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

37. Memorandum From the Administrator of the United States Agency for International Development (McPherson) to Secretary of State Haig¹

Washington, August 22, 1981

SUBJECT

• Cancun and Global Negotiations

It is important that we have a positive approach or we will undercut our other initiatives in the developing countries. I have given these thoughts to Bob Hormats.

Items which could be announced at the UN or Cancun, if some additional staff work is done.

(1) Promise that the US will put resources into developing specific technology breakthrough of great importance in developing countries for food and health. This would be a public commitment to do what AID, the Department of Agriculture and HHS are in the process of doing and could be quite dramatic. For example, we could announce a commitment to:

(a) Certain plant improvements through protoplast fusion and cell culture techniques. In the next few years we are likely to have crops that will grow in a wider variety of soils, endure harsher climates, etc. Total production will be substantially increased and much of this will be a direct value to the Third World.

(b) Major breakthrough in irrigation techniques resulting in less water to do the same job. About 80% of the world’s irrigated land is in Asia.

(c) Techniques to produce several crops per year on soils in humid tropics. Such lands are often not productive now and this would be of great value to many parts of the world.

All of these ideas are widely accepted in the scientific community as probable breakthroughs in the years ahead. The U.S., as the country that put a man on the Moon, would have great credibility in announcing a commitment to achieve them. Comparable examples are available in the health area.

(2) Pledge a review of the U.S. Tax laws in order to encourage flows of capital to developing countries. Changes might be structured in a way that would also increase investments of nationals in the developing countries. U.S. revenue loss for the first few years should not be great. I spent ten years doing international tax work, and this area is of great interest to me. We are talking with Treasury, but it may require your speaking with Secretary Regan.²

As to Global Negotiations

(1) We could agree to Global Negotiations but say that negotiations should be substantially conducted on a regional basis where policies of the Third World countries, e.g., food price policies, restrictions on technological transfers, investment restrictions, etc., would be discussed along with other issues. Under the regional format, different sets of donors would be involved in each region and the donor leadership would vary from region to region. We have the Sahal (French leadership) and the Caribbean Basin model to build on. We would also want to say that trade matters should be dealt with in GATT and finance matters at the IMF.

(2) Alternatively, we could propose that the Cancun countries meet again in the next year to discuss procedures for Global Negotiations outside the UN forum. We could also say that in the meantime the regional approach could be explored.

These are only two of the options that might be constructively presented without agreeing to the agenda that Global Negotiations have historically implied.

1. Source: Department of State, Bureau of Economic and Business Affairs, Investment Policy Files, 1981–1984, Lot 85D193: Cancun Summit—Global Negotiations—Background. No classification marking. The date “8/25” was written at the top of the memorandum. The date “’81 Aug 24” was stamped on the memorandum. A copy was sent to Hormats.
2. Haig highlighted this sentence in the right-hand margin.