Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

172. Minutes of a Meeting¹

London, June 8, 1984, 3:12–5:38 p.m.

RESUMPTION—AFTERNOON SESSION

[Omitted here is discussion not focused on international debt issues.]

3:52:33

Lawson: Of discussion of Finance Ministers last night and this AM

1. Interest

2. Debts

3. World economy

4. Trade

(Reading rapidly)

Agree that to keep interest down, inflation must be controlled.

Welcome US downpayment.

Regan does not want mention of US in Communique

Debt—Rise of interest adds to debt service costs. Idea of global discussions or inflationary actions not sound.

Need long-term private investment. Cooperation between IMF and World Bank. Should open markets to LDC exports. Where debtors put their houses in order, should reschedule.

Trade: Reduce subsidies, trade barriers. Can learn much from US on flexibilization.

G–10. Multilateral surveillance.

Study is not complete. Further report by deputies.

Meeting of Interim Committee first half of 85.

Thatcher: Relates to AM discussion of Heads, especially on trade liberalization.²

Any discussion of debt? Case by case basis, etc. Anything else?

Trudeau: This will not satisfy debtors. Suggests we aim to divide and conquer, prevent cartel. Dozens of debtors affected.

Thatcher: Any comments on protectionism? Each summit has opposed it.

Should we recommend starting preparation of a new round while continuing current GATT work.

Mitterrand: Causes of protectionism are the same in all countries. Accepts preparing for a new round. Finish what started in 82, do not set any dates.

Thatcher: We could only recommend.

MacEachen: Refers to Williamsburg statement.³ Through OECD we are monitoring protectionist actions.

OECD are accelerating Tokyo round.⁴

Canada prepared to consider committing to having 85 preparations and start negotiating in 86.

GATT work program in the fall of 82 had deadlines in the fall of 85. Badly behind. If to have credibility, should get on with GATT work program. Summit should at least urge them to get on with it. Will influence view of LDCs on a new round.

Secretary Shultz: Supports MacEachen descriptively, appropriateness of GATT. Welcome intensified discussions leading to a Ministerial in 85 that would make decisions. There has been a lot of standing up to protectionism. Best defense a strong offense.

Secretary Shultz (continues): Nature of trade has changed. Give GATT a push. Something strong in the Communique.

Thorn: Agreed on essentials. Must act as Shultz said and as MacEachen said. Finish work in progress. Embark on preparatory work. But can’t prejudge and set a date. Next Summit can see if circumstances are right.

Stoltenberg: Must proceed on a case-by-case method and develop criteria. (He’s talking about banks, credits; not GATT.) Reschedule when debtors make progress. Take account in our budgets.

Have strengthened IMF. Important. Must recognize that IMF will have liquidity problems in a year or two. Must think in long term. Recent rise in interest rates upsets IMF scenarios. How can we lower interest rates? IMF, World Bank ________ arrive at joint decision accepted by all industrialized countries.⁵

Abe: Re the new round, we should prepare in 85 and start negotiations in 86. Go further than OECD. Will help with debt problems.

Mitterrand: Can we release statement on Democratic Values.⁶ Agreed 4:30:45

Kohl: Political effects in debtor countries, especially Latin America. More at stake than economics—basic solidarity of Western countries. Important for churches—WCC, The Pope, Overwhelming importance for the world—youth, etc.

Secretary Regan: Why case-by-case basis? Debts from syndicatics [syndicates?] of varying composition. Lists about a dozen countries. No single solution for all causes—overborrowing. If they would open their borders, equity capital would come in. Communique should emphasize equity.

Thatcher says we will.⁷

Craxi: Countries even if they can repay debt are burdened—cannot borrow.

IS problem. How can we avoid saying something on all these problems—debt, trade, ODA. Refers to Gandhi proposal⁸ and says we should draft a reply reflecting the principles of Dec on DV.⁹

The President: Caribbean initiative—trade opened, financial aid. Encouraged private investment. Persuaded them to eliminate laws and rules and regulations that obstruct investment. Have sent agricultural teams. Provide practical aid _____.¹⁰ Now have a five-year program before Congress that would do same for Central America.

Nakasone: Diversity among LDCs. ODA in Africa, private elsewhere, 50/50 Philippines. Non-aligned countries important. Some close to Soviet Union, some to the West, some shifting from the Soviet Union to the West.

Lalonde: Gandhi, President of Mexico. Must be a response that will encourage them. Should not set up a new institution. Interim Committee alone not answer to concerns—it is concerned with monetary issues and we don’t want IMF spreading into other activities—movement of capital long-term issues role of World Bank. Should have a more dynamic use of the Development Committee. Financial issues versus development issues—Interim Committee deals only with finance not development.

[Omitted here is discussion of deficits, interest rates, and other issues.]

1. Source: Reagan Library, Executive Secretariat, NSC Trip File, [London] Summit—Economic Declaration; NLR–755–19–15–1–6. No classification marking. The session took place at the London Economic Summit. An unknown hand wrote in the top right-hand corner of the minutes: “WAW notes on session.” A different unknown hand wrote at the top of the minutes: “Je 8. Fri. pm.”
2. Minutes of the morning plenary session, which took place on June 8 from 9:54 a.m. to 12:55 p.m. are in the Department of State, Bureau of Economic Affairs, Office of Economical and Agricultural Affairs Files, Official Economic Summit Files, 1975–1991, Lot 93D490: London Summit—Economic Declaration Mtg Book.
3. For the text of the “Williamsburg Economic Summit Conference Declaration on Economic Recovery,” May 30, 1983, see Public Papers: Reagan, 1983, Book I, pp. 796–799.
4. Reference is to the multilateral trade agreements that were negotiated at the 1973–1979 Tokyo Round of GATT negotiations. See Foreign Relations, 1977–1980, vol. III, Foreign Economic Policy, Document 209.
5. Omission is in the original.
6. For the text of the “Declaration on Democratic Values,” issued June 8 at the London Economic Summit, see Department of State Bulletin, August 1984, pp. 1–2.
7. An unknown hand underlined this sentence and placed a checkmark in the left-hand margin.
8. See Document 119.
9. An unknown hand wrote: “(Declaration on Dem. Values).” at the end of the sentence.
10. Omission is in the original. An unknown hand wrote an illegible word in the blank after “aid.”