Foreign Relations of the United States, 1977–1980, Volume III, Foreign Economic Policy

1. Message From Vice President-Elect Mondale to President-Elect Carter¹

Togov 136

Washington, January 18, 1977

SUBJECT

• Visit to Europe and Japan

The reaction from the leaders of Western Europe and Japan to your announcement of my overseas mission has been positive and enthusiastic.² They welcome this early initiative to improve consultations and strengthen cooperation. They view it as a positive signal that you will exercise leadership on the economic, political and defense problems they share in common with the United States.

The January 23–February 1 mission will include discussions in Brussels with the North Atlantic Council, the Commission of the European Communities, Belgian and Dutch leaders; talks in Bonn with Chancellor Schmidt; a brief visit to Berlin; talks in Rome with President Leone and Prime Minister Andreotti; an audience with Pope Paul VI; talks in London with Prime Minister Callaghan, in Paris with President Giscard d’Estaing and in Tokyo with Prime Minister Fukuda. The primary focus of the trip will be on the personal discussions with Schmidt, Callaghan, Giscard and Fukuda.

My primary purpose in these meetings will be:

—to listen and to report back to you on the subjects foremost on the minds of each foreign leader and the proposals each wishes to offer for your consideration;

—to convey the direction of some of your initial policies and to emphasize your determination to move ahead with the United States’ friends and allies quickly, creatively and cooperatively; and

—to move toward agreement on certain initial steps such as summit location and timing, MTN consultations and consultations on issues such as non-proliferation which might be announced by you upon my return in the context of the accomplishments of the mission.

In each of the countries, it is probable that my hosts will raise a number of specific bilateral problems ranging from civil air and fishing rights, to steel quotas to host country negotiations with the IMF. With the exceptions noted below, I will not get into detailed discussion of contentious bilateral issues, to avoid complicating future specific negotiations.

The following paragraphs summarize principal issues I anticipate being raised during the visit, the approach I recommend to take on your behalf, and a request for your guidance.

The Summit:³ In discussing the summit and receiving the views of our European and Japanese colleagues, I will stress your objective of collaborating as closely as possible to speed international economic recovery. I will ask my hosts for their thoughts on the summit agenda. I will note that our initial thoughts as to agenda items include both political and economic issues: e.g., economic recovery, North South issues, trade, international financial issues, energy, East-West relations and procedural arrangements for continuing consultations after the summit. I will indicate that we would like to see the European Community participate. I will explore Giscard’s suggestion of a side meeting at the summit of the Europeans and the U.S.

I will emphasize the need for adequate preparation of the summit agenda items and offer our thinking on the usefulness of a few high-level preparatory meetings, with the first such meeting perhaps, at the end of February. I believe it would speed the planning process if I were in position to name the U.S. officials who will head our participation in planning meetings for the summit. The Economic Policy Group at its meeting today is preparing a recommendation to you on an individual to head the economic planning effort for the U.S. in coordination with the NSC/PRC.⁴ I would also plan to indicate your preference for summit timing no earlier than late May 1977,⁵ and to indicate that we would be satisfied with London as the site. With your agreement, I will be prepared to discuss the date, place and preparation for the summit, to name the U.S. participants for the economic and political preparatory meetings, and to propose that the summit date be announced after I return and consult with you.⁶

Coordination of U.S., FRG and Japanese Economies: The visit will allow me to review the details of the stimulative economic package you are sending to the U.S. Congress,⁷ a package reflecting your full recognition that healthy economic growth and measures to keep down inflation in the United States are important not only for Americans but for our trading partners as well.

I will state that a key factor in your decision to undertake additional economic stimulus to put the U.S. on a course of stable growth was the positive effect it would have on the economies of our trading partners. If the major economies do not at least meet their growth targets, it will have an adverse impact on these nations and strengthen protectionist pressures.

I will encourage the Germans and Japanese in developing their economic policies to take into account the significant role each country’s healthy growth plays in contributing to the recoveries of the weaker economies, to the well-being of the world economy, and thus to international political stability. If you agree, I will review the U.S. economic stimulation program and encourage Schmidt and Fukuda to stimulate their economies, unless they indicate they will do more than they presently plan to do.⁸

Multilateral Trade Negotiations (MTN):⁹ I will make clear your intention to administer U.S. trade legislation in such a way as to avoid solving our trade problems at the expense of others, and in a manner consistent with America’s traditional policy of ensuring an open international trading system. While avoiding detailed discussion of specific contentious trade issues, I will note that we are troubled by the trend toward bilateral solutions to trade problems, that such arrangements feed pressures in the U.S. for unilateral action and weaken the multilateral trading framework, and that the U.S., Europe, Japan and Canada must find ways to manage trade issues in a cooperative multilateral fashion, rather than further strengthen the dangerous precedent of bilateral solutions.

