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

113. Information Memorandum From the Acting Assistant Secretary of State for Economic and Business Affairs (Constable) to the Deputy Secretary of State (Dam)¹

Washington, May 25, 1983

SUBJECT

• A Positive Trade Overture at UNCTAD VI

Our UNCTAD VI strategy is based on an unequivocal presentation of our economic philosophy. Clearly, the trade agenda item is the most promising in terms of a positive approach to the Conference, due to our conviction that open trade, elimination of protectionism, and structural adjustment through the free play of market forces are vital to development.

At Belgrade we will underscore the good record of the United States in advocating trade liberalization, resisting protectionism, allowing structural adjustment to take place, and absorbing a large share of LDC exports, including nearly half of the manufactured exports from the non-OPEC Third World to the developed world.

Furthermore, we will restate our commitments to fulfill the pledge of the GATT and OECD Ministerials, refer to our active pursuit of the objectives laid out in the GATT Ministerial declaration,² and acclaim any agreement on trade achieved at Williamsburg.³

Translating Rhetoric into Reality

The risk we face in leading with strong words at Belgrade is that our rhetoric will be seen to outpace our actions. Despite the pledges at GATT and the OECD, resistance to protectionism in the United States seems to be weakening. Democratic party spokesmen are calling for fair or managed trade to protect American jobs. Calls for local-content rules, “reciprocity,” severe restrictions on GSP, and the like, arouse fears that further protectionist actions are imminent. The Administration’s own case for free trade, forcefully articulated by the President in the State of the Union Message⁴ and at the Commonwealth Club in San Francisco,⁵ appears to lack support or at least evidence of concrete implementation. At the OECD Ministerial, Bill Brock said that the U.S. is prepared to take steps to implement a commitment to dismantle trade restrictions. Many are asking what we mean.

UNCTAD VI is an opportunity to reverse the perception that our commitment to free trade is merely rhetorical. Our strong rhetoric will be bolstered by a detailed description of our accomplishments and intentions: open markets, renewal of a Generalized System of Preferences targeted at the needier developing countries, active support of the GATT Ministerial work program, and willingness to pursue liberalization of North/South trade.

In the day to day discussions and in negotiating resolutions, we will be supportive, opposing only wording that poses a danger to the mandate of the GATT. We can agree to an UNCTAD work program which promotes greater openness in the formulation and implementation of national trade policies. We can readily agree to improving transparency by encouraging UNCTAD to continue work on its inventory of non-tariff measures affecting trade. We will not block UNCTAD examination of the impact of agricultural trade barriers, including the effects of export subsidies on developing countries. We can agree to UNCTAD work in services, provided its role does not prejudice the GATT.

Clearly, the best outcome on trade would be a resolution which led to UNCTAD support of U.S. trade policy objectives in the GATT: strengthening international commitments to trade liberalization, achieving transparency in trade practices, bringing new areas under GATT disciplines. A trade resolution along the lines of Tab A would be optimal.⁶ In drafting this, we have dealt with the more objectionable elements of the G–77 trade resolution—commitments only by developed countries, mandatory government intervention in the market, monitoring of the GATT—by calling for action by all UNCTAD members, softening or eliminating any references to government intervention, and allowing only review or examination of the effects on trade of current trade practices.

Finally, we should recognize that any trade resolution which emerges by consensus at Belgrade may have a number of elements which could make us uncomfortable. But our trade philosophy is such that as long as the appropriate GATT/UNCTAD division of responsibility is preserved, our discomfort should be less than that of the Europeans. If the trade agenda at Belgrade fails, it should not be due to U.S. inflexibility.

Tabs B and C are the Trade Strategy Paper and the paper on the GATT/UNCTAD Division of Responsibilities.⁷

1. Source: Department of State, Files of the Under Secretary of State for Economic Affairs, W. Allen Wallis, Chrons; Memo to the Secretary/Staff and Departmental/Other Agencies; Memos to the Files; White House Correspondence, 1987–1987, Lot 89D378: Chron May 1983. Confidential. Drafted by Manuel Barrera (EB/GCP) on May 24; cleared in EB/GCP, EB/OT, USTR, and IO, and in substance in EB/SEN and EB/ODF. Hill initialed the memorandum. Sent under a May 26 covering memorandum to Dam, in which Wallis wrote that the memorandum and draft resolution “cause me some concern because the resolution is not ‘optimal’ as the memo claims, but is a compromise that fails to push hard for trade liberalization by the LDC’s. We shouldn’t be doing that at this stage, or taking any risk of tipping our hands.”
2. See footnote 2, Document 99. The 1983 OECD Ministerial meeting took place May 9–10.
3. In a June 23 memorandum to Clark, McMinn summarized the work done by NSC, State, and USTR to develop a strategy to implement the Williamsburg Summit commitments on trade. (Reagan Library, Henry Nau Files, Williamsburg Summit (1983): Miscellaneous Bilateral) McMinn included a paper outlining the general strategy of implementation, including that on North-South trade relations and the commitment by Summit participants to expand trade with and among developing countries.
4. The text of Reagan’s 1983 State of the Union address, delivered on January 25, is in Foreign Relations, 1981–1988, vol. I, Foundations of Foreign Policy, Document 139.
5. For the text of Reagan’s March 4 remarks and the question-and-answer session at the Commonwealth Club of California in San Francisco, see Public Papers: Reagan, 1983, Book I, pp. 330–338.
6. Tab A, “Draft Resolution on International Trade in Goods and Services,” is attached but not printed.
7. Tab B, “Trade Strategy for UNCTAD VI,” and Tab C, “GATT–UNCTAD Division of Responsibilities” are attached but not printed.