Foreign Relations of the United States, 1969–1976, Volume XXXI, Foreign Economic Policy, 1973–1976

185. Briefing Paper¹

Washington, undated.

SCOPE PAPER

The Tokyo Ministerial Meeting should mark an important step toward the U.S. objective of a more open and improved world economic system. It will formally open the GATT multilateral trade negotiations (MTN), give the negotiators general political guidance and create a Trade Negotiating Committee (TNC). The basic objectives the U.S. wishes to achieve are—political guidance by the negotiating parties for lowering trade barriers toward liberalization and improvement of the system, establish a Trade Negotiating Committee to supervise the negotiations and give it direction for a work program, and set end-1975 as the target date for their completion.

These objectives must be embodied in a Ministerial declaration to be approved by the nations participating in the Tokyo meeting. A draft declaration negotiated in July by the Preparatory Committee will be the basis. (Background Papers—Tab K.)² This text (aside from the bracketed passage on the trade/monetary link discussed below) is acceptable to the U.S. and incorporates language on all major issues we want covered. It specifies that the TNC will hold its first meeting by November 1, but does not lay out a detailed work program for it. The draft declaration has also been generally accepted by all the developed countries and there is a tacit understanding among these countries that they will approve the language as is. Accordingly, unless some of the agreed language is unexpectedly reopened, the issues that will need to be resolved are: (a) how to deal with the trade/monetary link (see Briefing Papers, Tab E); (b) how to deal with attacks on the declaration by the more extremist of the developing nations as noted hereafter and in Briefing Papers, Tab C; (c) how to be sure that the TNC begins a work program per Briefing Papers, Tab B, and (d) how best for the U.S. to provide continuing momentum to move the trade negotiation forward during and after the Tokyo meeting.

The attitude of the developing countries to the draft declaration varies. The more responsible LDCs, such as Brazil and Mexico, support the present text. However, in the final meeting of the PrepCom,³ Peru speaking for the Andean Group (Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela) and for Cuba said the draft was not acceptable because it did not go far enough to meet LDC interests. This group will probably continue to criticize the present draft and press for changes at Tokyo. While such discordant notes will be regrettable, they should not interfere with the basic objective which is approval of the declaration by the countries which are planning meaningful participation in the forthcoming negotiations. There is no requirement for any country to participate, and the election not to participate by a few developing countries will not affect the approval of the declaration.

It is important that the U.S. concert closely with the EC and Japan in dealing with problems which may arise on the LDC sections of the declaration.

The U.S. intervention will be one of the first and must lay the foundation to accomplish our objectives. Its purpose must be to set a high level tone toward our global objectives, yet with enough specifics to clarify U.S. purposes and to give leadership. (See attached paper on the Scenario.)⁴

Specific key points covered in the declaration are:

(a) Liberalization. The declaration meets our desire to highlight the importance that the MTN shall aim at “the expansion and ever-greater liberalization of world trade.”

(b) Reform of the world trading system. As the result of U.S. initiative, the declaration states that “improvement of the international framework for the conduct of world trade” can contribute to the objectives of the MTN. We intend to use this opportunity to press for the removal of inequities under the present rules. With regard to timing, the language in the declaration suggests that proposals for reform be developed and considered during the course of the negotiations and in the light of their progress. (See Briefing Papers, Tab B.)

(c) Trade/Monetary Link. This area is in disagreement. The French (and possibly some others) would like to condition the opening of trade negotiations on the U.S. keeping the dollar closer to the rates at the time of the Paris meeting (March 1973).⁵ If they can’t achieve that, they want agreement on a one-way link specifying that the trade negotiators should at all times during negotiations assess the progress being achieved in the monetary negotiations, and be prepared to stop—or not put into effect the results—if there is not sufficient monetary progress. How and by whom this would be assessed is not clear. The U.S. believes that any language on this point in the declaration should make it clear that the linkage is two-way. We believe with the dollar’s performance this may not be too difficult an issue as most of the EC members are in agreement with us. We believe the U.S. should maintain the link to assess the progress in each area relative to the other, as it gives us the maximum leverage in both negotiations until we are further along in each area, and we can best assess in both IMF and GATT that we are working toward a better overall economic system.

