§ 3.39 p.m.
§ The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts)
My Lords, with permission I should like to repeat a Statement, made this afternoon in another place by my right honourable friend the Prime Minister, on the Downing Street Summit. The Statement is as follows:
"With permission, Mr. Speaker, I would like to make a Statement on the Downing Street Summit which was attended by the Presidents of France and of the United States, and the Prime Ministers of Canada, France, Italy and Japan and the Chancellor of the Federal Republic, as well as the Finance and Foreign Ministers of the countries represented, and yesterday by the President of the European Commission. Nearly a year has elapsed since our meeting in Puerto Rico, and there was a general wish among the leaders of the major industrial democracies to consult, to exchange experiences and ideas and to harmonise as far as possible our responses to our shared problems, recognising that our wellbeing is bound up together. Our discussion had the purpose of agreeing a common analysis, and so a common approach.
25 "We have been able to share our views with the new American Administration, and to review the state of the world's economy and examine our present policies as a whole. We have reviewed our policies to combat inflation and unemployment and discussed the policies that will be needed to reach a successful conclusion of the CIEC. We also readily responded to President Carter's call for a close examination both of the need to conserve energy and of the dangers of nuclear proliferation.
"Let me briefly re-state seven target areas where we pledged ourselves to action. First, we agreed that our most urgent task is to create more jobs, including special measures for young people, and that, hand in hand with the fight against unemployment, is the fight against inflation. Inflation destroys jobs, corrodes democracy and undermines economies strong and weak.
"Secondly, Heads of Government committed themselves to maintain their targets for economic growth or for stabilisation policies. We recognised that growth rates must be maintained in the stronger economies, increased in the weaker economies, and inflation tackled successfully in both, if we are to cut unemployment and provide a basis for sustained non-inflationary growth.
"If countries concerned seem likely to fall short, they will adopt further policies to achieve their targets. This should give added stability and confidence.
"Thirdly, we committed ourselves to seek more resources for the International Monetary Fund and to support the link between its loans and the adoption of appropriate stabilisation policies. Such facilities are essential if countries now in balance-of-payments deficit are to maintain reasonable levels of internal activity and foreign trade so that the world can avoid the danger of new trade and payment restrictions.
"The danger of new trade restrictions also prompted our fourth pledge: that we would work to expand opportunities for world trade by giving a new impetus to the multilateral trade negotiations originally launched at Tokyo in 1973, whilst not removing the right of individual countries to avoid significant market disruption.
26 "In view of the increase in demand for energy and oil imports which is placing increasing pressure on finite resources of fuel, we pledged ourselves to greater energy conservation and agreed on the need for greater exchanges of technology, joint research and development for the efficient use; of energy resources, including the improved production and use of coal.
"This brought us face to face with the nuclear dilemma. The present generation has an awesome responsibility for the future of mankind. We agreed to launch an urgent study, the first stage of which we intend will be completed within two months, of how to reconcile the world's demand for nuclear power with the need to avoid the spread of nuclear weapons. Our initial studies will be concerned with the terms of reference for evaluating the nuclear fuel cycle internationally.
"Our seventh pledge was to the world's poor, for whom the impact of the oil crisis and world recession has been devastating. The countries attending the Summit agreed to do all in their power by means of trade, aid and finance to help the developing countries towards a just share in the sustained growth of the world economy. We should work for a successful conclusion of the CIEC in Paris at the end of the month. We also invite the COMECON countries to join us in this, the only war worth fighting, the war on want.
"We placed on record a welcome for the work being done to achieve international agreement to eliminate irregular practices in international trade, banking and commerce.
"The text of the Downing Street Declaration, together with the fuller Appendix issued with it, will be published in the Official Report.
"Mr. Speaker, all of us recognised the difficulties of raising standards or in certain countries even of maintaining them, and the problem of overcoming unemployment. But we shared a common determination to succeed, and we ended our discussions with the confidence that our democratic systems have the resilience and the inner strength to surmount our present difficulties. It is our perception that the world economy is one and must be managed increasingly as one. This weekend the seven leading 27 industrial democracies pledged themselves to a programme aimed not simply at their own future prosperity but in working for that prosperity to be more fairly shared in a safe and peaceful world."
My Lords, that concludes the Statement.
