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

293. National Security Council Report⁰

NSC 5822/1

December 30, 1958.

CERTAIN ASPECTS OF U.S. RELATIONS WITH CANADA

SECTION A. U.S. RESTRICTIONS ON IMPORTS OF OIL WHICH AFFECT CANADA

Discussion

Present System of Controls

1. The present system of voluntary control of imports was instituted in July 1957 with respect to crude oil and was extended in March 1958 to certain petroleum products. The controls were framed in terms, not of Canada or any other supplying country, but of importing companies and U.S. areas. The quota of each importing company was fixed on a historical basis, i.e., in relation to its past imports during a stated period.

2. The rationale for the imposition of controls was that the level of oil imports was such as to threaten to impair the national security. Section 7 of the Trade Agreements Extension Act of 1955 authorized the President to adjust the level of imports in the event of such a finding.

Effect of Present Controls on Canadian Production

3. So far as concerns Canadian oil, these import restrictions have not yet become a limiting factor on imports, due in part to the effect of the recession on expected demand. Nevertheless, under the present program because of price considerations the trend of imports has been in favor of Middle East and Far East oil sources to the detriment of Western Hemisphere sources. Thus, while quotas under the voluntary system of firms which normally import from Canada are currently 138,000 b/d (a figure substantially below the high point of 209,000 b/d reached in April 1957 during the Suez crisis), actual imports from Canada in CY 1958 are expected to average 80–90,000 b/d.¹

4. However, these restrictions can be expected to limit the import of Canadian oil when and if demand increases above the allowables and, in any case, may well have an important effect on the future development of Canadian oil. The present permissible import levels would not be high enough to stimulate exploration and development of Canadian resources.

5. Canadians consider that the most economic and effective development of their oil resources depends on assured access to their natural market in the Northwestern and North Central United States. Canadians believe their oil deserves, and should have, on security grounds, a preferential position in the United States relative to other imported oil. They regard the application of the U.S. import control system to importers from Canada as a sign that Canada will not have such a position in the U.S. market.

6. The prospect that the continuing need for U.S. quotas may affect normal growth of the U.S. market for Canadian oil is one of the factors in Canada’s current consideration of whether to provide an additional outlet for Western Canadian crude through construction of pipelines to the Montreal market. Such action by Canada would have the collateral effect of curtailing the present substantial market for Venezuelan crude in Eastern Canada, with detrimental effect on the development of additional reserves in the Western Hemisphere outside of North America.

Proposed Revision of Controls

7. The President’s Special Committee to Investigate Crude Oil Imports is currently considering a revision of the present import control system. What effects this revision will have on imports from Canada and the rest of the Western Hemisphere will depend on the weight given to Canadian and other Western Hemisphere resources in the interest of national security.

Controls a Departure from Past NSC Policy

8. So far as applicable to Canada, the oil import restrictions represent a departure from the policy adopted by the NSC in November 1953 (NSC 97/6, “A National Petroleum Program”)² which provided that the United States should resist further restrictions on imports of Western Hemisphere oil in order to insure maximum development and wartime availability of Western Hemisphere resources, with the understanding that continued scrutiny would be given to the volume of oil imports with particular relation to any significant adverse effect on the development of domestic resources.³ It should be noted that the President’s Special Committee, in developing the import control program, did not approach the problem from a Western Hemisphere or Canadian viewpoint but equated national security with domestic production.

Considerations Largely Same for Canada and Venezuela

9. While this discussion is directed primarily to Canada, in terms of the national security Canada, Venezuela and other Western Hemisphere sources should be given due consideration. Two factors peculiarly applicable to Canada are:

a. Pipelines may be used for the transmission of Canadian oil to the United States.

b. The Midwestern area of the United States bordering on Canada (the so-called “northern tier” area) is a natural Canadian market which cannot economically be supplied from other sources.