I will state your view that the next several months provide the U.S., Europe and Japan with an excellent opportunity to regenerate political commitment to a successful MTN. There is a new EC Commission and new Administration in Japan and the U.S. 1977 thus presents a chance, which we cannot afford to let slip by, to make significant progress on those issues which are central to a successful MTN—agriculture, a subsidies code, a tariff negotiating plan, and North-South trade issues.

I will state your intention to name a top-flight U.S. trade negotiator, adding that the U.S. will be prepared to consult actively with the EC and Japan to break any logjams which occur in the MTN. I will say that we suggest that four or five representatives get together at a high level to see how we might break existing deadlocks and avoid what we see as a dangerous precedent of bilateral deals.

In my meeting with EC Commissioner Jenkins, I will say we would like to begin informal discussions with a representative of the Community as soon as possible, and invite him to suggest an individual.

With your agreement, I will emphasize that the United States wants to get the MTN moving. I will recommend that we agree on intensive governmental consultations as soon as feasible with our key negotiating partners to develop realistic proposals for MTN progress, and I will seek their agreement on having these consultations announced by you at the conclusion of my trip.¹⁰

[Omitted here is discussion of NATO, East-West Relations, Berlin, Communism in Italy, U.S.–Vatican Relations, Non-Proliferation, and Arms Sales.]

Japan: In Japan, as in Europe, I will review planning for the trilateral summit and I will encourage early MTN consultations and cooperation on other stops on the trip, I will avoid detailed discussion of contentious issues.¹¹ I will plan to reaffirm your message to Prime Minister Fukuda emphasizing the importance you place on US-Japanese friendship and bilaterally and in the context of the interests we share in the Pacific with our fellow industrialized democracies.¹²

With regard to the Philippines, I will say that we will be undertaking review of our basing requirements, that we cannot accept the current Philippine negotiating proposal, that the bases are as much in the [interests of?] the Philippines as they are in U.S. interests—and that if the current outrageous demands are not lower we are prepared to do without the bases. I will assure the Japanese that we will consult fully with them during the Philippine base negotiating process.¹³

I will discuss your policies toward the People’s Republic of China and Korea, making sure Prime Minister Fukuda understands the importance you attach to questions concerning Korea, including the issue of troop levels, but not going beyond your stated positions. With your agreement, I will confirm your desire to have close consultations with Japan concerning Korea and U.S. relations with the People’s Republic of China, and agreement on the desirability of close US-Japanese consultations on all issues of common interest can be highlighted in your review of the results of the mission.¹⁴

[Omitted here is discussion of Southern Africa, Cyprus, and the Middle East.]

North-South Issues: I will state your commitment to a constructive relationship with the developing countries, and your desire for close cooperation among the industrialized countries to achieve this objective. I will emphasize that your Administration has not yet had a chance to examine North-South issues in depth and has not come to firm decisions on specific subjects. We will want to consult with the Europeans and Japanese at the earliest possible moment. I will say that we believe there are several suitable forums for such consultations including the Executive Council of the OECD, the Trilateral summit preparatory meetings, and the commissions of the CIEC.

With your agreement, I will make clear your interest in early consultations on North-South issues, and I will assure the Europeans and Japanese that there will be no surprise proposals from the United States.¹⁵

Energy: In each capital I will state that your Administration will give high priority to establishment of a comprehensive U.S. national energy program to reduce import dependence on Middle East oil, and I will review the initial steps—including your plans for a Department of Energy—that you are taking. I will further state that we strongly support cooperation among the industrialized countries in the International Energy Agency in behalf of concerted long-term efforts to reduce collective reliance on OPEC oil and the imbalances in the world energy market. I will suggest that technical cooperation on research and development of new sources of energy might be particularly fruitful. I will point out that, at present, the details of energy policy in your Administration are being developed as a matter of great urgency. In this regard, Jim Schlesinger is preparing specific talking points for the trip which I will ensure coordination within the Administration prior to my departure. With your agreement, I will stress the importance you are according to energy policy, the importance you attach to cooperation among the industrialized countries on energy issues, and the value we see in cooperative research and development programs on new energy sources.¹⁶

