Agreement entered into this seventh day of February, 1964 betwe-
en:
the Minister of Finance of Canada
hereinafter referred to as "the Minister",
of the First Part:
and
the Government of China
represented by its Ambassador to Canada, His Excellency Dr. Liu
Shih shun,
of the Second Part:
WHEREAS the Government of China has requested the Government of
Canada to make loans to the Government of China to enable the s-
aid Government to purchase Canadian-produced goods for export to
China;
WHEREAS by Order in Council P.C. 378 dated the fifth day of Feb-
ruary, 1964, the Minister has been authorized under the Export
Credits Insurance Act to make the loans hereinafter referred to,
on behalf of the Government of Canada; and
WHEREAS the Ambassador of China to Canada, His Excellency Dr. L-
iu Shih Shun, has been duly authorized by the Government of Chi-
na to execute this agreement on behalf of the Government of Chi-
na.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH that the parties here-
to, in consideration of the mutual covenants and agreements her-
einafter contained, covenant and agree each with the other as f-
ollows:
1 In this agreement the terms "exporters", "Canadian-produced g-
oods" and "cost of Canadian-produced goods" have the meaning
assigned to them by the Export Credits Insurance Act of Canad-
a or any regulations made thereunder.
2 Subject to the terms and conditions of this agreement, the Mi-
nister, on behalf of the Government of Canada, agrees to lend
to the Government of China, such amount not exceeding Sixty M-
illion Dollars ($60,000,000) Canadian, as may from time to ti-
me be requisitioned from the Minister by the Government of Ch-
ina to enable the Government of China to purchase from export-
ers and to pay the cost of Canadian-produced goods exported or
to be exported from Canada to China.
3 The Minister will pay amounts requisitioned under paragraph 2
of this agreement into the account of the Government of China
with the Bank of Canada.
4 The Government of China agrees to expend the moneys received
by it by way of loan under this agreement solely for the purp-
ose of purchasing from exporters and paying the cost of Canad-
ian-produced goods exported or to be exported from Canada in
accordance with a programme to be agreed upon from time to ti-
me by the Canadian Minister of Trade and Commerce and the Can-
adian Minister of Finance, and by representatives of the Gove-
rnment of China designated by the Ambassador of China to Cana-
da.
5 The Government of China agrees to pay interest at the rate of
three per centum per annum on each amount paid by the Minister
into the said special account from the date when it is paid i-
nto the said special account until the date of consolidation
of the debt into a consolidated debt to be evidenced by bonds
of the Government of China, as provided for in paragraph 6 of
this agreement.
6 The Government of China agrees that the amounts paid by the M-
inister into the account of the Government of China for the c-
redit of the Chinese Government, pursuant to this agreement,
during the period commencing on the date of the execution of
this agreement and ending on the thirty-first day of December,
1974, and interest thereon as provided in paragraph 5 of this
agreement, shall be consolidated into one amount called the c-
onsolidated debt, at the end of the said period, and the Gove-
rnment of China shall thereupon deliver to the Minister bonds
of a face value equal to such consolidated debt, which bonds
shall constitute valid, binding, absolute and unconditional o-
bligations of the Government of China; the said bonds shall b-
ear interest at the rate of three per centum per annum, payab-
le semiannually on the 30th day of June and the 31st day of D-
ecember, and shall mature serially in thirty equal annual amo-
unts of principal payable on the 31st day of December, 1948,
and on the 31st day of December in each year thereafter up to
and including the year 1977.
7 Any portion of the Sixty Million Dollars ($60,000,000) Canadi-
an referred to in paragraph 2 of this agreement, which has not
been requisitioned by the Government of China in accordance w-
ith the said paragraph 2 on or before the 31st day of Decembe-
r, 1947, shall lapse and be no longer payable by the Minister
unless the parties hereto mutually agree otherwise.
8 It is mutually agreed by the parties hereto that if the Gover-
nment of China fails to deliver bonds as hereinbefore provided
at the end of the period referred to in paragraph 6 of this a-
greement, of fails to redeem any of the bonds on or before ma-
turity, the whole amount of the loan shall thereupon become d-
ue and payable.
9 It is mutually agreed by the parties hereto that payments by
the Government of China shall be in Canadian dollars or fine
gold at the option of the Government of China. The value of f-
ine gold shall be calculated on the basis of the buying price
for gold of the Canadian Foreign Exchange Control Board (or s-
uccessor agency) on the date of its delivery. During such per-
iod as foreign exchange regulations in Canada require that ex-
ports from Canada to China result in the sale of a specified
foreign currency to an Authorized Dealer of the Canadian Fore-
ign Exchange Control Board (or successor agency) and permit C-
anadian importers of goods from China to make payment therefor
in such specified foreign currency, any Canadian dollars used
by the Government of China to effect payments under this agre-
ement shall be acquired by the sale to an Authorized Dealer of
the Canadian Foreign Exchange Control Board (or successor age-
ncy) of such specified foreign currency at the published offi-
cial buying rate, or in such other manner as may be mutually
agreed upon by the Government of China and the Minister.
10 The Minister agrees that the Government of China shall have
the right to redeem any or all of the bonds prior to their m-
aturities at par plus accrued interest if the Government of
China tenders payment in fine gold or Canadian dollars acqui-
red in the manner provided in paragraph 9 of this agreement.
IN WITNESS WHEREOF the parties hereto have caused these presents
to be signed on the day and year first above mentioned.
WITNESS:
David M. Johnson
J. L. Ilsley
Minister of Finance of Canada
P. Kiang
Liu Shih Shun
For the Government of China
Exchange of Letters
(I)
Ottawa, February 7th, 1946
His Excellency Dr. Lin Shih Shun,
Ambassador of China,
301 Wuitemburg Street,
Ottawa, Canada.
