311. Memorandum From the Special Representative for Economic Summits
(Owen) to President Carter1
Washington, July 12, 1978
SUBJECT
- North-South Issues at the Summit
1. In the attached memo (Tab A) Dick
Cooper reports to you about his talks in Jamaica with Prime
Minister Manley and other Jamaican
officials.
[Page 986]
2. I agree with Dick that the two key LDC
issues for the Summit are MTN and aid.
a. On MTN I concur with Dick’s
recommendation that the Summit should direct the US, EC, Japanese, and Canadian negotiators to bring the developing
countries into the negotiations.
b. On aid, I also agree with what Dick says about Summit pledges to provide
more resources for IDA and other
multilateral institutions.
3. We have late information about four likely North-South issues that other
heads of government may raise at the Summit:
a. Trudeau may want to strengthen that section in the
draft Declaration which calls for more aid to help LDCs increase energy
production, and requests the World Bank to examine how this can be done most
effectively. This is one of the more promising Summit initiatives, and we
should support Trudeau.
b.
Callaghan
may announce forgiveness of some past LDC debts to the UK. It is not
clear whether this would represent an increase in aid to LDCs; it might be
offset by reductions in new aid. This idea came up at the Summit Preparatory
Group; the British wanted all countries to join a multilateral statement to
this effect, but others did not agree. If Callaghan announces this British decision and say that
legislation now before the Congress would permit the US also to ease the
terms of some past LDC debts. I attach a
briefing memo on this point at Tab B.2
c.
Fukuda
will announce a doubling of Japanese aid from 1977 to 1980, with the
comparison being made in dollars. This is a disappointing outcome to the
argument between the Finance Ministry and the Foreign Ministry, which
favored a doubling from 1978 to 1981 in terms of yen. The Foreign Ministry
position would have meant $4 billion in aid in 1981; the Japanese decision
means $2.8 billion in 1980 (or about $3 billion in 1981). Bob McNamara urges you to press Fukuda at Bonn to change his position. I
agree. Aid proponents in Japan, we are told, believe that external pressure
on Fukuda might cause him to alter
his view. This could mean $1 billion more per year for LDCs.
d. Giscard may raise his idea of an African fund. If
so, you might say that the US agrees fully with the need for more effective
coordination among aid donors and between donors and recipients in Africa.
We cannot, however, support certain aspects of the French proposal as it now
stands: We cannot commit ourselves to multi-year financing or a high US
share of financing; nor can we commit ourselves to participation in every
project donors desire. But we have no objection to mentioning aid for Africa
in the Summit Declaration, and will continue dis
[Page 987]
cussions with others to assure the most efficient and
visible use of our resources.
4. You should know that Prime Minister Manley is again considering a North-South Summit. He has
invited Schmidt, Callaghan, and Nordli to Kingston in late August or early September and has
discussed the proposed meeting with Trudeau and Fraser. Over the long run, the idea of a North-South Summit
may well warrant exploration, but it would have to be well prepared, which
means that it could not happen in the near future. In the meantime, informal
North-South consultations of the sort that you directed Dick to hold with
Jamaican leaders will continue to be useful.
5. There is a US initiative in the aid field that you may want to mention:
your intention to create a Foundation for International Technological
Foundation [Cooperation], to relate US private and public science and
technology more effectively to LDC needs.
This is the one new idea to emerge from our aid review: you have mentioned
it in several of your speeches; and planning is now going forward. I believe
other countries would be interested and impressed. Talking points are at Tab
C.3
Tab A
Memorandum From the Under Secretary of State for
Economic Affairs (Cooper) to
President Carter
4
Washington, July 11, 1978
SUBJECT
- Report on my Discussions in Jamaica
On July 7–8 I led a small U.S. delegation to Kingston to meet with Prime
Minister Manley, Foreign
Minister Patterson and senior Jamaican officials to follow up your
Panama discussions on North/South
[Page 988]
economic issues.5 In his opening remarks Manley specifically requested that I
convey to you his compliments on “your superb performance in Panama,”
during which you gave so many speeches to so many people, providing
something different and pertinent on each occasion. The tone of our
meetings with Manley, and
subsequently with Patterson and his team, was cordial. Our exchanges
were frank, and often revealed substantial differences of approach.
This meeting was an attempt to find ways to improve the current
North/South relationship through an informal exchange of views on both
the substance and procedures of the dialogue. In view of the complexity
of the problems that beset the dialogue I did not expect to, nor did we,
achieve a breakthrough at the Kingston meetings. But I believe that over
time such informal consultations can help us reduce our political and
economic differences with the LDCs. The meeting has supported most of
the points made in my memo to you of July 3.6 And I believe
that most of the talking points on North/South issues that were sent to
you on the same date remain valid. However, many of the issues that the
Jamaicans raised will come up during the Bonn Summit and some will soon
require significant U.S. policy decisions.
