Assessing the new political trends, Dublin, 1976

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Assessing the new political trends, Dublin, 1976
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Table of Contents
    Front Cover
        Page i
        Page ii
    Foreword
        Page iii
        Page iv
    Letter of transmittal
        Page v
        Page vi
    Table of Contents
        Page vii
        Page viii
    Preface
        Page ix
        Page x
    Program for Dublin
        Page xi
        Page xii
    Participants
        Page xiii
        Page xiv
    Papers and summaries from working sessions
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
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    Appendix
        Page 71
        Page 72
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Full Text

N L n 9:Th





94th Congress COMMITTEE PRINT




ASSESSING THE NEW POLITICAL TRENDS

Dublin: 1976




R EPORT

ON THE

NINTH MEETING OF MEMBERS OF

CONGRESS AND OF THE EUROPEAN

PARLIAMENT

APRIL 21-23, 1976

PURSUANT TO

H. Res. 1062

AUTHORIZING THE COMMITTEE ON INTERNATIONAL RE-
LATIONS TO CONDUCT THOROUGH STUDIES AND INVESTI-
GATIONS OF ALL MATTERS COMING WITHIN THE JRIS-
DICTION OF THE COMMITTEE A, jl -






'4


JUNE 1976




Printed for the use of the Committee on International Relations


U.S. GOVERNMENT PRINTING OFFICE
73-026 WASHINGTON : 1976


























COMMITTEE ON INTERNATIONAL RELATIONS
THOMAS E. MORGAN, Pennsylvania, Chairman


CLEMENT J. ZABLOCKI, Wisconsin
WAYNE L. HAYS, Ohio
L. A. FOUNTAIN, North Carolina
DANTE B. FASCELL, Florida
CHARLES C. DIGGS, JR., Michigan
ROBERT N. C. NIX, Pennsylvania
DONALD M. FRASER, Minnesota
BENJAMIN S. ROSENTHAL, New York
LEE H. HAMILTON, Indiana
LESTER L. WOLFF, New York
J4)NATHAN B. BINGHAM, New York
GUS YATRON, Pennsylvania
ROY A. TAYLOR, North Carolina
MICHAEL HARRINGTON, Massachusetts
LEO J. RYAN, California
DONALD W. RIEGLE, Jw, Michigan
CAI)ISS COLLINS, Illinois
STEPHEN J. SOLAR, New York
HELEN S. MEYNER, New Jersey
DON BONKER, Washington
GERRY E. STUDDS, Massachusetts


WILLIAM S. BROOMFIELD, Michigan
EDWARD J. DERWINSKI, Illinois
PAUL FINDLEY, Illinois
JOHN H. BUCHANAN, JR.. Alabama
J. HERBERT BURKE, Florida
PIERRE S. nu PONT, Delaware
CHARLES W. WHALEN, JR., Ohio
EDWARD G. BIESTER, JR., Pennsylvania
LARRY WINN, JR., Kansas
BENJAMIN A. GILMAN, New York
TENNYSON GUYER, Ohio
ROBERT J. LAGOMARSINO, California


MARIAN A. CZARNECKi, Chief of Staff
CLIFFORD P. tlACKETT, Special Consultant
JEANNE M. SALVIA, Staff Assistant
(II)











FOREWORD


HOUSE OF REPRESENTATIVES,
COMMITTEE ON INTERNATIONAL RELATIONS,
Washington, D.C., June 22, 1976.
This report has been submitted to the Committee on International
Relations by the members of the committee who participated in the
meetings in Dublin, with an official delegation of the European Par-
liament on April 21-23, 1976.
The findings in this report are those of the committee members who
participated in the meetings and do not necessarily reflect the views of
the membership of the full Committee on International Relations.
Tiio-MAs E. MORGAN, Chairman.
(III)



















Digitized by the Internet Archive
in 2013













http://archive.org/details/asspoli00unit











LETTER OF TRANSMITTAL


HOUSE OF REPRESENTATIVES,
COMMrrEE ON INTERNATIONAL RELATIONS,
Washington, D.C., June 22, 1976.
Hon. THOMAS E. MORGAN,
Chairman, Committee on International Relations,
House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: We are submitting for consideration by the
Committee on International Relations a report on the meetings held
in Dublin on April 21-23, 1976, by members of the committee, and
other Members of the House with an official delegation of the Euro-
pean Parliament.
We hope that the report will be useful to the committee in its con-
sideration of legislation relating to U.S. relations with Europe.
DONALD M. FRASER,
BENJAMfIN S. ROSENTHAL.


















CONTENTS



Foreword -- III
Letter of transmittal ------------------------------------------------V
Preface -------------------------------------------------------- Ix
Program for Dublin ------------------------------------------------ x I
Participants ------------------------------------------------------ xii
Papers and summaries from working sessions:
I. Questions and answer period:
Questions of European delegation --------------------------1
Questions of American delegation --------------------- 3
II. East-West relations:
Summary of discussion ------------------------------5
Paper by Mr. Jahn -------------------------------------- 9
Paper by Mr. Johnson -----------------------------------I
Paper by Mr. Karth ------------------------------------- 19
III. Multinational corporations:
Summary of discussion ----------------------------------2
Paper by Mr. Gibbons and Mr. Lange ----------------------29
Paper by Mr. Archer --------------------------------35
IV. World food situation:
Summary of discussion ----------------------------------- 39
Paper by Mr. Houdet ------------------------------------43
Papers by Mr. Nolan ----------------------------------47 50
V. Mediterranean problems:
Summary of discussion ------------------------------5
Paper by Mr. Normanton ---------------------------------59
Paper by Mr. Ryan -------------------------------------- 6;
VI. Final summary discussion ----------------------------------- 69

APPENDIX
Declaration of OECD member governments on international investment
and multinational enterp"rises----------------------------------------71
Biographies of participants --------------------------------------------79
Brussels, Stockholm, and Rome programs ---------------5

1 The American participants began their program in Brussels at the headquarters of the
European Community. They also had official programs in Stockholm and in Rome follow-
ing the 1Dublin meetings. Programs for these other cities appear on p. 85.
(vii)














PREFACE


This ninth meeting of the delegations of the House of Represent-
atives and of the European Parliament was, in the judgment of the
participants, the most successful to date. Partly this was due to the
well-balanced and well-prepared delegations on both sides and partly
to the good blend of experienced members and those participating for
the first time.
The American delegation of 15 members was the largest ever to
participate in one of these programs; it was composed of five mem-
bers of our committee, an equal number from the Committee on Ways
and Means with the remaining five from three other House commit-
tees. This combination brought a wide range of interests and experi-
ence to the provocative papers and presentations made by both
delegations.
Our practice of meeting in different countries of the European
Community's nine members has been extremely useful for both the
American and the European participants. The exceptional gracious-
ness of our Irish hosts helped both delegations to gain an excellent
understanding of both the diversity and character of Ireland and of
that country's strong commitment to a united Europe.
The important decisions which the European Community will soon
make on direct elections to the European Parliament may mark the
start of a new and more vital stage of development for this assembly.
Direct elections, now tentatively scheduled for May 1978, will also
stimulate the growth of European political parties with broad implica-
tions both within and without the Parliament. We feel fortunate in
having developed a close and fruitful working relationship with our
parliamentary colleagues in Europe as they take these steps toward
unification which may be the most important political development in
this entire century.
DONALD I. FRASER.
BENJAMIN S. ROSENTHAL.
1 IX)














PROGRAM 1


WEDNESDAY) APRIL 21 1976
Morning-Arrivals of the Delegation of the European Parliament.
12:30-Arrival of U.S. Delegation by special plane from Brussels and
transfer to Shelbourne Hotel.
Lunch free.
14:00-Departure by bus from hotels for Dublin Castle, George's Hall.
14:30-Official welcome by Dr. Conor Cruise 0 Brien, Minister for
Posts and Telegraphs, representing the Irish Government, and the
Presidents of the Houses of the Oireachtas (Irish Parliament).
14 :45--Seasson I (George's Hall):
Question and answer period (1 hour). Each Delegation answer-
ing questions submitted in advance by the other delegation.
15:45-Coffee break in the Bermingham Tower Room.
16:00-17:30-Session II-Development of East-West Relations:
"Is D6tente Dead?"
(Papers by Mr. Johnson and Mr. Karth.)
"The European Scene in the Year After Helsinki."
(Paper by Mr. Jahn.)
18:30-19:30-Cocktails offered by I-on. Walter J. P. Curley, U.S.
Ambassador to Ireland, at U.S. Embassy.
20 :15--Ceili" Evening and Dinner offered by the European Parlia-
ment Delegation at the Royal Hibernian Hotel.

TnURSDAY, APRIL 22, 1976
09:30-Session III- (Dublin Castle. George's Hall)
Discussion of a Working Document on a Draft Code of Principles
on Multinational Enterprises and Governments.
(Joint presentation by Messrs. Lange and Gibbons.)
(Comments presented by Congressman Archer.)
11:30-Coffee Break.
11:45-Departure for excursion by coaches in the scenic Diublin Moun-
tains.
(Lunch en route at Lamb Doyles, Sandyford.)
Members of the two Delegations proceed by coach to Aras an
Uachtarain, Phoenix Park, the residence of the President of
Ireland.
16:00-Parliamentary Delegations to be received by the President of
Ireland. Mr. Cearbhail] 0 Dalaigh.
Return to Dublin Castle.
2 See p. 85 for study mission programs for Brussels, Stockholm, and Rome.
(XI)





XII


16:30-18:30-Session IV.
Continuation of discussion of East-West relations.
Political Aspects of the World Food Situation.
"U.S.-U.S.S.R. Grain Transactions."
(Paper by Mr. Nolan.)
"Political Aspects of the World Food Situation."
(Paper prepared by Mr. Symms and presented by Mr.
Nolan.)
"E.C. Perspectives on Agricultural Exports."
(Paper by Mr. Houdet.)
20:00-Buffet reception given by the Irish Government in Iveagh
IIouse (Ministry of Foreign Affairs).

FRIDAY, ARiuL 23, 1976
09:30-Session V-(Dublin Castle, George's Hall):
United States and European Views on Mediterranean Problems.
"U.S. Interests in the Mediterranean: Military Bases and Politi-
cal Developments."
(Paper by Mr. Ryan.)
"Future Roles of Greece, Portugal and Spain in an Integrated
Europe."
(Paper by Mr. Normanton.)
10:45-Coffee Break.
11 :00-Sess ion IV.
Summary discussion.
12:00-Press Conference.
12:30-Farewell Lunch offered by the European Parliament Delega-
tion, in Shelbourne Hotel.
15:00-Departure of the U.S. Delegation.











PARTICIPANTS


MEMBERS OF THE EUROPArw PARLIAMENT
Pierre-Bernard Coust6, Chairman, European Progressive Democrat,
France.
Girard Bordu, Communist, France.
Achille Corona, Socialist, Italy.
Peter Corterier, Socialist, Federal Republic of Germany.
Maurice Faure, Socialist, France.
Aart Geurtsen, Liberal, Netherlands.
Roger Houdet, Liberal, France.
Norbert Hougardy, Liberal, Belgium.
Hans Edgar Jahn, Christian Democrat, Federal Republic of Germany.
Liam Kavanagh, Socialist, Ireland.
Jan de Koning, Christian Democrat, Netherlands.
Erwin Lange, Socialist, Federal Republic of Germany.
Brian Lenihan, European Progressive Democrat, Ireland.
Charles McDonald, Christian Democrat, Ireland.
Tom Normanton, European Conservative, United Kingdom.
Ferruccio Pisoni, Christian Democrat, Italy.
John Prescott, Socialist, United Kingdom.
James Scott-Hopkins, European Conservative, United Kingdom.
Mario Vetrone, Christian Democrat, Italy.
SECRETARIAT OF THE DELEGATION
Karlheinz Neunreither, Director, Responsible for the Secretariat of
the Delegation, German.
Theo Junker, Principal Administrator, Secretary of the Delegation,
French.
Liz Foreman, Principal Secretary, British.

SPECIAL ADVISORS
Michael Palmer, Director, British.
Francis Roy, Director, French.
Axel Stahlschmidt, Head of Division, German.
Gerard Van den Berge, Head of Division, Dutch.
Boudewijn Van der Gaag, Principal Administrator, Dutch.
PRESS AND PUBLIC RELATIONS
John McGowan-Smyth, Director, Irish.
Joseph A. Fahy, Head o~f Dublin Information Office, European Par-
liament.
(xIII)





XIV


PROTOCOL AND ADMINISTRATiON
Dermot McKeever, Principal Administrator, Irish.

INTERPRETERS
ITrsula Padlrg, Gernan.
Giovanna Bittnburg, Italian.
Liselotte Dressel, German.
David Farley, English.
Olga Grinszpun, French.
Susan Guest, English.
Jean-Carlo Macario. Italian.
N. Tonietti, French.

MEMBERS OF CONGRESS

INTERNATIONAL RELATIONS COMMITTEE
Benjamin S. Rosenthal, Democrat, New York, Co-chairman.
Donald M. Fraser, Democrat, Minnesota, Co-chairman.
Leo J. Ryan, Democrat, Califoria.
Stephen J. Solarz, Democrat, New York.
(us Yatron, Democrat, Pennsylvania.

AGRIGITLTURE
James Johnson, Republican, Colorado.
Richard M. Nolan, IDemocrat, Minnesota.

BANKING AND CURE NCY
J. William Stanton, Republican, Ohio.

JUDICIARY
I ferman Badillo, I)eiocrat, New York.
William L. Iliungate, Iemocrat, "is"ouri.

WAYS AND MEANS
Bill Archer, Republican, Texas.
Sam (Uibbons, )emocrat, Florida.
Joseph E. Kartlh, Democrat, Minesota.
'fames G. Martin, republican, North Carolina.
(uy Vander Jagt, Republican, Michign.

5TA F NTERN ATIONA L RELATIONS CO'MMITTIE
Uolert 1I. Blottcler, Consultant.
Clifford P. Hackett, Consultant.
)onald '. Fortier, Minority Consult ant.
Jeanne M. Salvia, Staff As4.stant











Wednesday, April 21, 1976, Morning


SUMMARY OF DISCUSSION
SESSION I--QUESTION AND ANSWER PERIOD
Questions front the European Parliament Delegation:
U.S. TRADE ACT AND PROTECTIONISM3
1. Within the Community there is a perceptible growing anxiety
about the initiatives taken in the United States to restrict the import of
a certain number of products from the European Community. The
legal basis for these initiatives is to be found in the new Trade Act
of 1974.
In toto, the value of $4.5 billion of export products from the Com-
munity is at stake. The most important of these products, which the
United States Government has been investigating, are cars (represent-
ing in itself the value of $2.5 billion), rolled steel, speciality steels and
shoes.
Are the Congressmen aware that between one-fifth and a quarter of
the Community exports to the United States are covered by different
actions of a protectionist origin at various procedural stages under the
Trade Act of 1974, and do they not think that this represents a danger
which can provoke a snowball effect within the trade relations be-
tween the United States and the Community in particular, and on a
world level in general?
Mr. Gibbons replied that the United States is not looking for a trade
war and, in fact, favours a steady reduction of barriers. After the U.S.
International Trade Commission made adverse findings on imports of
shoes and speciality steel from the European Community, the Presi-
dent chose to use trade adjustment assistance rather than trade re-
strictions. He voiced disagreement with the ITC on European
speciality steel but stated some concern that in the case of rolled and
carbon steel, the European Community's value-added tax rebate
amounted to a substantial export subsidiary. This matter was now in
the U.S. courts since the President made no findings of an export
subsidy.
STABILIZED EXCHANGE RATES
2. What contribution could the United States make to the stabilisa-
tion of exchange rates in order to avoid, in particular, the risk of a
series of competitive devaluations?
Would the United States be prepared. in this regard, to take steps to
put an end to the lack of symmetry which characterises the present
situation in regard to intervention on exchange markets and which
places the burden of these operations almost exclusively on European
countries? Would the Americans be prepared, for example, to inter-
vene by accepting debts in foreign currencies?
(1)







Mr. Stanton replied that most of the U.S. Delegation agreed with
the U.S. Government's support of the present system of floating ex-
change rates. He explained that although the Executive Branch con-
sulted with concerned Members of Congress on International Monetary
Policy that Congress' role is mainly that of oversight and review.

AMERICA"N POLICY ON AN-GOLIA
3. Secretary of State Kissinger has stated that: "The United States
will not accept further Cuban military interventions abroad". He has
referred to the Soviet-backed Cuban operations in Angola as an "un-
acceptable precedent", and he has also stated that: "We cannot permit
the Soviet Union or its surrogates to become the world's policeman".
What do the Congressmen consider should be done to prevent Soviet
and Cuban intervention elsewhere in Africa? How do they consider
that the USA and Western Europe should insist that the Cubans
evacuate Angola?
Mr. Vander Jagt noted that Secretary Kissinger had made very
strong statements on these matters and urged that the European Com-
munity should join with the U.S. in protesting armed intervention.
Mr. Martin identifying himself as part of the "hard-line minority"
insisted that moral persuasion was ineffective and that the U.S. should
proNide arms to all who were willing to resist Communist aggression.
Mr. Ryan declared that the three to one vote in the House of Repre-
sentatives against U.S. assistance to anti-Communist factions in An-
golal expresses the desire of the American people to select carefully
the places where the United States will intervene. Although the vote
rejected intervention in Angola it does not necessarily mean rejection
of U.S. intervention in other situations should they develop. In such
sitiuationls the positions and actions of European allies would be very
important to the U.S. position and actions.
DEMOCRACY AND U.S. FOREIGN POLICi
4. Do imiembers of the American Delegation consider that a very
large part of the prestige and even of the strength of U.S. foreign
policy has been, traditionally, based on democratic principles, and do
they believe that this should also continue to be the case today and in
the future What are their reactions concerning U.S. foreign policy,
in recent years, concerning the countries surrounding the Mediter-
ranean basin
Mr. Fraser criticised U.S. failure to speak out and take action in
supp1)ort of democratic governments. If Secretary Kissinger wanted to
dvise France and Italy against Communist participation in their
governments, that was a quite separate il, rItter' from speaking out in
slipport of democratic governments and did nothing to remedy the
,W !7.S. record on that point.
Mr. oordu (France) insisted that if France and Italy wanted demo-
cratic changee then that change must not be denied if the democratic
process were to l)e maintained. Ie said that tIe Communists, who would
(on participate in the French and Italian governments, had not






challenged any existing alliances. In view of Secretary Kissinger's
complimentary statements regarding Social Democrats, he asked
whether or not there was some kind of anti-Communist alliance be-
tween the U.S. and European Social Democrats. Mr. Fraser replied
there is no reason to believe any such alliance existed, but that Ameri-
cans were concerned as to whether the recent changes in French Com-
munist Party doctrine were changes of expediency or not. He noted
that democratic freedoms had disappeared in countries where the
Communist party was in control. Although the U.S. had criticized the
French Communist Party it should be noted also that Moscow had
criticized the French Communists.
CHANGE THROUGH FREE ELECTIONS
Mr. Corona (Italy) said that if the French and Italians wanted
change they had the right to make changes through free elections. Mr.
Faure (France) declared that the shared concept of liberty was the
most important tie binding the Atlantic alliance together. The non-
Communist left in France wanted freedom and if the Communists
were to break the commitment to freedom then the coalition of Com-
munist and non-Communist left forces would collapse since liberty
must be the foundation of the Atlantic alliance.
Mr. Corterier (Germany) observed that the Communist Party
made its greatest gains in countries where the governments had not
made enough social reforms. In West Germany, social reform had
made Communist advances impossible. Mr. Pisoni (Italy) said that
although the U.S. should judge whether or not a government was an
acceptable ally, it might be counter productive for the U.S. to voice
alarm at this early stage-in fact such statements of alarm could ac-
tually serve the purpose of the forces that the U.S. opposed.
Questions from the American Delegation:

DEVELOPMENT AID POLICIES
1. Does the Community believe that a closer coordination of U.S.
and EEC development aid policies is possible, and, if so, by which
mechanisms?
Mr. Kavanagh (Ireland) recommended that at a future meeting a
full session be devoted to this subject. The European Community
would consider it useful to cooperate more closely with the U.S. on
development aid policies. The European Community and the USA
should elaborate common guidelines particularly in regard to raw
materials, energy, industrialization, and trade and aid for the poorest
countries. It is regrettable that the goal of 0.7 percent of GNP for
development aid was still not achieved and that most industrialized
countries were well below that mark. U.S.-E.C. coordination at the
Seventh Special Session of the U.N. General Assembly was reasonably
productive but there was no question that coordination should be
made more effective. The U.S. and E.C. should set up g-roups of experts
for this purpose at the Paris Conference and the UNCTAD Con-
ference in Nairobi.


73-02G-76--2







U.S. COMPLAINT ON TRADE
2. While the Members of the U.S. Delegation are sensitive to the
fears of Europeans about a new round of protectionism, it is difficult
for some U.S. Members to work against restrictive tendencies, es-
)ecially when the Community, in the agricultural field, seems itself to
set a bad example. To illustrate, why did the Community promulgate
regulations effective on 1 April, which will severely damage American
oilseed producers, by requiring that all animal feed be mixed with 5
percent nonfat milk which the Community has in surplus. This means
that there will be a 5 percent reduction in U.S. oilseed exports. Even
though this regulation is effective for only seven months, does it not
violate GATT, and is it not a bad example to U.S. interests also seek-
ing protection ?
MNr. Vetrone (Italy) explained that the European Community was
faced with the problem of reducing a one million two hundred ton
surplus of skim milk powder. The objective was to reduce the stock-
pile not to restrict imports of American soybeans. In order to reduce
the surplus, the European Community has required that animal feed
produced in the EC must contain a 2 percent volume, not 5 percent
of skim milk powder. The reduction of the stockpile, so the European
Community hoped, would have a less negative effect on U.S. soybean
sales than the imposition of levies.
Mr. Normanton (United Kingdom) raised the question of the Con-
corde supersonic airliner and suggested that the U.S. attitude toward
pirchasing the plane represented a non-tariff barrier to trade. Mr.
Ryan replied that inl his Congressional District, which included the
San Francisco International Airport, people had an intense feeling
against the significant increase in noise level that they anticipated if
the Concorde were allowed to land.
Mr. Badillo added that the American Congressional resistance to
the Concorde was not against trade with Europe since Congress sev-
era] years ago rejected government support for manufacturing an
SST in the U.S.
GOVERNMENT ROLE IN INDUSTRY
3. The pattern ini Europe is for a generally igter government role
in ownership and management of basic industries than true of the
United States. Does this factor not restrict the ability and the desire
of European governments to regulate MNEs, for example, and in
ge1nera1 to deal evenhandedly with other countries on restrictive trade
practices when government owned industries are involved?
Mr. Corterier (Germany) reported that the record showed that
govern ent ownership and management of basic industries was
actually decreasing in the European Community. It now stood at
about 8 percent of idustrl production.











