November 6, 1945

LIB

Ian Alistair Mackenzie (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MACKENZIE:

There is no point of order.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

The acting Prime Minister asked Mr. Speaker to settle the point of order.

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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

Order. I did not decide on the point of order. In his remarks the hon. member for Muskoka-Ontario, if I have

well understood, asked for an explanation and I offered a suggestion. I did not give a ruling.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

I wish to address my remarks to the fact that it was suggested Your Honour should give a ruling. I am glad to learn you did not do so, because citation 108 of Beauchesne, second edition, is quite clear on the point:

The Speaker decides the questions of order only _ when they actually arise and not in anticipation.

I suggest that the Minister of Finance should not ask the Speaker for a ruling on the point at this time. If there is any doubt- and, like my colleague from Vancouver East, I do not think there is-all that is necessary is for the government to give an undertaking that it will not. object to a discussion of these estimates in committee. Many a time we have had that experience, with the government giving an undertaking that even though an item is closed it can be discussed on a later item.

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LIB

James Horace King (Speaker of the Senate)

Liberal

Mr. SPEAKER:

The hon. member is not speaking to a point of order; he is replying to the minister, and according to the rules he may not speak twice.

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LIB

James Allison Glen (Minister of Mines and Resources)

Liberal

Mr. GLEN:

If hon. members will look at the motion they will see what Your Honour referred to in making your statement. The resolution provides that the committee shall report to the house from time to time. Citation 547 of Beauchesne, third edition, reads:

Generally speaking, the proceedings of a select (special) committee are assimilated, like those of standing committee, to those of a committee oi the whole house.

In other words the rules that would apply in committee of the whole house are the rules which apply also in a select committee. Then citation 555 reads:

555. It is important that the motion for the appointment of the committee should state whether the committee shall report from time to time, for if it should report once without having been given such power, it will be defunct until revived. Special authorization should also be given to sending for persons, papers and records.

All of that has been done. Then citation 560:

566. When the report does not contain any resolutions, recommendations or other propositions for consideration, of the house, it does not appear that any further proceedings in reference to it as a report are necessary. Every session, select committees make reports of this description, containing a statement of facts, or of the evidence on the subject of inquiry; hut as they do not contain any proposition which can he agreed to by the house, they are simply printed for the information of the members.

Surplus War Assets

Then the next citation reads:

561. Concurrence in reports from select committees is, in non-controversial cases, moved when motions are called by the Speaker during routine business. If it be expedient, the house will appoint the consideration of a report for a future day. By a motion made for that purpose in the British house, the report of a committee presented during a previous session has been taken into consideration.

Then following on page 203:

When a motion is made for concurrence in a select committee report, it is competent for the house to adopt it, reject it, refer it back to the committee or decide that consideration of the report will take place "this day six months".

As I understand the hon. member for Muskoka-Ontario, he was doubtful that there would be a report by the committee oh any matters that would be brought before that committee. So far as discussion of a report that comes to the house is concerned, the rule is that the evidence that is taken before the committee is not before the house while the committee is sitting and is therefore not under discussion. But that does not deprive hon. members from discussing any report when it comes before the house. In my opinion the Speaker is taking the proper position by saying that he cannot decide on a future proceeding of the house. When this matter comes before the house, the house will have to decide.

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PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. BRACKEN:

In view of what the

Minister of Mines and Resources has just said, may we have the assurance of the leader of the government that no one will be precluded from discussing these matters in committee of the whole?

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LIB

James Allison Glen (Minister of Mines and Resources)

Liberal

Mr. GLEN:

I have already said that the

rules are there. The government should not give any such undertaking.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

It has done it many

times.

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PC

Donald Methuen Fleming

Progressive Conservative

Mr. D. M. FLEMING (Eglinton):

Mr. Speaker, I should like to ask the Acting Prime Minister (Mr. Usley) a question arising out of the remarks he made in introducing this resolution. He indicated that this committee when set up should confine its activities strictly to the field assigned to it, and not go into the field of public accounts, which is a matter for the public accounts committee. If I am correctly informed, the public accounts committee has not met for the last year or two. It may be that the other committee on war expenditures went a little further in order to determine certain things than it would have gone had the public accounts committee been sitting. Could we have some indication from the government as to whether it is the intention that the public accounts committee shall sit during the present

session? It has not been called together yet. The scope of the inquiry ought to be disclosed to hon. members.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

