Foreign Relations of the United States, 1977–1980, Volume XXVII, Western Europe

75. Memorandum From Vice President Mondale to President Carter¹

Washington, January 26, 1978

SUBJECT

• Recommended Actions Resulting from My Visits to Canada and Mexico

The following highlights the key points to emerge from my talks with Prime Minister Trudeau and President Lopez Portillo and my meetings in Canada and Mexico.²

Canada

The talks in Canada included a private conversation with Prime Minister Trudeau, an expanded session with the Prime Minister and his Cabinet, and talks the following day in Edmonton with Premier Lougheed of Alberta.³

In the private meeting, I gave the Prime Minister a status report on the Middle East and US–Soviet relations, together with a report on the principal findings you made during your recent visit abroad.⁴

Trudeau took the initiative of raising NATO. He had two points:

(1) He expressed the hope that you would structure the NATO Summit this Spring as a genuine discussion at the political level, with meaningful give and take among the leaders of the alliance.⁵ He finds the set speeches of past summits—as he says, prepared by the military staffs—frustrating and largely a waste of time in that they do not permit a meaningful examination of the real problems facing the alliance. I think there is much to be said for Trudeau’s position, and I recommend that you approve having Cy and Zbig forward recommendations on the best format and agenda for the upcoming NATO Summit.⁶

(2) Prime Minister Trudeau believes that it would be in the best interests of NATO to have a new Secretary General this year, with Joseph Luns, who has served since the beginning of the decade, stepping aside by the time of the summit. Trudeau offered no firm views on his choice of a successor. He said that Prime Minister Gaston Thorn of Luxembourg is one promising candidate. He also noted that Viscount Davignon of Belgium, presently an EC Commissioner, had been suggested as another candidate.⁷ As you know the British, Germans and others think Luns should go, but they have been unwilling to face up to the problem. Trudeau apparently is willing to do so. I think we should develop your administration’s position on this issue and I recommend that Cy, Zbig and Harold Brown forward recommendations on the question of the timing of Secretary General Luns’ replacement and candidates for his successor.⁸

On Southern Africa, Trudeau said that Canada wants to be as helpful as possible. The Canadians are members of the Contact Group on Namibia. Trudeau personally is quite close to Kaunda. [7 lines not declassified].⁹ In the expanded session with Prime Minister Trudeau and members of his Cabinet, we reached agreement on a number of steps that should help us to realize further progress in our bilateral relations:

— Economic Consultations: We discussed the interdependence of our two economies, the spill-over of domestic economic decision making, and the value of having our economic policy makers stay in close touch. It was agreed, as I subsequently reported in my press conference, that it would be useful to have Mike Blumenthal and Charlie Schultze meet with Finance Minister Jean Chretien and his colleagues in Ottawa this March to begin this consultation process. With your approval, I will call Mike and Charlie to underscore the importance you attach to this step, to ask them to make the arrangements necessary for the March meeting and to report to you following the March meeting.¹⁰

— Agricultural Consultations: We noted the current beef and cattle trade irritants in our bilateral relations, and it was agreed that it would be useful if, again, we were to address this at the political level with Bob Bergland setting up an early meeting with his Canadian federal and provincial counterparts to explore ways of easing the problem. With your approval, I will call him to ask that he set up such a meeting and report to you following the meeting.¹¹

— Energy Cooperation: Bilateral energy issues were the most important item on the agenda in Canada. We agreed that it would be useful to carry out two joint studies: one on the feasibility of establishing a joint petroleum storage site in the maritime provinces, and the second on the feasibility of increasing electricity exchanges between the U.S. and Canada, given the fact that Canada’s peak comes in the winter, while ours comes in the summer. I recommend that Jim Schlesinger, working with Cy, follow up immediately to ensure that these studies are undertaken.¹²
Earlier, in my private conversation with Trudeau, I had noted the importance we attach to a joint study on oil terminal and transportation options including the Kitimat line and our hope that such a review could be undertaken within the next 12 months given your timetable for steps on this issue. Trudeau was non-committal. This is a sensitive political question for him prior to his elections this year. In brief, the western provinces do not want to agree to an oil pipeline from the West Coast if this means that they will risk being cut off from Albertan oil and made dependent on imported oil. I recommend that Jim Schlesinger and Cy continue to impress upon the Canadians the importance we attach to cooperating with them on a study of the oil pipeline and terminal issue.¹³
We agreed to encourage additional gas sales by Canada to the U.S., with the understanding that there would be a swap-back option (under which Canada would have the option of buying Alaskan gas in the mid-1980s) in order to facilitate accelerated building of the southern section of the Alcan pipeline. I recommend that Jim Schlesinger proceed with his Canadian counterparts to set up a joint working group to define precise terms for such gas sales.¹⁴