Wednesday, April 21, 1976, Afternoon


SUMMARY OF DISCUSSION

SFssIoN I-DEELOr.NENT OF EAST-WEST RELATIONS
(Working Documents: Mr. Jahn, Mr. Johnson and Mr. Karth)'
Mr. Johnson and Mr. Karth from the U.S. Congress introduced
their papers "Is D4tente Dead?" and Mr. Jahn (Germany) from
the European Parliament introduced his paper "The European Scene
in the Year After Helsinki".
Responding to the three papers on detente, Mr. Bordu (France) said
that the changes now underway in the world were irreversible. The
concept of the cold war is outdated for the present stage of world
history. The arms race is a negative factor for solution of the problems
of world peace and a diversion from social reform. The opposition of
the two systems of government is an obstacle to the fulfillment of
human needs and must be remedied by those who governed. The world
needed detente now because of great new demands on the world econ-
omy and the democratic thrust in the world based on interdependence.
The problem of interdependence must be dealt with because integra-
tion had not yet proven itself to be possible.
ROLE OF FRENCH COMIMUNISTS
French Communists would defend freedom in the same way whether
they were addressing Moscow or West Germany, for example. Helsinki
showed amazing success by reaching agreement among a large number
of very different countries. The ensuing policy of governments did not
directly reflect the agreements signed but French Communists strongly
favoured full implementation of the Helsinki Agreements. Peaceful
coexistence was essential; if the balance of power was a determinant of
peaceful coexistence, then balance of power policies must strive to
avoid the use of force.
Mr. Fraser saw little merit in discussion of the overall term "de-
tente" as such, since each of the specific acts taken together by the
U.S. and the USSR should be considered sperarately.
Mr. Corterier (West Germany) observed that in Germany, there has
been only minimal concentration on "detente" as a term. Aside from the
nuclear area, the process called detente seemed to mean efforts to re-
solve certain specific problems in Europe, like Berlin. In order to con-
tinue the process, an equilibrium between East and West must be main-
tained. The equilibrium was now jeopardized by a variety of crises in
the West, not necessarily caused by the Soviet Union---uch as eco-
nomic problems, Portugal, the Greece-Turkey conflict, and lack of
'See pp. 9, 16, and 19, respectively.
(5)






unI Ay.
Western European unity. To continue detente, Western institutions
must be strengthened. Since the USSR clearly wished to avoid a nu-
clear war, it was premature to conclude that it was reverting to cold
war policies; the progress of MBFR would be an important indicator
in this regard.
U.S. COMMITMENTS CLEAR
Mr. Solarz stated there was no alternative to seeking to avoid nuclear
war. Some believed that Angola revealed the weakness of detente, and
that the USSR took advantage of situations where the U.S. avoided
involvement. But, he emphasized, the U.S. must be careful not to
just "jump in" and intervene everywhere. Vietnam showed that such
conduct was not always vital to U.S. interests, but in the current
foreign policy debate in the United States, it was clear that the Ameri-
can people were firmly committed to defend democratic nations in
Western Europe, the Middle East and Japan.
Regarding suspicions of a trend towards isolationism in the U.S.,
he reported that the House of Representatives had recently authorized
more money for defense than the President had requested, and had also
rejected a proposal to reduce troop levels overseas. He characterized
NATO's viability as supremely important to the U.S. and cited two
threats it faced: (1) possible Communist participation in the French
and Italian governments and (2) the comparatively unfavourable
balance of conventional forces in Central Europe. On the former, he
was pessimistic about American ability to prevent Communist par-
ticipation and regarded as unproductive the flow of alarmed pro-
nouncements by President Ford and Secretary Kissinger. On the latter
point, he stressed the need for NATO to increase its conventional ca-
pacity so as to raise the nuclear threshold.

STRENGTIH OF VEST VITAL
Agreeing with Mr. Solarz, Mr. Scott-Hopkins (United Kingdom)
said the USSR remained .fully dedicated to overthrowing the West by
whatever means possible. Detente could be meaningful only if nego-
tiated from a position of comparative strength. Although the nuclear
balance was favourable, the situation with conventional forces was not
satisfactory. He urged a worldwide U.S. commitment because the So-
vlet Union would take advantage of any potential weak spot in the
world, He had reservations concerning MBFR since there could be no
reliable way of monitoring Warsaw Pact promises to cut back forces.
Mr. Prescott (United Kingdom) stressed the importance of detente
as a basis for hope that the division of Europe would not be perma-
ient. lie rejected the notion that NATO was a democratic shield;
rather it was simply a rmiltarN alliance with purely military obljec-
t ives and as such an unsuitable instrument for relaxation of tensions.
ExpreSsing interest in the efforts of the U.S. Congress to ouin more
control over foreign policy, he said it could be a constructive develop-
rnent if Congress fully recognized the reality of the inter-dependence
in the world, particularly between the two superpowers and between
the industrialized and developing nations.







COMMUNISM MIGHT CHANGE
Mr. Corona (Italy) said that Western perceptions of the Commu-
nist world were not always accurate, and that changes were underway
which might prove beneficial to the world: the Communist world was
so divided that China could not be regarded as enhancing Soviet
power; detente, too, had brought some favourable changes. But Com-
munist parties could not transform themselves overnight. In the
meantime, provocations by the U.S. could only make the situation
worse, as had been the case in the past. The Communist world would
not be likely to change in a positive direction if it felt encircled and
constantly threatened. The Italian Communists had said repeatedly
that they would not seek Italian withdrawal from NATO; we had to
take their word for it. If they were to win in Italy, they would win
democratically.
Mr. Hungate said in regard to the French and Italian Communists
that the results of free elections must be accepted, but that the Ameri-
can government could also properly say in advance whether or not a
particular result of an election in a foreign country would be viewed
as favourable to U.S. interests.
GROWING SOVIET STRENGTH
Mr. Jahn (Germany) said d'tente could be regarded as good only
if it had real substance based on facts; in the highly precarious
military situation in Central Europe, the psychological or philosophi-
cal value of detente could not be very important. He applauded the
U.S. Congress for increasing defense spending, and described the
growing conventional military threat across the border ,from his dis-
trict in West Germany.
Disagreeing with a point made by Mr. Solarz, he insisted that An-
gola had great strategic importance to the Soviet Union as a base area.
He said reports from Eastern European refugees had convinced him
that in order for the East to liberalize, the West had to remain
tenacious for the time being.
Mr. Martin expressed the opinion that the United States was mov-
ing toward a consensus view that if no balanced reduction of for s
and armaments were achieved, then a conventional war would break
out, which would be very disadvantageous to the West.
















PAPERS

THE EUROPEAN SCENE IN THE YEAR AFTER HELSINKI

Paper by Hans Edgar Jahn

I. INTRODUCTION
1. First of all Congressman Johnson and Congressman Karth are to be warmly
thanked for preparing two stimulating papers, for discussion in Dublin, both
with the same title: "Is d6tente dead?"
2. In the light of the reassessment of East-West relations which has been
under way at the governmental, parliamentary and media levels in most recent
months, it is hoped that the form adopted by your draftsman for this paper will
help to stimulate a lively debate. Following the introduction there is, first, a
section of brief comments on some of the outstanding developments in East-West
relations over the past few months. Next there is a brief Conclusion setting out
some personal views of your draftsman. Finally, Appendix I is a section on some
current Western views on detente.

II. SOME RECENT DEVELOPMENTS IN EAST-WEST RELATIONS
A. Followup to the Conference on Security and Cooperation in Europe (CSCE)
3. What practical results have come out of the CSCE since the Summit held
at Helsinki in August of last year?
4. As far as military manoeuvres are concerned (a point covered by Commit-
tee I of CSCE), 21 days notice was given, in accordance with the agreement at
Helsinki, by the Soviet Union to NATO and other Western Governments of So-
viet Army and air maneuvers held near the Turkish frontier in January 1976.
Turkey, Greece and Yugoslavia took up the invitation addressed to them by
the Soviet Union to send observers to these military manoeuvres. No notice was
given by the Soviet Union of its autumn manoeuvres held late last year, though
these may have been arranged in such a way that the exercises involved less
than 25,000 men and did not take place within 250 kilometres of a frontier, in
which case there was no breach of the Helsinki terms. It is interesting to note
that, quoting the official texts of Helsinki, three members of the 1968 Czech
Parliament signed an open letter to the Czech Federal Assembly on 25 November
calling for the withdrawal of Soviet troops stationed in Czechoslovakia and the
extension of full human rights to all Czech citizens.

CSCE COMMITTEE II
5. As far as followup Committee H of CSCE is concerned, the Soviet Union
has proposed, in statements made by Mr. Brezhnev and Mr. Gromyko, the calling
of a series of pan-European conferences on energy, transport and environmental
problems. This proposal has been rejected by the United States Government.
6. -There have been a number of developments concerning Committee III of
CSOE, TASS declared in January that during 1976, 18 Western papers would
go on sale in the USSR. Only time will tell how far this promise will become
reality and who will be allowed to buy these papers. As far as foreign journalists
are concerned, restrictions in Moscow on their activities have become less from
1 March of this year. They are now given about the same degree of freedom as
diplomats (i.e., not very much). The Soviet Government has also confirmed a
promise it made at Helsinki that journalists will be given multiple entry visas
instead of having to apply for exit re-entry permits every time they lcve
and return to the USSR. In January TASS stated that rules governing exit per-
mits from Russia for Soviet citizens had been simplified. It appears that the fee
for exit permits has been reduced from 400 roubles to 300. But it seems that
(9)






10


applicants for exit permits are still liable to be dismissed from their jobs,
thrown out of their homes, and subject to special surveillance by the political
police.
7. It should be noted that a "review conference" on followup to CSCE will
be held in Belgrade next year.
B. MBFR
8. Although the Western Governments involved in the mutual and balanced
force reduction negotiations at Vienna made a concession in December 1975 by
offering to withdraw 1.000 nuclear warheads from Western Europe (out of a
total of around 7,000) together with some Phantom aircraft and Pershing mis-
siles, in exchange for the withdrawal of a Soviet tank army, thus responding to
Soviet demands for the inclusion of air and nuclear forces in the Vienna talks,
the negotiations have remained in deadlock. There is no compromise between the
two sides on the cental point. This is that whereas the West insists that the re-
ductions should be "balanced", that is that the final totals of forces on each
side, in the reduction area, should be approximately the same, the Soviet Union
rejects this approach, insisting that reductions should be made on a one-for-one
basis, which would still leave the USSR and the Warsaw Pact with a consider-
able advantage over the NATO forces after cuts had been completed. Most West-
ern, observers feel that the West must continue to insist on its basic position in
this respect, othewise the resulting ageement is bound to be a bad one, and a bad
agreement would worsen rather than improve the existing situation.
9. Some, but far from all, Western military observers consider that the NATO
offer to negotiate a reduction of tactical nuclear warheads stored in Western
Europe was a grave error. They argue that it is primarily through the tactical
nuclear deterrent that Western Europe can redress its conventional inferiority
to the Soviet Union and that, therefore, whatever the technical reasons under-
lying the offer (age of warheads, over-sufficiency of stocks, etc.) this was a
negotiating error.
C. The COMECON approach to the EEC
10. On 1G February Mr. Weiss, Deputy Prime Minister of East Germany and
Vice-President of COMECON, visited Luxembourg and lodged the text of a
draft ECC/COMECON agreement with the President-in-Office of the Council
of the European Communities. Mr. Thorn. The text of the COMECON note has
been summarised in the press (notably by the "Agence Europe") but has not been
made available to members of the European Parliament by the Council or the
Commission, so it is difficult to analyse the COMECON proposals or to comment
on them.
11. 'Nonetheless, it is appropriate to raise a number of nuestions. First there
is the important political and institutional question of whether the deposing of
a note by COMECON with the President-in-Office of the Council respects the
primary competence of the Commission in external relations. Following earlier
soundings by Mr. Fedeyev, Secretary-General of COMECON, with the then
Da.ii-h Presi(lent-in-office of the Council, COMECON was informed, through the
Danish Ambassador in Moscow, that any formal approach by COMECON to the
C)mT, unities must he made to the Commission. It is essential, as far as members
of the Europan Parliament are concerned, that it should be the Commission
whih sihfuld represent the Community in talk and negotiations with
COMECON. If, as reported by the press the COMECON note proposes a trade
awreement, includin- a most favored nation clause, the abolitlo of barriers
to trnidp and the prohibition of restrictions on imports and exports, negotiations
could involve the grant1n of major concessions to the Soviet Union and its
partners. The 1ne1Pstion then arises of whether purely economic and commercial
concessions on the part of the Soviet T'nion would provide an adequate exchange
for privilege ranted by the Community? In particular, it might be asked whether
the Western (lovernnient4 involved should require parallel concessions in other
fl,,lds, 'uch s human rights and disarmament negotiations, before the EEC con-
edes rich trade prizes to COMECON? Tese are just a few of some of the
qu( -tions which immediately spring to mind in this context.
D. A ngoT
12. As far as Wetorn Eul narpens ire concerned it i- he events In Angola
which have done most. in recent months, to create disillusionment and sceptiesm
ibout '(I" It'ehre is no nieed here to rehearse once again, the events which






11

led to the triumph of the MPLA. It is also too late, and therefore useless, to ask
what the United States or Western Europe might or might not have done in
Angola. But we must now face the question of the implications of Cuban military
operations on the African mainland and the massive injection of Soviet arms.
There have been hints and rumours of further Cuban intervention in Africa.
Thus the communique of the meeting held at Conakry, capital of Guinea, on
14 March, between Fidel Castro and a number of African leaders warned that
"the destiny of the people of Namibia, Zimbabwe and South Africa" was involved
in the Angolan struggle. The main question is how far the Soviet Union is willing,
or even able, to restrain Castro in his African adventures. How can the West
stop the USSR and Cuba from military intervention, direct or indirect, in
Mozambique and Rhodesia if not South Africa?
13. Secretary of State Kissinger has stated that: "The United States will not
accept further Cuban military intervention abroad." He has referred to the
Soviet-backed Cuban operations in Angola as an "unacceptable precedent" and
he has also stated that: "We cannot permit the Soviet Union or its surrogates
to become the world's policeman." The British Government also warned Mr.
Gromyko concerning Soviet intervention in Africa during the Soviet Foreign
Minister's visit to London at the end of March. Mr. Gromyko denied that the
Soviet Union planned to intervene in Rhodesia or South-West Africa. "Do not
believe in fairy tales about the Soviet Union having anything to do with Rhodesia
or Namibia," Mr. Gromyko stated at a press conference. On the same occasion
he added that a Moscow deal with the West on Angola was "in the making". But
the acting Soviet representative to the United Nations Security Council, Mikhail
Kharlamov, stated, on 31 March, that the USSR would continue to help all
national and social liberation movements.
14. American and British warnings to Cuba and the Soviet Union are fine, as
declarations of intent. But declarations of intent must be translated into action
to be effective. What sanctions can the US or Western Europe apply in this
context?
E. Human freedoms
15. Although the specific follow-up to the work of the Cultural Committee
(Basket III) of CSCE is discussed separately in this paper, the whole question
of the rights of individuals within the Soviet Union and Eastern Europe requires
separate treatment. Indeed, as far as Western Europeans are concerned the
histories of Solzhenitsyn and Sakharov have probably influenced public opinion
in its thinking about d6tente almost as much as Angola.
16. Views in Western Europe concerning Solzhenitsyn are very much divided
on account of the fact that he has not only criticised Soviet repression of human
rights, but also many aspects of Western European society, and particularly
Western reactions-or lack of reactions-to actions of the Soviet regime. But
Sakharov, also, although more moderately, has made it clear that he considers
Western firmness essential for dealing with the USSR.
17. It is interesting to note that the dissident Soviet historian, Roy Medvedev,
has criticised, from within the Soviet Union, the stance taken by Solzhenitsyn
and Sakharov as reinforcing "the most reactionary circles, sentiments and in-
stitutions" in the Kremlin. Medvedev's views illustrate the diversity of opinion
amongst Russian dissenters. He has been criticised, by other dissidents, for
weakening their common effort, but he has rejected this criticism: "It is not
for us who seek the truth to introduce self-criticism into our midst and forbid
ourselves debate."
I8. An important part of the significance of Solzhenitsyn lies in his historical
works, which inform Soviet citizens, especially the younger generation, of many
things about their country which they cannot have known before-especially
the part played by Lenin and Stalin in setting the Soviet Union on a course of
repression. It should be noted, however, that there have been many criticisms
of what has been called Solzhenitsyn's "simplistic" approach to many complex
Western problems and it has been suggested that he has not fully understood
the pluralistic nature of Western society and its institutions.
19. Whatever one's personal views about the arguments of Solzhenitsyn and
Sakharov might be, there is no doubt that they have sparked off a fundamental
and fascinating debate about the nature of Soviet Government and Communism,
and the way in which the West should deal with Moscow and the Eastern
European countries.






12

F. 'ccutriy of Wrs tern Europe and the U.S. defense commitment
20. On 15 March the London "Times" published the conclusions of a study
carried out by a senior officer at the NATO Defense College in Rome. The basic
point of this study is that, in view of the imbalance between NATO and Warsaw
Pact forces in Europe, a surprise attack by the Warsaw Pact could result in
Pact forces crossing the Rhine within 48 hours. The advance of Soviet forces
could be so rapid, according to the Report, that NATO's 7000 tactical nuclear
weapons in Europe might never be used, in view of the probable delays in reach-
ing a political decision to escalate Western defence to the nuclear level. Whereas
some leading Western military specialists, notably General Steinhoff, have
tended to confirm this analysis, other leading experts, including Dr. Christoph
Bertram, Director of the International Institute for Strategic Studies, have chal-
lenged this pessimistic conclusion as "pretending that the Soviets are ten feet
tall, which they are not, and by emphasising only Soviet strengths and only
Western weaknesses." Whatever the facts may be--and perhaps we are here
dealing with hypotheses rather than with fact-the continuing Warsaw Pact
military build-up and the great advantage given to Pact forces by the use of
standardised equipment, provides in itself a good reason for serious reconsidera-
tion by members of the Alliance of their capability of holding a Warsaw Pact
assault. This problem is, of course, especially important for Germany, par-
ticularly in view of the doubts that have been expressed, over the years, about
the effe(-tiveness of NATO's strategy of "forward defense". In the United States
the Sfcretary of Defense. Mr. Donald Ruinfeld, has warned that if the West
continues to allow its military strength to be eroded a situation could develop
in which "our chief rival has the ability to threaten or intimidate much of the
world, and in which we do not possess the capabilities to withstand that
coercion."
21. Although the Europeans have been doing more to assume their fair share
of tl Western defense burden since the creation of the Eurogroup in 1968, it is
clearly US Governmient decisions, whether these be at the conventional or nu-
clear level, on which the security of Western Europe will primarily depend in
the event of Soviet aggression. Although even a small possibility of the West
unleashing nuclear weapons in order to defend themselves might be sufficient to
deter the USSR from attack, Western Europeans, on their side, will only feel
secure if they can continue to believe in the full and immediate commitment of
American armed might in the event of aggression. In particular Western Euro-
peans need to be reassured about the timing of American decisions, especially the
streamlining of the necessary procedures to release tactical nuclear weapons. It
would be most interesting to have the views of American Congressmen concerning
this I$'lnt at the Dublin meeting.
G. The Sonnenfeldt doctrine
22. At the end of March the European press displayed considerable interest
in the alleged remarks made by Secretary of State Kissinger's prominent ad-
viser. Mr. Heimnut Sonnenfeldt, In London last December to the effect that the
"in'lrganic, unnatural relationship" between the USSR and Eastern Europe,
based on Soviet military might, thratens world peace and "so it must be our
pol icy to strive for an evolution that makes the relationship between Eastern
Europeans and the Soviet Union an organic one." Mr. Sonnenfeldt is reported
as having stated: "The Soviets' inability to acquire loyalty in Eastern Europe
is IAm unfortunate historic failure because Eastern Europe is within their scope
wid area of natural interest. It is doubly tragic that In its area of natural inter-
est and crucial importance it has not been possible for the Soviet Union to
establish roots of Interest that go beyond sheer power."
23. Mr. Kissinger has stated that Mr. Sonnenfeldt's briefing of U.S. Ambassa-
lors to European countries has been misquoted. Mr. Ron Nesen. the White
ouse Press Secretary, has said: "There is no 'Sonnenfeldt doctrine'. There Is
a Ford policy and that opposes Soviet domination of Eastern Europe."
24. Despite the back-pedalling from Washington. Mr. Sonnenfeldt's alleged
thesis has caused grave disquiet in Western European political circles, particu-
larly :s regards its implications for countries such as Ronmania and Yugoslavia.
25. It would be Itiost interesting to have the views of the U.S. Delegation
on this point.