We are converting this debate into a discussion in committee, which is out of order. However, with the unanimous consent of the house I will endeavour to answer the question that has just been put to me. As I understand it, any member of the public accounts committee can have the public accounts committee called together at any time. If any member of the house wishes to move that something be referred to the public accounts committee, it is quite in order for him to do so. My recollection of the operations of the public accounts committee in times past is that there is a long-standing and well-established practice. I can remember occasions on which an opposition member rose in his place and made certain charges about wrong expenditures. The tradition and long practice is that when a member does that, he assumes a fairly heavy responsibility. It is considered to be his duty to press the matter in the public accounts committee. If he fails to make good his charges, it is perhaps not greatly to his discredit, but it is recognized as being an instance in which he has failed to make good a serious charge.

That is the course that has been followed in the past. It is not peculiarly the function of the government to organize or call together the public accounts committee. If matters are referred to the committee, or if any member of that committee wants the committee called together the committee can be convened.

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PC

George Russell Boucher

Progressive Conservative

Mr. G. RUSSELL BOUCHER (Carleton):

Mr. Speaker, like many others, I feel that we should not pass this resolution until we are clear as to what the position is. As the Minister of Finance has stated, in the past the war expenditures committee was charged primarily with investigations as a means of recommending economies. It was not charged with the responsibility, nor was it intended by the government, that they should examine individual items, or, as the minister termed it, go on fishing trips. As the resolution states, this committee is being formed for the purpose of effecting economies rather than of representing this house in the investigation of expenditures.

It is true enough that under the war appropriations we can discuss expenditures that are contemplated, and, to a limited degree, we can also discuss expenditures that have been made in the past. But there is no way in which the

Surplus War Assets

actual expenditures of war can. be investigated by a war expenditures committee or by this new committee that is to be set up.

It is said that discussion can take place when the committee reports back to the house. That is true enough if it reports back during this session. A select committee may report back two or three times, and according to the wording of this resolution this committee may report back, but the matter may never be opened for discussion in the house because we may be close to what will be the end of the session. At least we are close to the end of the current year. I can conceive of a situation in which this committee would not report to the house and no discussion could be had. In the meantime we would be precluded from going into actual expenditures.

There is another way in which investigation could be had, and that is by means of the public accounts committee. As the Minister of Finance has said, the way to have a matter discussed in the public accounts committee is for a member to stand up and make a charge or charges on his own honour and responsibility. The matter is then brought before the public accounts committee. That is not done very frequently; it is something not likely to be done. The result is that unless we can be certain that the setting up of this committee will permit the house to go into expenditures, I see no possibility of this house ever having a chance to discuss expenditures during this session.

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?

An hon. MEMBER:

Why appoint the

committee? .

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PC

George Russell Boucher

Progressive Conservative

Mr. BOUCHER:

My hon. friend asks,

"Why appoint the committee?" Apparently he was not listening to the Minister of Finance. The Minister of Finance said he wanted the committee to assist him or assist the government in arriving at economies, not to go on fishing trips. We have to face the issue that is before the house. The issue is whether in the house we shall be bound by the rules precluding discussion of actual expenditures if we set up this committee under this resolution. We are bound by the rules of the house and by the Speaker's interpretation of them. Unless I am badly mistaken, I cannot see any possibility of any expenditures being discussed by the members of this house if this resolution passes. I think we should consider this matter carefully before we get into, shall I say, a technical entanglement which will confuse the issue.

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PC

Howard Charles Green

Progressive Conservative

Mr. H. C. GREEN (Vancouver South):

Mr. Speaker, before this resolution carries I should like to make a suggestion to the Minister of Munitions and Supply (Mr. Howe).

I suggest that either later to-day or within the next day or two he give a statement on government policy with respect to the disposal of surplus war assets. The members will notice that this resolution for the first time gives the committee power "to examine the expenditures defrayed for other services directly connected with the war, including the disposal of surplus war assets." I should not be surprised if that subject became the main job of this committee, to consider the disposal of surplus war assets. It would be helpful if we could have from the government a general statement of policy on that subject.

Within the past ten days it has become very important in my province of British Columbia because of the sale of thirteen Fairmile boats. There has been some mention of their sale during the discussion of the war estimates. Boats were sold for $3,000 which cost at least $145,000 or $150,000, and some people say they cost up to $200,000. They were sold without any tenders being called, there were no competitive bids. Apparently the sale was arranged here in the east, not by the representatives of the Department of Munitions and Supply in British Columbia, and rightly or wrongly there is great dissatisfaction over that sale. It has been most unfortunate to have the question raised during a victory loan campaign. But there it is, and I think it is serious enough to call for a statement of policy from the government.