— Multilateral Trade Negotiations: I informed the Prime Minister and his Cabinet that we would be tabling in Geneva on January 20 tariff reductions very responsive to Canadian interests. The Canadians, in turn provided the welcome news that Canada would participate fully for the first time in the MTN as a formula country. I recommend that as the talks in Geneva proceed, Bob Strauss provide you with a status report on the MTN negotiations as they impact on US–Canadian trade interests.¹⁵

— Extraterritoriality—Impact of Antitrust Laws: I informed the Prime Minister and his Cabinet that the Justice Department wishes to cooperate more effectively with Canada on U.S. antitrust enforcement efforts involving U.S. subsidiaries in Canada. I noted that the Justice Department is willing, whenever it seeks information from persons in Canada in antitrust investigations, to notify and consult with Canadian officials in advance and to attempt to carry out its inquiry on a voluntary basis—reserving, of course, the right to proceed if the voluntary arrangements fail. This was well received by the Canadians and I recommend that Attorney General Bell formally develop this proposal with his Canadian counterparts and report to you on the results.¹⁶

— U.S. Tax Law on Foreign Conventions: I informed the Canadians of provisions in your tax reform package¹⁷ which would lift the ceiling on the number of tax deductible foreign conventions Americans may have abroad provided there is good reason for holding each convention abroad. The Canadians were pleased, seeing this as a step in the right direction in terms of the increased revenue they seek from additional U.S. conventions in Canada. They would like us to lift our 125% per diem ceiling on tax deductibility. I said we would be willing to consider further relaxations if Canada would, in turn, accommodate us in current tax treaty negotiations on tax concessions by Canada of interest to the U.S. I recommend that Mike Blumenthal follow up on this with his Canadian counterparts.¹⁸

The discussions in Edmonton with Premier Lougheed and members of his Provincial Cabinet focused on the linkage the Albertans place between their willingness to sell us more natural gas and our willingness to give more favorable treatment to Alberta’s beef and cattle, petrochemical products and rapeseed. I informed the Premier of the fact that we were tabling important MTN tariff proposals in Geneva that would go a long way toward meeting his province’s concerns and interests. He said the provincial government would have to study our MTN proposals.

At the same time that Jim Schlesinger works with State on the gas sales issue, I recommend that Bob Strauss coordinate with Cy and Ambassador Enders in Ottawa to determine how we can best ensure that the Albertan government fully understands the favorable impact that our MTN proposals will have on trade of interest to the province.¹⁹

In sum, I believe that the Canadian visit enabled us to move ahead on a number of important issues and that the actions recommended above should help ensure that we maintain desired momentum. Needless to say, Prime Minister Trudeau and his government expressed the hope that you and Rosalynn will soon be able to visit Canada.

1. Source: Carter Library, Office of the Staff Secretary, Handwriting File, Box 70, 1/27/78. Secret; Sensitive. The document bears a stamped notation that reads: “The President has seen.” At the top of the page, Carter wrote: “Fritz—Good trip & report—follow up on items—I’ll help personally when you need me. JC”
2. Mondale visited Canada from January 17 to 18 and Mexico from January 20 to 22. For the text of a speech he delivered during his visit to Alberta on January 18, see Department of State Bulletin, March 1978, pp. 9–11.
3. No memorandum of conversation has been found of Mondale’s private meeting with Trudeau. Telegram 6030 from Ottawa, January 19, transmitted a memorandum of conversation of Mondale’s January 17 meeting with Trudeau and his cabinet; telegram 6128 from Ottawa, January 28, transmitted a memorandum of conversation of Mondale’s January 18 meeting with Lougheed. (National Archives, RG 59, Central Foreign Policy File, D780028–0186 and D780034–0403)
4. Reference is to Carter’s December 29 to January 6 trip to Poland, Iran, India, Saudi Arabia, Egypt, France, and Belgium.
5. Next to this sentence, Carter wrote: “Pierre raised the same issue in London. I agree with him. Let’s be sure to comply.”
6. Next to this sentence, Carter wrote: “ok—do so.”
7. In this and the preceding sentence, Carter underlined “Thorn” and “Davignon,” and in the adjacent margin he wrote: “Both good men.”
8. Next to this sentence, Carter wrote: “ok.”
9. [text not declassified]
10. Next to this sentence, Carter wrote: “do so.”
11. Next to this sentence, Carter wrote: “ok.”
12. Next to this sentence, Carter wrote: “ok.”
13. Next to this sentence, Carter wrote: “ok.”
14. Next to this sentence, Carter wrote: “ok.”
15. Next to this sentence, Carter wrote: “ok.”
16. Next to this sentence, Carter wrote: “ok.”
17. On January 21, Carter submitted a tax reform package to Congress. (Edward Cowan, “President Submits Tax-Cut Plan for ‘Fairer and Simpler’ System,” New York Times, January 22, 1978, p. 1)
18. Next to this sentence, Carter wrote a question mark.
19. Next to this sentence, Carter wrote: “ok.”