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

89. Telegram From the Embassy in Canada to the Department of State and the Department of the Treasury¹

312.

Ottawa, January 19, 1981, 1735Z

SUBJECT

• Letter to Secretary Miller from Finance Minister MacEachen dated January 16, 1981.

Ref:

• (A) 1980 Ottawa 5930;²
• (B) 1980 State 342–366.³

1. The Embassy has been requested to transmit the following letter from Finance Minister MacEachen to Secretary Miller. MacEachen’s letter is in response to Secretary Miller’s letter (ref B) which in turn was in response to MacEachen’s letter (ref A) concerning the Canadian budget and National Energy Program. The original signed letter is being pouched to Treasury.

2. Begin text: quote: Dear Bill: Thank you for your letter of December 19 commenting on Canada’s economic and energy policies.

— I fully agree that the international dimension of our problems is sufficiently important that it must be kept in mind in framing our domestic policies and that we must use international forums to promote mutually reinforcing results.

— I am aware of the concerns expressed by your government about Canada’s National Energy Program. We, in turn, have sought to explain the unique features of the Canadian energy situation and to demonstrate how the program is responsive to our needs. In particular, there were two meetings of the Canada–U.S. consultative mechanism which took place on November 7⁴ and December 17⁵ of last year. I understand that the discussions were profitable and that many of your concerns were addressed.

— Apart from dealing with Canada’s energy needs, I believe the National Energy Program reinforces our positive commitment to the world economic system and is fully consistent with our international obligations. Under the program, Canada will reverse its growing dependence on imported oil and will become self-sufficient in oil by the end of the decade.

— With respect to Canada’s trade policy, I would emphasize that the NEP was not designed to undermine our international agreements, and that we fully intend to honour our obligations under the GATT. As was made clear at the December 17 meeting, our concern is to ensure that Canadian firms are given an equal opportunity, no more and no less, to compete for contracts for the development of Canada’s oil and gas resources.

— You mention Canada’s obligation under the OECD Declaration on International Investment and Multilateral Enterprises. While Canada is fully supportive of the principle of national treatment, as a general rule, our commitment to it is not an unqualified one. We consider the energy sector to be of special and vital importance to Canada, as it is, indeed, for all industrialized countries. We have consistently maintained that the degree of foreign ownership and control of the Canadian petroleum sector was unique in the Western world and could not be allowed to continue indefinitely. It was for these reasons that Canada signed the OECD declaration with the proviso that “Canada will continue to retain its right to take measures, affecting foreign investors, which we believe are necessary given our particular circumstances.” Oil and gas lands development was singled out as a case in point.

— We will, of course, welcome further opportunities to examine these matters and trust that a better appreciation of what Canada is attempting to do will help to avoid misunderstandings which might create undue difficulties.

— Thank you again for your comments and let me offer my best wishes to you personally for the future.

Yours sincerely, Allan J. MacEachen. End quote. End text.

Curtis

1. Source: National Archives, RG 59, Central Foreign Policy File, D810027–0924. Limited Official Use; Immediate. Sent for information to Paris for OECD.
2. See footnote 3, Document 88.
3. See Document 88.
4. Telegram 6122 from Ottawa, November 7, 1980, reported that during a meeting of U.S. and Canadian officials in Ottawa on November 7, Hinton “opened the discussions of Canada’s National Energy Program by expressing ‘shock and disappointment’ with the philosophical and political thrust of the energy program.” Hinton also “noted that the NEP seemed to work against the collective energy needs of the industrialized world by dampening oil production potential from Canada” and “emphasized the strong negative reactions the USG was receiving from industry and investors and he expressed concern that the general effect of the NEP was to undermine the cohesiveness of the international free trade and investment system that the Western world has created over the past 30 years.” (National Archives, RG 59, Central Foreign Policy File, D800533–0910)
5. Telegram 336006 to Ottawa, December 20, 1980, which was corrected by telegram 338749 to Ottawa, December 24, summarized the December 17 meeting of the U.S.-Canadian Energy Consultative Mechanism, which was devoted to the NEP. (National Archives, RG 59, Central Foreign Policy File, D800605–0631 and D800610–0026)