65. Memorandum From the Special Representative for Economic Summits (Owen) to President Carter 1
- Summit Follow-Up
1. Attached is the report on Summit follow-up agreed by the International Summit Preparatory Group that met September 29 and 30. Each national delegation is now submitting this report to its country’s Head of State or Government. The report will not be released to the press.
2. The report suggests that most Summit decisions are being well executed. Two failures were noted:
—Germany did not achieve its pledged 4.5%–5% growth target in 1977.
—Japan did not reduce its surplus.
The Group discussed at some length the reasons for these failures. In the case of Germany, there were forecasting errors, which were not recognized in time. In the case of Japan there are structural problems, which will require considerable time to correct. Both the German and Japanese representatives said that their countries’ Summit commitments had played a role in the expansionist decisions that their governments took in September.[Page 216]
3. The report stresses the importance of Germany increasing its growth rate and Japan reducing its surplus. The Japanese said that they would make a 6.7% growth in 1977 and 6% in 1978, and would begin to reduce their external surplus. The Germans said that their 1978 growth target was 4.5%.2
The weaker European countries did not believe that they should join in a general economic expansion in 1978. The Italians and French made clear that they were not about to throw away the gains achieved through their stabilization programs by premature and potentially inflationary expansion. The British position was similar but less clear. All three countries were prepared for moderate expansion if the stronger economies could achieve a good growth record.
4. This Group may meet in December to review the tentative 1978 growth projections that will have been discussed in the OECD in November. If the net effect of these targets seems unsatisfactory in terms of Summit commitments, the Group might say so to Heads of Government. If the targets look good, the Group might prepare a statement that the Heads of Government could issue in their respective capitals in January 1978, so as to put their full authority behind these targets. The German and Japanese delegates felt that this would make it easier to get agreement in their countries on action to meet these targets.
5. There was some discussion of future Summits. The British and Germans seem to be thinking of a meeting in mid-1978. Callaghan and Schmidt will talk further about this when they meet in Bonn in October. Clappier, the French representative, was attracted by the notion of a brief Paris Summit in late 1977 to discuss 1978 growth targets, at the time of your visit to Paris;3 but his enthusiasm cooled when he saw that the other countries were thinking of a later Summit.4
6. If you have any reactions to all this that you wish me to take into account in further planning, please let me know. I will be talking to my French and German opposite numbers further about these matters, when I go to a Trilateral Commission meeting in Bonn in late October.5[Page 217]
- Source: Carter Library, National Security Affairs, Brzezinski Material, Subject File, Box 64, Summits: 5–12/77. Confidential. Sent for information. Both Carter and Brzezinski initialed at the top of the page. Attached is an October 6 note to Carter from Brzezinski that reads: “Henry’s memo provides a good summary. No need to read Tab A.” (Ibid.)↩
- At the end of this paragraph, Carter wrote: “Japan has got to reduce/eliminate trade surplus. They have not tried.”↩
- Carter was scheduled to travel to nine countries, including France, from November 22 until December 3; in early November the trip was postponed. (Charles Mohr, “Carter Postpones Foreign Tour To Deal With Energy Legislation,” The New York Times, November 5, 1977, p. 47) Carter eventually visited France January 4–6, 1978.↩
- Carter wrote “Prefer FRG idea—1978” at the end of this paragraph.↩
- The Trilateral Commission (see footnote 3, Document 6) met in Bonn October 22–25.↩
- For the text of the London G–7 Summit Declaration and the accompanying appendix, see Public Papers of the Presidents of the United States: Jimmy Carter, 1977, Book I, pp. 819–824.↩
- Carter underlined the phrase “It portends little early reduction in Japanese external surplus” and wrote at the end of the paragraph: “We might be facing an unpleasant dialogue—Japan is blocking imports.”↩
- The OECD Economic Policy Committee dispenses macroeconomic policy advice.↩
- See footnote 2, Document 35.↩
- Carter wrote “We’ll give our effort” at the end of this paragraph.↩
- Carter wrote “Let’s push this—” at the end of this paragraph.↩
- See footnote 6, Document 27.↩