13

H. German-Polish Treaty
26. Since 1949 about 807,000 ethnic Germans have emigrated from Poland to
West Germany. On I October 1975 the Polish and West German Governments
signed four Agreements laying the basis for a full normalisation of their bi-
lateral relations.
27. Two main points of those agreements are:
The permission of the Polish Government for 170,000 to 175,000 more ethnic
Germans to emigrate from Poland to West Germany by 1979; and
The single transfer of 1.3 billion DM from the German Social Security Associa-
tion to Poland for pension settlements, as well as a special, low interest credit
of 1 billion DM for projects favourable for bilateral economic cooperation.
I. Powers of Congress concerning U.S. economic aid
28. Members of the European Parliament delegation will certainly be inter-
ested to hear from Mr. Fraser and his colleagues explanations concerning both
the motivation and implications of the recent Congressional legislation which
empowers Congress to block economic aid by the U.S. Administration to "re-
pressive regimes". If it is the intention of Congress to extend this power to the
blocking of military aid, this could have implications for the East-West military
balance and for East-West relations.
J. China
29. This paper is primarily devoted to Western relations with the Soviet
Union and Eastern European countries, but members will not need reminding
that no general discussion of East-West relations can entirely ignore the posi-
tion of China. The friendly contacts between the EEC Commission and China
continue to develop. Members of Congress will perhaps be able to inform us,
in Dublin, of their reactions to President Ford's visit to China. It would also be
interesting to have comments, at Dublin, concerning the present internal politi-
cal state of China, following the death of Chou en Lai.
K. U.S. grain sales to the Soviet Uniom
30. Since this topic is covered by Congressman Nolan's most interesting work-
ing document there is no need for the present chapter to examine this question.

III. CONCLUSION
31. The events in Angola, the publicity given to the views of Solzhenitsyn and
Sakharov, and the much publicised burst of concern expressed by Secretary of
Defense Rumsfeld, Mrs. Thatcher, General Steinhoff and others concerning
Soviet military power have, taken together, led to a dramatic hardening of the
climate of East-West relations. Both politicians and the public have now entered
a period of hard-headed scepticism concerning the policies, actions and motives
of the Soviet Union vis-a-vis Western Europe and the rest of the world. There
is no doubt that people have been impressed by President Ford's deletion of the
very word detente from the official vocabulary of the US Government. An even
tougher attitude has been expressed by Mrs. Golda Meir: "I don't know why you
use a fancy French word like detente when there is a good English phrase for
it-cold war."
32. But there is perhaps some danger of the reaction against detente going too
far. For the basic alternative facing the West is (a) either to try to control and
manage its relations with the Soviet Union and its allies, attempting to reduce
military and other tensions and promoting contacts in the economic and other
fields where we ourselves perceive a mutual interest in doing so, or (h) to foster
a policy of confrontation which could lead to war and nuclear annihilation.
3.3. In your draftsman's view what is required is for the United States and
Western Europe to build up and maintain their political cohesion, on the basis of
a strong and vigilant military alliance capable of deterring the Soviet Union
either from major aggression or from coercing the West politically, whilst, at the
same time, engaging in an active dialogue with the Soviet Union and the coun-
tries of Eastern Europe concerning the military balance in Europe, the easing of
political tensions, and the development of trade, cultural and other links. But in
this dialogue we must be sure we know what we want and we must not make
one-sided concessions. Our aim must be to make East-West relations a two-way






14


street. Finally, it should be remembered that the dialogue, and our problems in
East-West relations, is not just with the USSR but with a number of states, some
of which have very special, and very different, interests of their own.

APPENDIX I

SOME CURRENT THINKING CONCERNING DETENTE
In this section of the paper, your draftsman quotes, with the minimum of
comment, some views recently expressed by leading Western authorities on East-
West relations, in the hope that these statements will help to enlarge the basis
for discussion.
A. Statements by President Giscard d'Estaing and General Secretary Brezhncv,
dated October 14, 1975
During his visit to the Soviet Union in October 1975 President Giscard
dEstaing advanced the view that ideological competition was not compatible
with d6tente. He stated: "It is indeed desirable that detente in iNterstate political
relations be extended when the time comes to two fields: detente in the arma-
ments context, which can only be validly brought about on the world scale under
effective control and subject to the capacity of all the countries concerned to pro-
vide independently for their security; and detente in ideological competition, so
that the emulation between economic and social systems that are different for
reasons bound up with the nature of people and objectives factors may not lead to
excesive tensions."
In a speech on the ,ame day General Secretary Brezhnev expressed his own
very different view: "It goes without saying that in the course of cooperation
between states with different social and economc systems, with different ide-
ologies, the specific features flowing from those class differences cannot be re-
moved. It would probably be an illusion to believe that one could change the
general approach of each of the countries to the problems which it, proceeding
from its system and its international ties, understands and solves in its own
way.
The relaxation of international tension by no means eliminates the struggle of
ideas. That is an objective feature .
B. "Priorities for (dtent"c by Marsh all D. Shulman
The following extract from an article published in "The New York Times" of
October 31, 1!75, by Professor Shulman (Adlai E. Stevenson Professor of Inter-
national Relations at Columbia University) warns of the possible consequences
if, after years of official over-enthusiasm, a mood of undue sceptism gains
ground in the United States concerning US-Soviet relations.
"What are the real interests of the United States at this juncture, and what
should be our priorities in our relations with the Soviet Union? Here are four
pirop)sitions, advanced in the hope of stimulating an enlightened debate on these
central questions.
1. The central problem of Unite States foreign policy is not detente, but the
threatening disintegration of international relations into widespread violence
andl anarchy.
The risks and instabilities involved in many of these urgent problems would be
infinitely greater if the United States alnd the Soviet Union were locked into a
high-tension relationship instead of the imperfectly ioderated competition called
detente.
Therefore, it is more in the United States interest to have the Soviet Union
on a (16tente course, with all its am ie4tes and dangers, than to have it follow
an alternative policy of ximore active and militant exploitation of the world's
t roubled areas.
2. In our relations with the Soviet Union, the most serious and immediate
longerr is the possibility of a nuclear \var. Therefore, the first priority in our rela-
t ions with the Soviet Union in the immediate perod-whatever the nature of th
S(,vet rglmne-mtt be to reverse the present drift towards more unstable and
less controllable military technologies, towards larger and imre widely spread
military arsenals.
Our real security interests require a station of the military competition
at mo rate lev ls, instead of forcing t1e la'e of new mi111arv technologies in tim





15

vain pursuit of superiorty, which now threatens to block present and future
strategic-arms-limitation negotiations and to reduce our security.
3. The best instrument we have for encouraging more substantial restraint by
the Soviet Union in its foreign policy would be a modest and controlled expan-
sion of economic relations between the two countries, subject to cancellation if
Soviet behaviour were recklessly provocative or if there were signs of a new
military build-up.
There are many tough questions here concerning grain, credits, technology
transfer, which involve a balancing of risks and gains, but they should be decided
on the basis of national deliberation and national policy-not by private traders,
unions or companies.
4. Beyond these immediate priorities, we clearly have a long-term interest in an
evolution of the Soviet system towards a foreign policy of restraint and respon-
sibility, and domestic constraints on police repressiveness and arbitrary disregard
for elementary human rights.
There are forces for change in these directions within the Soviet Union. They
are more likely to be effective during a prolonged period of reduced international
tension than under the mobilised response to high tension. Moreover, although
the spotlight of world public attention can help to inhibit egregious police ex-
cesses, grandstand ultimatums from abroad for concessions tend to stiffen back-
lash resistance to restraints on the police apparatus.
If we make the transformation of the Soviet system our immediate first prior-
ity and use whatever leverage we have for this purpose. we are not only unlikely
to achieve more than the limited steps that are feasible for the Soviet system
as it is now constituted, but we will strengthen the military, the ideologues, the
police, the nationalists, and the other forces who seek to perpetuate the remnants
of Stalinism in foreign and domestic policy.
The main business of the present limited detente is to reduce the danger of
nuclear war by working towards a sane management of the nuclear instruments
of destruction. Unless this is sucessful, there will be no opportunity to work for
the strengthening of democracy in the world."
C. "Detente and political change in Europe" by Pierre Hassner
In an article in "Defense nationale" of December 1975 Pierre IHassner, Director
of Studies at the Centre d'Etudes des Relations Internationales, Paris, argues:
"At first sight, there are two attitudes which end up by denying the existence
of the problem through not distinguishing between the attitude adopted by the
Soviet Union and that towards the Communist, revolutionary or simply left-wing
forces of the various countries. The first, the classic Cold War one, consists of
being equally hostile to both, considering that the danger from both is the same.
The second, that of unconditional d6tente, consists of being equally conciliatory
towards both the Soviet Union and the left-wing movements of the different
countries.
Two other attitudes, on the other hand, attempt to make a fundamental dis-
tinction. The attitude of the United States, and especially of Dr. Kissinger, con-
sists in being conciliatory towards the Soviet Union, in the spirit of the age of
negotiation, and intransigent towards all forms of leftward internal evolution
in Western countries. The logic of this Realpolitik attitude consists of accepting
Communism where it is strong and fighting where it is weak. The idea has a
certain realism, but it is nevertheless paradoxical to think of the Soviet Union
as a power like other powers, with which one can exercise a certain condominium,
whilst seeing the Italian Communist party as an incarnation of evil with which
one must avoid all contact. Apart from the moral objection, this policy is in the
final analysis impracticable, because it is based on illusions both about the con-
servative character of the Soviet Union and about the United States' capacity to
oppose with her veto change in countries where the situation is uncontrollable or
revolutionary.
It would seem to be more reasonable to adopt the opposite attitude: that is,
to be more vigilant about Soviet military power and more tolerant towards
national change which cannot be prevented and which leads to consequences
which the Soviet Union herself cannot control."













IS DETENTE DEAD?


Paper by James P. Johnson
The assigned topic for this presentation is the question whether or not
detente is dead.
The word, itself, is certainly anathema because President Ford has removed
it from the national vocabulary. He has said, however, the policy we have been
following, which has been characterized by the word d6tente, will not essen-
tially change. The United States will continue to pursue its goal of peace in
the world from a position of strength. Obviously, there's nothing new in that
policy and so, perhaps, a more fitting title for this paper would be "Why Should
President Ford Feel it Necessary to Repudiate a Word While Retaining a
Policy ?"
Perhaps the answer lies in the election year politics of the United States.
Ever since World War II, anti-Communism and a strong defense establishment
have been the platforms and issues on which both parties and most politicians
could always fall back when there wasn't much else of interest to talk about
in an election year. Over the years, candidates have vied with one another to
prove their greater patriotism by their willingness to engage in higher defence
spending "to prevent the spread of Communism". Success has varied, but tactics
in an election year have not. Though the American people have undoubtedly
embraced the attempt to move away from cold war tensions, there is still a
residual, basic and unreasoning fear of Communism, which is periodically
exI)loited by some and which can never be ignored by anyone running for public
office in the United States.
SOME EXTREME VIEWS
Just to give an example of how deep this continuing attitude goes, it must
be recognized that there is in our country a number of theologically untrained,
biblically ignorant, self-annointed ministers of the gospel, who preach week
after week to millions of listening citizens in continuing "anti-Communist
crusades". One very prominent group right now says that the United States
is losing its place in the world because: (1) we lack the will to resist Con-
munism (without saying where or how); and, (2) pornography. The order
could be reversed because they seem to equate the two about equally as serious
causes for the alleged coming denouement. There are large numbers of other
citizens who do not believe that the United States should even have an ex-
change of ambassadors or any relationships at all with any Communist country.
Admittedly, these are extreme views which are held by a minority of citizens.
Nevertheless, this element of our society is sulbstantial in numbers, vocal in
expression, and must evidently be appeased in any election year.
Recent political events and polls lead me to believe, however, that the possi-
bility of a demogogic campaign on the issue of detente is receding. Secretary
Kissinger's rating by polltakers is high and the candidates themIselve, after
a little experimenting, have been generally approving of a policy which supports
improved VS-Soviet relations. As one columnist said, "The impU on sems
to be fairly clear that a substantial majority of Americans want their leaders
in Washington to continue to try to avoid a war with the Soviet Union. They
no longer seem to regard Doctor Kissinger himself as superman, but they have
J.t brought th- extremiely critical view that dfdente has simply been a one-
way street for Moscow".
DETENTrE AND ANGOLA
having given that brief, superficial review of our quadrennial circus, let
us examine briefly the elements of detente and the problems which face us.
e ItI lly, (teIIte must b un(Ierstoo(l us being nothIi Ing more than a lessening
of tensions, a broadening of contacts, a tentative ll)lroa(ch toward expanidedl
trade and halting of tIe arms race. e)l tente is not now, and never was, I
(1 f )





17

alliance or even a reconciliation of adversaries. On the American side, it was
defined as a relationship in which the goal of both sides was to maintain peace,
preserve vital interests, and adjust differences in a more understanding atmos-
phere. On the Soviet side, the corresponding term is "razryadka", which liter-
ally means "taking the charge out of a weapon". That is almost the same basic
meaning as detente", which originally stood for easing the tensions on a
crossbow. However, to the USSR, detente has never meant maintaining the
status quo in developing countries and it has been quite clear in saying so.
They have affirmed that there could not be detente in ideology. Thus, the whole
debate has been brought to a head over Angola. More about that in a moment.
The factors which impell us toward dtente-and we must all remember that
de Gaulle was the first to recognize the need to take positive steps to change
the cold war attitudes and climate-are generally recognized to be the follow-
ing: (1) the danger of global destruction through nuclear war; (2) the Soviet
need for Western technology and US trade benefits from commerce with them;
(3) adverse Sino-Soviet relations; (4) Soviet achievement of near strategic
nuclear parity and the prohibitive costs of an arms race; and, (5) a mutual
desire to establish a reliable structure for managing direct crises. Some of the
barriers to detente are recognized to be: (1) the Soviet view that the ideologi-
cal struggle between Socialism and Capitalism must continue throughout the
world, no matter what the relationship is between the two super powers; (2)
each nation sees the other as the only major military threat to its own security
and thereby feels compelled to challenge any action which might unfavorably
tip the delicate balance of power; and, (3) suspicions born of the long cold
war period are engrained on both sides.

A VOLATILE RELATION
It must be remembered that detente has had a rocky road, up to this point.
The Soviets cancelled the 1972 trade agreement with the United States in
response to Congressional action in the Trade Reform Bill, linking most favoured
nation treatment to liberalised Soviet emigration policies. MBFR and SALT II
negotiations have not culminated in agreement. There was a potential con-
frontation in the Middle East in 1973, which demonstrated the volatility of
the relationship.
Excluding the political factors present, which I mentioned earlier, the combi-
nation of heavy Russian spending in their own defence establishment, expansion
of their naval forces and Angola have brought about a renewal of analysis and
debate in US governmental circles. Though the US has said the outcome in
Angola is not going to affect the SALT II negotiations and is not going to mean
another grain embargo, the US has delayed three Cabinet level meetings of
Soviet and American joint commissions indefinitely. The State Department said,
"In light of the situation in Angola, we felt we could not conduct our business
with the Soviet Union as usual". These conflicting statements about our reaction
to Angola should not be confusing. There is a certain amount of face-saving
involved (we were in Angola, too) ; there is a certain amount of I)-aifylig
citizens at home; and there is the need to convey an attitude to the USSR.
The increased expenditures for defence this year will also provide a signal,
if one is really needed.

DETE-N\TE AND DEVELOPING COUNTRIES
In my opinion, the immediate future of detente is tied to Russian actions in
developing countries in the next few years. The people of the US truly want
peace'with the USSR; but we are wary and skeptical, and rapid expansion of
Russian influence can lead to a hardening of anti-Russian attitudes in the US
very quickly. On the other hand. the climate for detente is opportune for
improvement if there is no radical or dramatic event in the next few years
which will he perceived to a threat to American interests. After the election,
a new SALT treaty and expanding trade could renew the expectations that were
so widely felt prior to Angola. A Library of Congress research brief has this
to say, "1)tente has change markedly Soviet-American relations since early
1972 . The substance of the relationship has changed markedly. A multi-
level framework for orderly negotiations has been established and potentially
significant agreements have been reached in the fields of strategic arnmments.
international exchange and science and technology. Economic relates ha ve





18

also expanded. The magnitude of the improved relationship is evident by the
number of treaties. Of the sum, 105 treaties and other international agreements
with the Soviet Union since establishing relationship in 1933, 58 were concluded
between January 1969 and May 1974. Forty-one of them were signed during
1972-1974 . The political and power factors that created the rationale for
detente are not likely to dissolve within the foreseeable future".
Modern history does not offer much hope that European nations or the United
States can avoid war for a prolonged period. But one has to hope, and right
now this appraisal is basically an optimistic one.














"IS D1ATENTE DEAD?"


Paper by Joseph E. Karth
The world-renowed Albert Einsten, after becoming an honored refugee in the
United States, once declared:
"I do not know with what weapons World War III will be fought. But I do
know that World War IV will be fought with rocks".
Grim as that prediction was, the prospects for our world's future that loom
today are undoubtedly even grimmer, because it is possible that the rocks any-
where would be too "hot", radioactively, to handle.
But that ominous prospect is a measure of the chaos, confusion and drift that
now mark international relations and particularly relations between the nations
of the free world on the one hand and the Communist bloc on the other.
I have been asked to make a keynote presentation to this meeting on the theme:
"Is Dtente Dead?" I would like, if I may, for purposes of a more fruitful dis-
cussion to pose the question more realistically: "Was Detente Ever Alive?"
The change is not rhetorical; to the contrary, it is pressingly historical and as
such has decisive meaning for the world of today and the world of the future.
The question, "Is Detente Dead?" suggests the possibility that it may not have
died and that. therefore it might be revived and even made healthy.
The decision hy President Ford. to abandon the word "dtente" makes our re-
vised question more pertinent.

DID DtTENTE EVER EXIST?
There are three major aspects of our question. Was there ever actually such an
international agreement as detente? Was there ever detente in the sense that the
people of the free world or the people of the Communist world or the people
within any country had a common understanding of the term? And finally and
most importantly, was detente ever an operational part of Soviet Russia's foreign
policy or its pragmatic practices?
It is my conviction and the conviction of ,a growing number of people in the
United States and throughout the free world today, that the answer must be "no"
and that in no realistic sense did dktente ever exist.
But before the doubts began to rise about the very existence of detente, a
marked change of attitude toward detente became clear in all sections of the
American population. Public opinion polls taken in 1975 and 1976 disclosed a
mounting American distrust of the Soviet Union's motivations, intentions and
actions and finally a widening rejection of detente itself.
The idea of detente, we remember, came on the international scene in May
1972. It had everything in its favour. The American people approved; the press
approved; national leaders and the American intellectual community approved.
For good reason. Detente was seen as the end of the Cold war, the easing of
frictions, armament races and the danger of open hostilities. Detente was hope;
and Americans as well as other millions of people in the free world wanted, most
of all, hope.
CRITICISM OF DETENTE
Although frequently antagonists on both international and domestic issues,
the Wall Street Journal, the voice of American business and industry, and the
AFL-CIO, representing the American labor movement, are now criticising de-
tente in language that could easily be interchangeable. The Journal declared last
month (March 10) that "DC-tente is dead. And yet (Secretary of State Kissinger)
refuses to recognize it". As for American labor, AFL-CIO unions, individually
and collectively in convention, unanimously condemn detente and all its works
from the "one-sided" exchange of technology to the costly sale of grain to the
Soviet Union.
(19)


73-026-76-3






20

On the political scene there has been no outcry from the Republican Party since
its leader, President Ford, publicly repudiated detente and announced that hence-
forth United States policy would be something called "peace through strength".
On the extreme "right", Ronald Reagan, Ford's rival for the Republican presi-
dential nomination, seems to consider detente a fraud that should promptly be
killed if it is not already a corpse.
The Democratic Party, in position papers being prepared for its national con-
vention in July, will deny that detente ever worked and will advocate its re-
placement with a new philosophy and new implementing structures.
Within the US government there is occurring a policy shift much deeper and
broader than any abandonment of a term or shibboleth. The nation's most impor-
tant and influential newspapers have recently noted "a serious stiffening in the
United States' attitude toward the Soviet Union". This stiffening derives, of
course, from the recurrently bellicose and imperialist actions of the USSR in
Africa and elsewhere. But it also derives from an increasing doubt among the
leaders and rank-and-file of both parties that detente has ever been a two-way
street, that it has ever been a reciprocal operation.

A CONSENSUS ACHIEVED
So from every area of American life-public opinion polls, organised labour,
business, the major political parties, and the government itself-there has arisen
a consensus. And that consensus has been based on one or all of the following:
That detente has not achieved its primary purpose of relaxing international
tensions; that detente has not restrained the Soviet Union's military adventur-
ism; that detente has never been an effective two-way street; and that, in fact,
detente has operated at a disadvantage to the free world.
The Cold War-including, the not-so-cold occupation of Hungary and Czecho-
slovakia-dominated international relations In the 1950s and 1960s. Then with
the fall of Vietnam and the departure of American troops came detente.
Today, after nearly four years of detente, the question for the free world has
become; Was d6tente a delusion? Was detente merely a continuation of the Cold
War by the Soviets and a prayer for peace by Americans?