It would seem that government policy on the disposal of surplus war assets changes a bit from week to week; in any event we should know what the policy is with regard to calling for tenders, with regard to having sales by auction, with regard to selling direct to buyers rather than to dealers for resale by them to buyers, and with regard to priority to veterans who want to purchase some of these articles that are being disposed of; also as to how prices are set in such cases as the sale of these Fairmile boats.

I do suggest to the minister that it would be very helpful if he would make a statement of government policy on the disposal of these surplus war assets. If he does not do that now, it leaves the whole matter to the committee. The committee will not make a report to this house for a matter of weeks, and in the meantime government policy on this particular question is being discredited. I would ask the minister to let us know what he is prepared to do along the lines I suggest.

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LIB

Clarence Decatur Howe (Minister of Reconstruction; Minister of Munitions and Supply)

Liberal

Hon. C. D. HOWE (Minister of Munitions and Supply):

I have had a speech prepared for weeks.which I have been waiting to give to the house if we could ever reach the estimates of the Department of Reconstruction.

International Civil Aviation

I -was hopeful that we might reach them to-day or to-morrow, but from the length of time that has been taken in debating the appointing of this committee, which has sat for the last five years, the prospect of ever reaching my estimates seems hopeless. From present appearances it would look as if my hon. friend will have to wait until around Christmas time before I shall be given ah opportunity to make my statement. But whenever wh do reach that stage in the examination of the war appropriation, I shall be very glad to make a statement on government policy and answer any questions that hon. members may ask.

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PC

Howard Charles Green

Progressive Conservative

Mr. GREEN:

To-day the government has changed the order of business and the war appropriation may not come up again for "weeks.

Motion (Mr. Ilsley) agreed to.

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INTERNATIONAL CIVIL AVIATION

APPROVAL OF AGREEMENTS OF DECEMBER 7, 1944 AND FEBRUARY 10, 1945

LIB

Clarence Decatur Howe (Minister of Reconstruction; Minister of Munitions and Supply)

Liberal

Hon. C. D. HOWE (Minister of Munitions and Supply) moved:

That it is expedient that the houses of parliament do approve the interim agreement on international civil aviation signed by Canada on December 7, 1944, tabled on September 7, 1945, the convention on international civil aviation signed by Canada on December 7, 1944, taoled on September 7, 1945, and the international air services transit agreement signed by Canada on February 10, 1945, tabled on September 7, 1945; and that this house do approve the same.

He said: Mr. Speaker, I think I should begin, with an apology for the lengthy statement that I intend to make on this occasion. My reason is that there has been no discussion on international civil aviation policies in this house. The government has represented this country at a world conference at Chicago, and an international world assembly is sitting in Montreal at the present time, and so I think that a rather lengthy statement of Canada's place in international aviation is warranted. The resolution which I am presenting to the house asks for approval of three agreements which have been signed by the government and which were prepared at the international conference on civil aviation held in Chicago in the autumn of 1944.

Canadian Policy in Civil Aviation 1942-44. In order that the house may understand the circumstances which resulted in its preparation, and may comprehend the general pattern of aviation arrangements within which it fits, I propose to explain its background.

As hon. members know from various statements wdiich I have made to the. house, the

Canadian government has over recent years actively concerned itself with problems of external relations arising out of the development of international civil aviation, particularly in view of the rapid war-time developments in this field. A considerable time before these problems came to a head the government foresaw their importance and made preparations to meet them. In 1942 a direction was given to officials of the public service to devote special attention to this subject. In April, 1943, the Prime Minister (Mr. Mackenzie King) presented to parliament a statement of the broad lines of policy which the government proposed to follow in respect of civil aviation both in the domestic and international field.

On March 17, 1944, I presented to parliament a lengthy report upon our policy with regard to the development of civil aviation which carried several steps farther the outline given by the Prime Minister in the previous year. At that time I explained that the government considered that the subject of international aviation was of paramount importance because of its direct relationship with strategic military questions, because of its enormous potential importance in the bridging of time and distance and because the pre-war years had demonstrated that it could all too easily become a subject of serious international friction. I wish to quote to you a few sentences that I used at that time, since they represented', and still represent the basis of our approach to questions of international aviation. Speaking of the pre-war years I said:

Some countries refused to permit air lines to cross the air space above their territory, necessitating costly detours. Others refused landing rights, as well as transit rights. The necessity for hard and persistent bilateral bargaining resulted, especialy in Europe, in the establishment of so many competing national services that air transport became highly uneconomic, and lines were heavily subsidized at the expense of national taxpayers.

