States. In an article appearing in October on U. S.-Canadian rela – tions, Canadian Secretary of State for External Affairs Mitchell Sharp developed the theme of '. . living distinct from, but in harmony with. . . the United States, and proposed a policy for Canada which would reduce the 'continental pull' from the United States and emphasize Canada's independence. Sharp envisaged 'not a drastic change' in the bilateral relationship nor an unrealistic dismissal of 'some measure of interdependence in the world,' but, rather, adoption of a policy objective which 'would be, over time, to lessen the vulnerability of the Canadian economy to external factors, including, in particular, the impact of the United States and, in the process, to strengthen our capacity to advance basic Canadian goals and develop a more confident sense of national identity.' He urged the creation of an economy better geared to compete at home and to export to foreign markets, a strategy which 'may have to entail a somewhat greater measure of government involvement. At the same time, he stated that 'there is no basic change envisaged in Canada's multilateral trade policy.' Finally, the article advocated 'a relative decline in our dependence on the United States,' particularly in the economic field, and noted that such a policy was 'not incompatible with the view, advanced by President Nixon in his address in the House of Commons, that "no self-respecting nation can or should accept the proposition that it should always be economically dependent upon any other nation. "On the U.S. side, the article and its objectives were recognized as a thoughtful articulation of Canada's understandable concern over maintaining and enhancing its own 'national profile. ' Still, the outline of an economic strategy involving increased governmental intervention to promote export-oriented industries was a matter of concern to the United States, which is seeking to correct its serious and continuing trade and payments deficits, both global and with Canada, by means that will facilitate normal trade flows and adjustments. Throughout 1972, bilateral trade and economic problems persisted, although in many other areas, such as defense, preparations for the Conference on Security and Cooperation in Europe (CSCE) and mutual and balanced force reductions (MBFR) meetings, environmental protection, conservation and fisheries, narcotics control, and action against air piracy and terrorism, the year produced a number of bilateral and multilateral achievements reflecting a marked congruence of interests and close cooperation. * * * * "Economic and Trade Issues "Despite the emergence of a new, more realistic approach to cross-border issues by Washington and Ottawa, concern continued to be expressed in some quarters, including the U. S. Congress, over persistent economic and trade problems in relations between the two countries. Both governments sought to deal with difficult issues arising from the largest scale mutual economic involvement of any two countries in the world. The Canadian Government, for example, completed an extensive study of foreign ownership in the Canadian economy and in May proposed legislation for a new governmental screening process for foreign direct investment transactions involving 'takeovers' of Canadian firms. Canadian authorities also sought to develop an industrial strategy to deal with a rapidly expanding labor force and regional economic disparities. Because of the large role which the U. S. market has played in the development of the Canadian economy, aspects of these essentially, domestic policies can have spillover effects upon the United States--just as ours can upon the Canadian economy. "The U.S. Government, which had taken decisive steps to improve the management of its domestic economy and to induce restoration of its external balance, subjected our trade and financial arrangements with Canada to special scrutiny. During the winter of 1971-72 an effort was made to resolve some of the irritants which had arisen in arrangements affecting trade between the two countries. However, it did not prove possible to work out settlements of these issues within the same time frame --February 1972--which brought resolution of some of our short-term trade problems with Japan and the European Community. "Minister Sharp's article on U.S.-Canadian relations, cited above, quoted the assurance of President Nixon to the Canadian Parliament that 'the only basis for a sound and healthy relationship between our two proud peoples is to find a pattern of economic interaction which is beneficial to both our countries--and which respects Canada's right to chart its own economic course.' There are reasons to hope that, as the United States and Canada seek to work out their bilateral economic problems, the process will be facilitated by the prospects for major multilateral economic negotiations. The United States will look to Canada to play a role in these important proceedings commensurate with Canada's strong position in world trade and finance and its growing stature as an industrial nation. "Bilateral Environmental Cooperation "Bilateral cooperation between the two countries was particularly close in the field of environmental protection. In addition to the landmark Great Lakes Water Quality Agreement, the implementa tion of which is to be monitored by the U.S.