Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

101. Memorandum From Henry Nau of the National Security Council Staff to the President’s Assistant for National Security Affairs (Clark)¹

Washington, December 16, 1982

SUBJECT

• Trip Report: U.S.-EC Bilateral and Sherpa Meeting

You have probably seen the full reporting cables on the U.S.-EC Bilateral and the Sherpa meeting which I participated in on this trip. Wallis’ cable to you and Deaver on the Sherpa meeting was a particularly complete and useful report.² The following are a number of additional impressions on that meeting and the Bilateral which might be interesting to you.

Sherpa Meeting

— Despite some histrionics about the dates and a pained reluctance to yield the chair, Attali cooperated. He mentioned privately several times to Wallis and me that he would like to help to overcome future problems (see below). He and Mitterrand do have their internal problems with bureaucracy and politics, no less than we do. But then again, we have heard this kind of sweetness and light from Attali before.

— The overriding mood for Williamsburg at this point is uncertainty. There is some cautious expectancy that U.S. recovery may actually begin. At least, there was considerably less complaining about U.S. interest rates and the dollar and surprisingly less demagoguery about unemployment. Nevertheless, there was also the feeling that, if the U.S. economy did not begin to grow, things could get much worse and the world economy could swiftly unravel. Hence, there was a palpable fear hovering in the room, and it concentrated the mind.

— Realism prevailed. There was a desire to see our problems as interrelated and not separated from one another, with each country pushing its own pet priority. Unemployment was not seen apart from the painful gains we have made in the fight against inflation. Protectionism in the North was not separated from debt and debt repayment in the South. We proposed our three topics—relations between domestic and international policy, international institutions and E-W relations; and it was agreed that the first two topics should be viewed together, since domestic policies, international trade and financial relations and international economic institutions (GATT, IMF, etc. ) are all parts of the same whole. E-W relations, on the other hand, was seen as a separate topic since these relations exist in a totally different policy and institutional context.

— As a consequence of this integrated approach, we rejected treating North-South issues separately from macroeconomic and monetary questions. This was music to my ears (as was the discussion on GNs—see below) since this is the position with which we began the discussions leading up to the Ottawa Summit almost two years ago. At that time, however, North-South was the fashion and Trudeau made it and GNs separate and key issues at Ottawa.

— The trade issue aroused considerable concern, revealing fears that the U.S. would yield to protectionism to reduce the massive trade deficit next year and that LDCs would also be cutting back imports because of their debt servicing obligations.

— The French and the EC all but pronounced GNs dead and said explicitly it would not be on the agenda at Williamsburg. First, the EC praised the work done at Versailles to unify the Summit countries’ positions on the GNs issue, pointing out that, in contrast to the E-W issue, the N/S agreement was detailed and unambiguous (a bit self-congratulatory, of course, since the EC mediated this agreement). As a result, the EC emphasized, the agreement endured. The French then said it was a pity that the LDCs did not accept the Versailles amendments. But now the situation was blocked; and no one should spend any time lamenting this fact. There may be further efforts to see if movement is possible in New York, but this development would not have much effect on our relations elsewhere. The Canadians put it most succinctly: We would like to see GNs happen, they said, but we will pressure no one anymore to see that it happens. (Having worked this issue since February 1981, I thoroughly enjoyed its passing from the Summit scene. For all practical purposes, we have laid GNs to rest and gained points with our allies in the process. Now, we need to unify our positions for UNCTAD. If UNCTAD is reasonably successful, GNs will never return.)³

[Omitted here is information unrelated to North-South issues.]

1. Source: Reagan Library, Norman Bailey Files, International Economics File, Versailles Summit [1982]. No classification marking. Sent for information. Copies were sent to Bailey, Blair, Boverie, Childress, Fontaine, Kemp, McMinn, Reed, Robinson, and Tyson. An unknown hand wrote: “will summ.” on the memorandum.
2. Not found.
3. In a January 26, 1983, memorandum to Shultz on U.S. participation in UNCTAD VI, McCormack wrote: “The impasse over Global Negotiations increases the importance LDCs attach to UNCTAD as a forum for pressing their demands upon the industrialized countries.” (Department of State, Bureau of Economic and Business Affairs, Investment Policy Files, 1981–1984, Lot 85D193: UNCTAD VI, General)