Behind much of this friction, lay considerations of national prestige, but more especially of national security. Civil air transport fleets and civil aircraft industries represent a war potential, a reserve both of personnel and of industrial capacity which is all-important in time of war. The truth of this has been obvious in the present conflict. The emphasis in the pre-war period upon security aspects of civil air transport was therefore natural and goes far to explain the failure of nations at that time to agree upon a method of effective international control of international air services. Because of the rapid development of aviation since the outbreak of war the international rivalries which would develop in the future after the conclusion of hostilities would be even sharper than those of the past, unless softie improvement is effected.

In order to meet this situation. I tabled a draft international convention prepared by

International Civil Aviation

officials of the government and1 approved by the government as a suitable basis for approach to questions of international aviation. It was to pur credit that at that time in the spring of 1944 the government of Canada was well ahead of other interested countries, in clarifying the lines along which we believed international cooperation in air matters should be sought and in setting down detailed proposals to accomplish this objective.

Throughout this period we were in close and constant contact with other governments, particularly the United Kingdom and United States. We discussed our proposals with representatives of these other governments; and while our fundamental approach was in no way changed as a result of those discussions, useful suggestions and new ideas emerged which enabled us to add to and improve our proposals.

During that same year, 1944, the war rapidly took a turn for the better and it became apparent that before many months would pass the establishment of regular commercial international air services would become possible. We took the view that the first step should be discussion between the countries particularly interested; otherwise we feared all possibilities of improved international cooperation might be lost and we might return to the pre-war situation of hard bilateral bargaining, inequality and restrictive practices. We found, happily, that the United Kingdom and United States held like views and1, in consequence, the United States government invited the united nations, together with associated and neutral states to attend a conference in Chicago on international civil aviation starting November 1, 1944.

Prior to this conference, and again immediately following, it, commonwealth discussions on air transport took place in Montreal, but, as I have already reported on these, I do not think it necessary to repeat my earlier statements at this time.

The Chicago conference. At Chicago I pressed the Canadian case for international cooperation, and for an international system in civil aviation which would, on the one hand, remove restrictions from the development of international services and provide greater freedom, and, on the [DOT] other hand, maintain a system of regulation based on agreed rules which would prevent misuse of air services. I presented to the Chicago conference a revised version of the Canadian draft convention, as the type of agreement which, in our opinion, would best promote the sound development of international air services. Our proposals were the most detailed,

and carefully prepared, plan submitted to the conference, and we took some pride in the fact that they were adopted as the basis for discussion in the main committees which were working on the preparation of a permanent international aviation convention.

Statements have been made on earlier occasions regarding the role the Canadian delegation played at Chicago, but I seriously doubt whether, at any time, members of this house have fully realized how important that role was. By virtue of our own acknowledged standing and experience in the field of aviation, by virtue of our careful preparation for the conference, by virtue of the ability of those persons who represented us in Chicago, Canada found herself in a foremost position, and was accorded without question the position of one of the great powers at the conference. Nor did we fail to justify this position, for the efforts of our representatives had much to do with the success of the conference and upon more than one occasion brought agreement out of apparent discord between other major powers.

The agreements prepared at Chicago were all tabled and made available to members of ' this house by the Prime Minister (Mr. Mackenzie King) on September 7, 1945, and may also be found in the 1944 treaty series of the Department of External Affairs. No. 36. The five main documents were: the final act; the interim agreement on international civil aviation, with which we are concerned to-day; the convention on international civil aviation; the international air services transit agreement, and the international air transport agreement.

I may say that Canada signed the final act, the interim agreement, the convention, and the international air services transit agreement. Canada did not sign the international air transport agreement.

The Final Act. The final act proper is composed of a series of general resolutions accepted by the conference. The most important of these resolutions sets up a standard form of agreement to be used by nations negotiating bilateral aviation agreements. These standard clauses are intended to provide for reasonable equality in the operation of air services, and to assure a fair chance to all nations desiring to operate air services. Signatory states have undertaken to refrain from including in aviation agreements specific provisions which grant exclusive rights to any other state or airline, and have undertaken not to make agreements discriminating against the airlines of any state. This can do much to

International Civil Aviation

remove the closed systems and preferential agreements which hampered the prewar development of international air services.