THE SOVIET RECORD
To answer that, we need of course to look back on these four years and review
the record of the Soviet Union-not what the Soviet Union said but what it did.
That record includes:
The successful Invasion and takeover of Angola by Soviet arms carried by
4,000 to 6,000 Cuban troops;
Similar Russian military threats, most of them continuing, in Mozambique,
Guinea-Bissau, and elsewhere in Africa;
The provision of vast amounts of Russian military hardware of all varie-
ties to Syria, Egypt and other Arab countries, plus the Palestine Liberation
Organization (PLO), all of whom are openly determined to wipe out
democratic Israel, the free world's only ally in the Middle East;
The strenuous, though unsuccessful, Soviet effort to capture the fledgling
government of Portugal;
The USSR's enormous buildup of Its own military power, and the con-
tinuous enlargement of its army, navy, and airforce strength;
The deadlock after deadlock, by Soviet choice, in the Strategic Arms Limi-
tation Talks (SALT) during 1975 and 1976;
The repeated Kremlin attempts to whip the large Communist parties of
Italy and France into conformity with Soviet policies;
Accelerated and widened involvement of the Soviet Union in Africa;
The Soviet Union's corruption of the United Nations by pressuring the
Arab and African member states to vote for the outrageous resolution equat-
ing Zionism willi racism;
The perversion of the International Labour Organization (ILO) for Soviet
purposes and the ILO's gradual degradation Into a Soviet tool;
The USSR stalling tactics on the H1elsinki agreement to ease the exchange
of people, news and ideas;
The Soviet government's intensified warfare on a substantial number of
its citizens because they have indicated a desire to emigrate, including the
)wrsecutioi, a rrests, Siberian exile and commitillents to mental asylums of
those citizens;






21

The increased jamming of Radio Free Europe and Radio Liberty broad-
casts; and
The Soviet Union's success in forcing the exclusion of Radio Free Europe
reporters from the winter Olympic Games and its current attempts to have
them excluded from the Montreal Olympics this summer.
This, then, has been a partial catalogue of the USSR's crimes against detente.
We hardly need ask ourselves: Have these Soviet actions relaxed international
tensions? Do these actions reflect a USSR "accommodation" to the free world
or an intention to enlarge a spirit of amity between the Soviet Union and the
free world?
CONTINUED COLD WAR

Of course they do not. Rather than any mythical detente they suggest a con-
tinuation of the Cold War by the Soviet Union, even if on a somewhat diminished
scale. But even a diminishment is questionable in view of Angola and the Soviet
Union's unforgivable arming of the Arab countries for their almost inevitable
attempt to destroy Israel
But surely we who have lived with Soviet Communism for more than a half-
century cannot be astonished at the Soviet Union's making a mockery of Dr.
Kissinger's mythical detente. We witnessed, after all, the Soviet Union's rapid
opposition to the post World War I Marshall Plan and programmes to rehabili-
tate war-torn Europe. And we witnessed the building of the Berlin Wall, the
ultimate symbol of Soviet Communism's paranoia and fear of contact with the
West. And we witnessed the occupations of Hungary and Czechoslovakia and
the murder of Vietnam with Russian weapons.
Detente, we can now see, was a figment of Dr. Kissinger's imagination rather
than a practical, realistic formula for easing tensions and creating friendlier
relations between the US and USSR. And Brezhnev has confirmed this in stating
that under detente there was no change in Communist objectives either in the
Soviet Union or abroad. Was it wishful-thinking that made us forget, temporar-
ily, that the USSR is a Marxist state irrevocably committed to the "class strug-
gle" and to the destruction of capitalism and so-called bourgeois society?
A GRAND DELUSION
Detente was Dr. Kissinger's "grand delusion," his self-delusion, his confusion
of fiction with fact. The tragedy is that his delusion was able, for a time, to
mislead many Americans, including much of the intellectual community and the
press.
One of the riskiest consequences of detente was that it encouraged American
businessmen-who should have known better-to exchange their technological
secrets for a mess of pottage. They gave away, almost for nothing, the techno-
logical and scientific advantages we have traditionally held over the Soviet
Union. We are going to live to regret the exchange of those secrets for the right
to sell Pepsi-Cola in Murmansk and the transplantation of Alaskan musk-oxen to
Siberia.
We quickly lived to regret the first big deal under detente. The mammoth
sale of grain to the USSR proved, first, not as profitable as originally antici-
pated; second, highly expensive for American consumers who found themselves
paying higher and higher prices for bread and, third, it gave the Soviet Union
control of world food surpluses at a profit and without having grown any of
those surpluses.
But once again in 1976 American businessmen-industrialists and farmers-
are goifig to prop up the faltering Soviet economy with American technical know-
how and with America's golden sheaves of grain.
Detente failed-failed even a myth-for the above and for other reasons.
Joseph Kraft, a widely syndicated American newspaper columnist, recently put
his finger on another reason for the myth's collapse.

ROLE OF KISSINGER
"Vietnam alone does not explain the widespread disillusionment with detente",
the columnist wrote. "By no mere accident the term has acquired a bad name
just as the stock of the Secretary of State has dropped.
"To a large extent the fault lies with Dr. Kissinger himself. For years he has
disparaged the role of moral feelings in foreign policy. He has systematically
favoured corrupt and repressive governments of the right wing. He has beeii






22


deceptive with Congress and the country. The fact is that Dr. Kissinger does not
satisfy the yearning Americans feel for a foreign policy with moral content. His
diplomatic style reinforces the uneasy feeling that detente means trafficking with
the Commnnists to no good end."
It should be added that Kissinger's lack of a "foreign policy with moral con-
tent" is also sadly and reprehensibly evidenced by his encouragement-through
failure to do anything and failure to say anything--of the 200 American business
firms that have Joined the Arab boycott campaign against Israel. Through a
variety of available means Kissinger could have put a halt to this disgraceful
participation by American businesses in the Soviet-approved boycott.
But Kissinger's desire to appease the Soviet Union is almost obsessive. That
is why he came before Congress and asked us to guarantee financial credits to
enable the USSR to develop undeveloped resources. Congress did not approve the
Kissinger gu a r~ ntees.
Even while the detente bubble was continuing to disintegrate, Kissinger could
not bring himself to admit it. Instead he declared in a national broadcast that
"politically I think any candidate who says 'abandon detente' will be the loser
in the long run". President Ford obviously didn't believe his Secretary of State. A
few weeks later he abandoned dtente.











Thursday, April 22, 1976, Morning


SUMMARY OF DISCUSSION
SESSION. II-DIsCUSSION OF A WORKING DOCUMENT ON A DRAFT
CODE OF PRINCIPLES ON MULTINATIONAL ENTERPRISES AND Gov-
ERNM 3ENTS
(Worlng Documents: Mr. Gibbons and Mr. Lange, and Mr. Archer)'
Mr. Gibbons, rapporteur for the American delegation. felt that the
internationalization of production was basically to positive phenom-
enon. There was therefore no question of hostility to the multina-
tional enterprise as such. But there was an obvious need for a number
of directives- on the activities of enterprises engaged in international
operations.
It was true that other organizations. in particular the OECD, were
preparing relevant directives. The OECD draft 2 relied, however, on
voluntary commitments, whereas what the two rapporteurs wanted
was a binding agreement.
It was certainly not intended that national sovereignty should be
affected by the agreement. It was for this reason that the draft con-
tained a provision to the effect that, in the case of disputes, the law
of the host country should take priority. The draft was based on the
principle of equal treatment for multinational and national enter-
pries.
Mr. Gibbons regretted that publicity about multinationals usually
concentrated on their shadier aspects. This would certainly result in
an intensified investigation into their activities.
BI-DING CODE NEEDED

Mr. Lange, rapporteur for the European Parliament delegation, felt
that theclances of suc.eess-for the draft had improved now that cer-
tarn undesirable- practices of enterprises operating across national
frontiers had recently been the subject of publicity. From what had
been revealed it. must be obvious that a voluntary code woul be quite
useless. What was needed was a legally binding set of rules applicable
throughout the world. Economic structures had developed more rap-
idly than political ones. The political sector had to catch up.
Many of the activities of international enterprises could no doubt
be termed legal in a formal sense, but this did not mean they were
acceptable. Such activities had to be made impossible. It was inadinis-
sible that national parliaments should tolerate a situation wlre large
enterprises could lay down the law to the political authority.
1 See pp. 29 and 35. respectively.
2 See p. 71 for 0EID proposed code.
(23)





24


Efforts to achieve an international agreement on enterprises op-
erating across national frontiers were not something that had just
come into fashion. As early as 1947. when GATT came into being,
consideration had been given to introducing international regulations.
Both delegations should at least be able to reach agreement on the
principle of a legally binding agreement by the end of the morning.

SERIOUS OBJECTIONS RAISED
Mr. Archer stated that he had serious objections to the draft put
forward by Mr. Gibbons and Mr. Lange. In his view, intervention by
government authorities in the manner proposed in the draft report
was not the best way to solve the problems attendant on international-
ization of production. The proposals contained in the working docu-
ment could lead to the creation of an international organization with
powers that should be entrusted only to an elected body.
Mr. Archer raised the following specific points in connection with
the working document:
I aragraph 5: the idea of introducing "political control" appeared to
conflict with the free enterprise system.
Paragraph 10: it is a questionable procedure to say that, in case of
disputes, the law of the host country would prevail.
Paragraph 11: it was doubtful whether an international secretariat
of thle kind intended here could provide the most satisfactory solution
to the problem.
Paragraph 14: this passage required further explanation.
Paragraph 17, ff: harmonization of legislation on competition could
be us-efiil. although the effect it would have was still uncertain.
Paragraph 20: it is asking too much to require enterprises to pro-
vide t he authorities responsible for competition matters with all the
information asked for.

FURTIIER OBJECTIONS
Paragraph 22: the obligation to report all projected investments
should not mean that approval by a government authority should be
required in advance.
Paragraph 24: this gave excessive power to government authorities.
Paragraph 26, ff: provisions amplifying existing regulations seemed
unnecessary, since a sufficient number of taxation agree-ments had
already been concluded betweenn the industrial countries. Paramraphs
27. 28, 32. 33 and 34 were out of place in the working document.
Paragraph 42: this required further explanation.
Paragraph 44: There is no reason why residents of the host country
had to be allowed to acquire shares.
Paragraph 45, if: labor market policy was best left to the enter-
piases and trade unions. Mr. Archer felt that it was unnecessary that
'at la]st one host country national should have a seat on the manage-
Im-lt 1w.-ard."
Pai agraph 52: this required further explanation.
Paragraph 53: this passage should be elaborated further.
Recapitulating, Mr. Archer felt that the changes he had proposed
would considerably improve the document by Mr. Gibbons and





25


Mr. Lange; however, there were still insufficient guarantees of the
fundamental rights of sovereign governments, the owners of multi-
national enterprises, and their employees.

PREVENTING FUTURE ABUSES
Mr. Hougardy felt that it was not enough to investigate the scan-
dals such as those that had recently come to light, but that a way had
to be found of preventing their recurrence.
The draft prepared by Mr. Gibbons and Mr. Lange was aimed at
both multinational enterprises and governments, but especially at the
former. Care should be taken to ensure that the code was not used as
a pretext for restrictive national legislation. Governments must also
accept rules of good conduct in this complex area.
As regards free access to information on multinational enterprises,
Mr. Hougardy felt that the provisions in force in the United States
could well serve as a model. It was extremely difficult to lay down
comprehensive rules on transfer prices: who was to say what was a
fair transfer price, what came just within acceptable limits and what
was unacceptable?
It was somewhat alarming that so many organizations were occu-
pied with the problem of international production at the same time.
It was surely obvious that an attempt should be made to include
Japan in this entire effort and also to coordinate efforts with the
OECD. Further progress could then be based on what that organiza-
tion had already achieved and in this way there might also be less
scope for nationalistic tendencies within that organization. In con-
clusion, Mr. Hougardy wondered if the problem of multinational
enterprises should not also be raised in the North-South dialogue.

A STRONGER CODE NEEDED
Mr. Prescott felt that there was no need to discuss further the
principle of an international agreement on multinational enterprises;
it was obvious that there had to be a binding agreement. There were
two points no which he questioned the proposals by Mr. Gibbons and
Mr. Lange.
It was very doubtful whether competition policy provided the best
means of keeping the power of multinational enterprises within limits.
The question of investments was more to the point, since this was what
determined economic trends.
Secondly, it could be dangerous to proceed on the principle that the
law of the host country should take precedence in case of disputes.
There was always the possibility that certain countries would see the
advantage of maintaining or introducing arrangements favourable
to multinational enterprises.
NEED FOR BETTER INVESTIGATIONS
Mr. Prescott finally suggested that the European Parliament ought
to make more use of methods of investigation of the kind regularly
used in the United States, like public hearings, for example.
Mr. Normanton felt that it was hopelessly unrealistic to expect that
binding rules could be instituted on a worldwide scale. Integrity was





26


the general rule among multinational enterprises and practices such
as had occurred in the Lockheed Company were the exception. He
could support most of the observations made by Mr. Archer. Finally.
he noted, there is little chance of influencing the behavior of the great
state corporations like those in the Soviet Union.
Mr. Badillo felt that too little attention had been paid in the debate
to the demands of the Third Vorld. If some speakers felt that the
working document went too far, it should be remembered that the de-
mands of Third World countries were usually much stiffer. The Latin-
American countries would not be content with, for example, the pro-
vision that "enterprises must allow residents of a host country to
acquire their shares" (in a subsidiary of the foreign company) (para-
graph 44). These countries demanded the right to buy out the entire
subsidiary on conditions that were acceptable to them as host country.
The working document by Mr. Lange and Mr. Gibbons therefore
seemed more relevant to the industrialized countries.

X-c S AVOID COMPETITION
Mr. Bordu felt that scandals such as those that had recently come
to light were inherent in the nature of the multinational enterprise.
They were the direct consequence of attempts by these enterprises to
avoid the pressures of competition. It would be a good thing if com-
mittees of enquiry were to be set up that could go into the matter in
much greater depth than had so far been done.
It was true that the multinationd enterprise had stimulated techni-
cal progress, but it had also led to the demise of the small and medium-
sized firm.
The measures proposed by Mr. Lange and Mr. Gibbons were neces-
sary but incomplete. Investments should not only be reported : the el-
plovmnent opportunities they) provided should also be examined.
Mr. Coust6, chairman of the European Parliament delegation, re-
ferred to the special nature of the day's debate in that, for the first
time. a document drawn up jointly by reapporteurs from delegations
from the United States Congress and the European Parliament has
been the basis of discussion. This was all the more remarkable since
the topic under discussion was an extremely difficult one.
It was undeniable that international production was a logical de-
velopment of the present economic system; it was, however, one that
led to the (declifle of certain economic and political structures.

POLITICAL smUCTUnS LAO
Mr. Lange felt that at the root of the problem was the principle that
freedom rmust never mean licence. Everyone was in favour of freedom,
but freedom could be abused. Enterprises engaging in international
operations had mr1ade decisive contributions to technological progress,
bIt this did not entitle them to positions of political power.
political l integration was lagging behind economic integration. The
_ap had to be closed, and this would have to be done through an
international agreement. It would probably be sensible to proceed





27


gradually, confining initial action to an international agreement on
cooperation between competition and taxation authorities; a gradual
extension of the geographical area covered could also be considered.
A NEW KIND OF GATT NEEDED
There was no question of the two rapporteurs wanting new govern-
ment authorities to be set up. All that was necessary was that even-
tually-not necessarily in the first stage-an international body should
be created with responsibility for implementing an international agree-
ment on multinational enterprises. Its function, in its own field, would
be comparable to that of GATT in the field of international trade.
All the data that the rapporteurs wanted to have published could
be made public without delay.
It was certainly useful to bear in mind what had been accomplished
through the OECD, but it was clear that at best this organization
could achieve only limited success and was in no position to bring
about a binding agreement.
Mr. Pisoni called for improved safeguards of the rights of
employees.
CODE REVISIONS PROPOSED
Mr. Scott-Hopkins accepted that something had to be done along the
lines suggested in the working document by Mr. Lange and Mr.
Gibbons. The thought of creating a new international organization
did not, however, appeal. He wondered if the task could not be taken
on by GATT.
He supported Mr. Prescott's proposal on introducing methods of
investigation by the European Parliament similar to those used by the
American Congress.
Mr. Gibbons proposed that he, together with Mr. Lange, should
undertake some revision of the working document so that an agree-
ment in principle could be worked out at the next meeting.
Mr. Hougardy observed that the delegations were not competent to
adopt decisions.
The chairman, Mr. Fraser, suggested that the rapporteurs should
incorporate a proposal in their working document as to the subsequent
procedure to be followed; this was approved, and the meeting closed.
















PAPERS

A DRAFT CODE OF PRINCIPLES ON MULTINATIONAL ENTERPRISES
AND GOVERNMENTS

Paper by Sam Gibbons and Erwin Lange

INTRODUCTORY REMARKS
1. The internationalisation of production is a logical consequence of the devel-
opment of our economies; as such, it is a positive phenomenon, contributing to
economic growth and increasing prosperity.
2. Nonetheless, the organisation of operations beyond national borders by
multinational enterprises may lead to undesirable concentrations of economic
power and to conflicts with national policy objectives.
3. Therefore, it is appropriate to seek to encourage the positive contributions
which multinational enterprises can make to economic and social progress and
minimise and resolve the difficulties and problems which may arise from their
operations.
4. Just as it is normal for firms increasingly to carry on activities beyond
the frontiers of their own country, so it is normal and necessary for an inter-
national framework to be set up for these international activities obliging the
firms in question to respect certain basic rules and at the same time offering
them the necessary legal security.
5. Economic integration, as embodied in multinational enterprises, has stolen
a march on politics, for which in most cases the national frontiers remain the
relevant framework. Although far-going economic interdependence can be a use-
ful stimulus toward political integration, it is nevertheless essential in inter-
national relations too for public policies to take precedence over economics: that
is, the framework in which the multinational enterprise operates must be under
political control. This condition is not being met at present. Accordingly, certain
rules need to be laid down in an international agreement.
6. The problems connected with the activities of multinational enterprises
(MNEs) can no longer be dealt with only in a national context and cannot yet
be solved on a world scale. Agreements on M'NE activity among industrialised
nations would represent a great step forward. The delegation of the U.S. Con-
gress on the one hand and that of the European Parliament on the other can
in the first instance help to bring about an agreement between the United States
and the European Community, to which Japan, Canada, and other industrial
countries may later accede.
GENERAL FRAMEWORK
7. The agreements to be concluded, initially between the United States and
the European Community and subsequently expanded and extended to the whole
world, must be binding on all parties-that is, have the force of law in all the
States party to them and impose legally binding obligations on firms based in
or opera ting in those countries.
8. Multinational enterprises are companies of private, state or mixod owner-
ship established in different countries and so linked that one can exerise a
significant influence over others.
9. Multinational enterprises are to obey national and international laws and
respect the national policy objectives of parent and host countries.
10. Governments which are a party to these agreements are to treat multi-
national enterprises according to international law and are to deal with con-
flicts of national laws as they affect MNE: in case of disputes, host countries
are to prevail. However, when necessary, governments are to use international
dispute mechanisms to settle investment and other disputes involving MNEs.
(29)






30


11. These international agreements are to be implemented and enforced
through the mutual cooperation of government authorities and through existing
institutions of international law. If the need develops for an international secre-
tariat t,) administer these international agreements, it should be established
with due regard to the population and economies of the parties involved.
12. Before wide-ranging agreements of this kind are drawn up, either as a
whole or even in stages, the States that intend to be party to them should from
the outset consult and conclude agreements on administrative aid and on the
mutual recognition and enforcement of court judgment, etc., in order to acqnre
a me()sur, of control over the international activities of these enterprises until
effC.tive international agreements have been worked out. Prior to such inter-
nation'nl agree,nents or the harmonisation of national laws and policies, better
cooperation among government authorities will do much to prevent the circum-
vcltir ( of national laws and policies.
13. Tie :agreeinelts to he co icluded must be binding on all firms. There must
lie n (li,) riulnation against multinational enterprises as compared with national
en terprises.
INFORMATION
14. The annual public reports of multinational enterprises are to give govern-
ments and the public a clear picture of their activities, of their financial situa-
tion and of their connections with other enterprises. At least the following infor-
mation is to he published, broken down by specific operations and countries of
estaldlishnient
((a) The financial and overall structure of the enterprise and financial and
personal links with other firms;
(b) The funds invested, reinvested and transferred to the country of the par-
ent company
(c) The origin and composition of capital, existing and new;
(d) The nuilmer of enl)loyees, the number of jobs created and abolished, the
nunihler of host country nationals working at various levels:
(e) The balance sheet and profit and loss account, including gross sales, with
taxes paid shown as a percentage of sales;
(f) Expenditures on research and development; and
(g) Income from royalties, licenses and management contracts.
135. The same information is to be provided by comparable national enterprises.
16. Governments are to cooperate in efforts to establish an internationally
agreed upon. system of standardised annual accounts and reports for enterprises
of a significant size.
COMPETITION
17. Multinational enterprises, along with other large enterprises, frequently
have technical or financial advantages over their competitors, which means they
enjoy a certain position of power. Competition policy should be aimed at check-
Ing abuse of this position.
IS. To achieve this, the first es sential is much more intensive cooperation be-
tw(,en the antitrust authorities of the United States and the European Com-
runity. C(on trolling multinational enterprises is made difficult not so much by
the shortcomings in national legislation on competition as by the problems in im-
plemienting it. The antitrust bodies are frequently unable to prove abuse by an
MNE becaus-e th necessary evidence is in the hands of another o its establish-
mnents abroad. An international agreement should therefore authorize bodies to
have access to all relevant information. Moreover, the rapid exchange of infor-
nat ion ibetween the antitrust Iloies and niunlail support in investigations of re-
strictive practices must ie guaranteed. Finally, it must be made possible for anti-
trwt bodies to tak joint a(t ion against restrictive cartels and against abuses of

V). G''vrnments are to agree on safeguards and penalties to prevent the in-
apilhpropriate or indiscriminate use of antitrust information, for instance, to bring
a euiipetiive advantage for another firm.
20. Multinational enterprises are to avoid action which would adversely affect
c(Olilti)n, iu as price fixing, restricting the freedom of operation of subsidi-
ar'( and licjsees, acquiring interests in comletitively significant enterprises,
oJr euug'Igillg i- rest ictive (:I rtels or agreements. They are als) to c operate with
government comllietiiton enforcement authorities and provide information re-
(,sI ed Iby t Iese authorities.