Arguments for Eliminating or Reducing Import Restrictions on Canadian Oil

10. a. Restrictions on the importation of Canadian oil are contradictory to the long-standing plan of the United States and Canada to share their resources in time of war on a continental rather than on a national basis.

b. Increased Canadian and other Western Hemisphere oil resources, the development of which U.S. import restrictions tend to inhibit, would be essential in certain emergency situations as a supplement to U.S. resources. For example, because petroleum and petroleum products are expected to be limiting factors in the survival and recovery of the United States in the event of an attack on the continental United States, the immediate and continuing availability in neighboring countries of maximum supplies would be in the interest of national security.

c. Such increased resources would lessen the political leverage and economic impact on Free World security of the denial or interruption of Middle East oil. While preferences for the development of Western Hemisphere (dollar) oil would adversely affect the import of non-dollar oil from areas outside the Middle East (e.g., the Far East), in comparison with the adverse impact which the import control program has on foreign oil development, the effect of a preference for Canada and Venezuela would be small.

d. Although U.S. import quotas will not force Canada to provide access to Montreal market for Western Canadian crude, such access would tend to deny that market to Venezuela oil and thus adversely affect the development of oil sources in Venezuela. The economic effect on Venezuela of the loss of the Canadian market would be most serious and it is likely that the United States would be blamed.

Arguments Against Eliminating or Reducing Import Restrictions on Canadian Oil

11. a. A preference for Canadian oil imports would conflict with our general policy of non-discrimination among country sources and might create serious foreign relations difficulties, both in connection with our trade policy and in the broad economic and political field. However, special treatment of the imports of countries of a given area appears not to violate our obligations under GATT when the exception is “necessary for the protection of its (the United States’) essential security interests in time of war or other emergency in international relations”. It must be admitted that, were the exception applied to Canadian imports only, it is probable that under GATT or under our bilateral trade agreement with Venezuela such preferential treatment would be challenged.

b. In view of the state-imposed controls of oil production in the United States, the removal of all restrictions on oil imports from Canada would tend to give to Canadian producers a preferred position, as against U.S. producers, in the U.S. market.

Policy Guidance

12. In the interest of national security and consistent with a healthy and dynamic domestic industry, the continued development of petroleum resources readily available to the Western Hemisphere must be encouraged. In order to promote this development, the objective of the United States should be to give preference, in any system of import restrictions, to imports of petroleum from Canada and other Western Hemisphere countries.⁴

SECTION B. THE AWARDING OF CONSTRUCTION CONTRACTS FOR U.S. DEFENSE INSTALLATIONS IN CANADA

Discussion

1. It has been U.S. policy in negotiating with the Canadian Government that “equal consideration” will be given to the contractors of both nations in the construction in Canada of joint or U.S. defense installations. In six defense projects undertaken between mid-1953 and early 1957, construction contracts were awarded on this basis.

2. The United States has supported the “equal consideration” policy as being most consistent with the mutual defense partnership with Canada. Advantages of the policy are as follows:

a. It avoids creating out of defense activity a special advantage for the economic interests of either country.

b. It is equitable to the business communities of both countries.

c. It makes optimum use of limited funds in that no potential low bidder is excluded.

d. In view of the legislative concern in both countries over the disposition of military construction funds, it is a politically defensible approach.

3. U.S. support of “equal consideration” has also been prompted by a regard for the interests of the U.S. construction industry. Because of the proximity of Canada and the relative ease of doing business there, many U.S. firms consider Canada as desirable as the United States for construction work. While a policy of giving preference to Canadian companies would not seriously handicap U.S. companies with Canadian subsidiaries, it would handicap those construction companies which do not have such subsidiaries.

4. In practice, Canadian firms have received a significant share of the construction work on U.S. or joint defense installations in Canada. The natural advantages enjoyed by Canadian contractors, in terms of proximity to sites and knowledge of local conditions, have played an important role, and there is no question of the ability of Canadian contractors to bid competitively with U.S. firms. There is also no question as to their construction capability. A survey of contracts awarded on the basis of the “equal consideration” formula during the past several years (specifically, in connection with DEW Line, Mid-Canada Gap Filler, and Pinetree Augmentation Agreements)⁵ indicates that of a total dollar value of $202 million, all but $14 million have gone to Canadian firms.

5. In 1957, as negotiations for Air Force aerial refueling facilities got under way, the Canadians sought to provide in the agreement that construction would be undertaken through Canadian governmental agencies, employing Canadian contractors. This proposal was resisted by the United States but because of the necessity of going forward with defense preparations, a compromise was reached whereby the formal exchange of notes⁶ left contract matters to settlement by the appropriate administrative agencies. While reserving its general position, the United States assented in advance to the use of Canadian construction firms.