Another resolution of the final act refers certain unfinished business of the Chicago conference to the provisional international civil aviation organization, established under the interim agreement. Of this I shall have more to say later.

The Convention on International Civil Aviation. The permanent convention is the most substantial of the agreements prepared at Chicago. We found in the conference general agreement that some international aviation organization must be established. Pre-war machinery in this field was not comprehensive enough in its membership or its functions.

The convention, which in parts bears a striking resemblance to the Canadian draft convention is designed to provide for a satisfactory permanent organization. The general objectives in the development of international aviation, and the rules of the game to be pursued by each nation are, broadly speaking, laid down in the convention, and the permanent organization for which it provides is to watch over the growth of air services in order to keep it within the approved framework.

The first part of the convention deals with technical matters of air navigation and covers in comprehensive fashion all the technical and operational points necessary to the regular and safe functioning of international air services. I need refer to these only briefly:

Chapter 2 provides for flight over the territory of contracting states including such matters as scheduled and non-scheduled flights, reservation of cabotage, prohibited areas and rules of the air, entry and clearance regulations and landing fees. No discrimination is to be made in the matter of fees between national aircraft and those of another nation.

Subsequent chapters cover nationality and registration of aircraft, customs and immigration procedures, investigation of accidents, aircraft and equipment, air worthiness and licensing of personnel.

Chapter 6 which is of considerable importance offers the foundation for certain continuing work by the international organization which is to be established under the convention. In all these fields of air navigation which have been covered in general fashion in the earlier chapters, specific technical annexes elaborating in full detail a system of international standards and recommended practices are to be prepared. Members of the organization are expected to observe the

international standards established in these annexes and if unable to do so, to notify the organization regarding their difficulties.

Preparation of these annexes was begun at Chicago and is now being carried forward under the auspices of the provisional international civil aviation organization in Montreal. Canadian experts and technicians have played and continue to play a very substantial part in their preparation.

The convention, having dealt with air navigation, then goes on in Part Two to provide for the establishment of an international civil aviation organization to be composed of an assembly and a council. The permanent seat of this organization is to be selected by the provisional organization, at present functioning in Montreal, and it is expected that the provisional organization itself will in due course merge into the permanent organization.

The assembly is to meet at least annually and all members are to be represented in it with equal voting powers. Decisions are to be by majority vote. The assembly is to take action on the reports of the council, to approve the budget of the organization and review its expenditures, and may delegate powers and authority to the council, enter into arrangements with other international bodies and deal with any matter not assigned to the council.

The council, which is the working executive of the organization, is to be composed of 21 member states elected by the assembly every three years. It is expected to be in almost continuous session. In electing council members adequate representation is to be given to the states of chief importance in air transport, to states making the greatest contribution to provision of facilities for international aviation and to main geographical areas of the world.

Decisions of the council are to be by majority vote and no member of the council may vote in the consideration by the council of a dispute to which it is a party. It is also provided that any member state not on the council may participate without voting in discussion by the council or its committees of subjects especially affecting the interests of that member state. These features are an important protection to the position and rights of all intermediate and lesser nations, through their provision for fair representation and fair treatment.

The council is to carry out the directions of the assembly, collect and publish information regarding all international aviation matters, report on infractions of the convention and generally consider any matter relating to the convention. It may create subordinate commissions, conduct research into

International Civil Aviation

all matters of air transport and air navigation, study any matters affecting air navigation and air transportation, and investigate and report upon any situation presenting obstacles to the development of international aviation.

The council is to establish an air navigation commission composed of twelve members which is to concern itself primarily with that section of the convention dealing with air navigation and with the technical annexes and all matters related thereto.

The council is also to appoint and define the duties of an air transport committee chosen from its own members. The duties of the committee have deliberately not been defined in this convention because it is hoped that as a result of the work and experience of the provisional organization in Montreal some of the gaps which were left in the convention at Chicago may be filled by the time the air transport committee is established. Accordingly it appeared desirable to leave definition of its duties to the council itself at that time.

The council is also to prepare and submit the annual budget and annual statements of accounts. The assembly may suspend the voting power of any state failing to discharge its financial obligations to the organization.