31

21. Governments are to be cautioned to show objectivity in the enforcement of
antitrust laws against the various enterprises. There appears to be a trend to-
ward increased involvement of governments in enterprises, including direct own-
ership of firms. If this trend continues, it can be questioned whether such govern-
ments can continue to remain objective with regard to the enforcement of anti-
trust and other laws against enterprises in which they are involved, as opposed
to other enterprises. Any discrimination against foreign-based enterprises is also
to be avoided.
INVESTMENT POLICY
22. Investments planned by multinational enterprises are to be reported to
government authorities in the countries concerned.
23. In more than half of all cases, direct investment abroad takes the form of
a takeover of an existing firm. There are reasons for being more restrictive in
such cases than on new, direct investments. Takeover bids (open bids for total
or partial takeover) must be made subject to regulations. These must provide
at least that adequate prior information be given to government officials, officials
and workers of the firm to be taken over, trade unions and shareholders.
24. Canada, Belgium and Britain have rules under which, in the event of
foreign takeovers of firms, certain guarantees can be required as regards jobs,
investment policies, maintenance of national management and also, where ap-
propriate, maintenance of research activities and a certain share in exports.
These and other special investment regulations ought to be harmonised in an
international agreement. This agreement, while recognising national policy
objectives, should seek to minimise distortions to trade and investment, harmonis-
ing inventives and disincentives and avoiding discrimination on the basis of
country of origin.
25. Governments are .to agree on safeguards and penalties to prevent the in-
appropriate or indiscriminate use of investment information, for instance to
bring about a competitive advantage for another firm.
FISCAL POLICY
26. Multinational enterprises are to provide government tax authorities with
the information necessary to the correct determination of taxes due and are to
avoid the use of practices (such as distorting transfer prices) which alter their
tax base or have the effect of contravening national tax laws or policies.
27. Multinational enterprises in their accounting practices and governments in
formulating their tax policies shall seek to implement the principle that taxes
ought to be paid in the country where the income is earned. Dividend and interest
income may of course be taxed to shareholders and investors by their respective
governments. Where holding companies or other means are used to hold income
and avoid taxes, government authorities may want to disregard these third
parties and tax this income as received currently by shareholders.
28. Government authorities are to:
(a) Upgrade present efforts to facilitate the enforcement of national tax laws
and policies by entering into tax treaties or other international agreements pro-
viding for the comprehensive mutual exchange of information and assistance. It
is most important that adequate staff support be provided for these efforts.
Simultaneous or joint audits of selected enterprises by tax authorities of several
governments may sometimes prove frutiful;
(b) Seek to harmonise the withholding tax on portfolio investment in the
various countries;
(c) Seek to harmonise other national tax laws insofar as possible, especially
those affecting foreign investment;
(d) Take steps to combat the abuse of agreements for the avoidance of double
taxation;
(e) Work to establish a common position regarding tax havens. (Tax havens
are countries or areas with many or all of the following characteristics: low
taxes, little or no exchange control, bank secrecy, no exchange of fiscal data with
foreign authorities, a developed banking system and political stability). This
should include common actions against enterprises that misuse tax havens. Con-
sideration should be given to coordinated international action to deny such
enterprises the right to open new facilities in the countries that are party to an
international agreement on tax havens or to deny to these enterprises tax deduc-
tions for payments to any tax haven country (in computing tax due to any of






32


the countries which are parties to the agreement). Another option would be to
eliminate the withholding tax on portfolio investment for all investors except
tho.e giving tax haven countries as their residence.
29. Governments are to seek to establish effective international mechanisms
for the settlement of tax disputes.
30. Governments are to agree upon safeguards and penalties to protect against
the inappropriate or indiscriminate use of tax information provided to them.
31. An unacceptable amount of secrecy still surrounds the reporting of income
earned, especially by banks and others in certain European countries. This
secrecy is not justified and is in fact harmful to the legitimate revenue interests
of all countries. It is to be eliminated by national law and international
agreement.
32. Unilateral corrective action in tax areas such as that of financial secrecy
(or determination of transfer prices or action against tax haven holding com-
panies) could of course result in flights of capital to other countries. However,
coordinated action by government tax authorities In these areas and others, In-
cluding similar penalties for violations of principles agreed upon by the various
countries, would be most effective in eliminating the non-taxation of income.
33. Some measures for corporate or shareholder tax relief or "integration" of
corporate and personal income tax systems now being Implemented or studied
would discriminate against foreign shareholders. Because such results are not
compatible with the free flow of investment, these measures should be modified
or reconsidered.
34. Some governments are now using the so-called unitary method of assess-
ing taxes on corporations. Under this method, a multinational enterprise would
be taxed on the basis of its consolidated profit, and the profit assigned to a par-
ticulair firm liv government tax authorities would be based on the firm's sales
in t country or state and its assets and employment there. There are some indi-
cations that this method of taxing is being administered inequitably with regard
to foreign-based corporations. Such discrimination in tax treatment is wrong
and should be eliminated.
35. It is essential to maintain supervision of transfer prices (the prices applied
in transaictions that take place within an enterprise) and to take action against
transfer price practices which are directed at avoiding taxation.
36. Transactions within multinational enterprises-between subsidiaries of
the same enterprise or between a subsidiary and the parent company-consti-
tute in important part (20-25%) of international trade, Fixing the prices for
these operations gives multinationals possibilities that firms with establishments
in only ont country do not have, and that puts them in a position to make more
profit.
37. MNEs can have various reasons for setting a different transfer price from
the oIe tbt would be applied to a sale from a firm to another independent one.
An (nterpri-e with operations in various countries seeks to declare as much
profit I- lfihle in countries with a low level of taxation, and to keep down
the profit declared in countries with high taxes. MNEs may also seek to set
the transfer prices in such a way that more profit goes to wholly owned subsidi-
aries than to firms in which they have part interest only. In some cases, it may
also be advantageous for the MNE to declare low profits, or even losses, in a
country where its subsidiary is facing important wage negotiations. Other fac-
tors that play a part here are the country of establishment's currency stability,
exch1anie control, and the risk of nationalisation.
3S. (.v'erniments are to seek to construct internationally agreed upon rules
for transfer pricing and are to cooperate fully and intensely in trying to deter-
mine apiropriate transfer prices. Such rules can he based on the "arms length
principle" oir. when that principle cannot he applied, on a "cost plus" basis (pro-
duetion phits)11ps a reasonable profit margin). Other means that may help to
determine correct transfer prices on goods are:
(;ti comparison of reported transfer prices with prices of similar goods
delivered during a recent period of time or similar goods delivered elsewhere
about the same time. and (b) a comparison of the profit or loss margin on the
goods with averag-e profits or losses on similar goods sold by other firms.
39. governmentss are also to give attention to the transfer prices of services
as well as goods, including financial services and payments for the use of tech-
nical know-how, trademarks and patents.






33


40. One method now used by some governments to tax firms which use transfer
pricing is simply to check profits reported by the firm. If tax authorities judge
the reported profit figure too low, the firm may be taxed on a higher profit
figure. However, as with other methods which go beyond reported profit figures,
care should be taken to insure that this method of taxing is not administered
inequitably.
CAPITAL MARKET POLICY AND MONETARY POLICY
41. Multinational enterprises are to respect the balance of payments, monetary
and credit objectives of parent and host countries.
42. It is desirable for monetary authorities to have accurate data on inter-
national capital movements. In some European countries the banks are obliged
to keep the central bank of their country of domicile informed of their forward
exchange position. Consideration should be given to extending this kind of regu-
lation on exchange transactions to (a) at least all countries of the European
Community and the United States and (b) all enterprises of a significant size.
Information should be supplied monthly and also cover all capital movements
within the enterprise.
43. Government authorities are to avoid unduly restrictive capital controls
and are to consult and cooperate when necessary in doing so.
44. Enterprises must allow residents of a host country to acquire their shares.
Participation by host country nationals can be promoted by a provision that a
foreign company having recourse to the capital market in the host country must
do so partly through an increase in its equity capital available to host country
nationals.
SOCIAL POLICY AND LABOUR MARKET POLICY
45. The representatives of the workers in a multinational firm must be afforded
the opportunity of holding consultations with those responsible for the firm's
policy. At present it is often the case that the trade unions of a country have
to deal with a management that has only limited powers. Either steps must be
taken to ensure that the management of a firm can provide the workers with all
information relevant to their well-being and working conditions and also act
with the necessary autonomy, or else group works councils or other ap-
propriate labour representatives must be allowed to negotiate directly with the
central management.
46. As a rule, at least one host country national should have a seat on the
management board of the relevant firm.
47. Workers are to be informed and consulted in good time on matters affect-
ing them and, in the event of mass layoffs, they must have an important voice
in drawing up the labour phase-out plans. Moreover, workers must be guaranteed
retention of pension and other acquired rights where their firm is involved in a
merger. In addition, in the case of industrial labour disputes, operations carried
out in some parts and branches of the enterprise should not be taken over by
other parts or branches of the same enterprise in order to thwart the legitimate
and legal objectives of workers.
48. The trade unions, workers bargaining units-where they exist-the direct
representatives of the staff (works councils), or other duly constituted worker
organisations must be recognised by multinational enterprises as contractual
partners in negotiations on wage agreements and the fixing of work conditions
of the workers employed in a firm. Also, efforts are to be taken to establish the
framework for internationally valid collective bargaining agreements.
49. Multinational enterprises are to observe national and local employment
and industrial relations laws, standards, and practices.
50. Multinational enterprises are to avoid discrimination on the basis of sex,
age, religion, race, ethnic or national orignal or political activity.
51. Firms are to provide work in the host country for host country citizens.
Local nationals should also serve on the management bodies of firms or sub-
sidiaries.
TECHNOLOGY
52. MNEs should add to local scientific and technological capabilities and per-
mit the dissemination of technological know-how on reasonable terms.






34

PERNICIOUS POLITICAL ACTIVITIES
53. Multinational enterprises shall not attempt to exercise undue influence over
host country policies. In this connection, MNEs shall not make or be solicited
to make payments in money or other things of value to host government officials
(other than for manifest public purposes). MNEs shall not contribute to political
parties or candidates in any way unless such contributions are lawful and de-
tails on the amounts and the beneficiaries are disclosed in a timely manner.
54. Governments are to adopt strong penalties for violations of this prohibi-
tion. Possible penalties include the denial of a business tax deduction for any
such unlawful payments, heavy fines and/or prison sentences, and the denial of
normal business tax treatment and benefits to any business income connected
with such unlawful payments.














COMMENTS ON THE DRAFT CODE OF PRINCIPLES ON MULTINATIONAL
ENTERPRISES AND GOVERNMENTS

Paper by Bill Archer
Since the Code of Principles on Multinational Enterprises and Governments
is in draft form, I realise a great deal of the details and specifics have to be
developed and, things being what they are, it will be some time before a final
code of this type will be ready for presentation.
At this early stage I find the draft code's main goal to be correcting a number
of social, economic and political problems concerning multinational corporations
through increased governmental regulation and requiring these corporations to
file additional information and reports with governmental agencies. While I feel
these problems should be corrected, I do not think that increased governmental
regulation of the magnitude suggested by the draft code is the correct way to
solve these problems. In part, this view may reflect the United States' experience
in the late 1960's with foreign investment controls and our current experience
with the Employee Retirement Income Security Act of 1974 (ERISA) which was
intended to correct various abuses in the pension area. Instead, ERISA has
created many technical and administrative problems, while requiring numerous
new forms and reports to be filed and regulations issued. It may also be based
upon the fact that countries with large amounts of government regulation find
it difficult to effectively compete in world markets.

ROLE OF STATE LAWS
One point about the draft code that strikes me is that it does not take into
account the fact that U.S. corporations are created by, and also regulated under.
state law. Thus, any body of rules seeking to regulate U.S. multinational corpora-
tions will have to consider this fact.
Philosophically, I do not approve of the draft code's provisions which may
establish an international organisation to regulate multinational corporations,
primarily because this organisation will require the kind of power that only an
elected governing body should be granted. Perhaps the aspect of the draft code
which disturbs me most is its failure to provide specific controls and limitations
on (1) the kind of information that may be requested and (2) how this informa-
tion is distributed. These controls are especially necessary to preserve the
rights of those who are employed by multinationals.
With these introductory remarks in mind, I would now like to make some
comments on the various subjects discussed in the draft code. Where necessary,
I will refer to a specific paragraph number.

INTRODUCTORY REMARKS
Paragraph 5: The statement appears that multinationals must be under
"Political control" as distinguished from some type of governmental regulation.
I do not know why this should be true or desirable, since it seems to be contrary
to the'idea of the free enterprise system. Under the term "political control"
is correctly defined, the phrase and accompanying language should be deleted.

GENERAL FRAMEWORK
Paragraph 10 states that as a general rule, disputes are to be resolved in
favour of host countries. This rule is not explained and is not helpful. It should
be deleted.
Paragraph 11 establishes the basis for an international orzanisntion to Id-
minister various agreements concerning multinational corporations. Although
the exact duties of this organisation are not specified, it would seem that this
organisation could be one of the most powerful and influential world bodies. In
all probability, its daily activities would not be conducted or supervised by
(35)
73 1026-7-6--4






36


elected officials. Initially. I find the potential delegation of these vast powers to
such an organisation unacceptable and undesirabe. In addition, because of the
magnitude of its activities, such an organisation would not be able to function
effectively. In short, I do not feel that an organisation of the type contemplated
by paragraph 11 is the correct way to solve the problems concerning multi-
nationals.
INFORMATION
Paragraph 14 will require a great deal more specificity regarding the addi-
tional types of information that may be requested. For example, exactly what
tyl)es of information on research and development will be disclosed?
Paragraph 16 refers to "standardized annual accounts and reports for enter-
prises of a significant size". No indication is given as to the kinds of information
that will be required or how it will be used or disclosed. These points must be
cla rified, if the privacy multinational employees is to be preserved and business
secrets maintained.
COMPETITION
Since the United States' antitrust laws are generally more restrictive than
those of its European trading partners, some harmonisationn" of these laws
would be helpful, especially in the area of cartels. However, because of the
amount of government ownership and involvement in business outside the US, I
am not sure how effective this harmonisation would be. This may be what is
referred to in paragraph 21 where it is stated that: "There appears to be a
trend toward increased involvement of governments in enterprises, including
direct ownership of firms. If this trend continues, it can be questioned whether
such governments can continue to remain objective with regard to the enforce-
Inent of antitrust and other laws against enterprises in which they are involved,
as opposed to other enterprises. Any discrimination against foreign-based enter-
prises is also to be avoided".
While I agree with the statement in paragraph 20 that anti-competitive acts
should be removed, I do not agree with the statement that implies that multina-
tionals should provide all information requested by governmental enforcement
authorities. The types of information that can be obtained must be designated to
prevent abuses of individuals and corporations.

INVESTMENT POLICY
Paragraph 22 seems to imply prior governmental clearance for all types of
business investments. It also subjects, in its present form, business to the pos-
sibility of being caught in the middle of political disputes between countries, an
undesirable result. Initially the types of investments this paragraph contem-
plates should be stated and then considered by this body at some future date. I
hope the intent of this provision is not to require all international investments
to receive the prior approval of some governmental body.
Paragraph 24, because of its potential, deserves special comment. Initially, It
discusses certain rules that are to be applied to foreign takeovers and states that
those rules as well as ". . other special investment regulations ought to be har-
monized in an international agreement". The purpose of this agreement being
"... to minimise distortions to trade and investment, harmonising incentives and
disincentives and avoiding discrimination on the basis of country or origin".
There is no indication if this agreement is to be administered by an existing
organisation or a newly created one. An existing organisation does not come to
m11ind that has the staff or authority to carry 3ut the objectives of the proposed
international agreement. This would seem to mean that a new organistaion will
have to be established to administer the international agreement. It is not clear
if this is the same or a different organisation from that described in paragraph 11.
To be effective, the new organisation would require broad powers including
ultimate authority over all major acquisitions and investments. "To minimise
distortions to trade and investment.. ." the organisation may have to have some
"input" in the economic policies of the various signatory countries. In short, the
international agreement would cover areas broader than "foreign takeovem" and
for reasons previously cited, I feel that the establishing of such an organisation is
not a desirable objective.






37


FISCAL POLICY
A great deal of the material in this section concerns intercompany pricing
rules and exchange of information procedures. I do not see why an additional
body of rules for these areas is necessary since they are covered in detail in tax
treaties between the industrialised countries. In addition, the US has an elab-
orate set of pricing rules issued under Section 482 of the Internal Revenue Code
of 1954.
The "Tax Policy" statements appearing in paragraphs 27, 28, 32, 33 and 34
are out of place in a document such as the draft Code and should be deleted.
I think the statement appearing in paragraph 31 on bank secrecy should be
deleted and no position on this matter taken until it is fully discussed and studied.

CAPITAL MARKET POLICY AND MONETARY POLICY
Paragraph 42, like many of the prior "information" paragraphs, requires clari-
fication. I have difficulty in reconciling the numerous information requirements in
the draft code with the Statement in paragraph 43 that "Government authorities
are to avoid unduly restrictive capital controls .
I would like to see some explanation as to why host country nationals must be
given stock ownership rights. In the US, this decision is left to the individual
corporate owners, a method I favour.

SOCIAL POLICY AND LABOUR MARKET POLICY
This section contains numerous statements concerning labour-management
policies which are best left to individual companies and unions to decide. For
example, it is very doubtful that an international collective bargaining agree-
ment can adequately meet the needs of workers throughout the world.
As to local participation in corporate decision making, the requirement that
nationals of the host country serve in management, seems to be well intended
but does not appear to work well in practice. For example, this rule could lead
to direct government participation in corporate decision, a practice not found
in the US for various reasons.
TECHNOLOGY
The material on this subject is too brief in light of the importance of tech-
nology. For example, there is lacking even a general set of rules concerning the
kind of protection that would be afforded trade secrets. Thus, a company which
is capable of assembling the necessary financial and intellectual resources to
develop a new process or product would apparently be required to immediately
share its discovery with competitors, without receiving any benefit for its efforts.
This type of system can only be viewed as counterproductive over the long term.
Another aspect of the technology materials which requires clarification is its
relationship to existing patent and trademark laws. These laws generally afford
protection for a specified number of years. Is it the intent of the materials in
paragraph 52 to amend these laws in some way or to operate in conjunction with
them?
An additional aspect of the material in paragraph 52 which should be clarified
is to whom the technological know-how will be disseminated. That is, will multi-
nationals be required to make technological information available to local edu-
cational institutions, governmental agencies, competitors or only some of these
organisations?
Finally, there should be elaboration on the meaning of the phrase "reasonable
terms". I'm not sure if these terms will be left to the interested parties to deter-
mine or if they will be established by some third paty-for example, the interna-
tional body referred to in paragraph 11?
Unless these and related areas are clarified, much of the incentive for devel-
oping new technology may be removed by the draft code.





38

POLITICAL ACTIVITIES
I think a more specific body of rules relating to the political activities of mul-
tinationals should be developed. This is an area which can be considered by our
organisation and should be. We should be able to develop a body of rules that
wLould eliminate the current grey areas.
Amendments of the type I have suggested will improve the draft code but
will not, in my opinion, cure its basic failure to fully protect the rights of sov-
ereiln governments, owners of MNE's and individual employees. The protection
of these rights and the prevention of burdensome and costly administration re-
quirements are an absolute essential in my view.











Thursday, April 22, 1976


SUMMARY OF DISCUSSION

SESSION IV-PoLITICAL ASPECTS OF THE WORLD FOOD SITUATION
(Working Documents: Mr. Houdet, Mr. Nolan and Mr. Symms)'
Mr. Nolan apologized for Mr. Symms' absence and presented the
latter's report as well as his own.
The central topic of Mr. Symms' report concerned the best methods
of exploiting the earth's resources and means of production. Accord-
ing to Mr. Symms, private property was the cornerstone in a program
to fulfill the world's nutritional requirements. The Western world
ought to put an end to its policy of food aid and subsidies. Only pri-
vate ownership of the means of production would lead to rational
conditions of production.
In his report, Mr. Symms quoted comparative figures for the USSR
and the USA which highlighted the non-profitability o~f land in coun-
tries where there was no private ownership.

U.S.-U.S.S.R. GRAIN TRANSACTION
Mr. Nolan then passed on to his own report in which he described
the grain agreement signed between the USA and the USSR cover-
ing shipments amounting to between six and eight million tons per
year for five years. Those in favour of this agreement considered that
it should lead to a better balance in feeding Wthe world's population.
He wondered, however, if this agreement would not also have unde-
sirable effects on the market, in that it in some way withdrew from
free circulation grain which until now had found a buyer on the
"world market". He feared that in time of shortage. this agreement
would remove from the market these quantities fixed in this bilateral
agreement.
Apart from this, the USA had abandoned its attempts to influence
the USSR in other sectors; this could have been a reciprocal conces-
sion in the grain agreement.
What else could be done at world level? The World Food Confer-
ence had planned an aid program amounting to 10 million tons of
grain, Of which the USA would supply 60%. Agreements between the
developed countries might jeopardize this plan.
FAVORABLE U.S. AGRICULTIUAL TRADE BALANCE
Mr. Houdet noted that in his report Mr. Nolan was in favour of
world agreements and this was also the European Cominmitv's view.
Passing on-to bilateral relations, Mr. Iloudet recalled the dificulties
See pp. 43, 47, and 50, respectively.
(39)





40


encountered because of the U.S. attitude to certain imports coming
,from the Community (cheeses, Irish meat) although the balance of
trade in agricultural products between these two countries seemed
ver largely favourable to the United States.
As for refunds, had the United States itself not granted subsidies
to exporters for the sale of grain to the USSR in 1972? The Euro-
peans for their part had been particularly badly hit by the 1973 re-
strictions on soy exports, and European agriculture had suffered from
this for some time. As he mentioned in his report, Mr. Houdet con-
sidered that the European Community countries were fortunate to be
in a temperate zone and to possess large tracts of arable land. It was
therefore quite natural that they should be among the exporting coun-
tries and that they should contribute towards safeguarding world
supplies.
It could be argued that in one sense the Lome Convention was an
extension to Article 29 of the Treaty of Rome, in that for certain im-
ports, a price close to that obtaining in the EEC was granted to the
ACP countries for particular products.2 This was especially so in the
case of sugar.
MULTILATERAL AGREEMENTS BACKED
The rapporteur ended by referring to the conclusion o~f his report in
which he pointed out that multilateral agreements, together with cer-
tain medium-term contracts, formed a logical solution, even if this
gave rise to certain difficulties of implementation.
Mr. Ryan established a link between the previous political debate
and the present agricultural debate. Like Mr. Jahn, he pointed out that
the world political situation was uneasy and noted that arms sales were
increasing rapidly. Should we not be seeking a form of security other
than one based on armaments? In fact, the number of countries which
could be agriculturally self-supporting was decreasing. Could we not
try to establish more positive links than armaments, for example,
foodstuffs? Productive capacity was sufficient, the problem was rather
one of distribution. Trade with certain countries could be increased
without prejudice to a food-aid programme.