6. The Canadian Government has taken the same general position in all important subsequent negotiations. The agreement concerning Air Force facilities at Flin Flon, Manitoba, incorporated the same formula as was arrived at in the aerial refueling facilities agreement. In negotiations for Ballistic Missile Early Warning (BMEW) facilities, including radars at Cape Dyer,⁷ the Canadian Government is seeking even more favorable treatment, in that it is trying to obtain agreement that a Canadian agency would supervise construction. The United States has reserved its position on the above issues, and continues to treat each agreement on a case-by-case basis.

7. There is reason to believe that the Canadian Cabinet intends to press for an explicit formal commitment on the exclusive use of Canadian contractors in the construction of U.S. or joint defense installations in Canada. In negotiations for BMEW facilities, the Canadian authorities have indicated that they intend to make such a commitment a condition precedent to their agreement in principle on the facilities.

8. In short, the conflict in the matter of defense construction is between the Canadian Government’s insistence on its right to regulate the terms on which the United States does business in Canada and the U.S. view that: (a) in the interests of fairness and economy, construction bids should be let on the traditional basis of equal consideration for all bidders, and (b) the construction of mutual defense installations should not be exploited to forward the special interests of either country. Controversy over this question has contributed to delays in the completion of certain defense projects, but where delays have threatened to become unacceptably long from the standpoint of national security the construction issue has been resolved by U.S. agreement to the use of Canadian contractors in the particular case.⁸ Moreover, it is difficult to attribute delays to the construction issue alone, since the negotiating situation has generally been complicated by other points of difference.

Policy Guidance

9. The United States should continue to press for a policy of “equal consideration”, being prepared within this policy to discuss such modifications of bidding procedure as the Canadian Government feels are necessary to protect the interests of Canadian contractors.

10. The United States should continue to reject any policy of guaranteed preference to Canadian contractors where the United States assumes financial responsibility for the facility. If the Canadian Government conditions its acceptance of such a facility on obtaining preference for Canadian firms, the United States should seek a policy of conditional preference, i.e., a policy which restricts bidding initially to Canadian firms but provides that if the lowest bid exceeds U.S. cost estimates, the United States would subsequently solicit bids from both Canadian and U.S. firms. Any agreements giving Canadian firms such conditional preference should be classified.

SECTION C. PARTICIPATION BY CANADIAN INDUSTRY IN PRODUCTION OF EQUIPMENT FOR THE DEFENSE OF THE NORTH AMERICAN CONTINENT

Discussion

1. Efforts by the United States and Canada toward mutual cooperation in the broad area of defense production and procurement began in 1941 with the Hyde Park Agreement (Appendix l).⁹ Pursuant to the Agreement, the United States, during World War II, bought matériel in Canada valued at approximately $1-1/4 billion, which was about equal to the value of Canadian purchases in the United States. In May 1945, at the request of the United States, the principles of the above agreement were extended into the post-war period. Among the subsequent steps taken by the countries to coordinate their economic efforts in the common defense were: (a) the establishment of a joint U.S.-Canada Industrial Mobilization Committee in 1949; (b) promulgation of the “Statement of Principles for Economic Cooperation” in 1950 (Appendix 2);¹⁰ and (c) agreement to a Reciprocal Military Purchasing Arrangement, also in 1950.

2. The above arrangements and agreements clearly indicate that both the United States and Canada have accepted cooperation in the defense production field as a matter of policy. An outstanding example of this cooperation is the program developed under the arrangement for reciprocal procurement of military equipment, which has as its objective to provide: (a) a greater standardization of military equipment; (b) a wider dispersal of hemispheric munitions production facilities; (c) a supplemental source of supply for the United States and other NATO countries; and (d) an increase of defense cooperation between the two countries. Through this program the United States has made approximately $775 million of defense purchases in Canada during the period FY’s 1951–1958, with Canadian gross purchases in the United States totaling about $825 million for the same period (Appendix 3).¹¹ The program has assisted considerably in bringing the two military establishments closer together.

