Foreign Relations of the United States, 1955–1957, Western Europe and Canada, Volume XXVII

341. Memorandum of a Conversation, Department of State, Washington, March 8, 1955¹

Washington, March 8, 1955

SUBJECT

• Report on Energy Supplies and Resources Policy

PARTICIPANTS

• Mr. A. D.P. Heeney, Ambassador of Canada
• Mr. Douglas V. LePan, Minister Counselor, Canadian Embassy
• The Under Secretary
• Mr. C. Burke Elbrick, Deputy Assistant Secretary, EUR

Ambassador Heeney said that the purpose of his call was to express the concern of the Canadian Government over that part of the Report of the Energy Supplies and Resources Committee of February 26² which deals with crude oil imports. He said that he was instructed to express the strong hope of the Canadian Government that the recommendations with respect to this part of the Committee’s Report will not be put into effect. The development of exports of crude oil to the United States from Canada is a matter to which the Canadian Government attaches great importance and the Ambassador stressed the fact that the Canadian oil industry contemplated increased exports to U.S. refineries in the future. At present (1954) the Canadian Government is exporting about $7 million of crude oil to the United States while it imports something like $130 million³ from the United States. Any restrictions or limitations which might be placed on this development of Canadian exports to the United States would therefore seriously affect the Canadian economy and might, indeed, damage the whole area of Canadian-U.S. commercial relations.

The Under Secretary said that the Committee in preparing its report based its conclusions entirely on defense and economic principles. It was very conscious of the importance of maintaining the closest relationship and understanding with producing areas of the Western Hemisphere, such as Canada and Venezuela, since it regarded these two countries particularly as possessing reserves which the United States might draw on in the event of emergency. We therefore regard these two countries in a different light from the rest of the world though it was not possible in the Committee’s Report to make such a distinction. The Committee felt that any “significant” increase of over-all crude oil imports above the 1954 level would do great harm to the domestic industry. It emphasized, however, that any control or limitation should be voluntary and it was hoped that a balance would be achieved between imports and domestic production without resorting to legislation. Mr. Hoover expressed the belief that resort to legislation would undoubtedly create other difficulties for us. He said that any rise in tariffs would block imports from Canada and Venezuela, which are high cost producing countries, to the benefit of other areas of the world. The application of a quota system he felt would be even less satisfactory.

Ambassador Heeney said that his Government would be reassured by these observations of the Under Secretary. He said that the Canadian Government would be opposed to any restrictive legislation on this subject not only from the point of view of bilateral trade but also because the Canadian Government attaches great importance to the principles of GATT.

The Under Secretary thanked the Ambassador for his note⁴ which, he said, would be helpful to the administration in pursuing the line taken by the Committee in calling for voluntary control of oil imports.⁵

1. Source: Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199. Confidential. Drafted by Elbrick.
2. This Presidential advisory committee recommended that in the interest of national defense, crude oil and residual fuel oil imports should be kept in balance with domestic production. In the event that imports exceeded significantly, appropriate action, such as voluntary restraint by exporting countries, should be taken. The report is printed in Department of State Bulletin, March 21, 1955, pp. 487–491.
3. (crude oil and refining products) [Footnote in the source text.]
4. The Canadian aide-mémoire, March 8, is attached but not printed.
5. On October 16, 1956, Heeney was informed that the Committee on Energy Supplies and Resources Policy was moving toward a policy of considering Canada as a domestic source of petroleum products insofar as regulations for oil imports were concerned. Heeney expressed appreciation. (Memorandum of conversation, October 16, 1956; Department of State, Secretary’s Memoranda of Conversation: Lot 64 D 199) During 1955–1957, discussions on oil were continuous; documents on this subject are ibid., Central File 411.426.