-Canadian International Joint Commission (IJC), the United States and Canada agreed during 1972 to establish a joint planning committee to study the reduction of pollution in the St. John River on the Maine-New Brunswick border. The committee's recommendations are to be reviewed by the IJC. Also during the year, the IJC reported its findings on air pollution in the Detroit-Windsor, Port Huron-Sarnia areas of Michigan and Ontario. A joint working group was established to study the Commission's report and recommend remedial action. "The U.S. decision to permit construction of a trans-Alaska oil pipeline, which has been challenged in the courts, caused concern in Canada, particularly in British Columbia. The prospect of supertankers delivering Alaskan oil to the Cherry Point refinery in the State of Washington near the international border aroused fears that accidental oil spills would cause lasting damage in the confined waters of the area. Following a meeting in Washington in July of U.S. and Canadian environmental officials, the governments undertook to speed early conclusion of joint oil spill contingency plans, to coordinate antipollution research in the Puget Sound area, and to negotiate a navigation systems agreement to protect the waters and shores in the area of the Juan de Fuca/Georgia Straits. "Multilateral Cooperation on Global Problems "U.S.-Canadian cooperation in various multilateral matters was excellent throughout 1972. Noteworthy examples were decisions to contribute to the United Nations Environmental Fund and a serious effort to accommodate each other's interests in the preparatory work for the future Law of the Sea Conference, despite differences over the extent and character of coastal state jurisdiction under international law. "Also significant was U.S.-Canadian cooperation in the struggle against narcotics trafficking and abuse. There is close cooperation at all levels between the enforcement and prevention agencies of the two countries. The United States, Canada, and Mexico have held several meetings at the Attorney General and Deputy Attorney General levels to consider enforcement problems. Similarly, Canada participates with the United States and France in periodic meetings of the enforcement agencies of the three countries. The Canadian contribution of $400,000 to the United Nations Fund for Drug Abuse Control has been the largest contribution after that of the United States. Like the United States, Canada is an active member of the United Nations Commission on Narcotic Drugs. "Air piracy and terrorism were other areas of mutual U.S.Canadian interest, and the two countries worked together in 1972 in the worldwide effort to find effective measures to deal with these problems. Toward the close of the year, there was also close consultation on the role which Canada subsequently undertook to help observe and supervise the cease-fire in Vietnam. "The Deputy Assistant Secretary for Canadian Affairs "In a move recognizing the importance which the United States attaches to its relations with Canada, the Department of State announced on October 6, 1972, the creation of the new position of Deputy Assistant Secretary of State for Canadian Affairs. Rufus Z. Smith, Minister at the United States Embassy in Ottawa, was named to assume the new position. * "Central American States "Honduras "On September 1, 1972, the United States and Honduras exchanged instruments of ratification of a treaty by which the United States recognized Honduran sovereignty over the Swan Islands. This act, resolving a longstanding dispute over sovereignty of the Islands, was marked by simultaneous ceremonies held in Washington and on Great Swan Island. Under the terms of the treaty the two governments entered into a bilateral cooperative agreement to insure continued operation of the meteorological station operating on Great Swan Island. "Late in the year, a change of government occurred in Honduras. The armed forces deposed President Cruz, and installed General Oswaldo Lopez Arellano, who previously led the country from 1963-71, as Chief of State for 'a minimum of five years.' The new authorities informed us of their desire to continue relations and committed the new government to honor its international agreements and treaty obligations. We responded that we reciprocated Honduras' desire to continue our traditional cordial relations. "El Salvador "Colonel Arturo Armando Molina was inaugurated for a five-year term as President of El Salvador on July 1, 1972. He received a plurality of the votes in national presidential elections held on February 20, 1972. In the absence of a majority, the Legislative Assembly followed constitutional precepts and selected the nation's new leader from the two candidates with the highest popular vote. Molina succeeds General Fidel Sanchez Hernandez, who was elected in 1967. "In 1972 A. I. D. authorized a $4 million loan for agricultural research, education, and extension. These funds will be used by the Salvadoran Center for Agricultural Technology to help develop an applied rural research capability and to integrate educational research and extension activities within the Ministry of Agriculture. "Costa Rica "President Jose Figueres was a distinguished guest at the launching of Apollo 16 on April 16, 1972. U.S. grants to Costa Rica for technical assistance in agriculture, social development, health, and municipal development amounted to $1.4 million in FY 1972. These grant activities complemented loans in the respective sectors, particularly a $30.5 million agriculture sector development program composed of a $16.4 million A. I. D. loan and $14.1 million in Costa Rican contributions. "Nicaragua "Nicaraguan President Anastasio Somoza Debayle ended his five-year term of office and was replaced by a three-man |