February 19, 1962

EXTERNAL AFFAIRS

BERMUDA

PC

John George Diefenbaker (Prime Minister)

Progressive Conservative

Right Hon. J. G. Diefenbaker (Prime Minister):

Mr. Speaker, I wish to announce that a delegation of Canadian parliamentarians has been invited to attend an informal conference of congressional and parliamentary leaders of the United States, the United Kingdom and Canada to be held in Bermuda from the 20th to the 25th of this month. The chairman of the Canadian delegation will be the Minister of Finance (Mr. Fleming), who will be accompanied by the Minister of Mines and Technical Surveys (Mr. Flynn), the hon. member for Essex East (Mr. Martin), the hon. member for York West (Mr. Hamilton), and the hon. member for Peace River (Mr. Baldwin).

I am informed that the purpose of the conference will be to hold informal and confidential discussions on a number of major foreign policy issues, and in particular east-west relations including cessation of nuclear tests, disarmament and the problem of Berlin; organization of NATO and connected problems in Europe; economic co-operation, trade and financial problems of Europe, and common market and aid to developing countries and, fourth, commonwealth-United States relations.

This conference is the second such meeting, and I think the meeting together of representatives of the United Kingdom, the United States and Canada is most beneficial and helpful.

[Later:~\

On the orders of the day:

Topic:   EXTERNAL AFFAIRS
Subtopic:   BERMUDA
Sub-subtopic:   CONFERENCE OF U.S., U.K. AND CANADIAN PARLIAMENTARY REPRESENTATIVES
Permalink
NDP

Herbert Wilfred Herridge

New Democratic Party

Mr. H. W. Herridge (Kootenay West):

Mr. Speaker, I wish to address a question to the Prime Minister. The members of this united and forward looking group-

Topic:   EXTERNAL AFFAIRS
Subtopic:   BERMUDA
Sub-subtopic:   CONFERENCE OF U.S., U.K. AND CANADIAN PARLIAMENTARY REPRESENTATIVES
Permalink
?

Some hon. Members:

Oh, oh. _

Topic:   EXTERNAL AFFAIRS
Subtopic:   BERMUDA
Sub-subtopic:   CONFERENCE OF U.S., U.K. AND CANADIAN PARLIAMENTARY REPRESENTATIVES
Permalink
NDP

Herbert Wilfred Herridge

New Democratic Party

Mr. Herridge:

-were very interested in his announcement concerning the interparliamentary conference in Bermuda and trust it will serve some useful purpose. However, I should like the Prime Minister to explain

to the house why he did not follow the traditional and usual practice of naming members of all parties to this interparliamentary conference as part of the Canadian delegation, so that parliament can be completely and properly represented.

Topic:   EXTERNAL AFFAIRS
Subtopic:   BERMUDA
Sub-subtopic:   CONFERENCE OF U.S., U.K. AND CANADIAN PARLIAMENTARY REPRESENTATIVES
Permalink
PC

John George Diefenbaker (Prime Minister)

Progressive Conservative

Right Hon. J. G. Diefenbaker (Prime Minister):

Mr. Speaker, in so far as this particular type of delegation is concerned, the course the hon. gentleman suggests has not been followed in the past. In any event, far be it from me to inject anything into this day's proceedings that might be misunderstood, but I doubt whether agreement could have been secured.

Topic:   EXTERNAL AFFAIRS
Subtopic:   BERMUDA
Sub-subtopic:   CONFERENCE OF U.S., U.K. AND CANADIAN PARLIAMENTARY REPRESENTATIVES
Permalink

FINANCE

INTERNATIONAL MONETARY FUND


On the orders of the day:


LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Hon. L. B. Pearson (Leader of the Opposition):

Mr. Speaker, I should like to ask the Minister of Finance if he has any comment to make on an observation attributed by the Canadian Press to a spokesman of the international monetary fund to the effect that the fund cannot give up its objective of having an effective par value established, that is for the Canadian dollar, in accordance with the articles of agreement.

Hon. Donald M. Fleming (Minister of

Finance): Mr. Speaker, at the meeting of the executive board of the international monetary fund last Friday morning, no new undertakings or commitments were entered into on behalf of Canada.

In view of the way in which what has been involved in these discussions has been exaggerated, perhaps I should make a further explanation of just what was involved in these consultations.

This was a routine consultation under the terms of article 8 of the fund. There were previously consultations under article 14 involving countries which had not established convertibility, before they did so. When convertibility was restored, certain countries which had been under article 14, then moved under article 8 and were then in the same position as Canada. Canada had never been under article 14. The wish at that time was expressed for the continuation of such consultations because they had been found to be helpful in the past.

Inquiries of the Ministry

I may say, so far as consultations under article 8 are concerned, other countries have been parties to such consultations in the same way in which Canada was a party to the recent consultation. There was a team of experts from the fund here last autumn, and discussions at that time were fruitful. Of course I do not need to say they were very friendly indeed.

