February 14, 1939 (18th Parliament, 4th Session)


William Lyon Mackenzie King (Prime Minister; Secretary of State for External Affairs; President of the Privy Council)



Let me now discuss some of the benefits that come from the present agreement, so far as the Canadian producer is concerned. The Canadian producer in every part of the dominion will share in the benefits resulting from the agreement. For example, in the maritime provinces, the concessions with respect to fish will be found of the greatest benefit. Here I must emphasize again the fact that all that I am now setting forth in the way of benefit is in addition to what has already been obtained under the agreement of 1935. The benefits of the latter agreement remain in toto. The benefits I am speaking of now will be added to those of the 1935 agreement when this agreement is passed. I have already mentioned the concessions on fish. The reductions of United States duties on potatoes will be particularly appreciated in New Brunswick, and the fox farmers of Prince Edward Island will gain from the concession on silver fox furs. The producers of Quebec will gain from the reductions in the duties on maple products, on salted codfish, cream, milk, hay, buckwheat, certain types of paper, salmon and lumber. The producers of Ontario will benefit from the reductions on lumber, cattle and calves, cheese, bacon and pork, barley, clover and grass seeds, fresh water fish, paper, nickel, ferro-alloys, leather, and various manufactures of wood. The farmers of the prairies will gain from the maximum reduction of fifty per cent in the United States duty on heavy cattle and the enlargement of the tariff quota on this type of cattle, as well as through the concessions on horses, swine and pork, poultry, feed wheat, barley, oats and rye, feeds of various kind, and fresh water fish. British Columbia will be particularly benefited by the concessions with respect to forest products but will also gain from the concessions on salmon, halibut, fresh cod, sperm oil, zinc, cadmium, firebrick and limestone. Let me speak of a further advantage which will come under this agreement. Any advantage that i3 gained by Britain, for example, in her treaty with the United States will accrue to Canada under the most favoured nation exchange arrangement, which is part of the agreement.
Hon. members opposite have sometimes taken exception to the part of the agreement relating to most favoured nation treatment being accorded other countries. That principle was agreed to by their party when they were negotiating with the United States. Let me 71492-58
read what appeared in the actual exchange of communications which formed the basis of all subsequent negotiations:
The mutual concession of tariff treatment as favourable as that accorded to any other foreign country;
Perhaps I had better read what precedes that. This is Mr. Herridge speaking on behalf of Mr. Bennett and his administration:
I am authorized to put forward the following outline as a suitable basis for the negotiation of a trade agreement.
And the second feature is this:
The mutual concession of tariff treatment as favourable as that accorded to any other foreign country; this means that Canada would extend to the United States its intermediate tariff, involving reductions from the present rates of duty on some 700 items, including both natural and manufactured products, together with a number of further reductions below the intermediate tariff rates through the extension to the United . States of concessions made by Canada in trade conventions with foreign countries.
In other words, the most favoured nation principle was to be embodied in any agreement the previous administration might have found it possible to make. In addition to the benefits which we receive under our own agreement, we receive other concessions under the Anglo-United States agreement, which are extended to us under the most favoured nation clause. The chief commodities on which we receive concessions in this indirect way are books, manufactures of artificial abrasives, various types of leathers, boots and shoes, tobacco pipes, dressed furs, kippered herrings, biscuits, jellies, jams and marmalades, ginger ale, amorphous graphite and pig iron.
Now let us take the benefits to different industries in the country. Agricultural products on which we receive direct concessions include live cattle, swine, pork and bacon, cream, milk and cheese, poultry and eggs, horses, honey, barley, oats, buckwheat and feed wheat, mill feeds, mixed feeds and screenings, blueberries, strawberries and other berries, apples and cider, clover and grass seeds, potatoes, turnips, hay, maple products and silver fox skins.
Fisheiy products of almost every kind are conceded admission to the United States markets on more favourable terms. The most important concessions are those received on fish of the cod family-cod, haddock, hake, pollock and cusk, but valuable concessions have also been received on salmon, halibut, swordfish, mackerel, herring, fresh water fish generally, sturgeon and shellfish.
Forestry products receive concessions on lumber, shingles and many other manu-