EXPORTING IDEOfLGY OPP OSED
Mr. de Koning agreed with Mr. Symins that private ownernip
was the basic concept for agriculture in Europe and the USA. But it
wv:as not, necessarily the only method in the world. Everything was rel-
ative. The USA, New Zealand and Australia were at the top of the
production league. In Europe we were trying to restructure our agri-
culture but this would take us until the end of the century. Ilowever,
in other areas of tle world, private initiative would certainly not be
sufficient. Agricultural progress in China provided an example of a
different approach. iHe could therefore not agree with Mr. Syvinis
idea of exporting our ideology.
Coming to Mr. Nolan's report, lie conmmended the valuable informa-
tion given in this document, even if he (1id think flat the rapporteur
21Th Lom Convention of 1975 covered trade Pind dpvelooment aid to 46 eountrles of
Africa, The Varibbean and The Pacific areas (ACP) and The European Community.







had perhaps overstressed the drawbacks and underrated the advantages
which the Soviet grain agreement could bring to the American
economy.
Mr. de Koning thought that "Agricultural Power" could only be used
to a limited extent. le welcomed. however, the attitude adopted by
Mr. Nolan to the Community policy and finished by recommending
that efforts should be made to coordinate the policies of the two giant
partners in world trade.
HELSINKI ACCORD NEGLECTED
Mr. Stanton regretted that the detente preached in Helsinki was not
being put into effect to the extent that it ought to be. He was sorry
that Mr. Symms and Mr. Nolan had not taken greater account of the
efforts made by the United States towards solving world food prob-
lems; positive steps had been taken here. although the percentage of
farmers in the USA was very small compared with other economic
groups. It was true that at world level trade in food was hampered
by the basic problem of transporting foodstuffs.
Mr. Scott-Hopkins suggested that "Agricultural Power" was a two-
edged sword. If the USA had not signed the grain agreement with
the USSR the situation would have been even more serious. He simply
thought that the USA could have obtained concessions from the Rus-
sians in other areas. As for Mr. Houdet's point of view on building up
butter stocks, this would be real progress, though he doubted if this
could stimulate agricultural production. Stocks should be held against
a possible crisis. Food aid was not a permanent solution and we ought
to be thinking in terms of sending machinery or seed or even tech-
nological aid to the developing countries.

CAUTION ON CONTROLS
He voiced some doubts on multilateral agreements, since he feared
these might lead to a situation where the markets were too closely
controlled. A first stake might be bilateral agreements, particularly
between the USA and the EEC, for strategic food products.
Mr. Ryan replied by stressing that agricultural trade was indeed
a true political weapon. He would have preferred not signing the
grain agreement with the USSR, which was very expensive for the
United States, but rather that the USA should have been a member
of a world consortium.
According to Mr. Fraser, many Americans were not in favour of
the grain agreement. However, it must be taken into account that if
the Americans had refused the USSR would have signed this agree-
ment with other countries.
He pointed out the inflationary effect of the large purchase of cereals
by the USSR in 1972. For this reason resolute steps had to be taken
towards building up world stocks which could be used in time of crisis,
but the main point for discussion was whether a prices policy clause
was necessary or whether the quantitative element was the most im-
portant consideration.
















PAPERS

PROSPECTS FOR AN EEC AGRICULTURAL EXPORTS POLICY

Paper by Roger Houdet
The subject suggested for examination by your rapporteur leaves him some-
what perplexed, for while it is true that the Community exports agricultural
produce, it can hardly be said that it has ally guiding principle in the matter.
Yet the problem of exports is of concern as much to the farmers as to the
Community's Council which, on the occasion of the common agricultural policy
stocktaking in November last, ,admitted the need for the Community "to be
represented on the world market by its agricultural exports".
Having set out in the first part of this paper, the reasons which should induce
the Community to adopt an agricultural exports policy, your rapporteur will
examine it,. in the second part, the framework in which such a policy could
be achieved.
I. REASONS FOR ANI AGRICULTURAL EXPORTS POLICY
A. Developments
1. Af ter a long period of prosperity, the world economy recently suffered a
crisis, from which it is recovering only slowly at the economic level, and which
continues unabated in the international monetary sphere. There are some, indeed,
who wonder whether one of the causes of the 1973 crisis, even before the oil
price increase, had not been the record purchase by the USSR from the USA
of 29 million tons of grain. It resulted in a steep price rise for grain (soft
wheat tripled), which spread to a number of other agricultural products. The
farmers then had the benefit of the exceptional harvest of 1973/74, though it
should be noted that it was less profitable to European farmers, as the price
stabilization policy rightly pursued by the Community worked to their dis-
advantaged. Thereafter, the interplay of rapidly rising production costs and
falling market prices in real terms reversed the situation once again, from
he 1974/75 harvest onwards.
This series of events has focused attention on a number of factors, some of
which are old, but were thought to have virtually ceased to operate, others new.
2. T.the first category belongs the extreme sensitivity of agricultural com-
modity markets to variations in supply and demand, due to the relatively small
volume of agricultural commodity trade in comparison with total con-sumption.
Thus for grain, in which trade is the most substantial, this trade represents
only about one-sixth of world output.
3. Among the, second category is the Europeans' new awareness of the extent
of their dependence on third countries, particularly the USA, for appliess of
soya, maize and even fishmeal, now that these products have become an essential
constituent of animal feeds. The Europeans have also discovered how much of
an economic whip-hand the United States have thanks to their agricultural
exports. These account for 22 to 25 percent of their total exports, as against
10 percent for the EEC. Again, the Europeans have come to appreciate that
USA exports of agricultural products and foodstuffs are twice the size of the
corresponding imports,. while in the Community the situation is just the reverse.
This is a fact of particular importance for the United States' economic life.
even though thanks to their domestic petroleum production, they have not hid
to suffer the consequences of the oil crisis as acutely as the EEC.
B. Comments
4. This has prompted the Europeans to reflect whether their rather pnssive
attitude to agricultural exports should not be revised and give way to a more
active policy.
Various considerations come into play.
(43)






44


5. As the principal customer for US agricultural produce, the Community
Nine are surprised to note some protectionist trends in their relations with the
USA (at the Munich meeting we referred to the problem of cheese exports
to the USA who have reduced them by approximately 50 percent; today we
must draw attention to the suspension of imports of Irish meat) when the
Community puts zero duty on imports of American soy beans which are a factor
of its milk production.
6. Looking beyond these bilateral relations, the Europeans point to the
element of stability in the Community's agricultural output. Its agricultural
production is carried on in a temperate zone and is thus less subject to variations
than those of other countries or groupings of countries in other parts of the
world.
Both the USA, where certain States have been suffering a drought, and the
USSR, where the climate is becoming colder, are subject to climatic swings
much more violent than in Europe. In a world context, therefore, it would be
bad economics to force Europe to restrict its agricultural output.
7. Some European experts have, it is true, pointed to the dangers of over-
production, due mainly to the considerable technological progress in agriculture
of the last two decades, and have been calling for n rational prices policy that
would not encourage farmers to raise output too much. Against this, however,
our costly experience in the energy sector, where coal output had been deliber-
ately slowed down while nothing was done to promote the search for alternative
energy sources, argues for priority to security of supplies, with price levels a
secondary consideration.
8. The discussion, in fact, should be properly placed in the framework of the
world as a whole, where the contrast is continually sharpening between the
rich nations who eat as much as they want, and some Third World countries
where hunger follows bad weather spells or is actually endemic. To this must
be added the fact that the developed countries are consuming increasing quan-
tities of processed foods, which, insofar as they are cereal-based, represent an
additional drain on the poor regions' food resources. The imbalance between
the "fed" and the "hungry" is reflected in the alarm thant the FAO has been
sounding for years now over the threat of severe shortages, not to say famine
as a result of the world's population growth.
9. Food aid, of course, is one way to bring Immediate relief in the most
desperate cases, but while it can replace a medium-term programme of income
redistribution between the rich and the developing nations, it cannot be con-
sidered a solution for the very long run, as development of the countries which
are underprivileged today must, at least for those which possess cultivable
land, proceed through the expansion of their agricultural production.
10. What the developed countries can, however, do is to commercially export
such agricultural products as are complementary to those that the developing
countries are potentially able to sell.
As regards the developed countries, we should also keep In mind the role
played by agriculture in their economies and the exigencies consequent on that
role. The agricultural sector is closely linked, at one end with industries mann-
facturing the means of production, at the other, with the food and agricultural
product processing industries. If a level of agricultural productive capacity suffi-
cient to maintain the activity of these other sectors Is to be preserved, Incomes
in aerieulture must remain comparable to those of other economic sectors-
which is not everywhere the case--comparable, what Is more, to Incomes which,
except for the conditions of high unemployment created by the crisis, have been
steadily rising in recent decades.
11. All these facts, together with the social aspect which must not be over-
looked for those Community countries where the proportion of farm population
i4 high, argue in favour of maintaining a fair amount of agricultural activity
with gradual improvement of the conditions of production throughout structural
reform.
IT. FRAMEWORK FOR A POLICY OF AcRICUTT1TRAL, EXPORT
Setting aside food-aid programs, your rapporteur Proposes to examine in turn
some of the major agricultural commodities and then to deal with the legal
'1sT0P(.ts4






45


A. Some major commodities
12. For any commercial exports, the prime question is competitiveness. The
Community has often been accused of promoting competitiveness through export
refunds. But are such accusations really warranted, when we know that the
Community is by no means alone in subsidizing exports? Nor should the price
fluctuations referred to in the first part of this paper be forgotten. Is it gener-
ally realized that powdered milk is offered on the world markets today at $275
a ton, while last year it was selling at $1000, whereas in 1971, when world
prices were booming, the Community was obliged to restrict exports to prevent
shortages within the Six?
The example of sugar price fluctuations is still fresh in our minds. In the course
of 1973-74 they varied by a factor of as much as five.
13. Apart from the exceptional present situation with regard to milk powder
which may, in fact, prompt the Community to restrict its output by making
the producers bear more of the responsibility for the management of that market,
it would seem that European agricultural producers can normally compete with
their American counterparts. For in the agricultural sector the major factor
on production costs is labor, but there is no international market for drinking
milk, and the world market for butter is virtually saturated. This is why present
Community thinking turns on exporting milk powder to developing countries
where reconstitution plants would be installed. It is a logical line of thought,
since such a solution would both meet a trading need and the Community's justi-
fiable desire to obtain some recompense for the generous concessions made to the
developing countries under the Lom6 Convention, and, under other agreements,
to the Mediterranean countries-concessions mostly disadvantageous to Com-
munity farmers. Admittedly, the Community would then have to face the ques-
tion of the internal sharing out of the burdens and benefits of any such
agreements, since the sectors with export potential are not necessary identical
with those which are exposed to increased competition from imports from, say,
the Mediterranean countries.
14. Grain is another sector with export potential. The peculiar conditions of
1973 have already been described. Since then, world prices have dropped again,
but to nothing like their former levels.
How will the relative price levels for grain evolve in the EEC and the USA,
the world's principal exporter? Present market trends suggest that the prices
will converge. It can, in fact, be predicted that European prices in real terms
will fall (as has been happening since the fixing of the common prices), while in
America they will rise as inferior land, entailing higher production costs, is re-
turned to cultivation.
15. Sugar is a sector which is always difficult to discuss, since sugar cane is
a major source of revenue for many developing countries. But the demand for
sugar is great, while international trade in the commodity, at barely 10% of
world output (both beet and cane) is very small, and the competitiveness of this
commodity is tending to even out between the developed and the developing
countries. Thus, under the Lom Convention the signatories have been granted
in fact, if not on paper, a price equivalent to that obtaining in the EE C.
B. The legal aspects
16. The Community has in mind medium-term agreements, principally with
countries which are geographically close or with which more general trade
agreements already exist. It was thus that an agreement with Egypt, under
which 1 million tons of grain over a five-year period, as well as quantities of
milk powder were to be supplied, was drawn up. This project met with some
reservations from certain EEC countries, hestitant about embarking on a policy
of exports. The Egyptians, on their part, seem to have meanwhile lost interest
in the agreement, because it fixed the price of milk powder, which, as the market
crumbled, struck them as too high. But a rather disquieting aspect of this affair
is the report that the USA is said to have offered Egypt very long (40 year)
credit at very low rates, particularly for grain deliveries.
17. Other Mediterranean countries have asked to negotiate with the EEC.
Obviously, Community farmers are in favor of these negotiations, for the reasons
which have already been explained. It should be noted that agreements of this
type, while they fit into the concept of helping to offset the concessions granted





46


by the EEC, or, if concluded with oil-producing countries, could improve the
ComIuniry's balance of trade, concern quantities of commodities too small
to jeopardize in any way the Clommunity's proposals within GA'T for world-
wide agreements comprising the build-up of buffer stoks. The relevant mech-
anisns proposed by the EEC have been described by your rapporteur in the paper
dravn up for the 1974 Florence meeting with the United States Congress Dele-
gation, and the document is submitted to the present meeting again.
Your rapporteur was happy to observe at earlier meetings that the US Con-
gress Delegation was in broad a-reement with the views here propounded, but
he is astonished at the slowne s of the discussions in GAI on this subject, due,
it appears, to the unforthcoming attitude of the United States, despite the fact
that other delegates support the EEC's proposal.
CJon clusion
18. In the face of the disparities to be seen in the agricultural domain. par-
ticularly the contrast between a world food shortage and the fortuitous, or
sometimes structural, surpluses occurring at the regional level, and in view of
the competition which may arise among developed countries for the conclusion
of medium-term contracts, the logical solution still lies in multilateral contracts
providing for the build-up of buffer stocks, in financing agreements, in price-
review clauses and, possibly, in joint action on conditions determining output.
It is certainly not an easy solution an4 requires, moreover, the participation of
all the countries concerned in 1he -international agricultural commodity trade,
both exporters and importers who pay their way. However, the details of this
participation go beyond the purely peooniic and touch upon the political, a
sphere on which rapporteur does not intend, in this working paper, to encroach.














POLITICAL ASPECTS OF THE WORLD FOOD SITUATION: U.S.-U.S.S.R.
GRAIN AGREEMENT

Paper by Richard Nolan
On October 20, 1975, President Ford approved an agreement between the
United States and the Soviet Union for the sale of at least 6 million metric
tons' of US grain a year over the next five years. The agreement commits the
the Soviets to purchase a minimum of 6 million tons of wheat and corn annually
and provides for consultation with the US government if the Soviets wish to
buy more than 8 million tons a year. If the total US supply of grain falls below
225 million metric tons, the United States government may reduce sales to the
US SR below the 6 million ton minimum. The agreement also forbids the re-export
of US grain by the Soviet Union to other nations, although it does not affect
shipments of Soviet grain surpluses. Only wheat and corn are covered by the
agreement, leaving sales of barley, grain sorghum, oats, rice and other com-
modities unaffected.
At the same time the grain agreement was signed, a letter of intent was
approved providing for the sale of Soviet petroleum and petroleum products
to the United States. The letter of intent contemplated annual USSR sales of
up to 200,000 barrels a day of oil with prices to be mutually agreed. upon. At
present, the negotiations have been suspended because of failure to argee on a
shipping rate formula.
The agreement is scheduled to go into effect in October 1976. Serious questions
remain regarding the impact of this agreement on the world food situation, on
the developing nations, on America's regular customers, and on the ability of
the American farmer to continue producing abundantly.

WORLD FOOD BALANCES
The United States remains the largest producer and exporter of agricultural
commodities. The efficiency of our producers and the productivity of our farm-
land have permitted us to supply more than half the grain moving in world trade.
During the 1975/76 marketing year, the US is expected to supply about 50 per-
cent of the world's trade in wheat and 55 percent of the feed grains. US exports
have accounted for nearly all of the increase in the world grain trade in the last
five years.
During this same period, severe weather conditions in Africa, Asia and
Australia have reduced the total world food supply dramtically. Grain stocks
in the major food exporting nations declined 40 percent between 1972 and 1973.
In 1961, world reserves were at a level which would provide for 95 days of
world consumption. By 1975, that figure had been reduced substantially. At the
beginning of the 1975/76 marketing year, reserve stocks in the five major ex-
porting nations were down to 21 pounds per capita for the world's population.
This is equal to only 3 days food at US rates of consumption and 21 days con-
sumption at the rate of the world's poorest countries.
At the' same time, inclement weather and the Soviet drive to increase live-
stock production have forced the Russians into the international grain market,
thus causing enormous fluctuations in world prices. In recent years, the USSR
had joined the European Community and Japan as a net importer of grain.
While the Soviets have about 43 percent more land under cultivation than the
US, total Russian farm production is less. Estimates of total farm output inidi-
cate that for 1 1-Ti, Soviet output is 77 percent to 91 percent as large as US
farm output. Large areas of Soviet agricultural land are subject to a short
growing season and frequent droughts. Faced with unreliable crop production,
there is every reason to believe that the Soviets will continue to contribute to an
erratic and volatile world market.
I A metric ton is 1000 kilograms or approximately 2,200 lbs.
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48


IMPACT OF U.S.-U.S.S.R. GRAIN AGREEMENT
It was in the face of the dramatic drop in the world grain reserves that the
United States and the Soviet Union entered into this major grain agreement.
Proponents of the agreement argue that it will stabilize the world market, that
increased stability will assist American farmers in setting production goals and
will encourage increased production in the U.S. Additional stability, it is con-
tended, will provide other industrialised and developing nations with greater
confidence in the US as a source of supply. In addition, it is argued, the agree-
ment will encourage the Soviets to establish their own grain reserve by obligat-
ing them to purchase grain in years in which they have a domestic surplus.
In my judgment, there is serious question whether the US-USSR grain agree-
ment will achieve the goal of stabilising world markets, increasing production,
and encouraging additional grain reserves. In addition, it could have serious
detrimental effects on the international market and upon the American farmer.
There is no doubt that the recent large purchases by the Soviet Union have
contributed substantially to a volatile world market. However, it is likely that
the agreement will serve only to stabilise the market between the United States
and the Soviet Union. It may smooth out price fluctuations for those countries
who make their purchases solely from the United States or the Soviet Union,
but in the event of a world-wide shortfall, it could encourage even greater
fluctuations in prices between other countries.
It is naive to believe that we can stabilise the world market with a bilateral
agreement which represents only a small portion of the total world grain trade.
In 1975/76, the total world trade in grain is estimated to reach 158.8 million
metric tons. The 6 million ton purchase agreed to by the Soviets represents only
3.8 percent of that trade. In addition, it represents only 7.2 percent of United
States grain exports.
The U.S.-Soviet agreement might induce the Russians to build a grain reserve,
but it does not require them to do so. The Soviets have set a goal for themselves
of increasing their grain storage capacity by 40 million tons over the next five
years. While the agreement encourages the use of this capacity in years of
surplus by preventing re-sale of U.S. grain, it does not prohibit the Soviets sell-
ing their own surpluses to other nations. Unless the agreement actually encour-
ages the Soviets to build a reserve, it will not substantially reduce the volatility
of the world market.
Some members of the United States Congress have questioned whether the
Soviet Union will meet its obligations under the agreement. I am confident that
they will do so. Soviet crop production is susceptible to enormous fluctuations. It
was revealed recently that the Russians proposed a long-term agreement in the
summer of 1973, but the offer was rejected by the U.S. This is a clear indication
they have long believed it was in their best interest to enter into such an
agreement.
LEVERAGE MAY HAVE BEEN LOST
The United States, on the other hand, may have forfeited its principal source
of leverage with the Soviet Union for the next five years. The United States
may have sacrificed the opportunity to force Soviet cooperation with the U.S.
and the international community in other areas.
Absent this advantage, it is questionable whether such an agreement can he
justified by U.S. policy-makers considering the adverse impact it could have
on the American farmer. The 8 million ton limitation in the agreement may act
as a ceiling on Soviet grain purchases. It is possible the Soviet Union may have
pl)rchIase(l the amounts of grain specified in the agreement in any case since
the average Soviet purchase over the last four years has been well over 6 million
tons. In addition, there is fear that the 225 million ton level for U.S. stocks may
act as a trigger for government intervention in all export sales. American pro-
diwers vorry that the U.S. may be prepared to reduce exports from all other
countries when the trigger level is reached. and that a policy of close control of
(,xports could serve as a mechanism for iniposing a price ceiling in the U.S.
The American farmer is rightly asking whether any advantages have accrued
to hilm as a result (if this agreement nn(l whether these advantages are worth
the inferventlon in the market place which is likely to result.





49

Because the American farmer has interpreted this action on the part of the
United States Government as a move toward imposing a price ceiling, he is
requesting U.S. policy-makers to provide him with a reciprocal promise of a
guaranteed price floor. Until such time as the U.S. Government is willing to
assure its domestic producers that they will receive a price which will cover
their cost of production, the American farmer is going to be unwilling to engage
in all-out production. In my judgment, it will be difficult to encourage the
American farmer to engage in the maximum production necessary to meet world
food needs until he is assured of stable and profitable prices for his product.
MULTINATIONAL AGREEMENT
World hunger not only haunts our conscience but it threatens our world's
long-range stability. The World Food Conference established an annual food aid
target of 10 million tons beginning in 1975. The U.S. alone plans to ship 60
percent of the target in 1975/76. However, world food supplies remain danger-
ously low.
The vulnerability of our total food supply indicates that we must work to-
gether to attack the problem of world hunger. This problem will not be solved
by increasing the number of bilateral agreements such as that between the
US and the USSR. The stability of the world market will not be substantially
increased through a series of such one dimensional agreements, nor will we
have improved the international balance of food. There is a serious question
whether an agreement between two of the world's major producers of food is
appropriate when so much of the world's population is in need of food assistance.
Without a rational plan to balance world food needs, we may discover that the
sum of the parts is greater than the whole. We may find that a series of bilateral
agreements between the developed nations of the world has pre-empted the food
supply necessary to meet the needs of the world's hungry.
What we need is an international commodity agreement in which the entire
international community participates and for which the entire international
community takes responsibility. Rather than a series of bilateral agreements
between nations, we should encourage the importing and exporting countries of
the world to clearly set forth their reciprocal benefits and obligations. We need
to reach a world agreement which will clearly set out our international needs
so that American farmers, and our foreign customers know where they stand.
If the American farmer is to continue to engage in all-out production so that
the United States can remain a reliable supplier of food, he must be assured
that his own increased production will not be used to depress world prices. The
European Community has done an effective job of insuring that its producers
and consumers are protected from harmful fluctuations in world markets. This
has permitted European farmers to continue producing food for European tables.
If we are to ask farmers around the world to engage in maximum production
and to -contribute to a world food reserve, we must provide them with similar
assurances that they will realize a price which will cover their costs and permit
them to plant new acres. American farmers are willing to participate in a plan
which will provide an abundant supply of food even in years of a world shortage
if they receive a reciprocal guarantee that their prices will not be depressed in
years of surplus.
We cannot ignore the problem of world hunger. If the United States, the
Soviet Union or the European Community is going to enter into international
food agreements, it must be with full consideration for the needs of all the na-
tions of the world. We must all take the responsibility of assuring that no man
goes huigry. We are talking about a two-fold obligation. First, to assure once
and for all that no person in this world is without food, and second, to assure
that our agricultural producers receive the compensation they need to make that
end a real and possible goal. Eliminating hunger must be a world effort, a goal
all men pursue, and it will be an end from which all men will benefit.