There is no difference in kind so far as Canada's relationship to the articles of the fund is concerned between what existed prior to June 20, 1961 and what has existed since. I mentioned the other day that an attempt had been made something over a decade ago, indeed two attempts, to hold the Canadian dollar in terms of a fixed relationship to the United States dollar, and that the government of the day had abandoned both those attempts because of pressures that did exist. The Canadian dollar then went to a premium in terms of the United States dollar, and that continued until last June. Since that time the Canadian dollar has been quoted at a discount in terms of the United States dollar. However, throughout this period the Canadian dollar has not been maintained at a firm, fixed relationship with the United States dollar.

Now, naturally, having regard to the terms of its articles, the fund holds out the relationship of currencies to the United States dollar as the ultimate goal. There is no question about that. But Canada has not been required to establish such a fixed relationship at this meeting, and no date has been set for further consultations on the subject. The fund recognized that Canada has been one of the fund's best supporters and that Canada has followed international policies that are in accord with the fundamental aims of the fund. It is recognized that the exchange fund of Canada has been operated, as I reported to the house on February 9, page 711 of Hansard, with a view to responding to and moderating market pressures. It has not driven the exchange rate in one direction or another. It has not operated aggressively. It has not been manipulated. It has not been operated in a manner to hurt the interests of other nations.

After eight months of operation under the budget policy announced on June 20, 1961, our holdings of foreign exchange in the fund are virtually unchanged. We have carried out a most successful operation with, I am sure, great benefit to the Canadian economy and without hurting the interests of other countries. The fund is aware of the balance of payments problem which the budget policy of June 20 was announced to meet. The fund is aware that Canada has enjoyed a remarkable economic recovery since that time; that its growth has kept pace with that of the

United States, and at a time when the economies of other countries have been moving sidewise rather than upward. The fund is also aware, Mr. Speaker, that the balance of payments problem to which I have referred is not new.

I simply add, Mr. Speaker, that it is one that we inherited in its fundamentals from our predecessors in office.

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Mr. Pearson:

I wish to put a supplementary question on the minister's somewhat long and involved reply to my first question. Is it not a fact that at this meeting the members of the fund indicated they were not satisfied with the exchange policy of the Canadian government, and that they have announced there are to be periodic consultations with the Canadian government on this matter?

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

I just said that no date had been set for further consultations. I have also said the fund has its ultimate goal, but the Canadian representatives, acting on behalf of the Canadian government, have not entered into any new undertaking or commitment. I have also stated the view of the government in that respect. However, we do not take a dogmatic view of the matter, as to what may be the ultimate optimum in that respect. We say nobody can establish what may be the ultimate optimum relationship at the present time, and I think all Canadians will realize that the beneficial policies that have been followed in that regard should be allowed to operate, and so long as they are-

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
PC

Daniel Roland Michener (Speaker of the House of Commons)

Progressive Conservative

Mr. Speaker:

Order. I think the minister has been given ample opportunity to explain. He is now entering into the realm of opinion as to effects, and therefore debate, and should he continue it will be necessary to allow a reply. We would then enter into a debate which would be improper at this stage. Has the Leader of the Opposition something to say?

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Mr. Pearson:

I would like to repeat my question. Is it a fact that announcements have been made in Washington that there are to be periodic consultations with the Canadian government on this matter?

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

I am not aware of any such announcements; and so far as the newspaper reports are concerned, I have seen three of them and they are quite at variance with each other, so I hope I will not be held responsible for those reports, or for at least one headline I have seen since in regard to it. By way of answering that particular headline I say that the Canadian government has entered into no new undertaking.

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
LIB

Paul Joseph James Martin

Liberal

Hon. Paul Marlin (Essex Easl):

As a supplementary question, based on the minister's statement that he has seen varying newspaper reports, will the minister admit there was one opinion expressed in all these reports, and that was that there was not general satisfaction with the policy Canada has pursued in this matter, notwithstanding the able presentation of the governor of the Bank of Canada?

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinlon):

I will say, I think for the third time now, that naturally having regard to its articles the fund wishes a fixed relationship to be maintained in respect to currencies as an ultimate goal, but as to the immediate situation the position is fully understood and fully explained. I am quite certain that subject to what I have said about the ultimate goal of the fund policy, the Canadian position is satisfactorily explained and understood. What more I can be expected to say on that I just do not know. The hon. member knows what the fund articles are, and he knows that if there has been a departure from the articles of the fund since last June, or since June, 1957, it has been the same departure in kind that he and his colleagues were responsible for in preceding years.

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
LIB

Lester Bowles Pearson (Leader of the Official Opposition)

Liberal

Mr. Pearson:

May I ask the minister, is it a fact that the executive committee of the fund have expressed the view that this ultimate goal should be achieved in a matter of months?

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink
PC

Donald Methuen Fleming (Minister of Finance and Receiver General)

Progressive Conservative

Mr. Fleming (Eglinton):

That is not my information, that it should be achieved in a matter of months. There was a discussion as to what might be reasonable in regard to the goal or what modification might be considered. It was a matter of general discussion and was not at all a matter of an indictment being levelled against Canada. I deplore the extent of exaggeration that has been created on this subject and, I regret to say, deliberately by the opposition.

Topic:   FINANCE
Subtopic:   INTERNATIONAL MONETARY FUND
Sub-subtopic:   STATEMENT ON MEETING OF EXECUTIVE BOARD
Permalink

February 19, 1962