§ Following is the Declaration and Appendix referred to above:
§ "In two days of intensive discussion at Downing Street we have agreed on how we can best help to promote the wellbeing both or our own countries and of others.
§ "The world economy has to be seen as a whole, it involves not only co-operation among national Governments but also strengthening appropriate international organisations. We were reinforced in our awareness of the interrelationship of all the issues before us, as well as our own interdependence. We are determined to respond collectively to the challenges of the future.
§ "Our most urgent task is to create more jobs while continuing to reduce inflation. Inflation does not reduce unemployment. On the contrary it is one of its major causes. We are particularly concerned about the problem of unemployment among young people. We have agreed that there will be an exchange of experience and ideas on providing the young with job opportunities.
§ "We commit our Governments to stated economic growth targets or to stabilisation policies which, taken as a whole should provide a basis for sustained non-inflationary growth, in our own countries and world-wide and for reduction of imbalances in international payments.
§ "Improved financing facilities are needed. The international monetary fund must play a prominent role. We commit ourselves to seek additional resources for the IMF and support the linkage of its lending practices to the adoption of appropriate stabilisation policies.
§ "We will provide strong political leadership to expand opportunities for trade to strengthen the open international trading system, which will increase job opportunities. We reject protectionism. It would foster unemployment, increase inflation and undermine the welfare of our peoples. We will give a new impetus to the Tokyo round of multilateral trade negotiations. Our objective is to make substantive progress in key areas in 1977. In this field structural changes in the world economy must be taken into consideration.
§ "We will further conserve energy and increase and diversify energy production so that we reduce our dependence on oil. We agree on the need to increase nuclear energy to help meet the world's energy requirements. We commit ourselves to do this while reducing the risks of nuclear proliferation. We are launching an urgent study to determine how best to fulfil these purposes.
§ "The world economy can only grow on a sustained and equitable basis if developing countries share in that growth. We are agreed to do all in our power to achieve a successful conclusion of the CIEC (Conference for International Economic co-operation) and we commit ourselves 28 to a continued constructive dialogue with developing countries. We aim to increase the flow of aid and other real resources to those countries, we invite the COMECON countries to do the same. We support multilateral institutions such as the World Bank, whose general resources should be increased sufficiently to permit its lending to rise in real terms. We stress the importance of secure private investments to foster world economic progress.
§ "To carry out these tasks we need the assistance and co-operation of others. We will seek that co-operation in appropriate international institutions, such as the United Nations the World Bank, the IMF, the GATT and OECD. Those among us whose countries are members of the European Economic Community intend to make their efforts within its framework.
§ "In our discussions we have reached substantial agreement. Our firm purpose is now to put that agreement into action. We shall review progress on all the measures we have discussed here at Downing Street in order to maintain the momentum of recovery.
§ "The message of the Downing Street Summit is thus one of confidence.
§ "In the continuing strength of our societies and the proven democratic principles that give them vitality—that we are undertaking the measures needed to overcome problems and achieve a more prosperous future".
§ Appendix to Downing Street Summit Declaration World economic prospects
§ Since 1975 the world economic situation has been improving gradually. Serious problems, however, still persist in all of our countries. Our most urgent task is to create jobs while continuing to reduce inflation. Inflation is not a remedy to unemployment but one of its major causes. Progress in the fight against inflation has been uneven. The needs for adjustment between surplus and deficit countries remain large. The world has not yet fully adjusted to the depressive effects of the 1974 oil price rise.
§ We commit our Governments to targets for growth and stabilisation which vary from country to country but which, taken as a whole, should provide a basis for sustained non-inflationary growth worldwide.
§ Some of our countries have adopted reasonably expansionist growth targets for 1977. The Governments of these countries will keep their policies under review, and commit themselves to adopt further policies, if needed to achieve their stated target rates and to contribute to the adjustment of payments imbalances. Others are pursuing stabilisation policies designed to provide a basis for sustained growth without increasing inflationary expectations. The Governments of these countries will continue to pursue those goals.
§ These two sets of policies are interrelated. Those of the first group of countries should help to create an environment conducive to expansion in the others without adding to inflation. Only if growth rates can be maintained in the first group and increased in the second, and inflation tackled successfully in both, can unemployment be reduced.