POLITICAL ASPECTS OF THE WORLD FOOD SITUATION


Paper by Steven Symms 1

I aln thankful for the opportunity to speak to this distinguished gathering
today on the subject of agricultural trade with the Soviet Union. I expect to
learn a great deal from our exchange of ideas and hope I can offer something
fresh and worthwhile to these discussions.
The world has approximately 4.2 billion people, and we are increasing our
population by 70 million per year, or put in different terms, every year enough
people are born to equal 20 times the population of the Republic of Ireland
Of these billions, about 4.6 million are suffering from the effects of malnutrition
and 40 percent of these people are children.
For at least 60 known centuries, this planet that we call Earth has been
inhabited by human beings not much different from ourselves. Their desire to
live has been just as strong as ours. They have had at least as much physical
strength, as the average person of today, and among them have been men and
women of great intelligence. But down through the ages, most human beings
have gone hungry, and many have always starved.
Sales of agricultural products to the Soviet Union in recent years have been
an important factor in keeping the Russian people from going hungry and in
making US agriculture one of the most fully-employed and productive areas in
the nation's economy. Our agricultural exports have shot up from $7.6 billion
in 1971 to $22. billion in 1975, enhancing our balance of trade. In buying grain
from us, the Soviets are paying in US dollars which they are getting by selling
large amounts of their gold on world markets. On the whole, many think the
sales have been helpful to both parties. They could, if put into proper perspec-
tive, be a model les son for the world and the feeding of all its people.
A MIXED BLESSING

Of course, these transactions have been a mixed blessing from the American
viewpoint. American farmers were enthused about the prospects of new markets.
and the sales helped the US balance of payments. Many of us still vividly recall
the first US-Soviet grain sale in 1972. At that time our taxpayers were obliged
to finance $300 million in export subsidies and another $400 million in trans-
portation subsidies to insure that while Americans were buying domestic wheat
at $2.12 Ipr bushel, the Soviets would only pay $1.65 per bushel Our Commodity
Credit Corporation financed the deal with $750 million in American taxes at an
interest rate slightly lower than what the US must borrow at in the market-
place. In addition, the sales to Russia created massive shortages in the US grain
supply which vere partly responsible for the food price increases that followed.
American consumers ended up paying at least $2 billion more for their food
during the nine months following the 1972 election year grain deal.
While Americans were paying 49 cents for a loaf of bread, Russian housewives
were paying 23 cents for US grain-enriched two pound loaves on the streets of
Moscow. In fact, the Russian people were feeding the cheap bread to their
cows. The Kremlin permits individuals to own one cow, but feeding the animals
presents a problem because most of the pasture land is held by collective or
state farms. So Russians were feeding their cows cheap bread made with US
grain, while their government carefully censored from them the fact that they
were purchasing US grain at all.
The total cost of the Russian grain deal to the American public was close to
4 billion. Sonie Americans said, "That's a high price to pay for a $1 billion
credit transaction

1This paper was summainrized for Mr. Symms, In hIs absence, by Mr. Nolan. See p. 39.
(50)






51

ANOTHER BAD EXPERIENCE
Last year our country had another bad experience over Soviet grain sales.
This time the circumstances were far different and it was the American farmer
who bore the brunt of the problem. But, as in the 1972 sales, the fault rested
not with the Russians but with our own government. The US Government told
our farmers to plant from fence to fence and assured them they could sell on
the open market, anywhere, anytime, anyplace as long as it was for cash. The
US Government assured them of continued markets in the Soviet Union and
they planned accordingly. But then our government changed the rules in the
middle of the game by suddenly putting an embargo on further grain sales to
Russia. By doing so, it simply encouraged the Russians to go elsewhere to buy
15 million tons of grain. Our government was not living up to its commitments
to our nation's farmers. By not playing according to the rules it had agreed to,
it caused the farmers to lose sales of an estimated $2.2 billion or more.
Hopefully, America and the rest of the Free World have learned from these
past mistakes and in the future will set policies which are logical and con-
sistent-policies which the taxpayers, farmers, and consumers can all live with.
Much of the problem in the past has sprung from the fact that transactions
with the Soviet Union are not genuinely free market in nature. It is not Western
businessmen dealing with Soviet businessmen. It is Western businessmen dealing
with Soviet bureaucrats-an open, free society dealing with a closed, controlled
society. This has created, as we have witnessed, a number of distortionary
effects on the free economies. In agricultural markets, strongly fluctuating and
exaggerated demands can raise instant havoc and cause tremendous distortions
in price and supply. Trade policies of the Free World nations must reflect the
dangers and pitfalls that exist when dealing with communistic, non-market
countries, and must incorporate various safeguards that will protect our inter-
ests, such as earnest money payments in advance for a long-term agreement.
My. colleague, Congressman Nolan, will cover this subject in some detail in his
presentation, so permit me to digress at this point to some personal observa-
tions on other aspects of the Soviet-US trade question and on the question of
food shortages in general. These, I think, offer the most significant lessons for
all peoples and nations around the world.
Why is it that Russia, once a grain exporter, in 1973 set a record by import-
ing more food supplies than any other nation in history? Many of those record-
breaking imports came from the United States, even though the US devotes
only one-third as many acres to wheat production as Russia does.
Why is it that Russia is experiencing massive food shortages each year even
though one-third of their total population works in farming? In the United
States approximately 4 per cent of the population are on the farms.
Why is it that in many areas of Russia, agricultural production is actually
below the levels of 1913? Agricultural advancement in the US since that year
has been enormous.
BAD WEATHER CONDITIONS
Soviet leaders blame it all on the weather. I don't doubt that they've experi-
enced some inclement conditions. But every year? And what is interesting to
me are the reports I hear of bountiful harvests which exist in that country on
the scattered plots of privately owned land. We have all heard the accounts of
private entrepreneurs who are supplying the Russian people with privately
produced fresh produce, such as the famous tangerine caper, on the black market.
Many Russians would otherwise be unable to purchase any fresh fruits or vege-
tables, owing to their extreme scarcity in that country. But don't the private
parcels of land experience the same weather conditions? Of course, Pravda and
Radio Moscow would have us believe that there are freezes and droughts on the
collective farms while adjacent private lands are receiving the perfect combina-
tions of temperature and rainfall. In the Rocky Mountains of America we have
saying-we love the weather, rain, snow, hot or cold, because it comes from
God and not the government. Evidently in Russia the weather comes from the
government and is consequently bad.
I contend that the current shortages of food supplies both in Russia and
around the world derive not from weather or agricultural failures, but from
ideological failures. In the Soviet Union and other socialistic countries, collec-
tivisation of farming has destroyed all incentive to produce.





52

Collectivised farming has been notoriously inefficient since its bloody incep-
tion. Peasant resistance took the form of armed revolt and sabotage at the start,
but now it has been replaced by a heavy, uncaring lethargy. Paltry incentives
and a marginal existence have produced millions of farmers in Russia whose
chief ambition is to get a job in the city. Evidence of the deadening effect of the
collectivised farm system is seen everywhere in that country. For example, there
are numerous reports of heavy damage to state crops because the peasants do
nothing to keep the weeds under control. Fields become a sea of weeds, making
it difficult to see the grain because there are three or four times as much wild
oats and thistles.
The Soviet bureaucrats and master planners, of course, continue on their
merry way, unable to see the forest for the trees. They promise to solve all the
shortage problems with heavier doses of collectivism and coercion. During their
latest five year plan, for example, the Soviet Union plunged into the meat busi-
ness with a $70 billion investment in livestock breeding. Most of the money went
into vast, factory-style production centres so that by the end of 1974 the country
had 400 mechanised stock breeding complexes and 584 poultry factories. The
plants are literally enormous. Some of the hog fattening centres, for instance,
can handle 180,000 pigs at a time.

FEED GRAI PROBLEM
However, there was one thing the Russian planners didn't count on-some-
thing that private investors would have known right away. Costs make the
entire project unfeasible. They discovered after building the plants that the only
way to produce meat on so large a scale is to feed grain to the animals-and it
takes far more grain to produce a pound of meat protein than if the protein were
eaten directly as bread. Since the Soviet Union Is unable to raise such feed grains
as corn and soybeans, valuable wheat often is diverted to use as animal fodder.
Contrast these conditions with those of American agriculture. A single US
farm worker supplies on the average enough food and fibre for 56 people. His
output is twelve times greater than that of a Soviet worker. American farmers
constitute one tenth of one percent of the world's population, but feed 25 percent
or more. The food they produce is at the lowest possible cost to consumers. The
average US citizen today spends only 17/2 percent of his paycheque on food.
It is no coincidence that from the small tracts of private land In Russia, which
contitute only 3.5 percent of the land under cultivation, the state receives 20 per-
cent of all its potatoes, 37 percent of its eggs, 18 percent of all wool, 18 percent
of its meat and poultry, 18 percent of its green vegetables and 95 percent of its
flowers. This is in addition to the large quantities of private produce from this
land which is sold on the open market. It Is an amazing testimony to the success
of private enterprise, right within the borders of the Soviet Union.

ROLE OF HUMAN NATURE
Why does private agriculture work while collectivised, government controlled
farming doesn't? It works because it upholds three very basic principles of human
nature and therefore supplies the necessary Incentives for people to become cre-
ative and productive. First, it recognizes that people need rewards for their work
and that the rewards must be proportional to the level of productivity. Second, it
recognises that owning one's own land is a basic human desire. Finally, it recog-
nises that people work best when allowed to develop and use their own solutions
to the problems 1nd ,lptunities :irUid then without being unduly hemmed in
by regulation,, lienseq and artificial restrictions. In other words, human beings
must be free to be productive.
The Soviet Union and other non-market countries have been violating these
basic prin'iples, and as a result have developed an agricultural systemm based on
minimum human motivation and creativity. It is safe to say that the Russians
will likely continue to experience food shortage difficulties in the years ahead and
that they will therefore remain a lucrative, if not reliable, market for Western
agricultural exports. The same may also be true for Mainland China, India, and
most of the Third World.
However, what I am proposing today is that we export more than food to these
countries. I submit that we should export the ideas of free, private Initiative, too.
This, in the final analysis, is the biggest contribution Free nations can make to
the world's hungry masses.





53

A major fact which many people have not fully understood is the high level of
technology required to develop and maintain modern agriculture. For many years,
people have laboured under the mistaken belief that industrialisation represented
the highest level of civilisation. We were taught that men first lived in caves and
hunted, then they developed farming and villages, and later developed cities and
industrialisation. The idea which was not taught was that after industrialisation
men developed modern agriculture.
At first glance, it would seem more difficult to build aeroplanes, automobiles,
and television sets than it is to raise food. However, it is actually much harder
and it requires a much higher level of technology to grow food than to do almost
any other activity.
ASSEMBLY LINE PROCESS
A minute of thought will make this clear. If a team of developers goes to a de-
veloping country to build TV sets, their problem is relatively simple: the factory
must be built, component supplies located in some convenient country must be
found, and then local people must be trained to work on the assembly lines.
It is quite possible to take young men and women from very primitive sur-
roundings and, within a few weeks or a few months training, prepare them to
carry out their particular limited responsibilities on that assembly line.
However, with modern agriculture the problem is entirely different. It is
true you can supply chemicals and machines, but the local person who is in
charge of the land must know how to farm. This requires a sophisticated under-
standing of managerial skills, a high level of training in the use and mainte-
nance of equipment, a working knowledge in the use of modern agricultural
chemicals, and a knowledge of soil, climate, and plant diseases which can only
be achieved with intensive and lengthy training.
Having once recognised these two facts: (1) The need for an economic and
political system which releases rather than destroys individual energy and
creativity, and (2) the high level of technology and technical training required,
then we must decide what we can do to increase food production around the
world.
I am proposing that we make serious efforts, regardless of the political or
economic system we are dealing with in a food-short country, to insure that the
farmers are allowed to own the land which they farm. I am talking about the
men and women who actually go out on the land, plant the seeds and harvest
the crops; not the politicians, not the planners, not the experts, but the farmers.
This means they must not be burdened with impossible debt and they must not
be subject to irrational regulations in the use of their land. They must truly
be able to go to their house or cottage or hut in the evening, sit down with their
family at their own table, look out the window at a growing crop, and quietly
say to themselves: This is mine, this is my land, this is my crop-I am in charge
of my own life.
END FOOD GIVEAWAYS
The following are proposals I wish to recommend to free nations wishing to
spread the doctrine of agricultural free enterprise to the nations which need it
most. First, I would recommend that the West terminate virtually all foreign aid
food giveaways, except in cases of disaster relief. Let these nations pay for the
fruits of our free economies. Let them think about what it is costing them to
maintain their inefficient, collectivist systems. This is especially applicable to
the Third World nations. Most of these countries are young and in the early
developmental stages. Now is the crucial time in their histories when they must
decide what kind of economic system they want. Freedom or coercion? Abun-
dance or starvation?
Secondly, I would recommend that all agricultural transactions with non-
market countries be done on a cash and carry basis. No subsidies and soft loans,
courtesy of our overtaxed citizens. The easier we make it for these countries, the
less reason they will see to reform their archaic feudal systems. Russia and
Communist China would be the countries most affected by this policy. In the
case of Russia, I would prefer that they pay the United States in gold. Russia
possesses about $8 billion in gold reserves and is the second largest producer
of that metal in the world. She can spare the gold and we in America can
certainly use It to help stabilise our currency. It makes good sense all the way
around.






54

Third, we need to encourage joint ventures of Western agri-business and food
processing to the Third World countries. And as I mentioned earlier, the farmers
in these nations should be able to own their own land.
One final note. I know there are those, including some in my own country,
who urge that we move in the exact opposite direction from what I propose.
Rather than strengthening our respective free enterprise systems and exporting
these ideas abroad. they would have us move closer to the socialised Russian
system. In the case of the United States, this could certainly be done in all
1 teas of economic activity. We could be just like the Soviet Union after a little
work. All we would have to do is reduce our paycheques by 75 percent, move 60
million workers back to the farm, abandon two-thirds of our steel making
capacity. destroy 40 million TV sets, tear up 14 out of 15 miles of our highways,
juink 1!? out of 20 of our automobiles, tear up two-thirds of our railroad tracks,
knock down 70 percent of our houses, rip out nine-tenths of our telephones, and
then all we would have to do is find a capitalist country willing to sell us wheat
on credit so we wouldn't starve.
But frankly, I think the American people are happy with what they've got.











Friday, April 23, 1976


SUMMARY OF DISCUSSION

SESSION V-AXERICAN AND EUROPEAN POSITIO S ON THE
MEDITERRANEAN
(Working Documents: Mr. Normanton and Mr. Ryan)'
The debate was opened with Mr. Rosenthal in the chair.
Mr. Ryan outlined his working document. He raised the following
points in particular:
The indivisibility of American and European interests;
Whether the US military presence could continue in some loca-
tions, such as Greece and Turkey;
The emotional connotations of the term "communism" in Amer-
ican society and the pressure on election candidates to adopt a
totally hostile attitude to it;
The role of the Italian Communist Party in Europe; and
The fact that NATO was strong enough militarily to divert
some of its attention to other matters.
Mr. Normanton then introduced his working documents with these
comments:
From the point of view of the United States, European integration
was primarily a stage in the strengthening of Western defense. By
contrast, the iportance of the European Community to European
countries was above all economic. But although defense matters were
expressly excluded from the terms of reference of the Treaty of Rome,
they had been increasingly raised by the European Parliament in the
last three years. Before 1973 this would have been unthinkable.

EQ ROLE IN FOREIGN POLICY
There was a growing awareness in the Community institutions that
external economic policy formed part of overall foreign policy. Re-
cent political developments in other countries-Greece, Portugal,
Spain and Iceland-had confirmed this view. Flexible interpretation
of the Treaty of Rome was therefore called for. The European Parlia-
ment was keeping abreast of these developments. In the Mediterranean
the position of Yugoslavia could become critical when President Tito
left the political scene.
CYPRUS PROSPECTS BLEAK
Mr. Solarz referred to his recent visits to Greece, Turkey and Cy-
prus. The prospects for a solution to the Cyprus problem were bleak in
his view. He had the impression that both sides wished to maintain the
See pp. 59 and 66, respectively
(55)
73-026-76----6





56


status quo. Although he felt as a result of private talks that some form
of participation was generally favored, neither side was ready to make
concessions. With Greece, the refugee problem was a central issue.
The continuation of the American arms embargo against Turkey
would only strengthen Turkish resistence to a solution and foster
Greek illusions, lie urged the total lifting of the embargo and ap-
proval by Conoress of the agreements recently arranged by the United
States with Greece and Turkey concerning military bases in both
countries. Rejection of these agreements by Congress could force
Turkey to seek other allies. Greece had, moreover, more to fear in the
long term from the Soviet Union than from Turkey. He hoped that
America's allies in the European Community would continue to stress
the importance of full Greek and Turkish membership of NATO.
Mr. Pisoni also wondered about possible developments in Yugo-
slavia in the post-Tito period. He felt that Mr. Ryan had a very super-
ficial view of Communism in Italy and warned against jumping to
conclusions.
CLOSE RELATION OF U.S.-EC INTERESTS
Mr. Couste noted that the fate of Western Europe was of especially
great importance to the security of the United States. Defense matters
had also been raised by the Council of the European Economic Com-
munity. There was an increased awareness of the growing threat from
the Soviet Union. Political relations between the European Commu-
nity and the United States were characterized by an atmosphere of
mutual trust.
Mr. McDonald also dealt with the connection between the activities
of the, Community and overall foreign policy. The Community should
grow along with the new political developments. Ie regretted that the
United States had failed to take advantage of the political opportuni-
ties afforded by the European Community. It was, after all, in the
interests of the United States to have a united Europe. The Com-
munist parties in Europe were being financed from abroad. In con-
clusion, he stated that he was opposed to permanent partition of
Cyprus.
Mr. Ryan asserted that a permanent partition should not be the basis
for a final Cyprus solution. In virtually no instance has partition
brought real peace.

BASE AGREEMENTS SUPPORTED
Mr. Corterier endorsed the views of Mr. Solarz and hoped that
Congress would approve the two agreements referred to. He noted that
the Federal Republic of Germany was giving military aid to both
Turkey anl Greece. The role of the European tCommunity in this con-
nicxtioll was politically important, since in some respects, it had taken
ov er from NAT O there. he Community was attempting to stabilize
the sit uaton by making financial and economic sacrifices. In the wider
view, the possible accession of Greece to the European Community-
irrespective of the financial consequences for the wealthier countries
of the Community, in particular-had also to be considered. The Yrow-
ing success of communism in southern Europe wats a serious matter but





57


should not be dramatized at present. Participation by the Commu-
nist Party in the Italian government was, however, imminent and
bound to raise serious problems.
Mr. Corterier noted the efforts that Germany and, Europe in gen-
eral, have made to compensate for the lack of American aid to Turkey.
He noted, too, that in the case of Greece the Community was in many
respects replacing NATO which continued to stand in great disrepute.
He added that the effort of the EC to stabilize the Mediterranean
and to maintain a western influence there during the failure of US
policy should not go unnoticed. He said that it was often asked of
Europe: What are you doing for .NATO and the West? The answer
is that we are doing a lot and it is very expensive.
Greek membership in the community will be a particular problem
from an economic standpoint, aggravating an existing imbalance be-
tween the affluent Benelux countries and the poorer states. And yet,
for overriding political reasons, we recognize that Greece must be in
the alliance. Moreover, if we accept Greece, it is inevitable that com-
pensatory arrangements will have to be established with Turkey.

MORAL ASPECTS IMPORTANT
Mr. Fraser noted that there were important security considerations
at stake in Southern Europe, but that it was wrong to simply ignore
the moral dimensions of the Turkish invasion of Cyprus. This he
found reminiscent of the arguments used to defend U.S. support of
the Greek junta.
Mr. Fraser felt that it was unfortunate that Europe was not able
to play more of a mediating role when that conflict unfolded. He said
that he understood that the NATO council had been discouraged from
taking any action; if this is true then it compounds the error of US
policy.
U.S. MISI-TANDLING OF CYPRUS
In Mr. Fraser's view the Cyprus problem had been mishandled by
the United States from the beginning. He doubted whether Congress
would approve the pacts with Greece and Turkey. A complete lift-
ing of the arms embargo against Turkey could cause Greece to view
membership of NATO as an encumbrance. In the United States there
was the overwhelming feeling that the Greek population of Cyprus
had suffered a great injustice. In NATO the principle of justice should
have priority. Mr. Badillo endorsed Mr. Fraser's views, especially the
judgment that the arguments now used to justify normal relations
with Turkey were the same justifications used during the Greek mili-
tary dictatorship to continue normal relations with the junta.
Mr. Lenihan felt that EC aid to southern European countries could
only be justified if and when it was certain that they had a pluralist
democracy. The Community's external policy had to be compatible with
overall foreign policy.
Mr. Corona hoped that American delegations from the Congress to
Italy would subsequently establish contact with all political group-
ings there, including the Communists. He expressed his appreciation
of Mr. Ryan's understanding of the delicate political situation in
Italy.





58

Referring to the point made by Mr. Fraser, Mr. Guertsen observed
that one injustice in Cyprus should not be met by another in Turkey.
lie therefore hoped that the American Congress would approve the
two agreements.
Following concluding remarks by the two rapporteurs, Mr. Ryan
and Mr. Normanton, the chairman closed the debate.














