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3.
B. CANADA
We have already raised the following points:-
a) Active encouragement by Canada of United Kingdom and sterling area imports, particularly as regards United Kingdom capital goods. These are somewhat general issues on which it is difficult to visualise further specific progress before September, when we expect to be talking to Canadian representa- tives not only in the tripartite conversations but subsequently at a meeting of the Anglo-Canadian Continuing Committee in Ottawa.
(76) Freer use of the Canadian Credit. The present assumption is that we shall draw $120 millions in 1949/50. That would leave a balance of $55 millions. The Canadian attitude is that, given their own general balance of payments position and the likely effect on them of our contemplated import cuts, they are unlikely to be able at the most to do more than confirm a willingness to allow us to draw $120 millions in 1949/50. It is doubtful if it would be wise to press this point any further before. September.
(c) Canadian stockpiling of certain strategic raw materials. Mr. Abbott promised to have this examined on his return to Ottawa, but he made it clear that available Canadian funds were extremely limited (about $8 millions in total) and that the prospects of the Canadian Government being able to ask for an increased vote were very slender. This, too, can best be pursued in September.
(a) Co-operation in avoiding any liability on the United Kingdom to repay Newfoundland's interest-free loan.
As a result of the financial arrangements made between Canada and Newfoundland, there is a real danger that Newfoundland may ask for repayment of the interest-free loan of approximately $8 millions. Ways and means of avoiding this unwelcome additional liability were discussed with Canadian officials, who promised to send us a considered reply after discussion with Ministers in Ottawa. They were not very hopeful and we may have to deal with the matter by accepting the liability to pay interest against an undertaking by Newfoundland not to call the loan for a given period of time.
(e) Easement of the arrangements for repayment of the 1942 interest-free loan. This loan is being repaid by the sale of United Kingdom/Canadian securities. The original sum of $700 millions has been reduced to about $300 millions. Current repayments have, however, been reduced to a negligible level by arrangements to offset against the sale of securities requirements for United Kingdom investment in Canada and for the purchase price of Canadair aircraft. For the moment the se commitments absorb practically the whole of the proceeds from the sale of securities. It is proposed to discuss the matter again in September.
(f) Co-operation in evolving a scheme designed to relieve the United Kingdom of the heavy drain of emigrant remittances to Canada. On our figures this liability is about $27 millions
The Canadian figures are a good deal lower and the
per annum.
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