§ We are particularly concerned about the problem of unemployment among young people. Therefore we shall promote the training of young people 29 in order to build a skilled and flexible labour force so that they can be ready to take advantage of the upturn in economic activity as it develops. All of our Governments, individually or collectively, are taking appropriate measures to this end. We must learn as much as possible from each other and agree to exchange experiences and ideas.
§ Success in managing our domestic economies will not only strengthen world economic growth but also contribute to success in four other main economic fields to which we now turn—balance of payments financing, trade, energy and North/South relations. Progress in these fields will in turn contribute to world economic recovery.
§ Balance of payments financing
§ For some years to come oil-importing nations, as a group, will be facing substantial payments deficits and importing capital from OPEC nations to finance them. The deficit for the current year could run as high as 45 billion dollars. Only through a reduction in our dependence on imported oil and a rise in the capacity of oil-producing nations to import can that deficit be reduced.
§ This deficit needs to be distributed among the oil-consuming nations in a pattern compatible with their ability to attract capital on a continuing basis. The need for adjustment to this pattern remains large, and it will take much international co-operation, and determined action by surplus as well as deficit countries, if continuing progress is to be made. Strategies of adjustment in the deficit countries must include emphasis on elimination of domestic sources of inflation and improvement in international cost-price relationships. It is important that industrial countries in relatively strong payments positions should ensure continued adequate expansion of domestic demand, within prudent limits. Moreover these countries, as well as other countries in strong payments positions, should promote increased flows of long-term capital exports.
§ The International Monetary Fund must play a prominent role in balance of payments financing and adjustment. We therefore strongly endorse the recent agreement of the interim committee of the IMF to seek additional resources for that organisation and to link IMF lending to the adoption of appropriate stabilisation policies. These added resources will strengthen the ability of the IMF to encourage and assist member countries in adopting policies which will limit payments deficits and warrant their financing through the private markets. These resources should be used with the conditionality and flexibility required to encourage an appropriate pace of adjustment.
§ This IMF proposal should facilitate the maintenance of reasonable levels of economic activity and reduce the danger of resort to trade and payments restrictions. It demonstrates co-operation between oil-exporting nations, industrial nations in stronger financial positions, and the IMF. It will contribute materially to the health and progress of the world economy. In pursuit of this objective, we also reaffirm our intention to strive to increase monetary stability.
§ We agreed that the international monetary and financial system, in its new and agreed legal framework, should be strengthened by the early implementation of the increase in quotas. We will work towards an early agreement within the IMF on another increase in the quotas of that organisation.30
§ We are committed to providing strong political leadership for the global effort to expand opportunities for trade and to strengthen the open international trading system. Achievement of these goals is central to world economic prosperity and the effective resolution of economic problems faced by both developed and developing countries throughout the world.
§ Policies on protectionism foster unemployment, increase inflation and undermine the welfare of our peoples. We are therefore agreed on the need to maintain our political commitment to an open and non-discriminatory world trading system. We will seek both nationally and through the appropriate international institutions to promote solutions that create new jobs and consumer benefits through expended trade and to avoid approaches which restrict trade.
§ The Tokyo round of multilateral trade negotiations must be pursued vigorously. The continuing economic difficulties make it even more essential to achieve the objectives of the Tokyo Declaration and to negotiate a comprehensive set of agreements to the maximum benefit of all. Towards this end, we will seek this year to achieve substantive progress in such key areas as:
§ One—A tariff reduction plan of broadest possible application designed to achieve a substantial cut and harmonisation and in certain cases the elimination of tariffs,
§ Two—Codes, agreements and other measures that will facilitate a significant reduction of non-tariff barriers to trade and the avoidance of new barriers in the future and that will take into account the structural changes which lave taken place in the world economy,
§ Three—A mutually acceptable approach to agriculture that will achieve increased expansion and stablisation of trade, and greater assurance of world food supplies.
§ Such progress should not remove the right of individual countries under existing international agreements to avoid significant market disruption.
§ While seeking to conclude comprehensive and balanced agreements on the basis of reciprocity among all industrial countries we are determined, in accordance with the aims of t le Tokyo Declaration, to ensure that the agreements provide special benefits to developing countries.
§ We welcome the action taken by Governments to reduce counter-productive competition in officially supported export credits and propose that substantial further efforts be made this year to improve and extend the present consensus in this area.