3. The Canadians are appreciative of the broad lines of the policy of cooperation in defense production which Canada and the United States have followed since 1941, but are not satisfied with the present U.S. interpretation and implementation of this policy. In recent negotiations they have held that the provision in the agreements on joint installations in Canada (which provides the electronic equipment used in the joint installations should, as far as practicable, be manufactured in Canada) should be interpreted to mean that: (a) contracts should be awarded to Canadian firms if they can meet the specifications and a reasonable delivery date; (b) Canadian firms should not be directly competitive with U.S. bidders insofar as price is concerned; and (c) if the prices bid by Canadian firms are reasonable by Canadian standards, a lower bid by a U.S. manufacturer should not determine that award. The United States, on the other hand, has maintained that before Canadian firms can be accorded preference they should meet the prices quoted by U.S. bidders. With respect to implementation of the policy, the Canadians assert that at present too much emphasis is placed on determining whether individual items are to be manufactured in Canada or in the United States, and not enough on working toward genuine integration of the defense production and development capabilities of the two countries, with the objective of maintaining diversified defense industrial facilities in each.

4. In its desire to assist Canada’s defense production industry, the Canadian Government is confronted with a dilemma. On the one hand, the Government has emphasized the rights of Canada as a sovereign power and the relationship of defense production to Canadian industrial and scientific growth; on the other hand, it is faced with the economic reality that Canada does not have the resources to finance the more expensive weapons systems for modern defense. The Government’s difficulty is exemplified by its recent decision to reduce drastically the production of the Canadian-developed CF–105 supersonic interceptor aircraft and to introduce into the Canadian air defense system the U.S.-produced BOMARC missile in its stead. Development of the CF–105 has cost Canada $303 million, and completion of the development and procurement of the aircraft to meet Canada’s requirement of approximately 100 aircraft would have cost $1–1/4 billion more. Before making this decision, Canadian officials tried unsuccessfully to interest the United States in the purchase of CF–105 aircraft for use by the USAF, a proposal which was rejected on the grounds that the United States had under development aircraft of superior performance and earlier availability.

5. While the Canadian Government does not now contemplate an independent Canadian effort to develop a new weapons system for continental defense, it can be expected to be sensitive over any future defense production arrangements which create the impression that Canada will produce only minor components for joint defense projects in Canada while the United States produces all the important major components. That the Canadian Government intends to press for significant Canadian participation in such production was revealed in recent discussions concerning the proposal (a) to strengthen the Pinetree system with additional radars, (b) to extend the semi-automatic ground environment (SAGE) system into Canada, and (c) to introduce the BOMARC missile into the Canadian air defense system. In approving the proposal, subject to agreement on cost sharing, the Canadian Government made it clear that Canadian industry must be permitted to share in production related to these projects as well as to future joint defense projects. Furthermore, during the recent U.S.-Canadian conference on defense production,¹² the Canadians stressed the need for early discussion of the sharing of defense production and expressed the hope that Canada could play a significant role in such production “without becoming a subcontractor”, and that Canada might also assist in research and development work.

6. It is evident that Canada’s desire to participate in the production of equipment for continental defense is not being satisfied under the Reciprocal Military Purchasing Arrangement as presently implemented. While total U.S. purchases in Canada under this arrangement have been quite substantial—they amounted to more than $270 million in FY 1953—they have dwindled drastically in recent years. There are certain obstacles, however, to a substantial increase of U.S. defense purchases in Canada. Several segments of American industry would object strongly to giving Canadian concerns an equal opportunity to receive defense prime contracts, especially in view of significant pockets of unemployment in the United States, and would probably cite the “Buy American” Act as a basis for their objections. (This Act applies to purchases of supplies and equipment for public use in the United States but not those for use outside the United States. With respect to purchases of certain Canadian-produced items for use in the United States, the Military Departments have taken advantage of an exception to the law which permits each Department to determine that it would be inconsistent with the public interest to apply the restrictions of the Act.) Another obstacle is the attitude of the Canadians, who have often insisted on producing equipment that is readily available from an active production line in the United States and on occasion have maintained that Canadian firms should not be directly competitive with U.S. bidders insofar as price is concerned. There are also other obstacles, including those connected with security, programming, patent and royalty rights, and proprietary rights.

