451. Telegram From the Department of State to the Embassy in Canada0
1357. Assistant Secretary Johnson and BNA called in Canadian Chargé (accompanied by Schwarzmann, Hudon, Taylor) June 28 and made points summarized briefly below in representation re Canadian budget Memcon follows.1
US views had not been previously presented pending study and waning of internal political difficulties for GOC. However, discriminatory features of budget had come as real surprise. While Pearson had indicated at Hyannis Port some consideration would be given problem of investment we had no impression any measures contemplated so directly affecting US investment.
Reasons for US concern include (1) principle of national treatment which we observe with most advanced nations highly important and we presumed Canada would think it also important especially in context US-Canadian relations; (2) budget clearly discriminatory; (3) many US subsidiaries will be placed in most unfair position since prospect is for insufficient Canadian buyers to enable subsidiaries to qualify especially with relatively short deadline; (4) precedent and encouragement furnished for other but less developed countries to promote measures discriminatory against US and foreign investment generally; (5) unfortunate to erect new barriers between Canada & US in area where none previously extant.
Dept extremely unhappy re these budget proposals and hopes GOC in course forthcoming detailed consideration in Committee of House will take our points into full account in considering question of approval. While we recognize Canadian anxiety over foreign investment we hope there will be full recognition of advantages to Canada such investment and consideration other less objectionable ways of accomplishing general goal.
Chargé expressed appreciation for US understanding in not making immediate formal representations. He thought no Canadian party could ignore political difficulties associated with foreign investment because [Page 1210] of its preponderance and despite its advantages. He did not think there was any inconsistency between Pearson’s remarks at Hyannis Port2 and budget but perhaps slight difference of interpretation of remarks. He would report our views promptly to Ottawa.
- Source: Department of State, Central Files, Fn 15 Can. Confidential; Priority. Drafted by Carlson, cleared with Armstrong, and approved by Johnson.↩
- Not found. On June 20 the Department of State had told the Canadian Chargé that the United States was reserving its judgment on the new Canadian budget. On the following day the Chargé informed the Department of State that the parliamentary situation on the budget was very precarious and that Pearson had instructed him formally to convey his preference that the United States not make representations about it. (Telegram 1333, June 21; ibid., Pol Can-US)↩
- See Document 449.↩