Canada-U.S. Trade Agreement

trade agreement of modern times, that between the United States and the United Kingdom. I do not stand here and make an unsupported claim for the party I represent that we helped make possible this agreement between Great Britain and the United States. The United Kingdom was the first to acknowledge the service rendered by Canada in that particular. The United States has done the same. During the course of the debate on the address I placed on Hansard a communication which I had received at Washington the day the trade agreements between Canada and the United States and the United Kingdom and the United States were signed. That communication thanked the Canadian government, in the name of the British government, for having made possible the agreement which was concluded by them at that time.
I want to emphasize the international significance of these agreements, because now we have to consider not merely the two agreements Canada has made with the United States, but the two agreements that are conspicuously before the world to-day, namely the agreement between Canada and the United States and the agreement between the United States and the United Kingdom. Those agreements are inseparable in the sense that neither could have been effected without the other. It is important to remember that it would not have been possible for us to have extended our own agreement beyond a certain time, except with the good will of the United States. Let it not be forgotten that the first agreement we made with the United States was for three years, subject to termination after that period by either party on six months' notice. Those three years were up on January 1 of this year. We also have a trade agreement with Great Britain, which expires next year. As far as those two agreements are concerned, notice in regard to one could have been given last year, and in regard to the other the agreement with Great Britain, notice of termination might be given this year, to become effective next year. I now ask: Where would this country be in the matter of its future trade if it had not sought to be accommodating when asked to cooperate and had not lent its good offices to those two great countries, who are our principal customers, and to whom we look, so far as trade is concerned, more than to all the other countries of the world combined? Where would we have been if we had not played the part which Canada, above all others, has an opportunity to play in this world to-day, namely that of interpreter, between those two great countries, and so cMr. Mackenzie King.]
far as possible a conciliator of their differences? I say one of the greatest achievements any government has ever had to its credit is that of having been able to play a part in bringing about a new situation in trade relations between such a great group of nations as Great Britain, the United States and Canada; and, as my hon. friend the Minister of Finance (Mr. Dunning) has just said to me, not only a leading part but a decisive one.
May I point out that before these negotiations took place the democratic countries of the old world were so concerned about the situation in Europe that England and France together asked the then premier of Belgium, Mr. Paul van Zeeland, if he would not undertake a commission to investigate and report on the possibility of persuading the great nations that for the good of the world in general they should seek to remove some of those restrictions on trade which were making for economic nationalism, an economic nationalism which many believed was bringing the world closer and closer to war. Mr. van Zeeland undertook that commission. It was an inquiry into the possibility of obtaining a general reduction of quotas and other obstacles to international trade. He was recently in Ottawa, where he spoke to a number of us with regard to these matters. At that time he said, as he has said publicly in the United States and elsewhere, that there had in the recent past been no contribution made to a solution of the problems of our day that he could think of that was comparable to that which had its outcome in these trade agreements between the United States, the United Kingdom and Canada. His report on international economic reconstruction, which was published by the Carnegie Endowment for International Peace, is quite lengthy. I will not take time to read more than one paragraph. It was written before the United Kingdom-United States agreement had been negotiated:
In the present state of affairs, the negotiation of bilateral commercial agreements, based on the most favoured nation clause, remains one of the most efficacious methods for reducing tariff barriers. ... No one would underestimate the effect which would be produced- either directly, in its reaction on _ the two national communities concerned, or indirectly, in its repercussion on the whole rvorld, by the conclusion, in a spirit of international collaboration, of a commercial agreement covering the wide range, between the two great Anglo-Saxon communities.
That was what Mr. van Zeeland reported as the result of his inquiries in different countries, that one could not overestimate the

