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

115. Memorandum From the President’s Assistant for National Security Affairs (Scowcroft) to President Ford¹

Washington, January 5, 1976.

SUBJECT

• US-Canadian Relations

At a December 13 farewell reception for Canadian journalists, U.S. Ambassador William Porter made a point of expressing concern over the growing reaction in US business circles, the Congress, the press and public to recent actions in Canada adversely affecting established US interests. Specifically, Ambassador Porter raised such issues as lack of clarity in Ottawa’s restrictions on foreign investment, deletion of commercials from American television signals carried by Canadian cable companies, the requirement that most commercials broadcast in Canada be made in that country, plans to nationalize the potash industry in Saskatchewan, the Canadian energy policy, including increased prices and curtailment of deliveries, and removal of favorable tax status for the Canadian editions of Time and Reader’s Digest. The Ambassador noted that, if unchecked, this increasing climate of unease and resentment on both sides of the border could have an adverse impact on relations between our two countries.

Ambassador Porter’s remarks may not have been entirely felicitous, but they were distorted by the Canadian press. A number of articles erroneously reported that he had said relations between the United States and Canada were deteriorating, and that a summit meeting between you and Prime Minister Trudeau was called for to deal with the problem. During the extensive parliamentary debate which resulted from the interview, the Prime Minister, apparently without checking on the accuracy of the press reports, said he was “surprised” at the Ambassador’s comments, which did not reflect the tenor of his recent meetings with you and the Secretary of State, adding that Ambassador Porter, if quoted correctly, had gone beyond “acceptable bounds.”

The Ambassador’s comments have been clarified to the press both here and in Ottawa, and by Secretary Kissinger and Canadian External Affairs Minister MacEachen on the fringe of last month’s producer-consumer meeting in Paris. As a result, favorable comment is beginning to appear in the Canadian press.

The Toronto Globe and Mail, Canada’s most respected and influential English-language newspaper, has criticized Prime Minister Trudeau for “over-reaction,” noting that a frank dialogue must be maintained across the border if the United States and Canada are to have a “mature” relationship.

The following paragraphs review in greater detail some of the issues raised by Ambassador Porter. While the United States and Canada continue to have the largest volume of trade between any two countries in the world, and are the recipients of the largest share of each other’s foreign investment, Canada, the junior partner, sees US size and influence as a potential threat to Canadian independence and sovereignty.

Against this backdrop, Ottawa has taken a number of restrictive measures to preserve and enhance control over Canadian economic and cultural life. We have expressed understanding of Canada’s actions, but have also indicated our concern that programs of enhanced national control in Canada frequently encroach on substantial US economic interests. We have pointed out that the cumulative effect of these actions has caused growing concern on the part of the US business community and Congress and could have the unintended effect of inspiring demands for retaliation in the United States.

—Oil Supply. The Canadian government has announced that oil exports are to be phased out by the early 1980’s in order to ensure that Canadian domestic needs continue to be met. We have been discussing with Canada for some time how the requirements of traditional U.S. customers can be taken into account. We are hopeful that arrangements can be made, including “oil exchanges”, so as to avoid undue hardship for U.S. customers who may have difficulty in finding alternative sources of supply.

—Gas Supply. Ottawa has also warned that shortfalls in natural gas export commitments can be expected beginning with the 1976–77 heating season. The U.S. has been assured that there will be no cutbacks during the current heating season and we are continuing discussions with Canadian officials regarding the potential long-term impact on U.S. customers.

—Pipeline Treaty. U.S. and Canadian negotiators have virtually agreed on a draft text of a pipeline treaty which would provide for secure and nondiscriminatory treatment of throughput of oil and gas pipelines across each other’s territory.

—Takeover of Potash Mines in Saskatchewan. The Saskatchewan government announced last month its intention to take over the potash mines in the province. A large percentage of the potash imported to the U.S. comes from these mines, many of which are owned wholly or partially by U.S. interests. Presently, the provincial government is talking to each of the affected companies and we are awaiting the outcome of these discussions. In the meantime, we have sent a note to Ottawa drawing its attention to the action by the Province of Saskatchewan and underscoring our important economic interests there. We have asked for the assessment by the Canadian government of this provincial action and are awaiting a response.

—Cable TV Deletions. The Canadian government has been following a policy of encouraging the development of the Canadian TV industry for both cultural and economic reasons. One facet of this policy has been to require Canadian cable TV companies to develop plans for random deletion of the commercial messages contained in U.S. TV shows carried over Canadian cable TV. The intent of this policy is to discourage Canadian advertisers from putting their money into U.S. TV programming and to divert advertising instead to Canadian stations. U.S. broadcasters have taken legal action, and the case is before the Canadian Supreme Court. In the meantime, the Canadian government has recently agreed to discuss this issue with us, and the first talks will be held in Ottawa in January.

—Time-Reader’s Digest. The Canadian Parliament is expected to pass legislation soon removing the tax deduction which Canadian companies advertising in the Canadian editions of Time and Reader’s Digest have enjoyed in the past. The Canadian legislation and implementing regulations are drawn up so as to treat these magazines in the future as foreign, not Canadian, periodicals. They will probably stop publication as a result. We have recently relayed to the Canadian government Time’s complaint that, during its efforts to continue to qualify as a Canadian publication, it has not been treated fairly by Ottawa. In raising this matter, we have underscored that we are not questioning the right of the Canadian government to take the legislative action proposed, but are concerned over the impact of the action.

—Canadian Defense Decisions. Reversing a trend of the past decade which has led to the downgrading of the Canadian military establishment, Ottawa has announced decisions which will increase defense spending, modernize Canadian military equipment, and reaffirm its mutual defense obligations within NATO and to the U.S. Canada will maintain its land/air mix in Central Europe, will modernize its tank force and will purchase Orion long-range patrol aircraft from the United States. Earlier this year, Canada renewed the NORAD air-defense agreement with the United States.

1. Summary: Scowcroft discussed the state of U.S.-Canadian relations.

   Source: Ford Library, National Security Adviser, Presidential Country Files for Europe and Canada, Box 2, Canada (7). Confidential. Sent for information. A stamped notation on the memorandum indicates the President saw it. Ford initialed the memorandum. On December 17, 1975, Kissinger and MacEachen discussed Porter’s remarks and U.S.-Canadian relations. (Memorandum of conversation, December 17; National Archives, RG 59, Records of the Office of the Counselor, Helmut C. Sonnenfeldt, 1955–1977, Entry 5339, Box 3, HS Chron-Official, Oct–Dec 1975)