7. Overcoming the above obstacles will not require a change in the policy set forth in the “Statement of Principles of Economic Cooperation”. As the Canadians themselves recently pointed out, the two governments in approving these Principles agreed to cooperate “in all respects practicable, and to the extent of their respective executive powers, to the end that the economic efforts of the two countries be coordinated for the common defense and that the production and resources of both countries be used for the best combined results”. Moreover, the Principles include the statement that “the two countries shall develop a coordinated program of requirements, production, and procurement”. Thus, what appears to be necessary is the development and implementation of improved procedures for carrying out these Principles. Such procedures, however, should not accord Canadian firms a preferred position in bidding for defense contracts, inasmuch as preferential treatment to Canadian firms probably would result in a less economical use of defense funds and provoke criticism by the affected segments of U.S. industry and labor.

8. While Canada is not economically capable of independently developing and producing the large complex weapons and weapons systems required under modern defense concepts, Canadian firms are capable of producing major components of these weapons and weapons systems. They are also capable of independently producing defense equipment of a less complex nature, including trainer, transport, and reconnaissance aircraft and certain types of radar and communications equipment. However, Canada’s individual defense requirements are not sufficient to support Canada’s extensive and diversified production base, and Canadian defense industries are not likely to thrive unless they are able to share in the production of weapons and defense systems now under development by the United States or some other NATO power. Unless Canadian defense industries do remain healthy, the United States probably will not receive the same excellent cooperation in the joint defense effort that has prevailed in the past. Moreover, the United States would lose the reserve potential of scientific knowledge, technical capability and industrial capacity developed within Canadian defense industries.

Policy Guidance

9. Take steps, as feasible, to assure Canada a fair opportunity to share in the production of military equipment and matériel involving programs of mutual interest to Canada and the United States, and in the research and development connected therewith. Such steps, to the extent practicable, should include measures to: (a) promote closer integration of U.S. and Canadian military production; (b) provide for the necessary flow of information to Canadian firms; (c) insure the most economical use of defense funds; and (d) accord equal consideration to the business communities of both countries.

SECTION D. GREATER EXCHANGE OF INFORMATION WITH CANADA ON NON-MILITARY DEFENSE

Discussion

1. The Joint Industrial Mobilization Planning Committee (JIMC), established in April 1949, provided an effective medium for joint industrial mobilization planning with Canada. During the Korean War the economic efforts of both countries were, through that device, coordinated for the common defense, and production and resources were used for the best combined result. The JIMC has not been abolished, but has not met since 1953. With the change in direction of mobilization planning toward greater emphasis on readiness, induced by the USSR’s acquisition of a nuclear capability, the need has arisen for a broadened joint administrative mechanism for the coordination of all phases of non-military planning and actions essential to continental security.

2. The Joint U.S.-Canadian Civil Defense Committee, organized in 1951, has provided the meeting place with Canada for those matters of common interest which, on the U.S. side, were within the responsibilities of the Committee’s U.S. representative, the Federal Civil Defense Administrator. But while the committee has accordingly exchanged information on such FCDA programs as continuity of government at the State and local level and those elements of survival item stockpiling for which FCDA was responsible, it has not concerned itself with the corresponding ODM programs, often involving some other phase of the same problem. The activities of this committee can feasibly be extended to embrace all aspects of this class of program, including, from the U.S. standpoint, those handled in the past by ODM as well as FCDA.

3. There are certain non-military responsibilities, such as some of the programs for the sharing of resources in the event of war where effective performance cannot be had without reference to military planning. The Canada-U.S. Committee on Joint Defense, set up following the recent discussions between the President and Prime Minister Diefenbaker at Ottawa,¹³ provides an effective forum for exchange of information on such military-related matters.

Policy Guidance

4. The scope of the activities of the Joint U.S.-Canada Civil Defense Committee should be broadened to facilitate the exchange of information, and joint planning, with respect to non-military defense activities having a close relation to civil defense.