Canadar-U.S. Trade Agreement
advantages to the whole world of an agreement of that character between those two great English-speaking communities could such be obtained. And what Mr. van Zeeland regarded as desirable is exactly what has now been done in an effort to produce a more satisfactory international situation. The Anglo-United States trade agreement could not have been concluded without the negotiation of the Canada-United States agreement and the acceptance by Canada of some modifications in the empire preferential system. Surely we can afford to view with pride a contribution, however slight, to so great an end!
May I now give, as coming with perhaps greater authority than words spoken by me personally at this moment, the expression to the world of the views of the governments concerned in these transactions, with regard to their international significance. On November 17, as hon. members will recall, the Canada-United States agreement and the United Kingdom-United States agreement were signed at Washington on the same day and at the same time. The representatives of the three countries were asked by the president of the United States to speak on that occasion and were thereby afforded an opportunity to indicate what in the opinion of these governments was the international significance of the agreements. If the house will pardon me I shall place first on the record a part of what I said on that occasion on behalf of the government of Canada, as expressing our conviction and what I believe is the conviction of the people of Canada with respect to the international significance of the agreements. I said:
On the earlier occasion-
Referring to the agreement of 1935-
[DOT]-I also expressed the view that the benefits of our agreement would not be confined to trade. They have not been so confined. It is no exaggeration, but the simple truth, to say that the relations between the United States and Canada have never been happier than in the three years that have elapsed since November, 1935.
To-day's ceremony, has, fortunately, an even broader significance than that of three years ago. We have also just witnessed the conclusion of a far reaching agreement between the United States and the United Kingdom. There will be in Canada genuine satisfaction that in facing the problems of to-day the two countries, with whose fortunes those of Canada are so closely linked have effectively strengthened the friendly relations which have long prevailed between them.
It must be increasingly apparent that the stability of the civilization we cherish depends more than ever on the friendly association of the great English speaking nations of the old world and the new.
That statement is unquestionably true, and it is a very significant statement.
We cannot but be impressed by the fact that the occasion of our coming together to-day has been, in part at least, determined by the willingness of the sister nations of the British Commonwealth to facilitate a trade agreement between the United Kingdom and the United States. Our satisfaction at the conclusion of these long and arduous negotiations is all the greater because the agreements which have been reached are in no sense exclusive. Indeed their effects will be to remove many obstacles from channels of world trade. Their benefits will extend far beyond the limits of the three countries immediately concerned.
We cannot too earnestly hope that they will provide to other countries an example of the mutual advantages which flow from the broadening of trade relations not only in the realm of material well-being, but in the wider sphere of human understanding and good will.
I wish now to give to the house, in regard to the international significance of the agreements as viewed by the United States, the words of Mr. Cordell Hull, Secretary of State for the United States. I believe it would be impossible to cite any person whose words are more deserving of careful thought and consideration at this time. Mr. Hull said:
The two documents are of historic significance. Not only do they provide an instrument for an expansion of valuable commerce between the countries concerned, but they constitute an expression of determination on the part of three of the world's largest commercial nations to maintain and strengthen a sound and healthy basis of international trade. The conclusion of the two agreements is a fortvard stride of surpassing importance in the direction of a firm establishment of non-discriminatory treat-ment_ as the foundation of international trade relations.
These agreements furnish concrete and powerful support for a future trend of world developments along the lines of increasing understanding and cooperation among nations; of peace built upon order under law; of expanding international trade based upon fair dealing; upon equality of commercial treatment; and upon stability of those business conditions which ar j necessary if private enterprise is to flourish and thus to enhance the economic prosperity of each nation. Through the conclusion of these agreements, our three nations have given a new vitality to the basic principles of a civilized world order, the acceptance and application of which are indispensible to economic well-being and social security within nations, to peaceful relations between nations, and, therefore, to the continued advancement and progress of mankind.
I wish now to quote the words of the British ambassador, speaking in the name of the British government:
I wish to join with the Secretary of State in the expression of deep satisfaction at the conclusion of these agreements. The agreement which we have just signed relates firstly to the trade between the United Kingdom and the United States of America. It also relates
Canada-U.S. Trade Agreement

to the trade of the United States with Newfoundland and the numerous territories which constitute the British colonial empire. We are glad that at this same moment the Dominion of Canada has signed a new trade agreement with the United States based on those principles which govern our own. And we gratefully acknowledge the contributions made by the dominions and India in order to facilitate the conclusion of our agreement.
As it is, the extent and variety of the trade covered are very great.
And then in conclusion:
On this sound and healthy basis trade will be facilitated, the prosnerity of our peoples increased, and the arts of peace encouraged. I share fully the sentiments expressed by the Secretary of State as to the promise for improvement in relations among nations which rows out of international negotiations of the ind which have been so happily concluded between our two countries.
May I supplement the words of the British ambassador by these words which appear in a cable which came to me as Prime Minister of Canada from the Secretary of State for Dominion Affairs in London, and which was received at Washington at the time of the signing of the agreements:
On occasion of to-day's signature United Kingdom-United States trade agreement I should like to express again to Canadian government cordial appreciation of their readiness to facilitate our agreement with the United States by consenting to such modifications of their rights under their existing trade agreement with the United Kingdom as were necessary to enable it to be concluded. It is our confident hope that agreement now signed together with complementary agreement between Canada and the United States which is being signed at same time will assist substantially in reducing barriers to trade and will thereby prove a real contribution to world appeasement.
In the opinion of this administration, we in Canada, because of our democratic and peaceful outlook upon world affairs and also because of our position as one of the world's largest traders with much to gain from the extension of world trade, were bound both ey our sentiments and by our economic interests, to join with the two larger Englishspeaking democracies in promoting a policy of Anglo-Saxon friendship and of international goodwill. A policy of national selfsufficiency is out of the question for Canada which is peculiarly in need of international trade because of its enormous production of primary commodities and its relatively small population. Thus we cannot, like some other countries, pursue a policy of producing all that we consume and consuming all that we produce. Our whole economy, the prosperity of our vast wheat areas, our mines and forests and fisheries, and our far-flung transportation systems, are based upon the continuance of international exchange of goods on a