(d) Tariff Techniques. “Appropriate formulae of as general application as possible” are called for. We would have liked something more explicit. However, the EC opposed language which would have called for a substantial cut in tariffs. The EC tends to favor “tariff harmonization” as an approach, which would in many cases require the U.S. to make bigger cuts than the EC. However, it is unlikely that the various possible tariff cutting techniques will be discussed at any length in Tokyo and the languages leave open the issue of the extent of the tariff reductions. (See Briefing Papers, Tab B.)

(e) NTBs. There was an easily reached consensus that NTBs should be reduced, eliminated, or brought under more effective international discipline. It is clear that there is general agreement that NTBs will be a priority topic in the negotiations. (See Briefing Papers, Tab B.)

(f) Safeguards. The adequacy of the GATT safeguard system is to be examined with a view to furthering trade liberalization and preserving its results. The U.S. pressed for the decision to reexamine the adequacy of the present system; others asked for the reference to furthering and preserving liberalization. The text leaves open the question of how it should be accomplished, but clearly makes safeguards part of the negotiation. (See Briefing Papers, Tab B.)

(g) Agriculture. Agriculture is to be included in the MTN, with the approach being in line with the general objectives of the negotiations, but with account being taken of its special characteristics and problems. This was a compromise between U.S. insistence that agricultural liberalization should be an equal objective and the EC view that agriculture needed to be treated differently. The declaration also contains the important provision that the negotiations shall be considered as one undertaking, the various elements of which shall move forward together. This allows the U.S. to keep the agriculture issue as part of the negotiation and not to allow it to be separated and possibly lost. (See Briefing Papers, Tab B.)

(h) Developing Countries. (1) The declaration reiterates earlier policy declarations promising special attention to the trade problems of the developing countries, including less than full reciprocity, and support for generalized preferences. This language is broad enough to include any proposals without advance commitment on any specific system of preferences. (See Briefing Papers, Tab C.) (2) There had been some question on how LDCs who are not members of the GATT would participate. The prevailing view, which the U.S. accepted as a concession, is that they should be allowed to participate, and then at the end of the negotiation decide whether they will join the GATT or otherwise enter into any or all of the agreements that affect them. This could create problems of LDCs interfering unreasonably or of attempting to filibuster on certain issues. It appears the procedures can prevent this and we believe it is best to have them as participants in the negotiations, although they would obviously not participate in all bargaining sessions. (See Briefing Papers, Tabs B and C.) (3) The LDCs themselves could not agree on how the least developed versus the more developed nations should be treated. While this is basically a LDC problem, we need to watch it to make sure that their internal argument does not disrupt the Tokyo meeting or interfere with approval of the declaration. (See Briefing Papers, Tab C.)

(i) TNC. Will have mandate to work out negotiating plan and supervise negotiations. First meeting to be no later than November 1. We believe that there is much basic work that the TNC should start on this fall and winter, and that we will be able to participate in fully even before the TRA is enacted. (It should be made clear to other delegations that we are consulting closely with Congressional leaders and will, of course, be careful not to get out ahead.) The draft declaration leaves open the membership of the TNC and the general direction to start the preparatory work, analysis, etc., prior to the actual offers and counter-offers. We propose to try to clarify and get as much agreement as possible at Tokyo as to how the TNC should proceed. We believe the membership should be limited to nations participating in the negotiations without observers from non-participants or international organizations.

The report of the July Preparatory Committee, which is also on the agenda, does not require comment and should merely be noted. It served as a useful repository at the PrepCom meeting for recording unagreed views. (See Briefing Papers, Tab H.)⁶

[Omitted here is material concerning the GATT Article XXIV:6 negotiations with the EC.]

