Foreign Relations of the United States, 1969–1976, Volume E-15, Part 2, Documents on Western Europe, 1973–1976, Second, Revised Edition

111. Memorandum of Conversation¹

Washington, December 4, 1974, 3:01–4:25 p.m.

PARTICIPANTS

• Pierre-Elliott Trudeau, Prime Minister of Canada
• Allan MacEachen, Secretary of State for External Affairs
• Ivan Head, Special Assistant to the Prime Minister
• Ambassador Marcel Cadieux
• President Gerald R. Ford
• Dr. Henry A. Kissinger, Secretary of State and Assistant to the President for National Security Affairs
• Lt. General Brent Scowcroft, Deputy Assistant to the President for National Security Affairs
• Arthur A. Hartman, Assistant Secretary of State for European Affairs
• Ambassador William Porter, U.S. Ambassador to Canada

SUBJECTS

• The President’s Trip to Far East and Vladivostok; Energy Cooperation; Defense Issues; Economic Policy; Environmental Cooperation

The President: It is very nice to have you here, Mr. Prime Minister.

Kissinger: I told the President we should let you rearrange the furniture, to reciprocate [what happened when President Nixon visited Ottawa in April 1972].

Trudeau: Well, it was an improvement.

President: I was with a group of parliamentarians as part of a Canadian-US Parliamentarian group. I got to know many members of the Senate and Parliament. When I became Minority Leader I had to drop it.

Trudeau: Our longevity is not high, but there still may be a few around.

President: We have had some problems in that regard.

Trudeau: Like our by-elections.

President: You had good elections.

Trudeau: Yes, but we had a tough 18-month period. It was tough, and our relations weren’t dealt with as closely as they should have. You also had your problems.

President: I am looking forward to working with you. I will run again and I think the pendulum will swing back. I think with some progress we can turn things around not only within the United States but in a way which will benefit the world.

We think our relations with the Alliance have improved after a rocky year or two. We want to make our relations as firm as possible. I met with your Ambassador the day I entered office. I am committed to the continuity of our foreign policy. I was fortunate to have worked with Henry on some of the tough chores of 1971, ’72 and ’73, so we have worked closely.

[Omitted here is discussion of Ford’s trip to the Far East and Vladivostok.]

Energy Cooperation

Trudeau: I am grateful for this briefing. On Japan, I guess they won’t give the economic leadership the world needs. It is apparent the EC won’t, so it is up to the United States. We want you to know we think that that leadership is important. There is no substitute for strong leadership, economic and military, and we look to you.

President: We want to work together with our allies, you and Western Europe. We all recognize the oil prices require us to get the consumers together. We don’t rule out the possibility of getting together with producers, but we think we must get the consumers together first. Secretary Kissinger laid it out in his Chicago speech. We are pleased with the success of the IEA. We think we need the $25 billion facility so we can handle the petrodollar problem if we are going to deal with the problem.

Trudeau: You know of our support in general for that. I suppose there are measures we might talk about. You have made clear you don’t want confrontation, but we fear the counter-cartel idea. We rejected that on sulphur, iron ore, and copper. We think the world will be better off if the consumers and producers talk with each other rather than confront each other. Some Europeans fear that you are seeking a confrontation. We think that if the consumers get together first they will be stronger than the producers. If we bind together tightly and tell the producers we are on a collision course, given their history, we may be on a collison course. Maybe you do want a head-on collision. I would like your views.

President: We would prefer it without a tightly knit head-to-head confrontation. But if we find the problem magnified, with further price increases, and if the financial aspects continue to worsen, we may have to tighten the consensus to prevent a catastrophe.

Trudeau: I speak in confidence, but Giscard used pretty much the same language as you did. He thinks you are on a confrontation course. But he said the same as you if they insisted on raising the prices. I think your views this way are the same. But in this period he thinks you want too tight a group. We are in between.

President: I was impressed with the willingness of Japan not to lead but to support us.

Trudeau: After going behind our back last year.

Kissinger: We don’t seek a confrontation. But if the consumers are not unified, a conference will only result in the sort of bilateral discussions that are already going on now. The President asked me to speak in Chicago to give the consumers the sense that they can master their destinies. If they are constantly confronted with the consequences of decisions made elsewhere, the confidence of the West will constantly erode. We have good relations with Iran and Saudia Arabia. The French are exaggerating our position.

Trudeau: Because they don’t like you.

President: Fortunately the producers do. The Middle East was discussed in Vladivostok. We want to continue the step-by-step process. We can go to Geneva at some time, but not now.

