Foreign Relations of the United States, 1952–1954, Western Europe and Canada, Volume VI, Part 2

611.42/5–953

No. 971
United States Minutes of the Second Meeting Between President Eisenhower and Prime Minister St. Laurent, The White House, May 8, 1953, 3 p.m.¹

secret
SLT MIN–2

Washington, May 8, 1953, 3 p.m.

Participants:

• U.S.

  • President Eisenhower
  • Secretary of State
  • Secretary of Defense
  • Secretary of Treasury
  • Asst. Secretary of State Merchant

• Canada

  • Canadian Prime Minister
  • Secretary of State for External Affairs Pearson
  • Canadian Ambassador Hume Wrong
  • Mr. J. W. Pickersgill, Secretary to the Canadian Cabinet

[Here follows a brief table of contents.]

At the outset of the meeting, Governor Sherman Adams brought in and the President showed to the Prime Minister a draft of the press release² to be issued that afternoon by the White House reporting the Cabinet decision that morning supporting U.S. participation in the construction of the International section of the St. Lawrence Seaway. This was briefly discussed and one or two verbal changes suggested by the Prime Minister were incorporated. Governor Adams thereupon left the meeting. The President commented that the Attorney General felt that opponents’ efforts to frustrate the development of power jointly by New York and Ontario would rest on a poor case on legal grounds.

The Prime Minister opened the discussion by stating that he was disturbed by threats of restrictive tendencies in trade on the part of the U.S. He referred to various actions relating to dairy products (including apparently increased strictness on the part of U.S. Government veterinarians in turning back higher numbers than in the past of dairy cattle for export to the U.S.) and said that whereas Canada had not so far been hurt badly, the signs seemed to him disturbing. He mentioned the resolution passed unanimously by the House of Commons asking him to make “further vigorous efforts” during his visit to bring about the removal of U.S. restrictions on Canadian agricultural products.

The President then described the situation with respect to butter, pointing out the heavy purchases forced on the U.S. Government by reason of high support levels which he described as “paying for our own fool straightjacket”.

The Prime Minister referred briefly to the fact that Canada also had support prices but at lower levels which served to ease seasonal fluctuations.

Secretary Pearson underlined the opening remarks of the Prime Minister, pointing out their general concern over the possible future development of U.S. trade policy. He emphasized the importance of this to Canada particularly with respect to base metals. He mentioned some support in Canada for retaliation by means of export duties on asbestos and nickel in the event U.S. import barriers were raised on lead and zinc.

Secretary Dulles interjected that the Administration hoped to defeat the Simpson Bill and extend for one year unchanged the Reciprocal Trade Agreements Act.³

The Prime Minister mentioned Canada’s hope that the production of base metals like defense production could be kept on an even keel.

The President said that there were impulses of nationalism directed against common sense all over the world and that all must cooperate and do their best in the interests of common sense.

Secretary Dulles described briefly the post-Korea rise in world prices with the resultant speculative expansion of marginal producers and the necessity of returning to normal prices and production.

Secretary Pearson noted that Canada had not regarded expansion in its base metal production as a speculation but as in the interests of the free world’s defense effort and in part, as a matter of fact, at the request of the U.S. Government.

Secretary Humphrey noted the past build-up of large stocks of some commodities by the U.K.

At this point Secretary Wilson expressed his conviction that we should move toward free trade between Canada and the U.S.

The President assured the Prime Minister that this general subject of liberalizing trade was constantly before the Cabinet and that its pursuit involved contesting the extremists at both ends of the scale.

The Prime Minister agreed and confessed to the necessity in Canada of taking certain actions which were not economically sensible such as the maintenance in production of certain gold mines which could not produce at a profit at the present price of gold but where the absence of housing facilities elsewhere made it necessary to keep the mines open. He then asked about oats and queried whether there might develop an embargo by the U.S. on the import of feed grains. On the general question of agricultural trade, the Prime Minister said he had recently noted with interest that Canada imported from the United States more agricultural goods than it exported to the United States.

When the President said that Secretary Benson should have been invited to be present, Ambassador Wrong assured him that Canadian officials were in close contact with the Department of Agriculture on all these problems.

At this point, Secretary Pearson threw out the suggestion that for handling this general area of potential difficulty, there might be merit in establishing a Joint Economic Board comparable to the Joint Defense Board. He thought the effective performance of the IJC during the forty years of its life, and that of the Defense Board, over a period of 12 years, pointed the wisdom of such an entity in the economic field. Such a board should be advisory, either government being empowered to refer matters for study and recommendation. It should not deal with tariff rates, per se. The President expressed interest in this suggestion and both Secretary Wilson and Secretary Humphrey indicated immediate reactions of definite interest.

The President then asked Secretary Dulles to take the lead in examining carefully the possible desirability of establishing a Joint Economic and Industrial Board paralleling the Joint Defense Board.