Annex¹⁴

SECTION E. CANADIAN ACCESS TO NUCLEAR WEAPONS IN PEACETIME

Discussion

1. The United States and Canada, recognizing their mutual interest and interdependence in the defense of the North American Continent, have established integrated continental defense arrangements unprecedented in either country in peacetime for defense operations. From a military point of view, the early attainment of an operational nuclear delivery capability for Canadian continental defense forces would contribute significantly to these defense arrangements. To this end, U.S. and Canadian defense officials have discussed the provision to Canada of nuclear warheads for MB–1 rockets for manned interceptors, for antisubmarine weapons, and for the BOMARC air defense missile, although to date Canada has not requested through diplomatic channels any specific nuclear weapons systems.

2. a. It is anticipated that a formal Canadian request for one or more of the foregoing continental defense nuclear weapons systems, with the warheads under U.S. custody, will be received within the coming year. Prior to provision of any of these weapons to Canada, it will be desirable for Canada to have information about their nuclear warheads, such information to include that necessary to attach the warhead to the weapon vehicle, information necessary to assure the operability of the nuclear warhead, and information necessary for safety in the employment of the weapons. The release of such information is not possible under current agreements with Canada, and will require an additional agreement.¹⁵

b. Whether or not the Canadians themselves request actual custody of and authority to use nuclear warheads, such custody and authority will be required for optimum effectiveness if we are to assure an operationally-ready and fully effective continental defense posture. The evolving threat to continental security and the exposed geographic position of Canada with regard to this threat, together with the complexity of existing and future weapons systems, generate a requirement for reduced reaction time which can be met only if Canada has actual custody and authority to use the nuclear warheads in question. For example, if MB–1 rockets are provided, the Canadian forces should be allowed to carry the weapon aloft, in preparation for an attack, on the same basis that U.S. forces can carry such a weapon. If nuclear anti-submarine weapons are provided, the warhead should be aboard the Canadian vessel and subject to procedures for use identical with those for U.S. vessels. In the case of any fast reacting air defense missiles system, the utility of the weapon would be degraded if involved bilateral procedures delayed weapon launching. The requirement for reduced reaction time will become even more compelling when the Soviets achieve an operational ICBM or submarine-launched ballistic missile capability.

c. It is considered that the transfer to Canada of custody and the authority to use nuclear weapons should be in accordance with agreed procedures consistent with U.S. Presidential directives for the expenditure of nuclear weapons by U.S. forces.

3. Under the provisions of the Atomic Energy Act, the United States is precluded in peacetime from transferring custody of nuclear weapons to foreign countries, except by means of a Senate-approved bilateral treaty between the United States and the recipient nation or an international agreement approved by both houses of the Congress. Such a treaty or international agreement would place Canada in a “favored-nation” category and could, of course, have considerable political impact on our discussions with other NATO allies regarding the availability and use of nuclear weapons. On the other hand, our North American continental defense arrangements with Canada were established outside of the NATO structure; and the peculiarities of geography, the defense structure which we have established, the purely defensive role of the weapons under consideration, and the partnership of the United States and Canada in this defense undertaking, provide a reasonable and logical basis for according Canada a favored-nation status. On the Canadian side, there are understandable political considerations regarding U.S. retention of custody of nuclear components for Canadian-manned defense weapons. To the Canadians such an arrangement could carry an implication of distrust or a limitation on the partnership status envisioned under our continental defense arrangements.

4. It must be recognized that other NATO allies may advance similar justifications for equal treatment, and that Canada itself may not desire preferential treatment. In the past, Canada has taken the position (which the United States has opposed) that our continental defense arrangements should be regarded as coming under NATO and therefore should be integrated into the NATO military structure. Canada may reassert this position in connection with access to U.S. nuclear weapons. With regard to NATO, there is under way a U.S. study, based on paragraph 18 of NSC 5810/1, “Basic National Security Policy”,¹⁶ involving consideration of the long-term development of a NATO nuclear weapons authority. It is not now possible to forecast the conclusions of this study, but from a U.S. standpoint the problem of Canadian access in peacetime to nuclear weapons for North American continental defense can and should be treated as a bilateral matter. Authority to transfer nuclear weapons would require:

a. Recognizing the special status of Canada through appropriate amendment of the Atomic Energy Act,

b. Seeking bilateral arrangements, either by treaty or as may otherwise be permitted under the Yaw existing at the time, to provide for Canadian custody in peacetime of nuclear components for Canadian forces.

