Foreign Relations of the United States, 1955–1957, Foreign Economic Policy; Foreign Information Program, Volume IX

48. Telegram From the Embassy in Canada to the Department of State¹

Ottawa, October 12, 1955—3 p.m.

143. It is Embassy’s considered view that Canadian resentment over US agricultural surplus disposal policy is outstanding issue today between two countries and one which easily could be inflated to unmanageable proportions. With every indication of increasing surpluses on both sides of border, problem is apt not only to be continuing one, but with normal crop and marketing conditions may become even more acute.

All sectors of Canadian press have criticized US position and have castigated our alleged failure dispose of surpluses without disturbing normal commercial marketings.

The initial favorable press reaction to Secretary Benson’s Calgary speech June 10 and of the announcement following Joint Committee Meeting September 26² has been replaced by expressions of profound scepticism re willingness of US to dispose of its surplus agricultural products in any fair and reasonable fashion and of utility of Washington talks.

Editor of Winnipeg Free Press today told Embassy officials that apparent failure of Canadian Ministers to present Canadian position more forcefully at Joint Committee Meeting had created anger among prairie province farmers which he fears may have serious political implications. This same fear has been expressed by other government officials and farm leaders with whom Embassy has discussed matter.

Canadian officials challenge US contention that its disposal policies have not injured normal Canadian markets and speak in bitterest terms re our methods and their results. Two specific cases recently cited to Embassy by M.W. Sharp, Assistant Deputy Minister Trade and Commerce and Canadian Government’s foremost expert on international wheat trade, were: (1) Italy had requested Canadians to submit wheat offers but Italian interest had “dried up” immediately it was known that there was possibility of obtaining US surplus wheat; (2) West German interest in Canadian wheat had declined as result of US officials indicating to that country that its absorption of US wheat would be a criterion of its willingness cooperate with US.

Canadian officials do not feel that implementation of our policy has resulted in increased wheat consumption or that international demand for wheat has been raised by facilities we have extended.

Importance which Canadians attach to Washington wheat talks on October 20–21³ may be judged by fact that Sharp will go to Washington instead of heading Canadian Delegation to International Wheat Agreement Conference.⁴

I know personally that Minister Trade and Commerce, C.D. Howe has taken our assurances seriously that he anticipates that question will be renewed with greatest care in Washington and that positive results will be forthcoming.

It should be realized that in Washington talks Canada will be interested not only in having information on each specific deal US is contemplating but also they will wish to consider whole realm of surplus disposal policy as a joint problem.

Canadians consider that their restraint has been largely responsible for maintaining international wheat prices and they insist that rising domestic pressures will not permit them to continue to stand aside while we edge them out of their foreign markets.

Sharp said that Canadian Government is through making official protests to US Government and that it now desires some concrete evidence that US will carry out in good faith President Eisenhower’s assurances (given at time of signing of PL 480 in July 1954)⁵ that PL 480 “wisely sets forth the intention of the Congress that it shall expand world trade on a sound basis and not disrupt it. I am glad that this makes it possible for me to assure normal suppliers to commercial markets at home and abroad that the act will be administered so that the United States will not be engaging in unfair competition or in other practices which would disturb world markets …⁶ the US will not use its agricultural surpluses to impair the traditional competitive position of friendly countries by disrupting world prices of agricultural commodities”.

Embassy fully appreciates that question of disposal of wheat surpluses poses an almost insoluble problem. It is concerned, however, over possible grave consequences to US-Canadian relations if solution satisfactory to both countries is not found.

It is Embassy’s opinion that there is some validity to Canadians contention that US surplus wheat disposals have adversely effected normal Canadian export sales. Unless some convincing evidence is given to Canadians that such disposals in future will be carried out in manner consistent with President Eisenhower’s assurances, the Washington talks will be a failure and an even more acute situation created.

Stuart

1. Source: Department of State, Central Files, 411.0041/10-1255. Official Use Only.
2. For text of the joint communiqué issued in Ottawa, September 26, see Department of State Bulletin, October 10, 1955, p. 576.
3. No record of these talks has been found in Department of State files.
4. This conference was scheduled to begin in Geneva, October 26, under the auspices of the United Nations.
5. The text of the President’s statement made on July 10, 1954, is printed in Public Papers of the Presidents of the United States: Dwight D. Eisenhower, 1954, p. 626.
6. Ellipsis in the source text.