Secretary Wilson mentioned the possibility of eliminating tariff barriers with Canada completely on a product-by-product basis as examination indicated no serious damage would be done. When the President reminded him of the existence of the Most Favored Nation clauses in most of our commercial treaties, Mr. Wilson suggested with a smile the possibility of establishing a “Super-Favored Nation Clause” for Canada.

The President then remarked that the existence of our long common border required some sort of special recognition. There followed thereafter a discussion of the applicability of GATT especially in connection with its provision for the establishment of complete Customs Unions. The President again asked Secretary Dulles to take the lead in examining the possibility of establishing a Joint Board, including the identification of areas of difficulty such as the effect on immigration. [On subsequent examination, it was ascertained that the GATT also provides for free trade areas without requiring participants to maintain equal tariffs against third countries.]⁴

Secretary Wilson remarked that we might have almost a duty to set an example between our two countries for the Western Europeans whom we were urging to integrate economically more and more closely.

The President remarked that if this study revealed no hidden difficulties, he would support the idea.

At this point, the Prime Minister noted that we should be careful not to give the impression that Canada and the U.S. were contemplating creating a trade union which would be exclusive and keep others out because of the importance of maintaining cooperation in these matters on a world-wide scale. He cited the reaction of the U.S. in the past to imperial preference measures.

When Secretary Humphrey raised the question of possible effects on the Commonwealth relations, the Prime Minister said that these were not so much affected. It was primarily a question of the world as a whole that he was referring to.

Secretary Pearson at this point said that a few months ago, following the Commonwealth Economic Conference and their discussion of them at the time of Mr. Butler’s visit to the U.S., he had been hopeful that progress was being made on a broad front. Now he felt both Britain and Europe as a whole were becoming apprehensive and fearful that time was running out and that sufficiently rapid progress towards breaking down trade barriers was not possible.

Secretary Humphrey replied that the British proposals in general seemed a trifle premature and Secretary Dulles referred to the necessity of Britain placing in effect certain internal measures before convertibility could be successful. He said that encouraging progress was being made in this general area, reminding them that Mr. Douglas was in the U.K. at the present time as head of the U.S. Commission studying the problem of the sterling area.

Secretary Wilson referred to the underlying fear of unemployment which was instinctive in all peoples.

Secretary Dulles noted that fear of war from without is also a compelling force. He noted that from the Federalist we learn that the compelling force toward unity among the 13 colonies was fear of aggression by Spain, England or France. Similarly, the fear of aggression by the Soviet Union is serving to drive Western Europe closer and closer together. At this point, the Secretary of State excused himself from the meeting.

Copies of the draft communiqué were then passed to the participants and approved with minor changes.⁵

The Prime Minister handed the President’s [President his] memorandum⁶ on trade and commercial policy which the President directed be delivered to the Secretary of State with the request that the latter distribute it to other interested Cabinet members, including Secretaries Humphrey, Wilson, Weeks and Mr. Stassen. The Prime Minister also left the text of the House of Commons resolutions regarding imposts on Canadian agricultural exports.⁷

The Prime Minister spoke of tempting trade offers being made by the Russians to countries which were finding difficulties in developing markets or sources of supply in the free world. Trade liberalization was thus needed to help such countries resist the Communist bloc and make their full contribution to the defense of the free world. The President agreed that such countries had to make a living.

There then developed a discussion of the relationship of defense effort to economic capabilities, in which the President pointed out that this was a complicated and difficult problem but not beyond solution by the brains of men if there was sound leadership and a dedicated people. He pointed out that there are two inter-related periods in war, the first one being the aversion of disaster in the early phases of war and, the second, the building up of the necessary power for a counter-offensive leading to victory. The first phase required forces in being adequate to train the large body of reserves necessary in the second phase. Obviously, a balance must be struck between these two requirements, both as regards matériel and manpower.

Secretary Wilson reverted to the desirability of free trade between Canada and the U.S.

In closing the second and final meeting, the President and Prime Minister agreed that pressures which existed at all times for retrograde steps in the area of maintaining and liberalizing trade policies must be resisted and that it was a problem which in all countries required continuous effort.

1. Drafted by Merchant on May 13. The minutes of the first meeting, SLT MIN–1, which took place at 12:15 p.m. on May 7, was not declassified when this volume went to press.
2. For text of the “Special Committee’s Report on St. Lawrence Seaway Project,” released by the White House on May 8, see Department of State Bulletin, May 25, 1953, p. 753.
3. For information concerning the Simpson Bill, see footnote 4, Document 968.
4. Brackets in the source text.
5. For text of the approved draft, as released by the press on May 8 at the close of the meeting, see Department of State Bulletin, May 25, 1953, p. 752.
6. See footnote 2, supra.
7. Not further identified.