125. Memorandum From the President’s Assistant for International Economic Affairs (Flanigan) to Secretary of Labor Shultz and the President’s Assistant for National Security Affairs (Kissinger)1

    • Oil Negotiations with Canada

The meeting in Ottawa last Tuesday2 was limited to a presentation by the Canadians outlining their view of the national security problems posed by Eastern Canada’s substantial reliance on overseas oil imports, a proposal by the Canadians for an arrangement with the USG to permit greater exports of Western Canadian oil to the US while meeting GOC national security needs (Tab A),3 and a mutual discussion of the security problem in the context of the GOC proposal.

The Canadians had done some homework this time and were substantially more explicit and forthcoming on the security issues than they have been in prior phases of these long drawn out discussions. Nevertheless, their view of national security contingencies which must be met in fashioning North American oil policies (a 25% overseas [Page 302] cut-off for six months) is substantially less rigorous than USG security planning (which assumes a 100% cut-off for one year). Moreover, GOC officials expressed complete unwillingness to take any protective actions beyond their limited national security efforts in the event such additional actions would be necessary from the US standpoint to justify complete removal of US oil import quotas on Canadian oil.

The US side agreed to study carefully and to respond to the GOC initiative. The two governments also agreed (i) to exchange views as to the bases for their respective national security policies, and (ii) to cooperate more closely in the work of the OECD Oil Committee.

Our ultimate goal is to eliminate the quotas on Canadian oil imports to permit the free market to operate for the maximum development of North American oil and gas resources. The current GOC position, if accepted and formalized, would seem to justify expanding the Canadian quota significantly but is not adequate for a common national security policy.

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 671, Country Files, Europe, Canada, Vol. III, Sept 71–Dec 72. No classification marking.
  2. The memorandum of conversation of the June 27 meeting is ibid., RG 59, Central Files 1970–73, PET 4 CAN–US.
  3. Attached but not printed at Tab A is “Possible Objectives for the Canada-U.S. Oil Discussions of 27 June, 1972.”