§ Mr. Albu
asked the Chancellor of the Exchequer if he can report the present position with regard to the interest-free loan made by the Government of Canada to the Government of the United Kingdom in 1942, and in particular the outcome of the discussions into which the two Governments agreed to enter before 1st January, 1951, under Article 6 of the Financial Agreement of 6th March, 1946, Command Paper No. 6904.
§ Mr. Gaitskell
As a result of discussions between the two Governments it has now been agreed, subject to necessary confirmatory legislation in the Canadian Parliament, that the interest-free provision and the other arrangements with respect to the Loan shall continue as at present until January 1, 1954. The two Governments have agreed to enter into discussions before that date with,respect to the question of interest on, and the terms of repayment of, the balance of the Loan then outstanding.
Under the arrangements which are being continued up to the end of 1953, the dollars accruing from the sale by United Kingdom residents of Canadian market securities, or from redemption, will be 215W used by us in repayment of the Loan, but the Canadian Government will allow us to set off against the amounts repayable in this way the cost of new direct investments in Canada by United Kingdom residents. For this purpose, new direct investment is taken to mean the extension of an existing productive enterprise or the establishment of a new productive enterprise in Canada.
The arrangements, therefore, do not prevent new investments in Canada which, so far as resources permit, are allowed by the Treasury where they are shown to be advantageous in relation to our dollar position and in the interests of both countries. Unfortunately, the arrangements do prevent the switching of Canadian securities held by United Kingdom residents. The Canadian Government did not feel able to agree to any modification of this one aspect of arrangements which on the whole represent very generous treatment for which we are indeed grateful in our continuing dollar difficulties.