Foreign Relations of the United States, 1958–1960, Western European Integration and Security, Canada, Volume VII, Part 1

282. Memorandum of Conversation⁰

PVC/MC–2

Ottawa, July 8, 1958, 4 p.m.

PRESIDENT’s VISIT TO CANADA

Ottawa, Ontario, Canada, July 8–11, 1958

[Here follows the same list of participants as Document 281.]

SUBJECT

• 1) Communist China
  • a) Recognition
  • b) Trade by US Subsidiaries
• 2) Lead and zinc
• 3) Strategic metals—COCOM
• 4) Stockpiling program

Section II—Prime Minister’s Conversation with the President

The Prime Minister then raised the question of China. He said that, as we knew, Canada did not recognize Communist China and that he contemplated no change although the Government was under very considerable pressure in this matter. The President interjected that if Canada recognized China it would “wreck” us, and he added it would probably also wreck the United Nations. He urged strongly that Canada maintain its policy of non-recognition and its support of the moratorium in the United Nations.

The Prime Minister then went on to the question of exports to China and raised the matter of the Ford car order which had been blocked. The President indicated both familiarity and sympathy in this matter. He pointed out the difficulties which faced us, among which he mentioned the problem which would be created domestically in the United States if foreign subsidiaries of U.S. companies could trade with China whereas domestic companies with no foreign subsidiaries were barred from such trade. The Prime Minister indicated his understanding of this aspect of the problem which apparently he had not considered before. There ensued some further discussion of the matter with both the Secretary and Sidney Smith entering into discussion. At one point Mr. Smith suggested that a “cut-off” date be applied to U.S. companies owned by U.S. corporations with respect to the matter of China trade. The apparent thought behind this was to prevent U.S. parent companies from benefiting in future from any relaxation of trade with Communist China via foreign subsidiaries through the formation of subsidiaries after some established date. There was a little desultory discussion on this point but it was not seriously considered.

The Prime Minister then raised the question of lead and zinc from the point of view of United States import restrictions and other metals including aluminum, nickel, and cobalt from the point of view of COCOM prohibitions on trade with China and the Soviet bloc. The discussion of these two items became intermingled.

During the course of the discussion in which the two Secretaries of State participated, the President pointed out that lead and zinc for us was not only a domestic problem but a matter of concern in relation to other friendly countries such as Mexico. Also during this phase of the talk both the President and Secretary emphasized the extreme importance we attach to the continued restrictions in COCOM on cobalt and nickel. The Prime Minister seemed unaware of the fact that COCOM discussion had been under way and did not realize that the result would be a reduction in the number of strategic items.

The discussion then swung around again to the problem posed by the Ford case. The President indicated an understanding of Canadian concern and said that he was sure some modus vivendi could be worked out. He suggested that Secretary Dulles and Mr. Smith discuss this in more detail and report back with some proposal. He re-emphasized the importance of avoiding any solution which would have the effect of weakening our own policy with respect to Communist China. The Prime Minister expressed appreciation for the attitude expressed.

There was then some discussion on the extent to which the Soviet Union was in surplus on some of the materials which had been talked about. Reference was made to dumping in Western countries of aluminum and other materials.

The President then inquired of the Prime Minister if Canada had a stockpile program. The Prime Minister said he thought not and Ambassador Robertson confirmed this point. There was then some discussion of the U.S. stockpiling program including a reference to the fact that nickel was suffering from the fact that U.S. government stockpile purchases had ceased. The President then expounded at some length on the desirability of having dispersed stockpiles of key raw material as a protection if we should be atomically attacked. He pointed out that, even if the war were successful and over in a few hours, there would be great need for such material in order to rebuild essential plant and transportation facilities. He indicated that he thought Canada might well consider such a policy since under the circumstances envisioned we would not be able to move even to Canada materials which we had thus stored.

By this time it was 5:30, but before the meeting broke up the Secretary brought up the question of the challenge of the Soviet economic offensive to the free world, illustrating the advantages the Soviet possessed in competing with a private enterprise system. There was some extended discussion on this point and general consensus that this was a matter which would require the closest and most tolerant collaboration between the members of the free world. The meeting ended at about 5:40 P.M.¹

0. Source: Eisenhower Library, Whitman File, International File. Secret. Prepared by Merchant. See also Document 281. The meeting was held at the Prime Minister’s residence.
1. At 6:05 p.m., Hagerty and Nelson briefed the press on the first formal meeting between the President and the Prime Minister. A transcript of this press conference is in Department of State, Conference Files: Lot 63 D 123, CF 1046. At 8 p.m., the President, Secretary Dulles, and Ambassador Merchant and their wives attended a dinner given by Governor General Massey. A brief memorandum of President Eisenhower’s dinner conversation with the Prime Minister concerning the differences between the Canadian and U.S. systems of government is ibid.