agreement. It considers, however, that Colonial Airlines, by its actions in refusing to recognize the validity of the agreement in the United States, whilst continuing to do business in Canada under & license issued by the Air Transport Board which is conditional up>on the observance of this agreement, has adopted a position which is inconsistent with the condition of the aforementioned license. Order 530 delivered to Colonial Airlines on December 1, 1949, notified them that they are liable to appear before the Air Transport Board to produce evidence to the contrary.
7. In view of the situation explained in Paragraph 5 above, the Canadian Government would not wish to interfere at this time with the administrative action undertaken by the Air Transport Board in connection with the proposed hearing outlined in Order 530. The Board, before reaching a decision, will have to study the evidence produced during the hearing which will open on December 12. If the discussions proposed by your government are undertaken in the immediate future, it is unlikely that any decision could be handed down by the Air Transport Board in advance of these discussions.
Accept, et cetera.”
Meeting Thursday 15th afternoon confirmed orally.