Policy Guidance

5. The United States should be prepared to make nuclear components readily available for Canadian-manned and operated defense weapons and weapons systems, under U.S. custody as required under existing U.S. law, as soon as Canadian forces are capable of employing nuclear weapons in the defense of the North American continent. To this end, a new bilateral agreement should be negotiated which would authorize immediate release to Canada of sufficient information on the nuclear weapons employed in North American defense to permit Canadian training and employment of these weapons in the continental defense system.

6. It is in the U.S. security interest to transfer to Canada at an appropriate time the custody of nuclear components for continental defense. To this end, necessary steps should be taken as soon as practicable to insure that the United States will be prepared to make such transfer, with the understanding that employment by Canada of U.S.-provided nuclear components will be for mutually agreed continental defense purposes under agreed procedures consistent with U.S. Presidential directives for the expenditure of nuclear weapons by U.S. forces. In no case should action be taken outside the Executive branch without prior knowledge that Canada desires such custody.¹⁷

7. Any bilateral arrangements between the United States and Canada regarding access to nuclear weapons for continental defense purposes should not prejudice either Canadian or U.S. participation in nuclear weapons arrangements made within the NATO framework.

0. Source: Department of State, S/S–NSC Files: Lot 63 D 351, NSC 5822 Series. Secret; Sections B and D are marked Confidential. As directed by the National Security Council on August 14 (see Document 291), the NSC Planning Board prepared a draft statement of policy on certain U.S. relations with Canada (NSC 5822), dated December 12. This draft was considered by the Council at its 392d meeting on December 23 at which time a revision in paragraph 12 was made, and the resulting statement of policy renumbered NSC 5822/1. The statement was approved by the President on December 30, and eventually rescinded on January 12, 1962. The memorandum of discussion by the NSC on December 23 is printed in vol. IV, pp. 587–590. A copy of NSC 5822 is in Department of State, S/S-NSC Files: Lot 63 D 351, NSC 5822 Series.

   NSC 5822/1 consists of a cover sheet, a note dated December 30 from the Executive Secretary of the NSC stating that it had been approved by the President, a table of contents, sections A-E, a chart of crude oil imports, and three appendices. Only sections A-E are printed here. Section A is also printed in vol. IV, pp. 581–584, along with other documentation on the impact on Canada of U.S. restrictions on oil imports.

1. The tables on page 8 only show U.S. oil imports, 1954–58. [Footnote in the source text. The table is not printed.]
2. See Foreign Relations, 1952–1954, vol. I, pp. 1054–1060.
3. NSC 97/6 was referred to the Director, ODM, by NSC Action No. 1554, May 1956. [Footnote in the source text.]
4. NSC 5822 had two alternatives for this paragraph. A subsequent proposal by the Joint Chiefs of Staff was considered by the NSC at its 392d meeting, revised slightly, and incorporated in the text printed here. The texts of all three alternatives for this paragraph appear in NSC 5822.
5. For texts of these agreements, dated May 5, June 13, and June 15, 1955, see TIAS 3218, 3452, and 3453.
6. For text of the aerial refueling facilities agreement, June 20, 1958, see TIAS 4051.
7. The BMEW negotiations were concluded in July 1959; for text of the agreement, see TIAS 4264.
8. An important factor in such cases, and one which has reduced our negotiating latitude, has been the shortness of the construction season in northern Canada. Also in these instances, the presence of qualified Canadian contractors on or near the sites justified the assumption that, had the bidding been open to international competition, Canadians would have submitted the lowest responsible bids. [Footnote in the source text.]
9. Not printed; for text of the Hyde Park Agreement, April 20, 1941, see Department of State Bulletin, April 26, 1941, pp. 494–495.
10. Not printed; for text of the Statement of Principles for Economic Cooperation, September 20, 1950, see ibid., November 6, 1950, p. 743.
11. Not printed.
12. See Document 292.
13. See Documents 281 ff.
14. Top Secret.
15. For text of this agreement, signed at Washington, May 22, 1959, see TIAS 4271.
16. NSC 5810/1, May 5, is scheduled for publication in volume III.
17. This sentence did not appear in NSC 5822.