As in the Canadian draft convention, stress is laid in the Chicago convention upon the maintenance of international peace, both in the preamble and through the provision that the organization may with respect to air matters affecting world security enter into appropriate arrangements with the United Nations organization and where necessary with other international bodies as well. Even though the San Francisco meeting had not taken place when we met in Chicago we were determined that full recognition should be given to the necessity for subordinating the interests of international aviation to those of the maintenance of world peace.

The concluding part of the convention deals with matters of international air transport and it provides for the filing of full reports on all air operations, air agreements and related matters, with the council. It also specifies the right of each member state to designate in its own territory the routes to be followed and the bases to be used by international air services.

Special provision is made whereby the council of the organization may intervene to assist in the provision and maintenance of air navigation facilities where it proves impossible for a state to do this itself. The chapter (15) covering these matters is especially designed to meet the position of small states, which because of geographical location may be of importance in international aviation, but which

are not in a position to meet the heavy expenditures involved in provision of needed aviation facilities. The sovereignty of the state concerned is protected while at the same time the financing of the necessary developments through the international organization with the assistance of the states whose air lines are chiefly involved may take place.

Member states also agree to accept the convention as abrogating all obligations and understandings between them which are inconsistent with its terms and undertake not to enter into new agreements which would be inconsistent with it.

Perhaps one of the strongest features in the convention is the provision for compulsory settlement of disputes, and the penalty for states found in default. In any case of dispute or disagreement between states arising out of the convention, procedure is provided for settlement either through the council, the permanent court of international justice or a special tribunal and members undertake to be bound by the decision reached. If any member breaks this agreement other members undertake not to allow the airlines of the state in default to operate over their territory.

The convention is to come into force when it has been ratified by twenty-six states. It has been signed by forty-seven states.

It was our thought that the permanent convention should go even further and should provide for freedoms of the air, on the one hand, and for a system of regulation to prevent development from following dangerous paths, on the other hand. We contended that if nations were to avoid the restrictive bargaining of the pre-war period, by granting the freedoms of the air to other nations in a multilateral agreement, (that is, the right to cross foreign territory, to land and to pick up traffic), then misuse of these freedoms must be prevented by some adequate rules of the game which would provide a fair opportunity for all, and prevent unfair practices. To some extent this has been done in the convention, particularly in provisions for the settlement of disputes. We did not, however, manage to agree upon the principles that should apply in respect of settlement of rates, and allocations of and changes in services. The differences which existed, particularly between the United States and United Kingdom, and which were not bridged at that time, have been referred to the interim organization for further examination with a view to settlement.

Problems not settled in Chicago. Let me say, however, that it is a great mistake to assume that impassable gulfs existed at Chicago, and that the conference could be dwiHed

International Civil Aviation

into those nations who favoured strict regulation and those who preferred unhampered freedoms of development, with the two groups at opposite poles. Reading some of the comment after the conference, I have feared that the impression might be created in the United States that those who wanted regulation wished to introduce a harsh system of control which would hamper any reasonable development; and that, on the other hand, other nations, including the United Kingdom, would be led to believe that those who were inclined to minimize regulation were concerned only with their own selfish interest at the cost of driving smaller and less well-equipped nations out of the field of air operations. Any impression of this sort is mistaken. Virtually all countries at Chicago had the same objectives; and while the approach to these objectives may have been from different backgrounds, complete agreement was achieved on a substantial number of points, and on those matters which were not finally settled the difference of opinion at the conclusion of the conference was relatively slight, particularly in comparison with the progress achieved.

I propose to review briefly the attempts at Chicago to deal with rates, allocation of services and freedom of the air.

In the first instance the United States, the United Kingdom and Canada sought a formula which could apply to these matters. Canada suggested that rates should be calculated on each service in relation to cost of operation, and in relation to speed and type of accommodation provided. The costs of the most economical operator on the route were to be the standard accepted for calculation. In following these principles the operators themselves were in the first instance to decide upon suitable rates which would then be subject, if necessary, to review by the international organization. This -approach seemed generally acceptable.

On the question of regulation of services, we tried to find a formula to govern both initial allocations and later modifications. Despite various differences in the course of discussion, at the end there was only one relatively small point of difference, but It proved impossible to settle this point.

Generally we agreed that any country should have the right to operate on any international route terminating in its territory a minimum service of one round trip a week. This would in the first instance provide fair opportunity for all. Beyond this minimum right, it seemed appropriate that further services should be

adjusted in accordance with the amount of traffic on the route terminating or originating in the country operating the service.