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 67, Transition Messages: To Governor #115–141: 1/8–19/77. Secret; Eyes Only. Mondale did not initial the message, which incorrectly identifies Carter and Mondale as the President and Vice President, respectively.
2. Carter announced on January 8 that Mondale would travel to Western Europe and Japan for consultations with U.S. allies. (Charles Mohr, “Mondale to Explain Carter Aims on Visit to Europe and Japan,” The New York Times, January 9, 1977, p. 1) In message Togov 102 to Carter, January 5, Brzezinski proposed the trip as a way “to underline your commitment to prompt action on international economic issues through close consultations with our principal allies, as well as to reduce pressures for early separate summits.” (Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 66, Transition Messages: To Governor #87–114: 12/31/76–1/7/77)
3. On December 2, 1976, Giscard publicly proposed the convening of an Economic Summit of the seven major industrialized democracies: Canada, the Federal Republic of Germany, France, Italy, Japan, the United Kingdom, and the United States, known as the G–7. Giscard also approached President-elect Carter about his proposal, which Carter endorsed. See Foreign Relations, 1969–1976, vol. XXXI, Foreign Economic Policy, 1973–1976, Document 152.
4. No minutes of this meeting were found.
5. Carter circled the word “late” and wrote “omit ‘late’” in the margin adjacent to this paragraph.
6. Carter indicated his approval of this position and wrote: “except no need to name our participants until agenda approved. Do not limit to ‘economic.’”
7. For the text of Carter’s January 31 message to Congress, in which he proposed a 2-year $31.2-billion economic recovery program, see Public Papers of the Presidents of the United States: Jimmy Carter, 1977, Book I, pp. 47–55.
8. Carter indicated his approval of this position and wrote: “Schmidt making major statement this week.” See Document 2.
9. The seventh round of multilateral trade negotiations (MTN) held under the auspices of the General Agreement on Tariffs and Trade, known as the Tokyo Round, was initiated at a GATT Ministerial Conference held in Tokyo September 12–14, 1973.
10. Carter indicated his approval of this position.
11. At a January 22 NSC meeting, during a discussion of Mondale’s forthcoming visit to Japan, Blumenthal, noting that Carter would “be confronted with some very important trade issues in the near future,” suggested that if Mondale did not explicitly refer to such issues, “the Japanese will consider the omission to be significant. The Japanese need constant pressure.” Carter instructed Mondale to tell the Japanese “that unless they are receptive to voluntary agreements this will put us under great political pressure.” Blumenthal expressed his “doubt that we should raise the specific question of voluntary agreements. We should tell them that they have a large trade surplus and should watch it.” When Mondale suggested raising the issue of Japanese color television exports, Blumenthal replied, “As an example.” (Memorandum of conversation, undated; Carter Library, National Security Council, Institutional Files, Box 54, NSC–001, 1–22–77)
12. At the January 22 NSC meeting (see footnote 11 above), Brzezinski suggested that U.S.-Japanese issues be broached “in a somewhat larger framework. We should emphasize the importance of Japan’s assuming a major international role. We should put it in the perspective of history. Then we could turn to specific issues where they might play a greater role: trade, North-South issues, defense, etc. But do it in the context of Japan emerging as a major global power.” Carter agreed, adding, “If Fukuda raises some specific questions it will give us a better idea of their concerns.” When Mondale suggested that the United States and Japan were “immediately establishing closer working relations—this is a beginning,” Carter noted that “Japan is now a major world power and we look forward to sharing the responsibility with her.”
13. Carter wrote “Do not be belligerent re Marcos with Fukuda” at the end of this paragraph.
14. Carter indicated his approval of this position.
15. Carter indicated his approval of this position. At the January 22 NSC meeting (see footnote 11 above), during a discussion of North-South issues, Carter asked whether the U.S. position was “to shift to a multi-national approach.” Vance replied, “On the provision of capital funds, I believe we should,” while Blumenthal noted that, “Many of the solutions in the US involve multi-national fora.” Vance raised the issue of CIEC timing, asking, “Would we like a CIEC meeting before or after the summit? If after, their expectations will be raised and they may not be met. I would prefer early April.” Blumenthal replied, “They already have great expectations about the new Administration. We will have to disappoint them in some regard.” He also suggested that “If others are anxious about it we should have a meeting in April. We could listen but say we have not yet firmed up our views.” Vance agreed.
16. Carter indicated his approval of this position.