§ We consider that irregular practices and improper conduct should be eliminated from international trade, banking and commerce, and we welcome the work being done toward international agreements prohibiting illicit payments.
§ We welcome the measures taken by a number of Governments to increase energy conservation. The increase in demand for energy and oil imports continues at a rate which places excessive pressure on the world's depleting hydrocarbon resources. We agree therefore on the need to do everything possible to strengthen our efforts still further.31
§ We are committed to national and joint efforts to limit energy demand and to increase and diversify supplies. There will need to be greater exchanges of technology and joint research and development aimed at more efficient energy use, improved recovery and use of coal and other conventional resources, and the development of new energy sources.
§ Increasing reliance will have to be placed on nuclear energy to satisfy growing requirements and to help diversify sources of energy. This should be done with the utmost precaution with respect to the generation and dissemination of material that can be used for nuclear weapons. Our objective is to meet the world's energy needs and to make peaceful use of nuclear energy widely available, while avoiding the danger of the spread of nuclear weapons. We are also agreed that, in order to be effective, non-proliferation policies should as far as possible be acceptable to both industrialised and developing countries alike. To this end, we are undertaking a preliminary analysis to be completed within two months of the best means of advancing these objectives, including the study of terms of reference for international fuel cycle evaluation.
§ The oil-importing developing countries have special problems both in securing and in paying for the energy supplies needed to sustain their economic development programmes. They require additional help in expanding their domestic energy production and to this end we hope the World Bank, as its resources grow, will give special emphasis to projects that serve this purpose.
§ We intend to do our utmost to ensure, during this transitional period, that the energy market functions harmoniously, in particular through strict conservation measures and the development of all our energy resources. We hope very much that the oil-producing countries will take these efforts into account and will make their contribution as well.
§ We believe that these activities are essential to enable all countries to have continuing energy supplies now and for the future at reasonable prices consistent with sustained non-inflationary economic growth: and we intend through all useful channels to concert our policies in continued consultation and co-operation with each other and with other countries.
§ North/South Relations
§ The world economy can only grow on a sustained and equitable basis if developing countries share in that growth. Progress has been made. The industrial countries have maintained an open market system despite a deep recession. They have increased aid flows, especially to poorer nations. Some 8 billion dollars will be available from the IDA for these nations over the next three years. As we join others in fulfilling pledges to its fifth replenishment. The IMF has made available to developing countries, under its compensatory financing facility nearly an additional 2 billion dollars last year. An international fund for agricultural development has been created, based on common efforts by the developed OPEC, and other developing national
§ The progress and the spirit of co-operation that have emerged can serve as an excellent base for further steps. The next step will be the success- 32 ful conclusion of the conference on international economic co-operation and we agreed to do all in our power to achieve this.
§ We shall work:
- (I) To increase the flow of aid and other real resources from the industrial to developing countries, particularly to the 800 million people who now live in absolute poverty: and to improve the effectiveness of aid;
- (II) To facilitate developing countries' access to sources of international finance;
- (III) To support such multilateral lending institutions as the World Bank, whose lending capacity we believe will have to be increased in the years ahead to permit its lending to increase in real terms and widen in scope;
- (IV) To promote the secure investment needed to foster world economic development;
- (V) To secure productive results from negotiations about the stabilisation of commodity prices and the creation of a common fund for individual buffer stock agreements and to consider problems of the stabilisation of export earnings of developing countries; and
- (VI) To continue to improve access in a non-disruptive way to the markets of industrial countries for the products of developing nations.
§ It is desirable that these actions by developed and developing countries be assessed and concerted in relation to each other and to the larger goals that our countries share. We hope that the World Bank, together with the IMF, will consult with other developed and developing countries in exploring how this could best be done.
§ The wellbeing of the developed and developing nations are bound up together. The developing countries growing prosperity benefits industrial countries, as the latter's growth benefits developing nations. Both developed and developing nations have a mutual interest in maintaining a climate conducive to stable growth worldwide.
§ 3.46 p.m.
§ Lord CARRINGTON
My Lords, we must thank the noble Lord opposite for having repeated that Statement. I think we should all be careful not to expect too much from Summit Conferences. In the very nature of things, the Heads of Governments meeting for a comparatively short time cannot be expected to go into much detail, or really to lay down the means by which the aims which they have set out can be implemented. But Summit Conferences can do two things, and probably this Conference did both.
