146. Memorandum From the Chairman of the Council on International Economic Policy Operations Group (Samuels) to the President’s Assistant for International Economic Affairs (Flanigan)1
- CIEP Study Memorandum 16 UNCTAD III
The third United Nations Conference on Trade and Development (UNCTAD III) is scheduled for April 13-May 19 in Santiago, Chile. It will be an important event in the evolution of DC-LDC relations.[Page 372]
Attached is the general strategy and position paper for that Conference requested in CIEP Study Memorandum No. 16. There is general inter-agency agreement on U.S. positions to be taken on all major UNCTAD III issues except debt relief and an interest equalization fund where Treasury has expressed opposition.2 The dissenting Treasury positions on these two issues are spelled out in the paper.
The study calls for a generally forthcoming but low key approach to the Conference. We are not proposing major new initiatives on behalf of the LDCs, but plan to support LDC requests when these are reasonable and consistent with U.S. economic and political objectives. The proposed position is designed to make the best of a difficult situation in which demands of the LDCs are excessive and the prospects for new DC measures are not promising. Our general approach appears to be consistent with the strategy which other developed countries will follow at the Conference.
At UNCTAD III, we can expect the LDCs to press the U.S. hard on a number of issues: aid volumes, LDC participation in monetary reform, the SDR link, negotiation of a cocoa agreement, improved market access for LDC exports, investment problems, etc. What the U.S. does or does not do on GSP will have a particularly important impact on our posture and image at the Conference.
Significant U.S. positions contained in the attached paper are as follows:
- SDR Link—In parallel with other DCs, the U.S. should indicate at UNCTAD III support for a study in the IMF of the relevance and desirability of a link between the creation of new reserve assets and development finance within the context of international monetary reform.
- Debt Relief—The U.S. should be prepared to support further IBRD work on general guidelines for debt relief so as to make it as consistent as possible with development needs if this is sought by the developing countries, it being understood that such guidelines are not intended to indicate a broad policy of debt rescheduling. (Treasury does not support this position.)
- Adjustment Assistance—The U.S. can accept recommendations at UNCTAD III, couched in general terms, that developed countries should seek to develop programs for adjustments to deal with the problems caused by increasing imports from the developing countries.
- Export Development—As part of our planning for the Conference, the U.S. is exploring opportunities for expanding technical and financial assistance for export development. However, the U.S. would oppose recommendations which call on DC Governments to develop domestic programs designed specifically to encourage and promote the sale of imports from developing countries.
- Foreign Private Investment—Without highlighting private investment as an issue in the UNCTAD forum, we should make clear the contribution of private investment to the development process.
- AID Untying—We have indicated the current international trade and monetary situation must be clarified before negotiating a final untying agreement. Under present circumstances we cannot be forthcoming on this issue at the Conference.
- Multilateral Interest Equalization Fund—The U.S. should oppose resolutions calling for the establishment of a multilateral Interest Equalization Scheme. However the U.S. could support an LDC initiated and supported resolution calling for the IBRD to study the feasibility of establishing a modest fund to subsidize interest-cost differentials. (Treasury supports the first but not the second position.)
- Institutional—The U.S. should continue to recognize and support UNCTAD as an institution for discussion and consultation on problems and policies connected with trade and development. We should firmly resist pressures to make it more operational and a forum for negotiations.
- Least developed—The U.S. should be willing to assist the least developed countries in terms of program proposals and to consider financial contributions possibly through the UNDP, the regional banks, or through bilateral programs
- Source: National Archives, RG 59, S/S Files: Lot 73 D 288, Box 835, CIEPSM 16. Confidential.↩
- According to a March 27 memorandum from Flanigan, the CIEP Review Group was scheduled to meet on March 29 to discuss debt relief and interest equalization issues, which needed further interagency discussion. Flanigan also suggested other issues the Group might take up. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, CIEP Study Memoranda)↩
- Reference is to the G-77 meeting in Lima October-November 1971.↩
- Following the Smithsonian Agreement of December 1971 (see Foreign Relations, 1969–1976, vol. III, Document 221), President Nixon announced the lifting of the 10 percent import surcharge during his Summit meeting with Prime Minister Heath in Bermuda on December 20, 1971. See Department of State Bulletin, January 17, 1972, p. 63. Secretary Rogers, at his press conference on December 23, 1971, expressed satisfaction with “the measures we have been able to take this week which will benefit the developing nations, especially those of Latin America. I refer to the lifting of the 10-percent surcharge and the President’s decision to present legislation to the next Congress establishing generalized trade preferences.” (Ibid., p. 49)↩