Dear Sir:
At the time of signing today with you the agreement for the pro-
vision of a credit of $60,000,000 to the Government of China un-
der the Export Credits Insurance Act, I desire to place on reco-
rd our understanding regarding certain points in connection with
the use of the credit and about purchases which China will make
in Canada, to be financed by Canadian dollars acquired from the
sale of gold or foreign exchange convertible into gold.
In paragraph 4 of the agreement it is specified that the Govern-
ment of China will expend the moneys received by it under this
agreement for the purpose of purchasing Canadian-produced goods
in accordance with a program to be agreed from time to time by
the Canadian Minister of Trade and Commerce and myself on the o-
ne hand , and by representatives of the Government of China on
the other. In this connection I wish to place on record that it
is our understanding that $25,000,000 of the $60,000,000 provid-
ed in the credit will be reserved for the purchase of supplies
and equipment which had been requested by China from Canada as
Mutual Aid, other items in production in Canada at September 1,
1945, which are surplus to Canadian requirements, and also cert-
ain items of used industrial equipment which China had sought to
purchase from Canada, together with the costs of reconversion
and completion of such equipment for Chinese use and its prepar-
ation for shipment.
The remaining $35,000,000, it is understood, will be available
for purchasing equipment , supplies and services desired by the
Government of China in Canada for reconstruction and other post-
-war purposes, items of which are to be agreed from time to tim-
e with the Canadian Departments of Trade and Commerce and of Fi-
nance, as specified in the agreement. I have noted your request
to be permitted to use the credit in paying the cost of transpo-
rting goods from Canada to China in Canadian ships. At present
our legislation and the regulations under it do not make this u-
se of the credit possible, but the legislation and the regulati-
ons may be changed in this regard, and if that is done, my coll-
eague, the Minister of Trade and Commerce, and I will be prepar-
ed to give sympathetic consideration to the inclusion in the pr-
ogram of the costs of shipping goods to China in Canadian vesse-
ls.
I wish also to record that I am prepared to agree to the redemp-
tion, under paragraph 10 of the agreement, of the bonds to be g-
iven in accordance with the agreement, out of any Canadian doll-
ars accruing to the Government of China from current account tr-
ansactions between Canada and China. I am also prepared to agre-
e to the use in the repayment of the credits advanced under the
agreement, or for redemption under paragraph 10 of the agreemen-
t, of Canadian dollars acquired by China from the International
Monetary Fund or the International Bank for Reconstruction and
Development. I wish also to confirm our understanding that the
Foreign Exchange Control Board (or its successor agency) will s-
ell to China Canadian dollars in exchange for United States dol-
lars, at the official rate in force on the day of the transacti-
on, for the purpose of making repayments of the credit provided
under the agreement signed today.
I wish also to record that it is the intention of the two Gover-
nments that a certain proportion of the Canadian dollar require-
ments of China shall be covered by the purchase from Canada of
Canadian dollars for gold or foreign exchange convertible into
gold. To implement this intention, it is understood that the Go-
vernment of China will during or at the end of each half year d-
uring which the credits referred to in this letter are being dr-
awn upon, commencing with the first half of 1964, acquire Canad-
ian dollars by the sale to Canada of gold or foreign exchange c-
onvertible into gold in an amount not less than twenty per cent
of the amount of the credit drawn during each such half year. It
is understood that the Canadian dollars so acquired will be used
to meet current requirements of China in Canada, including purc-
hases of the Government of China or its agencies and including
Canadian shipping services and marine insurance charges. Any p-
urchases of Canadian dollars for gold or foreign exchange conve-
rtible into gold during the first half of 1946 prior to the sig-
ning of this agreement shall be regarded as coming within the a-
mount of such required purchases during the first half of that
year. These agreed purchases of Canadian dollars for gold or fo-
reign exchange convertible into gold shall be reduced by an amo-
unt equal to the Canadian dollar equivalent of any United States
dollars or other foreign exchange convertible into gold paid by
Chinese importers for imports from Canada during each half year
in question, provided that the Government of China supplies Sat-
isfactory evidence of such payments and they are verified by the
Foreign Exchange Control Board of Canada. In case the amount of
such Chinese imports from Canada in any half year exceeds the r-
equired purchases of Canadian dollars for that period, the exce-
ss shall be carried over to the succeeding half-year period or
periods.
I would appreciate it if you would confirm the understanding set
forth above, and also if you would inform me from time to time
of the representatives of the Government of China who will agree
with the Departments of Trade and Commerce and of Finance upon
the program of purchases to be covered under this agreement.
Yours very truly,
(Signed) J. L. Ilsley
Canadian Minister of Finance
(Ⅱ)
Ottawa, February 7, 1964
Right Honourable J. L. Ilsley,
Minister of Finance,
Department of Finance,
Ottawa, Canada.
Dear Sir:
I take pleasure in acknowledging receipt of your letter of toda-
y's date relative to the agreement signed today for the provisi-
on of a credit of $60,000,000 to my Government under the Export
Credits Insurance Act, in which you were good enough to place on
record our understanding regarding certain points in connection
with the use of the credit and about purchases which China will
make in Canada, to be financed by Canadian dollars acquired from
the sale of gold or foreign exchange convertible into gold .
In the name of my Government I wish to confirm the understanding
referred to above. I shall be pleased to inform you from time to
time of the names of my Government's representatives who will a-
gree with the Departments of Trade and Commerce and of Finance
upon the program of purchases to be covered under this agreement
.
Yours very truly,
(Signed) Liu Shih Shun
Chinese Ambassador to Canada