First of all, by meeting and exchanging views, and because of the personal contact in so doing, the Leaders of the Governments in the West can to a degree overcome the differences between them; at the lowest level they can begin to understand the reasons why they do differ. I would have thought there was evidence 33 that this Conference had done that, although possibly all of us are a little sorry about the problems of the EEC and Mr. Jenkins. The second thing that a Summit Conference can do—and this one I think has done this—is to outline the direction in which Western policy, in this case, should go, and give it the authority of the West's leaders and the impetus of their backing.
I do not think anyone could quarrel with the seven points outlined in the Statement. They seem to me to be entirely unexceptionable and all of us could support them. Having said that, of course, it is all the more necessary that these seven points should be followed up. The only concrete outline we are given of how any of the points are to be followed up is the Conference on Energy which is to be finished in two months. May I ask the noble Lord opposite—and I suppose in a sense it is a case of the blind leading the blind; I was not there and nor was he, and he may not be able to answer this question—whether he can give the House any more information about how these seven aims are going to be followed up, whether any mechanism has been devised in order to push forward these aims, and whether he could tell us how we are going to be informed about the progress?
§ 3.49 p.m.
§ Lord GLADWYN
My Lords, we also should like to thank the Minister for reading out this Statement of impeccable principles, which, so far as it goes of course, is very satisfactory. I see that priority was given—I think on the initiative of our own Prime Minister—to combating unemployment, and indeed unemployment of young people. But, surely, unless we get a revival of international trade we are unlikely to see much improvement in unemployment, and indeed in inflation, both of which go together, though there may be, I suppose, some advance in combating unemployment and inflation if we all pursue sensible and identical policies. But trade revival is directly connected with the problem of the suitable disposal of the vast sums which are now coming into the possession of the OPEC countries—something like £40,000 million, I believe.
It does not seem to matter so much where these moneys are invested so long 34 as they are invested, and here we come to the seventh point which is the share of wealth that should increasingly accrue to the developing countries. If those moneys are invested in the West, the West can re-invest them in developing countries; if they are invested directly in the developing countries, the West can profit by offering increased trade. It goes round in a circle. Presumably it is in the, interests of OPEC countries that the money should be invested, otherwise in the event of breakdown how are the developed countries to buy the oil at all? Here presumably we conic up against political obstacles—I do not know whether they were considered at the Summit meeting—such as, of course, the difficulty of a Middle East settlement and the necessity of large expenditure on armaments unless we can diminish tension with the Eastern bloc. Therefore the moral to be drawn from this Conference is that everything hangs together—all is one. The last paragraph of the Statement says exactly that:…the world economy is one and must he managed increasingly as one".So if that principle has now penetrated the minds of the greatest of our rulers, certainly the Conference will not have been in vain.
The aim of the Summit must hive been to make it clear that this is the only principle on which we can proceed. My Lords, more especially, should it not be the principle behind the organisation of the European Economic Community? I hope that the Government will agree with that. I only hope that that principle has not been damaged by the extraordinary exclusion of Mr. Jenkins from the first day of the discussions, which I hope the Government will ensure never happens again.
I wish to ask only two questions. The third paragraph of the Statement says that if countries seem likely to fall short—that is to say, countries with weaker economies which are falling short in their growth rates—then all the seven leaders will adopt further policies to achieve their targets. What sort of policies may we therefore expect? Secondly, I am glad to see—and it is one of the most important results of the Conference—that the Ministers committed themselves to ensuring more resources for the International Monetary Fund. Does that mean that the United States will take the 35 lead, because it would depend on the United States finding new money—new resources—for the IMF, and, if so, where will all these resources come from? I am all for that and merely ask whether that will be a great step forward or not.
§ Lord GORONWY-ROBERTS
My Lords, first may I thank the two noble Lords for their comments on the Statement made by my right honourable friend. The noble Lord, Lord Carrington, made the point that if this Summit Meeting has done nothing else, it has value in that it has brought together the leaders of the seven world industrial democracies, and that is undoubtedly a most encouraging aspect of this Summit. I can only say that Mr. Jenkins made a significant contribution, and, naturally, together with the two noble Lords, I would have wished that the opportunity had been greater, but what opportunity was given he made very good use of.