The Jamaicans made clear that they were not speaking for the Group of 77, but would convey their best
interpretation of the G–77 position,
even though focusing occasionally on issues of particular concern to
Jamaica. Patterson placed the highest priority on: 1. agreement on a
Common Fund, 2. debt relief, 3. energy. Manley and Patterson also stressed the importance of
trade, referring to Manley’s
agreement with you in Panama on the need for trade liberalization.7 During the discussions they further emphasized the
importance of negotiations on international commodity agreements, the
institutions for conducting the North/South dialogue and cooperation for
development with OPEC and the Eastern
European countries—on the last point they made a specific proposal for
greater East/West cooperation. They clearly favored expanded flows from
developed countries. They responded in a constructive manner to subjects
that we had raised in our papers, especially private investment and
illicit payments.
[Page 989]
—Common Fund. The Jamaicans put considerable
emphasis on the early negotiation of a Common Fund with its own
resources to support the buffer stocks of international commodity
agreements and a “second window” based on voluntary contributions by
participating countries. They see the Common Fund as an important
instrument to restructure markets so as to stabilize export earnings
from commodities. The Common Fund has considerable political
significance and our ultimate approach to it will have to weigh the
importance of this issue to our North/South relations, its probably
modest economic impact, and the considerable political efforts that will
be necessary to gain Congressional approval of a Common Fund.
Tactically, I recommend that we not go beyond the present brief
reference to the Common Fund in the Summit Declaration. Any movement
toward the LDCs on this point at the Summit would reduce our flexibility
when negotiations resume.
—Debt. The Jamaicans’ main point is that LDC commercial indebtedness is bound to
pose serious problems over time. Accordingly they would like to
establish a facility for rescheduling private as well as the official
debt. We indicated the difficulties with this, and they probably could
not get G–77 support for their view,
particularly for advanced developing countries who must borrow in
private capital markets.
—Energy. The Jamaicans stressed the links between
energy and achievement of a New International Economic Order. However,
apart from Venezuela, they do not have OPEC support for their views that trade-offs exist between
energy and other North/South issues. The Jamaicans did support the types
of energy cooperation between developed and developing countries that
will be considered at the Summit.
—Trade. The Jamaicans are disappointed with
progress in the MTN on matters of
interest to them and other developing countries. They are particularly
concerned about the liberalization of trade in agricultural products and
the negotiation of a safeguards code, where acceptance of the proposal
of the European Community for selective safeguards would be quite
detrimental to LDC interests. Jamaica
also stressed a bilateral trade issue: their request for a U.S. offer of
a tariff concession on rum, an item of great interest to many Caribbean
countries and on which a final U.S. decision is still pending.
—North/South Dialogue. The Jamaicans strongly
supported the U.N. Committee of the Whole,8
which in their view should follow up the CIEC with high level negotiations on key North/South
issues. Our approach to this U.N. Committee is different—we favor frank
ex
[Page 990]
changes, but not
negotiations. Other Summit participants are skeptical as to the value of
this Committee.
—East/West Issues. The Jamaicans proposed that the
Summit countries call upon the Soviet Union and other Eastern European
nations to collaborate with industrialized democracies in support of
Third World development. This was the main Jamaican initiative during
the meeting and it reflects Jamaica’s hope that the Socialist countries
will play a larger role in world development. Manley may have supported this
initiative because he believes the Socialist countries have something to
contribute but also because he feels the West would do more if the
Socialist nations were more forthcoming.
The Bonn Summit
Jamaica would like to see several results from the Summit:
- —recognition that economic development in the LDCs will strengthen
prospects for growth in developed countries, thus there is a
mutuality of interest in economic progress in developing
countries.
- —agreement on the importance of providing increased assistance to
LDCs for development purposes, and to provide special support to
LDCs in balance-of-payments difficulty.
- —a commitment to provide substantial benefits to the developing
countries in the MTN.
- —discussion of, but not necessarily public statements about, the
desirability of joint East/West collaboration for
development.
Recommendations
What to say at the Summit: I recommend that at
the Bonn Summit you stress:
—The importance of developing country growth to developed country
prosperity.
—The need for a common commitment to substantial increases in development
assistance, including the need for large World Bank and Inter-American
Development Bank capital increases and a large IDA replenishment (along the lines you already approved),
stressing your personal commitment to work with the Congress to make
good on our commitments.
—The importance of a common effort by developed countries to insure that
the developing countries both contribute to and benefit from the overall
results of the MTN, namely through
greater developed country tariff concessions on specific products of
concern to LDCs, and avoidance of a closing off of offers and final
agreements on tariffs and codes—especially the safeguard code—until
adequate negotiations have taken place with LDCs. In this connection the
Summit should ask negotiators to integrate the LDCs more in the MTN.
