319. Memorandum From Secretary of the Treasury Dillon to President Johnson1


  • Report on meeting of Joint U.S.-Canadian Committee on Trade and Economic Affairs
[Page 680]

As acting Chairman of the U.S. Delegation at the 9th meeting of the Joint U.S.-Canadian Committee on Trade and Economic Affairs held in Ottawa, I submit the following report. The entire meeting was attended by Secretaries Udall, Freeman, Hodges and Dillon. Chairman Heller and Under Secretary Ball attended for the first day, Secretary Rusk attended for part of the second day. The Canadian Delegation was headed by the Secretary of State for External Affairs, and included the Ministers of Finance, Trade and Commerce, Agriculture, and Industry, plus the Governor of the Bank of Canada and the Chief Canadian Trade Negotiator.

The meeting was characterized by a far greater spirit of cooperation and understanding than had characterized our first meeting with the present Canadian Government in September.2 The Canadians made a point both privately and publicly of improved relations with the United States. This is of course accurate, but it also reflects the interesting conclusion that, while the present government retains the traditional Canadian sensitivity on matters of national pride, they now apparently consider it good politics in Canada to play up their success in improving relations with the U.S. This is in sharp contrast to the previous Canadian Government which found it expedient to make U.S.-Canadian relations appear worse than they really were.

All items except two were handled without any disagreement of importance. Full agreement was reached on parallel positions to be followed at the May 4 meeting of GATT and on the general approach to the Kennedy Round.

One item that might lead to serious difficulties in the future is the regulations recently promulgated by the Department of Commerce concerning the control of the export of technical data. It was obvious that certain U.S. exporters have over-reacted to the intent of this regulation which was published on April 1. Commerce will undertake a broad campaign to eliminate this misunderstanding. Nevertheless, some serious problems may remain and this matter still has the potentiality of causing major difficulties in our overall relations with Canada. Accordingly, State will join with Commerce in a careful reevaluation of the substance of these rather extensive and hitherto unpublicized controls.

The second matter on which no agreement was reached was auto parts. The Canadians were prepared for a vigorous counterattack on our views based on economic arguments and looking to the substance of the problem. However, they found no answer to the legal arguments [Page 681] we put forth regarding the necessity of initiating action under our countervailing duty procedures. They accepted with good grace our decision to proceed as a matter of legal necessity. They showed no give whatsoever on the substance and originally refused to even consider joint working level talks looking to a possible solution. However, when they realized that a public proceeding would soon begin in the U.S., they agreed privately that joint technical studies should be undertaken immediately by a working party. Publicly they maintained their position of no give. It is too early to predict whether they will in fact eventually agree on anything of substance. It is also clear that our decision to proceed with public hearings, under our countervailing duty law, was the only reason they agreed to substantive consideration of the matter by a working party. The Department of Commerce will head up the U.S. side in these talks.

It is noteworthy that despite the disagreement on this item, which is of considerable political importance to the Canadian Government, the Canadians continued to talk about improved economic and overall relations with the U.S. and publicly labelled our meeting a great success.

Douglas Dillon 3
  1. Source: Johnson Library, National Security File, Country File, Canada, Vol. 1. Confidential.
  2. Documentation on the 8th meeting of the Joint U.S.-Canadian Committee on Trade and Economic Affairs, held at Washington September 21, is in the National Archives and Records Administration, RG 59, Conference Files: Lot 66 D 110, CF 2311.
  3. Printed from a copy that indicates Dillon signed the original.