MacEachen: Turner and the Government are concerned about trying to support the multilateral organizations in recycling while the private systems are doing some of it. We tend to want to use the multilateral systems like the IMF. That would tend to involve the producers more directly.

Kissinger: You know we don’t agree with that at all.

MacEachen: Why?

Kissinger: There are two problems—the developed and the least developed countries. With the underdeveloped it is the way to go. With the developed countries, they have to take steps themselves, and also they can’t become dependent on decisions made elsewhere. The producers will eventually seek the political benefits of their position. The developed world needs to feel they can master their own destinies.

Trudeau: Yes, unless they face 25% unemployment.

Kissinger: Of course, but we don’t think it will come to that. We think it can be done in the developed countries without an increase in unemployment or protective unilateral moves. We made clear in Japan that conservation shouldn’t be at the expense of growth.

President: This is why we are pushing voluntarism.

Trudeau: We will go that way too. I can’t argue Turner’s point. I’ll let him talk to Simon.

President: I have been importuned by the Northern Tier states whose refineries depend on Canadian crude exports. They asked me to raise it with you. I see your problem—you have your needs and considerations. Any tempering you can do will be appreciated.

Trudeau: I am having breakfast with some of them; I expect it to be raised. On January 1 we will go down to 800,000 barrels per day. The additional proposal—which isn’t policy—which I must discuss with you and the provinces—is to go down to 650,000 in July. Perhaps the provinces won’t want to shut in that 150,000 but would rather sell. We know the problems of the refineries—we understand their need is 650,000, and that they will get even with our additional plan. Of course, on next January 1 there would be a further cutback.

We would hope the companies would find ways to reallocate. There are some complicated formulas which I can’t explain. I guess if the worst came, we could give you more in exchange for something. A while back, you asked that more not be sent in.

Frankly, it is a political problem. The Canadians know you have more than we have. You have Project Independence. We know we will be short in less than 10 years.

President: I appreciate hearing your views on this. These are some helpful congressmen who raised this, and I wanted to express their concern.

Trudeau: You stopped exporting years ago. Our reserves are not what we thought they were. Why? Because we have been producing at a capacity to supply you. Who knows what decisions will be made? What arguments will I get?

Porter: They will say the refineries were built specifically for this oil. It is true we asked that no more come in, but informally it did increase.

Trudeau: What would an American do in our situation? On price, we are selling you oil at the same price we bring it in. There is no reason we should make a gift to the Americans. But the oil supply is embarrassing, but I can’t see any other way.

MacEachen: Our decision resulted from a study of our reserves by our regulatory advisory board. Under law we can’t export more than the board says is surplus. Another point is we have had criticism at home that our conservation hasn’t been severe enough—that we should have cut back faster.

President: One benefit of getting the consumers together is to expand alternative sources of energy. Project Independence needs to be more vigorous. It won’t give us self-sufficiency by 1980. It is a good program, but it won’t make that date. Our research would be shared with that group. If we can expand research in other energies, we can do more, but not by 1980. I think this can be an added incentive for cooperation.

Trudeau: I think under IEA there is a trigger. If a shortage gets to—what—7%, sharing does start, and we of course would then supply the Mid-West refineries. By 1982 there will be a gap, even with tar sands. We are very willing to cooperate.

President: This will be a bipartisan group tomorrow.

Trudeau: What else will they bring up?

Defense Issues

President: I think we should discuss security. I think NATO is vitally important to peace. We have elements wanting us to withdraw forces. They want to turn inward. We will keep the forces there in the absence of an agreement in MBFR. The British are thinking of a $10 billion reduction, but they said it would be in areas other than NATO. I hope they exempt NATO.

Trudeau: We don’t intend pulling out of NATO. It is our third priority: Canada, North America, NATO. Next year’s budget is 11.2% above this year’s. We think it is better than any other’s, but admittedly from a smaller base. In this economic climate, we think this expansion is proof that we are not trying to renege on NATO. We have increased our effort in NORAD and peacekeeping.

President: You have done a fine job in peacekeeping.

Trudeau: I’m glad to hear that.

President: It is very important.

Trudeau: I am very pleased. The aim of our review is to give us the best for our defense dollar—mobile forces, repairing dams, etcetera. We want to discuss with you your strategic concepts. How important is having an ASW effort as compared to surveillance only? Also the role you see for strategic bombers. Incidentally, the possible procurement of ASW patrol aircraft would help reduce the imbalance that Nixon and Kissinger discussed—from $500 to $50 million.