great and growing scale. The restriction of international exchanges involves a declining standard of living, as the totalitarian nations have found to their cost. The increase of international exchange of goods involves a rising standard of living, not for ourselves alone, but for all peoples that are ready to join with us in removing the obstacles which at present obstruct the free course of international trade.
Canada, then, on both political and economic grounds, is committed to a policy of peace and goodwill, and of freer exchange with countries which will meet us half way. More especially are we committed to such a policy in dealing with the countries with which there can be no question of the disturbance of good political relations, particularly the countries included within the British empire, together with the United States. Nearly nine-tenths of all our international trade is already conducted with the British empire and the United States, and a considerable part of the remainder with the smaller democratic countries of Europe. Indeed, if it had not been for our empire and continental relationships, we should, as I have already said, have fared much worse than we actually did during the great depression.
So far as greater freedom of trade is concerned, we are always willing to add to these countries, other countries prepared to trade with us on a reciprocal basis, whether they be countries whose policies are guided by the same democratic ideas, such as France, the Scandinavian countries, Holland and Belgium, or countries with domestic policies differing from our own. We do not regret that such countries may derive some incidental benefit from the operation of the agreements recently concluded. We feel that if we take rather more of their products, they will take more of ours.
It is to be remembered also that the agreements command the full support of the other chief countries of the British commonwealth. In the old days it used to be claimed by some that in matters of trade Canada had a choice between the United Kingdom or the United States. Now we have chosen both. Our trade agreement with the United States has the full approval of the United Kingdom, and our preferential trade agreements with the United Kingdom and other empire countries have the full assent of the United States. We have made the best of both worlds, and have assisted the United Kingdom in securing freer access to the markets of the United States. Once again we have played the part of reconciling and interpreting the two great Englishspeaking nations to each other. The making of these agreements, especially when the world

Canada-UJS. Trade Agreement
situation is so precarious as it unfortunately is, is an achievement of superlative importance, which will have its repercussions throughout the world in the next generation. In the present, each of us sleeps more safely in his bed because of the rapprochement between the world's two greatest democracies, a rapprochement that could not have been effected without the assent and the cooperation of Canada. If this administration were to end to-morrow, it would have its honourable place in world history on this score alone. That is the broad fact of the present situation. Like Canning, we have done our indispensable part to call into existence a "new world to redress the balance of the old."
It has been truly said that economic insecurity and depression are major causes of internal disorders and of international friction and economic warfare that sometimes develop into military warfare. Such insecurity and depression are frequently caused by excessive trade obstacles that prevent citizens of one country from exchanging products with the citizens of other countries. Removing excessive trade barriers, and thus permitting a greater exchange of goods to contribute to economic prosperity and security, is clearly a means of avoiding some of the deep-rooted causes of military warfare.
The trade agreements concluded between Canada and the United States, and Great Britain and the United States constitute the one outstanding contribution of our times toward economic disarmament. As such, they have immeasurably helped to create a basic situation more favourable to peaceful relations between nations. Let us say in conclusion, the agreements are proof of the feasibility of working out fair and friendly adjustments in the economic field which lessen the friction of conflicting interests and remove the risks of international misunderstanding. They represent the attainment of an objective in substantially reduced barriers to trade, toward which the commercial policy of the present administration has been steadily directed. It is deeply gratifying to the government that in our efforts to ensure, over a longer period of time, the advantages of wider markets to producers, and the advantages to consumers secured in the trade agreement of 1935, we were able, in a still wider arena, to further not only the ends of commerce and trade but the all important ends of international goodwill. No more important contribution toward a new order of relations between nations has been made at this critical period in the affairs of the world.

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