When it came to the question of changes in existing services, we put forward a principle which became known as the "escalator clause". This proposed that any line which proved its efficiency by increasing the amount of traffic it carried should be rewarded by the right to increase its services; nations losing traffic below a certain proportion should be expected to reduce services. While this general approach also seemed satisfactory difficulty arose over application of the formula to fifth freedom traffic.

Fifth freedom traffic is the so-called intermediary traffic on any given route; third and fourth freedom traffic is the originating and terminating traffic. In other words on a route between Canada and France by way of Newfoundland, Ireland and England any traffic starting from Canada and going to any place on the route or any traffic on the return journey coming to Canada, no matter where it came from would come under the third and fourth freedoms. Any other traffic on the route, that is, between Newfoundland and Ireland, between the United Kingdom or France, between Ireland and the United Kingdom or France or between the United Kingdom or France is intermediary or fifth freedom traffic.

The United Kingdom argument was that fifth freedom traffic should not be considered in estimating the right of any nation to increase its services. The reward for efficiency should 'be Ibased only on traffic starting from or coming to the country of origin of the service; otherwise the large and powerful airlines of major nations would encroach upon the lesser local traffic market and, by poaching on remote sections of a route, would be able to increase their services until all reasonable chances of development for smaller local operations had been killed1.

The opposing case to this presented by the United Stages, was that experience had already demonstrated on any long operation that fifth freedom traffic made tha difference between reasonable economic operation and operation at a loss; no nation should be expected to base development of its air services solely on traffic from its own territory. This argument was soundly based in the logic and experience of lengthy operations.

Various attempts to bridge this gap were made and at the end the only difference that existed was whether the escalator clause should apply to all traffic, including fifth freedom traffic or whether it should apply primarily

International Civil Aviation

to third and fourth freedom traffic with however a special committee of the international organization given discretion to take fifth freedom traffic into' consideration in any given case.

This was a small difference, but the weariness arising out of a protracted and exhausting period of meetings, at a time when weather and immediate surroundings were apt to add to the general restlessness, as well as other * incidental difficulties, resulted in a cessation of attempts to bridge the gap. Instead the provisional international civil aviation organization has been directed to pursue study of the principles to be followed in establishing rates and services. I believe they will be successful; the necessity for a set of rules will become more and more apparent as development of international air services takes place, and the development itself should provide, out of experience, some indication of the desirable pattern of rules.

With regard to the freedoms of the air, we felt that since arrangements for regulation, which were in effect general rules of the game to be observed by each nation, were not to be inserted in the convention it would be unwise to insert the freedoms since there would be no safeguard against their misuse, even though without them arrangements for international air services would involve a great deal more bilateral negotiation than would otherwise be the case.

The United States however suggested that those nations which wished to accept the freedoms might be given the opportunity to do so in separate documents, pending further discussion of the method by which arrangements could be made to insert them into the permanent convention. Accordingly the other two agreements which I mentioned earlier were prepared at Chicago, namely the international air services transit agreement, commonly known as the two freedoms agreement and the international air transport agreement, commonly known as the five freedoms agreement.

The Two Freedoms Agreement. The transit agreement, which has been signed by Canada, provides for a multilateral granting of the first two freedoms of the air. These two freedoms cover the right to fly across and to land in the territory of other nations, but do not include the right to pick up or set down any traffic. Canada agreed that, if these two freedoms could be removed from the realm of bilateral negotiation, a substantial contribution to the development of international air services would be made. Accordingly the government has accepted the two freedoms agreement. The

airlines of other countries which have accepted the agreement may now fly across or land in Canadian territory while Canadian services in return may fly across or land in the territory of these other states. Designated routes and airports are of course to be used in each case. As a matter of fact, the first two countries to bring these two freedoms into effect between each other were Canada and the United States, and the first use of the two freedoms was when Trans-Canada Airlines some months ago began to fly across American territory on the transcontinental route between Winnipeg and Toronto on occasions when the weather in the Canadian territory north of the great lakes did not permit use of the Canadian route. Forty-five nations have signed the air transit agreement and eighteen nations have accepted it.

Topic:   INTERNATIONAL CIVIL AVIATION
Subtopic:   APPROVAL OF AGREEMENTS OF DECEMBER 7, 1944 AND FEBRUARY 10, 1945
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November 6, 1945