Scenario

The draft declaration is generally adequate for our purposes. If all goes reasonably well, there will be little opportunity to open the draft, even to small changes, lest we open the door to each participating nation to suggest some other “small change.” At the same time we need to give inspired leadership to the session. With the great amount of time and effort already done on the draft declaration, and the general consensus reached, the key trading nations will be prepared to approve the draft as it stands.

Therefore, our first choice of options should be to take the leadership and support the declaration by:

(a) Determining in the days before the meeting in Tokyo what, if any problem, exists with the draft. (Each member of the delegation will be assigned a group of countries to seek out and stay in touch with.)

(b) Working out language on the trade/monetary link with the EC at Tokyo before the formal opening of the meeting.

(c) Clearly supporting the draft declaration in concert with the other major trading nations.

(d) Designing an intervention that is positive, high level in policy presentation, yet specific as to some of the issues. Such specificity to clarify our positions, show some flexibility, and encourage others to get on with the negotiation promptly, but not get out ahead of Congress. (See Draft Speech.)⁷

(e) Get as much agreement as possible as to the specific tasks for the bargaining work of the TNC. (See Briefing Papers, Tab B.)

Alternate scenarios will arise if there are serious questions raised about the draft and it in fact is opened up for general changes. There appear to be three alternatives that we have in this event:

(1) Negotiate on an acceptable basis the changes so long as they are consistent with our objectives, or

(2) If unable to negotiate satisfactory solutions for the changes, postpone the session to another date and reconvene the Preparatory Committee for more work, or

(3) Agree to disagree and leave the future preparation and negotiation open for a later decision.

It would appear that the alternate options should rank in order of listing, with the first one being the only one that is consistent with our basic objectives. Obviously, we will know by September 10 or 11 what problems there are as most key delegations will then have arrived no later than Monday, the 10th. The EC will hold a Council of Ministers Meeting on September 11, the Canadians will have been there on the 6th–7th for meetings with the Japanese, etc. We have also asked the Embassies to report if there are any indications any issues may be reopened.

Our positions under alternate (1) must be consistent with our objectives and we will have to leave open how we best achieve this in the corridor negotiations. In the event such problems arise, our intervention could change nominally to take note and urge acceptance. Any other specific reference to problems will be decided at the time of the session. This could mean the U.S. opening of certain issues to accomplish our purpose.

Options 2 and 3 are undesirable fallback positions. Option 3 should be avoided if at all possible as it would undoubtedly cause the trade negotiations to be set back for a year or two, at best, as the momentum would be lost. Obviously, Option 2 could be used but only if we have no agreement on the changes. These changes will follow the various papers prepared for the PrepCom and this meeting.⁸

[Omitted here is material concerning the GATT Article XXIV:6 negotiations with the EC.]

1. Source: National Archives, Nixon Presidential Materials, White House Central Files, Staff Member & Office Files, Council of Economic Advisers, Herbert Stein, Box 104, Meetings Files, Multilateral Trade Negotiations, Feb–Dec 1973. Confidential. This paper was included in a briefing book for the GATT Ministerial meeting held in Tokyo from September 12 to 14. The tabs are attached but not printed.
2. The draft declaration was transmitted in telegram 3982 from the Mission in Geneva, July 30. (Ibid., RG 59, Central Foreign Policy Files)
3. The GATT Preparatory Committee met in Geneva from July 2 to 25.
4. Printed below.
5. The G–10 Ministers met in Paris on March 9; see footnote 4, Document 32.
6. At Tab H is a briefing paper on the U.S.–EC Article 24:6 negotiations. The Preparatory Committee Report is at Tab Q.
7. Not attached. A note at the end of the briefing book index states that the draft opening statement would be forwarded the following week. Attached but not printed is a suggested outline for Shultz’s opening statement at Tokyo.
8. The final text of the Tokyo Declaration, adopted on September 14, was transmitted in telegram 11943 from Tokyo, September 14. (National Archives, RG 59, Central Foreign Policy Files) It is also printed in Department of State Bulletin, October 8, 1973, pp. 450–452.