The noble Lord, Lord Carrington, referred to the follow-up. In relation to three of the seven objectives set out in the Statement, one could point to two practical indications of follow-up. For instance, the conference on energy, which is now reaching fruition, will take into account the discussions and decisions in which the Summit was involved when it takes its decisions. The urgent study on nuclear energy, which is expected to be completed in the next two months, is clearly addressed to the central problem of utilising nuclear power for civil purposes while endeavouring to avoid nuclear proliferation in the military field. That study will report in the next two months.
The proposals with regard to the IMF are pretty indicative and this brings me to the question asked by the noble Lord, Lord Gladwyn. I would expect the United States to be very prominent—if indeed it does not take the lead—in the operation to increase the resources of the IMF, but it would not do so on its own. We shall have to wait a little for the actual details of this.
The noble Lord made the point about revival of trade being essential for the reduction of unemployment. I could not agree with him more. The whole tone of the Statement and the Communiqué issued at the end of the Summit meeting, 36 plus the Appendix, which will of course be included in the Official Report, bears him out on this. Apart from the decision to maintain growth, there is also the forthright declaration against trade restriction as well as for the expansion of IMF facilities. I would add one development as regards indications of future, hopeful action to which both noble Lords referred. It is contained in one rather short but very significant sentence. At the end of page 2, the Statement says:We also invite the COMECON countries to join us in this, the only war worth fighting—the war on want".That refers to the seventh pledge to assist the world's poor, but if this is successful in bringing Eastern and Western Europe and Japan together for that purpose, there may be hope for common action between both halves of Europe and other parts of the world for wider purposes even than the assistance of the world's under-privileged.
§ Lord HARMAR-NICHOLLS
My Lords, although few would dissent from the words of this Statement, it could possibly carry dangers for Britain because it can be looked upon as soothing syrup, which will not do us any good. The idea which it presents, that we all suffer from unemployment, investment and taxation problems may be true, but our problems are much worse than those of the other countries, and unless we face that and take internal steps to deal with our taxation and productivity problems this joint Statement will not do. If we swallow this soothing syrup and believe that we all share the same burdens in every respect and have no special responsibility to ourselves, it can be dangerous. I hope that the Government will bear that in mind.
§ Lord GORONWY-ROBERTS
My Lords, as we were reminded by the noble Lord, Lord Carrington, declarations from Summits of this kind must, if possible, issue in action. I think that from the start of this Summit there was the feature of personal and what might be called broad philosophical accord among those taking part. I would point to this evidence of basic consensus, of personal congeniality and philosophical consensus. The noble Lord made the point about our problems being worse. In some 37 respects they are worse than those of the other countries; in some respects they are rather better. That is the realism that we should apply to this country's condition and that of the rest of the industrial world.
§ Lord DAVIES of LEEK
My Lords, although I welcome the Statement, particularly the words of co-operation with COMECON, the reality is that British businessmen and others are already cooperating and obtaining trade wherever they can in the East. However, I have one small caveat to make. I do not wish to be cynical, and welcome the meeting of men together. I have had the privilege on two occasions of attending conferences where people were sincere all the way round the table. We must not take too much notice of cynical writing by theorists and commentators because the statesman has to approach the world pragmatically. If one approaches the world pragmatically it does not necessarily mean that one is a cynic. Cynicism and pragmatism are two completely different things. Consequently, I welcome the Statement. It is an effort at least, in one of the most difficult transitional periods historically, to try to meet overwhelming problems when the old theories of trade, horizontal and vertical, and the old ideas, maybe, of capitalism and socialism, and other "isms" and "wasms", need bringing off the shelves and redusting, and man needs to think again about the problems that he faces.
§ Lord GORONWY-ROBERTS
My Lords, I can hardly add anything to that tremendous philippic except to say that the only thing worth being cynical about is cynicism itself. I endorse what my noble friend has said in such eloquent terms. This was a Summit perhaps with a difference. The leaders who got together share—I almost used the word "ideological"—social and international purposes. They come from a wide spectrum of political experience and thought, from the Right to the Left, centring perhaps on the realism of the declaration I have just repeated.