Foreign Relations of the United States, 1969–1976, Volume XXXVII, Energy Crisis, 1974–1980

235. Memorandum From Secretary of Energy Duncan and Henry Owen of the National Security Council Staff to President Carter¹

Washington, September 27, 1979.

SUBJECT

• Trip Report

This memorandum reports on the results of the meeting of Summit Energy Ministers held in Paris on September 26, 1979 at President Giscard’s initiative to assure fulfillment of the Tokyo agreements. The U.S. delegation was led by Charles Duncan and included Henry Owen and Dick Cooper.²

At this meeting, the Tokyo Summit agreements and your July energy initiatives provided the basis for making progress toward securing country specific oil import commitments from the EC countries, as well as on several other Summit energy measures, and a better understanding by our partners of the importance of your July initiatives.

1. 1985 European National Oil Import Targets. The European Summit countries carried out their Tokyo commitment to specify 1985 national import targets. The five non-Summit EC countries also fixed their 1985 national targets. The intra-EC negotiation that led to agreement on these nine national targets was only completed halfway through our meeting; we were told that it might not have been completed at all without the pressure created by holding this Ministers’ meeting. The European import ceilings are set at or slightly above 1978 import levels, except for Italy (which, you will remember, was granted exceptional treatment at Tokyo) and the Netherlands—both of which secured large increases. The 1985 European total is 472 million tons (approximately 9.5 MMB/D), which was the EC net import total in 1978. Within this total, the UK will move from its current position of being a net importer to becoming a marginal net exporter of 5 million tons (100 MB/D) in 1985. The four European Summit governments each made a political commitment at the Paris meeting to achieve the national ceilings that they specified. Although the targets of Italy and the Netherlands are not sufficiently rigorous, they resulted from complicated intra-EC negotiations; taken as a whole the EC total is acceptable. We have gained considerable ground by the EC’s adoption of the national target approach and by the stringency of the French and German targets.

2. North Sea Oil. The U.S. indicated, as did the Japanese and Canadians, that North Sea 1985 oil exports over the indicated 5 million tons could not be used to increase individual European country import targets for 1985.³ The UK took the same position and made clear, moreover, that if its 1985 exports went over 5 million tons it could give no assurance that these exports would go to the EC; British Energy Secretary Howell said this not only in the meeting but publicly at the press conference that followed. In private bilateral talks, the French and Germans disputed this US–UK view, saying that North Sea oil should be viewed as community property. The EC representative took the same position until Howell publicly outlined the UK view; after that, he told us the U.S. had won its point. This question will be discussed further when a small internal high-level group of the seven Summit nations and the EC meets early next month. This group will meet periodically thereafter, in accordance with the Tokyo Declaration, to monitor fulfillment of Tokyo import pledges.

3. 1980 European National Targets. We pressed for fulfillment of the Tokyo commitment to develop 1980 European national import ceilings. After some discussion, we were assured that this would be done, probably next month.

4. Japan. Energy Minister Esaki repeated to the meeting what he earlier had said in Washington to the Vice President: that Japan was planning to achieve the lower end of the 6.3–6.9 MMBD 1985 range that Japan had accepted at Tokyo. He repeated this statement of intent at the press conference, while protecting himself by pointing out that Japan’s formal commitment remained within the 6.3–6.9 range.

5. U.S. Import Ceilings. The others seemed impressed by Secretary Duncan’s description of measures being taken by the U.S. to restrict imports—particularly the 8.2 MMBD ceiling for 1979 and the fact that import quotas would be used, if necessary, to achieve the 8.5 ceiling for 1980. The Paris press gave front-page treatment to this latter point, stressing Secretary Duncan’s statement that these quotas would not require Congressional approval. This may have been an important step in increasing European awareness of U.S. energy policy. In fact, throughout the Ministerial and related bilateral meetings, it was the U.S. which appeared to be on the offensive in terms of meaningful commitments to action, and the Europeans who appeared to be on the defensive. This difference was less than at Tokyo, however, since all were committed to fulfill the Tokyo decisions.

6. Registration of Crude Oil Transactions. It was agreed, in accordance with the Tokyo Declaration, to activate immediately a system for monthly registration and publication of crude oil import transactions. Through this reporting of prices and terms on a cargo basis, we will increase market transparency, and thus inhibit the kind of speculative purchases that destabilized the market last spring. The International Energy Agency and the EC will study extending this system to all products and making it a fortnightly, instead of monthly, system.

7. Spot Market. The French made further proposals for surveillance of the spot market,⁴ including a Tokyo–Brussels–Washington hotline to discuss actual or impending violations of the Tokyo commitment to moderate use of the spot market. These proposals were referred to the IEA and EC for urgent study. The hotline idea may be useful.

8. Alternative Energy Sources. It was decided to activate the International Energy Technology Group agreed on in Tokyo, on the basis of a U.S. paper outlining the Group’s charter. The Group will assess what each country is doing to develop alternative energy sources, and will explore possibilities for international collaboration, including financing. Its first meeting will be in late October or early November, and it will present its report to the Venice Summit.

9. Distillate Entitlement. In accordance with your decision, Secretary Duncan indicated that there would be no further extension of the $5 distillate entitlement beyond October 31.⁵ This brought a very favorable reaction at the meeting and in the French press.

10. Conclusion. The French press treated the meeting as a large success in translating the Tokyo decisions into concrete actions earlier and more effectively than had been anticipated. Our view is more tempered. We made progress on specific European national import ceilings and other decisions to fulfill Tokyo commitments. But some of these targets (Italy’s in particular) are too high. How rigorously the other European import targets bite will depend on whether the UK maintains its projected lower level of exports (designed to extend the life of its oil reserves), and whether the UK continues to insist (along with the U.S., Canada, and Japan) that any increase in exports over this level will not alter existing national European import ceilings. We will discuss how best to nail down this latter point and related matters with UK Secretary Howell when he visits Washington next week.

All in all, the Paris meeting was a promising start toward fulfilling the Tokyo energy commitments; we made all of the progress that could reasonably be expected; other participating governments were pleased. But a good deal of hard work still remains if effective implementation of the Tokyo decisions is to be assured.

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Agency File, Box 8, Energy Department, 8–10/79. Confidential.
2. Telegram 256287 to Paris, September 29, summarized the Energy Ministers’ meeting. (National Archives, RG 59, Central Foreign Policy Files, D790445–0563) Telegram 256740 to Paris, September 29, transmitted memoranda of conversation of bilateral meetings held during the meeting. (Ibid., D790446–0231)
3. Regarding this North Sea oil issue, see Document 228.
4. French officials initially discussed their spot market proposals in Washington June 14–15. See footnote 2, Document 218.
5. Regarding the Carter administration’s original decision on middle distillates and the European reaction, see footnote 2, Document 214.