FINANCIAL AGREEMENT WITH CANADA. (Hansard, 7 March 1946)

§ THE SECRETARY OF STATE FOR DOMINION AFFAIRS (VISCOUNT ADDISON)

My Lords, the discussions which have been proceeding in Ottawa during the past month between representatives of the Government of Canada and of the Government of the United Kingdom have now been concluded successfully. These discussions have been concerned with the request of the Government of the United Kingdom for a credit to enable the United Kingdom to purchase the foodstuffs and other supplies which she will require from Canada during the next few years and with the settlement of other financial issues between the two Governments arising from their joint effort in the war. The desire of both Governments has been to make constructive arrangements which would enable the United Kingdom to meet the serious problems which she has to face after the losses and destruction caused by the war.

An agreement, the text of which is being circulated in the Official Report, has been reached between the two Governments. Under the agreement the Government of Canada will provide the Government of the United Kingdom with a credit of 1,250 million dollars. This credit will carry interest at 2 per cent. from January 1st, 1951, and will be repayable over fifty years beginning at the end of 1951. As in the case of the United Kingdom-United States Financial Agreement there is an article providing for the waiver of interest payments in defined circumstances. The agreement also contains a provision that the interest-free loan granted to the United Kingdom in 1942 will be continued on the same basis as heretofore until January, 1951. Before that date the two Governments will 1216 discuss how they are to treat the service and repayment of any balance of the loan then outstanding.

The carrying out of another provision of the agreement will involve the cancellation of the indebtedness of the Government of the United Kingdom in respect of the Commonwealth Air Training Plan. The amount of this indebtedness is 425 million dollars. Finally, the two Governments have agreed to accord to each other both in regard to exchange controls and import restrictions treatment not less favourable than that provided for in any agreement which either of them has made with the Government of any other country.

The immediate purpose of the agreement is to enable the United Kingdom to overcome her temporary financial difficulties in purchasing from Canada. The agreement will also contribute to the steady development of trade between the two countries, the removal of trade barriers and the free use of currencies for international trade. These policies are in the vital interest of both countries and both Governments believe that by this agreement they have taken an essential step in the expansion of world trade on which the prosperity of their countries depends.

A supplementary agreement was also arranged for the settlement of all remaining claims which each Government has against the other arising out of the war effort of the two countries. Under this supplementary agreement the United Kingdom Government will make a payment to Canada of 150 million dollars and will cancel all its claims on the Canadian Government outstanding as at February 28, in return for which the Canadian Government will cancel all its outstanding claims on the United Kingdom not otherwise dealt with, including the cost of food and other supplies delivered by the Canadian Government to the United Kingdom between VJ Day and the end of February, 1946.

In conclusion I should like to express our cordial appreciation of the sympathetic and understanding approach to our mutual problems which the Canadian Government have shown in the course of these negotiations and to state my conviction that the agreement arrived at will be of great value in the common interest of our two countries.