We have no intention of pulling out of NATO or NORAD.

President: I am glad to hear that. Sometime I would like to hear how you managed to unify the services. Not that we could do it, but I would like to hear about it.

Economic Policy

Trudeau: We see that you think your economy is softening. We are so dependent on you. Could you talk about this a bit?

President: When I came in, we were in a very serious inflation. We came up with a plan which initially focused on inflation but recognized that the danger signals wouldn’t let us put the clamps on too hard. The one million barrels a day conservation the economists said would add to our downturn problem. We now are analyzing whether we should shift our emphasis. The auto industry has plunged. That industry depends so much on consumer attitude. But we feel we must get inflation down from 12% to 7 or 8% by the summer. If we can get it to 8% we are doing well. If we don’t undercut this too much by stimulative measures, we think the recessive influences will be over by next summer or fall. If Congress panics and turns on the spigot, all the good we have done will be down the drain. We hope to keep a steady course and, depending on the next statistics . . . . . we are not frozen, but we don’t want to panic.

Trudeau: I assume that price and wage controls are not anticipated now?

President: I have no plans for that. Congress may make a move to give me the control authority so they can wash their hands of it—but labor won’t buy that now.

Trudeau: We don’t plan on going in that direction, but if you move, we would have to consider it. We are trying to do about the same as you. We are stimulating housing, and the consumers are still confident. That leads to automotive imports. As far as our auto agreement is concerned, two years ago we said we had an accidental year. I think our experts should get together and look over the automotive industry over the long run.

On trade in general, we don’t have much to do, because our private sectors do most of it. We have the biggest trade of any two countries—it is 66% free trade and with the trade bill, it will go to 88%.

President: Any influence you have with our Senators will help. We are hopeful, but time is running out. The Jewish immigration issue is worked out. Now one problem is non-germane amendments. I think we have a 75% chance of an acceptable bill by adjournment.

Trudeau: We wish you well because we need to get on with the negotiations. On tourism—another message for Kissinger—our last budget goes in the direction we said we would. American tourists spend $1.2 billion and Canadians spend $1.0 billion.

I want to mention beef. We think we were right, but our officials are talking and I am confident they will resolve it.

President: I hope they are making every effort.

Trudeau: I will concede the appearance of what we did was bad, but I think we were right on the substance.

President: I’ll be frank. We had a political problem.

Trudeau: We did too. I would say we almost asked for it.

Environmental Cooperation

On environmental matters. I see the clock. . . .

President: Go ahead.

Trudeau: There are several irritants. We won’t resolve them here, but our ministers should be told to work on it. The most serious is your Garrison Diversion Project in North Dakota, and its effect on Canada.

President: I am not an expert on that.

Trudeau: We see your experience with Mexico.

Porter: We know your fears, but have said we would not change the quality of the water.

MacEachen: I don’t see how you can deliver on the content.

Porter: We will work with you.

President: We are slow on many things but we don’t want to move out on inadequate treatment plants, but we will keep our commitment.

Trudeau: I’m glad to hear that.

President: Our major problem is technical.

Trudeau: Let me raise a couple of other items, just to say I mentioned them. [He mentioned the Skadjet (?) Valley project and the Juan de Fuca Straits.]

President: We will move cautiously.

Trudeau: People are very worried about big oil spills. It would badly influence our people.

President: I would like to mention our joint park efforts. Morton asked if we couldn’t move more rapidly.

Trudeau: I’m all with him. If there is a slowdown on our part, we will take care of it.

President: It would give us a chance for an announcement for future get-togethers.

Trudeau: At dinner I will bend your ear on cultural identity and economic identity—the Canadian “third option” of more Canadian control over its destiny.

1. Summary: Ford, Kissinger, Trudeau, and MacEachen discussed energy cooperation, defense issues, economic policy, and environmental cooperation.

   Source: Ford Library, National Security Adviser, Memoranda of Conversation, Box 7. Secret; Nodis. All brackets are in the original except those indicating text omitted by the editors. The meeting took place in the Oval Office. Trudeau paid an official visit to Washington on December 4. Kissinger and MacEachen met on September 24 in New York, where they discussed non-proliferation, the Middle East, Japanese-Canadian relations, the possibility of a visit by Trudeau to Washington, beef quotas, the increase in the export price of Canadian natural gas, and the September 28 to 29 meeting of G–5 Foreign and Finance Ministers at Camp David. (Ibid., NSC Europe, Canada, and Ocean Affairs Staff Files, Box 1, Canada 1974 (3) WH)