PAPERS

THE FUTURE ROLES OF GREECE, PORTUGAL AND SPAIN IN AN
INTEGRATED EUROPE
Paper by Tom Normanton
In the short space of time available to prepare this paper it is not possible
to do more than provide thumb-nail sketches of each of the three countries
which are prospective new members of the EEC, their present social and eco-
nomic state and stages of development, their progress and prospects for ad-
vancement towards pluralistic parliamentary democracy, and the course which
negotiations might be expected to take as formal requests for full membership of
the Community are submitted. Only then can an assessment be made of the
consequences for the Community of the Nine arising from its progressive
enlargement.
GREECE
Greece is the only country of the three which has formally asked for full
membership and whose membership is now under consideration. During the
military regime the Association Agreement, negotiated in Athens in 1962, was
frozen under the initiative of Europeans who felt that the new undemocratic
system of government in Greece was inconsistent with such an agreement. This
objection to the development of closer links lost its validity in July 1974, when the
junta collapsed and power was returned to the politicians under Mr. Constantine
Karamanlis.
The military government does not seem to have hindered the swift develop-
ment of the Greek economy in the early 1970s. Between 1973 and 1974 the GDP
rose by 18 percent, from $16,040 million to $19,000 millon. Between 1968 and
1973 the average hourly wage for unskilled workers rose by 61 percent, from
19.31 pence to 31.13 pence. While this increase is lower than that of Spain, which
in the same period increased its equivalent wage from 24.63 pence to 49.39 pence,
one must bear in mind that the cost of living in Greece was markedly low and
that Greece is generally poor in natural resources, including agricultural.
The Greek economy continues to make good progress, although the violent
events of 1974 have taken their toll. Greece has felt herself morally obliged to
give massive aid to the Greek part of Cyprus. (It was, after all, the Greek
junta's interference in Cyprus affairs which brought tragedy to the island as
well as democracy to Greece.) Because of the confrontation with Turkey, Greece
is now spending large sums on equipping her armed forces, and the effect of the
crisis on Greece is economically greater, because of the relative sizes of the
two countries. Massive fortifications are being built on the Greek islands of the
Aegean and along the River Evros, which marks the Greek-Turkish frontier.

POLITICAL MOTIVATION
Greeks are ready to admit that their recent application for full membership
was politically motivated, but they do not adniit that it was an anti-Turkish
manoeuvre. Instead, they say, it is an earnest desire to reconsolidate democracy
and to restore their position as a respectable European nation. opposed to ex-
tremes of both right and left. There are some who, in the present mood of anti-
Americanism, see membership of the Commutnity as a substitute for good rela-
tions with one of the superpowers. After the disasters of 1974 they feel deeply
in need of friends, so there is a danger that the EEC may be built up in the
minds of the Greek masses as the answer to all their problems. This is ob-
viously to be discouraged, because this euphoria could so easily be replaced by
disillusionment.
When he visited the European Parliament in June 1975 Mr. John Peznmzoln.
Chairman of the Greek side of the mixed committee presently discussing the
(59)






60

application, said that he expected that Greece would join the Community "in a
year or so". But since then it has become clear, on both sides, that this estimate
was very over-optimistic. The application has been considered by the EEC Coi-
nis sion, who gave their opinion in a carefully analysed report dated 29 January
1976. Their conclusions are as follows:
"15. In preparing the present opinion the Commission has been deeply con-
scious of the obligation that lies on the Community to find a fitting and ap-
propriate response to the Greek request for membership. This request, coming
a few months only after the restoration of democracy in Greece and enjoying
the support of almost every shade of Greek political opinion, represents a
remarkable affirmation by the Greek people and their leaders of the overriding
importance they attach to their country being committed to the cause of European
integration. It is clear that the consolidation of Greece's democracy which is a
fundamental concern not only of the Greek people but also of the Community
and its Member States, is intimately related to the evolution of Greeces relation-
ship with the Community. It is in the light of these considerations that the Coni-
mission recommends that a clear affirmative reply be given to the Greek request
and that negotiations for Greek accession be opened."
The Commission opinion has been presented to the Council of Ministers, de-
bated in the European Parliament, and has been and still is the subject of
intense debate.
FULL GREEK MEMBERSHIP
The European Parliamentary Committee on External Relations has recom-
mended in a report drafted by Mr. James Scott-Hopkins dated 17 March 1976
"that the Commission should begin negotiations immediately with a view to full
Greek membership with a transitional period which will take account of the
difficulties which have to be overcome".
The Council of Ministers expressed on 24 June 1975 its satisfaction in principle
that Greece had submitted the application, and, without pre-judging the outcome
of negotiations on details, has given clear indications that no efforts will be
spared to bring about a conclusion satisfactory to all parties. The ultimate oh-
jeetive must be full and unconditional Membership, the acceptance of all existing
obligations binding upon present member States.
No indication has been forthcoming on the duration of negotiations other
then that "there shall be no delay". It would be unwise however to read too much
into the official prenouncements to date, since the "difficulties" to be resolved in
the economic field are to say the least considerable. In some respects the political
"difficulties" may even be greater since they relate to third countries, e.g. Turkey,
with which the EEC has but looser links at present but hopes for closer links
in the future.
On the assumption that negotiations will be successful, a time-scale of from
2 to 5 years should be considered for Greece achieving membership, even if sub-
ject to a transitional formula leading to full acceptance of the Treaty of Rome.
The EEC will therefore guard carefully against committing itself too ob-
viously to one side or the other in this dispute. In permitting the progress of
the (,reek application, she will be careful to reassure Turkey at every turn and
to keep Turkey in the political picture. This will require delicate diplomacy on
the Community's part. But it is hardly an impossible diplomatic task, and the
problem is hardly so great as to make Greece's progress towards membership
out of the question.
SPAIN
Of the three countries under consideration, Spain appears to be the one with
the most developed economic structure and the highest standard of living. She
has the lowest percentage of the active population engaged in agriculture (27.f
percent) and the highest percentage employed in industry (37.7 percent). The
comparable figures for Greece are 35.7 percent and 25.2 percent, for Ireland 25.7
percent and 30.3 percent. for France 12.7 percent and 38.4 percent. Between 1973
and 1974 the GDP per head rose by a remarkable 19 percent, to $2088.
The Spanish economy enjoys all the advantages of late industrialisation. Its
faet4Irl operate up-to-(ate equipment. Its workers have been taught up-to-date
skills. In the year 1973-74 its GDP rose by about 20 percent, from $60,710
million to $73,300 million. If this rate of growth continues at its present speed.
Spain could within five years overtake one or two of the poorer members of






61

the EEC. Economists seem to agree that Spain has ridden the world recession
better than most. From the purely economic point of view, Spain could cope
with most of the problems of entry now. Purely economic negotiations would
almost certainly be successful.

SUPPORT OF FRANCE
The difficulties are, of course, political. The only support for speedy Spanish
accession, in government circles, comes from France. There are those in France
who think that the Community is now biased in favour of the Anglo-Saxons as
a result of the recent accession of Denmark, Ireland and the United Kingdom.
This would be redressed if Spain were to join. On May 18th 1974 Monsieur
Giscard d'Estaing was quoted in the Spanish Press thus: "Spain will soon be-
come part of the Common Market. Every effort to liberalise and to make Spain
more outward looking will contribute to this end. Personally, I want this to
happen as soon as possible. I would even go so far as to say that it was part
of France's vocation to facilitate this accession." The Socialist leader Monsieur
Francois Mitterrand said at the same time that he too wanted Spain to join,
but only after "a total evolution toward democracy".
The simple fact is, of course, that under the Treaties membership of the EEC
is only open to democracies. Though the Treaties do not define the term "democ-
racy", recent statements by senior EEC representatives have made it clear what
are, in their view, some of its essential elements: the freedom to form and join
political parties, to stand for election against the government and, if successful
in elections, to take over the government. These conditions do not as yet exist
in Spain. The personality of General Franco has always been an added barrier
to closer relations, since he was personally detested by many powerful EEC
political groups, including most of the Social Democrats.
As early as 1962 the Spanish Foreign Minister wrote to the President of the
EEC Council of Ministers asking for an Association Agreement. During the talks
which followed it became clear that it was because of the incompatability of
the Spanish political system with the principles governing the Community that
no Association Agreement was possible. Instead a preferential trade agreement
was negotiated which covered at the time about 75 percent of the commercial ex-
changes between Spain and the "six", and which reduced customs tariffs on indus-
trial products imported by the EEC from Spain by some 60-70 percent. For
her part Spain agreed to reduce customs tariffs on goods coming from the "six"
by between 25-70 percent, depending upon the product in question. This agree-
ment came into force on October 1st 1970.

ASSOCIATION AGREEMENT
There is certain illogicality, however, in the decision to refuse Spain an
Association Agreement on the grounds that democratic rights and individual
freedom do not apply in that country. The EEC has signed such agreements
with several non-democratic governments, for instance Morocco, and very few
of the States which have signed the Lom Treaty even reach the state of politi-
cal democracy in Spain. The EEC's insistence on democracy has been consistent
with regard to full membership, but not with regard to Association Agreements.
The death of General Franco (20 Nov. '75), it had widely been hoped, would
signal a profound and fundamental move away from all that he was deemed
to represent politically. Such expectations were voiced from inside Spain as
well as from outside it. In the European Parliament there have been and still
are frequent and violent outbursts condemning measures taken by the new
Spanish Government, under King Juan Carlos as Head of State, against in-
dividuals and groups of people who are described as "terrorists, anarchists,
separatists etc.". Whether the actions of such people should be deemed to be
"legitimate" by the Governments and political parties in the Community is a
matter of considerable difference of opinion. It does however seem difficult to
understand how the murder of a policeman in Spain can be "justified" and even
acclaimed, while a similar act in a Member State would at best rouse feelings
of anger, or at worst indifference. This raises a question of considerable signifi-
cance to the present state and prospects for future political developments in
the Community, which will be considered later.






62


It must be noted therefore that though there are no economic barriers to
Spain's accession, the political barriers are formidable, and political events in
the Community and in Spain, from time to time, will make progress towards
cce~sion highly problematical. Spain does not need Membership. but would
benefit in many ways from a closer relationship; she is not a "supplicant-. The
SIpanish Government has declared itself to be in principle in support of the re-
iuirements of the Treaty of Rome and to be willing to take progressive steps
towards meeting the democratic political pre-conditions of entry.
Should a formal application for Membership, whether Full or Asociate. be
made to the EEC, then the EEC will have to think very carefully before it
presses a Spanish (overnment to adopt its principles. The Spanish People. all
the people, will hardly take kindly to being dictated to. Such behaviour would
be thought insulting to the national honour. Only a step-by-step approach, with
the greatest possible need for diplomacy and tact on the part of the EEC, would
be fruitful, and may require many years of effort before even formal Applica-
tion and Negotiations might be contemplated.

PORTUGAL
Portugal has the lowest GDP per head of any of the four potential countries
except Turkey. Under the Salazar-Caetano governments it was unique among
Europ ean countries in that its wealth was concentrated in the hands of a tiny
number of People, a few hundred families. WVanres were low. far lower than in
Spain. In 1968 the average daily wage for unskilled workers (male and female)
wa 93.75 pence. In the same year the hourly wage for an unskilled worker in
Italy was 30.94 pence, in the U.K. 40.6 pence and in Denmark 1. The economic
aind social structure of the country was, by European standards, rudimentary
aind old-fashioned. Agricultural production was low because of the government's
lbackward-looking policies: lack of encouragement to mechanise. a grant system
fatvouring traditional methods of cultivation as well as a credit system which
\va not adapted to the small size of most of the farming units.

HIGH EXTERNAL TRADE
Portugal, which had a high level of external trade, suffered particularly from
the world economic crisis hiich began at the end of 1073. Until then there had
been sme inprovenit in for(-ign caIpital investment, a ri e from $G0.9 million in
1!(9 to $ n. million in 1971. but this was offset by the very high expenditure
imposed hy the war in the cl olies.
Thel new military takeover on April 25th 1974 accelerated the economic
crisis. The new government was fortunate in that it inherited a large treasury
,f foreign exchange, and the country has been living on this fat for the past
year and a half. But immediately after the takeover income from tourism began
to fall, remittances from Portuguese abroad grew less, business developed a
1o00d( of insocity. The policy of deolonisation, swiftly implemented by the
new government, led to the return of a large number of troops, officials and
entrepreneurs. The result was an alarming rise in unemployment. All this took
pbac at a time of high expectation among the Portuguese working people, many
,f whom -Hlieved that the Revolution would bring them liberty and prosperity
oVwrnii-ht. Sowial tension has increased as these hopes have failed to naleri;lis" ,.
The new government gained some popularity through its plans to redistribute
th, wvlthi of the very rich families and to raise industrial wages (though there
11 olH elmllic justification for the latter). But these and other revolutionary
m~lres have brought the Portugues economy to chaos and disaster. The (U)ll.
whii trew by an average of (.(6 per rnt between 1967 and 1972. is now actually
f*11in, awd o111 economists have predicted that it will decrease by as uclh
( percent letween 1974 and 1975. In fact. the (,pantrv is in ziwcli a state of
,emmuir, anarchv that the question of full membership of the EEC coul hardly
h w eMsid(ered at this stqge.
Since April 1974 Portual has approached the EE institutions several times
with requests for aid, the sums involved totalling nearly 1.000 million units of
:,eoijtI. In fth beginning these requests were received with sympathy. but tho
yitnihv was fast eroded as the political situation in Portiulal deteriorated.
The lVir'1ean Parliament has repeatedly expressed its support for the eon-
,'pt of a "free" Portugal and pressed the Commission to grant aid. this to ble for
iJei!i' iiruJct and not fo-r gn1r11l u1ii satlon by the P'ortuguese governn I.





63

A CHAOTIC ECONOMY
The state of the Portuguese economy is to say the least chaotic; politically
it is no better. But in recent weeks it would appear that the forces of anarchy.
the Marxist and Communist revolutionary leadership, are being eroded and
replaced slowly by less extremist elements. Many of the military units are
being relieved of their arms and the semblance of a Government, though still
dominated by the left and without a democratically elected base in the country,
is beginning to emerge.
With a General Election now promised for 25 April, and the return of what
may appear to be an uneasy peace in the country generally, there is at least
some hope and a better prospect of progress towards a form of pluralistic dem-
ocratic government. In the light of this development the EEC has authorised
quite considerable loans to be negotiated by the European Investment Bank, and
negotiations to be opened by the Commission on trade relations. Should the Gen-
eral Elections prove successful in producing an effective and democratic Gov-
ernment, or clear progress in that direction, these negotiations may lead to more
ambitious areas for agreement with the Community.
One thing is certain however. There is no programme nor firm prospect for
Portugal's membership of the EEC until the internal revolution has confirmed
conclusively the political direction it will take. In the meantime the economic
distress and hardship is increasing, a situation which is being aggravated and
exploited by political forces both inside the country and from outside.

STATUS OF THE EEC
Before considering the effects upon the Community consequential upon its en-
largement, it is essential to attempt an objective assessment of the EEC as at
this time, April 1976. Even viewed superficially it presents a disturbing picture.
Politically each Member State is in some difficulties, whether it be Germany
in the throes of an election year with at least the possibility of a change of
Government, or Italy where the weakness of the Christian Democrat Govern-
ment offers a prospect of Communist influence as yet unique in Europe. The
net result of the many changes, current and prospective, is being reflected in the
inability of the heads of Member States to reach agreement on any significant
political questions. Their last meeting, April 1976, was a complete non-event
which, if repeated, might well spell the collapse of the community.
Progress towards the loudly proclaimed goal of Economc and Monetary Union
has to be set against the present total disarray of world currencies generally.
and the EEC's in particular. Instead of the promise of economic unity we have
the probability of economic division into a two class Europe. Instead of a con-
certed effort to extricate western Europe from its abject dependence upon energy.
and the monetary consequences, we see a display of "hands off, it's mine" atti-
tude, and "notb ing but a free market economy".
A Lngstanding firm commitment to a directly-elected European Parliament.
with teeth, is being challenged or at least questioned. It may become a reality
by 1978 or 1.79,. but if not there is growing fear that it may be shelved indefi-
nitely, during which the power of the European Council as the instrument of
Heads of State will increase and accentuate national differences instead of
creating areas of common concern.
The vorld economic recession has hit all Community members alike. but the
refusal of Member States to reach common solutions to coiimmon problems, purely
for nationalistic domestic, political rea oits, has mnagnified I he ecoomic differ-
ences and thereby p)osed a threat to tr-ade liberalisation upon which European
liosperity depends.
NO EEC DEFENSE ROLE
Western defense, in tHi form of WEU and NATO. is in a critical condition,
",ith France outside NATO. Turkey and Greee at loggerheads, Portugal dither-
ing on the brink of leaving or a doubtful element at best, ind Britain slash-
ing her defense contribution. Only Germany continues tfu shoulder her burden, in
money, mnterils and men. And all the time the strength and active aggresive-
ness (in Africa in particular) of the USQ+SR grows apace. But of course defense
1s not a responsibility of the EFC--yet!
Although the Conmunity has been developing and implementing a tr:ide
policy and strategy on a Community basis, the isolation of trade olicy from





64

foreign policy creates a highly artificial situation when the Commission enters
into commercial dialogue with third countries. This cannot continue, the Mem-
ber States and European parliamentarians are agreed, in the face of politico-
commercial trends among state-trading countries in general and the USSR and
satellites in particular. Commercial policy is but an extension of foreign policy
and must come within the remit of the Community.
Though tariff barriers have been abolished for internal trade, a veritable
jungle of non-tariff barriers still impedes progress towards a truly open domestic
market.
The announcement by the Commissioner for Community Agricultural Policy
of his intention to resign highlights the chronic complexity and frustration
of reaching Community agreement on this aspect of of policy. So long as there
is a source of unlimited noney-in this case Germany-any system can be
made to work. But even a milch cow says "sorry, no more" sometime!
(n the industrial front there has still been no progress, at Community level,
tovwird:s the adoption of measures which would encourage European industry ro
re-structure to take full advantage of a huge home market, of higher technology,
and Iarge-s'zale production. This is, or should be. essential for such industries
as data-processing, aircraft-manufacture, ship-building, and the automobile
i(nd!stry. Instead of a community approach each Member state adopts its own
method, state aid, nationalisation, subsidies.

MONOPOLIES EXPOSED
The Community has in the Treaty of Rome a commitment to oppose all forms
of monopolistic practices and restraints in the path of achieving a free and
competitive market. To some small extent this finds reflection in a degree of
antipathy towards multi-national companies, partly because of their structural
character, and partly because some are American. Though this feeling is by no
means extensive or sustainable, its existence should not be ignored.
To sum up, the Community is going through an extremely difficult period
both politically and economically. The enlargement from Six to Nine created
internal stresses, accentuated by the course of subsequent international events.
It is not in the best of condition to attempt a further enlargement, though
timing may not be for the Community to choose.

THE CONSEQUE-NCES FOR THE EEC OF ENLARGEMENT
(a) The concept of the EEC, as drafted by the founding fathers, took progres-
sive enlargement (by application) as inevitable and desirable, so long as appli-
cant countries conformed to the basic principles of the Community and accepted
in full all existing obligations as at date of entry.
(b) All existing institutions could accommodate new members, within the
minimum of adjustment, although with increase in size would inevitably go an
increase in diversity of interest and therefore increased difficulty in reaching
agreement.
(c) Since the Common Agricultural Policy is still the major element in the
Community Budget, the inclusion of Greece, Portugal and Spain would impose
a considerably greater burden on the net contributing Member States since
the agricultural industry of the new Members is generally at a low level in
efficiency. There is also a high degree of product competition as far as wine,
olives -and citrus fruit are concerned.
(d) Since large areas of the new states are in need of considerable financial
aid for regional development, the Community may find a disproportionate share
of available funds absorbed there.
(e) In industrial terms the capital plant producers in the Nine, or rather
Germany in particular, should benefit considerably by the enlargement of the
"home market". The competitive efficiency of the modern Spanish shipyards
would pose some major problems for the existing Community ship-building
industry and its proposed re-structuring. The aeronautical industry of the Nine
is in need of reorganization, on a community basis, and the addition of three
new Member States may pose problems for them in the short term.
(f0 In the longer term, however, there can be no doubt that the economies of
the enlarged Community would be considerably strengthened as a result of a
larger home market and the scope for rationalization in the heavier industrial
field.





65


(g) Spain, Portugal and Greece occupy a special position in the textile field
and very heavy capital investment has gone into their productive capacity of
cotton yarn, fabric and made-up garments. The older textile industries of the
Nine may be faced with even more intense competition, though here again it
may be argued that in the long term this may be to the greater overall benefit
of the enlarged Community.
(h) For some considerable time Greece has supplied labor for work in
Germany in particular. As "Gast-arbeiter" [guest-worker] they have tended not
to settle in their areas of employment. Full membership of the Community
would change their status and may bring about more permanent movements of
population unless progress towards industrialisation were to be speeded up
in their home region.
LONG TERM GROWTH

(i) The right of establishment for "foreigners" in Spain, Portugal and Greece
is severely restricted at present. On becoming Full Members of the Community
existing firms in the Nine would move to expand their activities and in some
commercial sectors create difficulties. But here again, in the long term such
developments would serve to strengthen economically the Community as a
whole.
(j) A major impact on the Nine may well be a widening of the areas of
"differences" as new States join, leading to slower progress than even the
present towards economic and monetary union and the strengthening of Com-
munity institutions. For example, take the European Parliament, whatever
size and representational system is adopted, provision would have to be made
for approximately 20 percent more Members and 3 extra languages.
(k) In political terms the observation has already been made that the entry
of Greece would pose extremely difficult problems for the Community so long
as Greece and Turkey remain embroiled in the Cyprus quarrel since Greece
would wish to bring in Cyprus, or rather the Greek (?) portion of it.
On the other hand the EEC faces an even more serious dilemma should
Greece, in our outside the Community, become involved in a war with Turkey
or slide once again into political crisis, either of the Left or Right. At least
Membership might be expected to impact some element of stability.
(1) The same could be said about Portugal's internal political difficulties.
Membership and economic growth may serve to stabilize political development.
Isolated, she may slide into political relationships alien to the interests of the
Nine.
(m) Spain, politically, is quite a different matter. Her development must
come from within -and any attempt to pressure her Government or people would
be counter-productive. A successful and peaceful transition towards Associated
status would be politically to the advantage of the Nine and probably pave
the way for an internal move towards a system of government more in accord
with the Treaty of Rome.












U.S. INTERESTS IN THE MEDITERRANEAN: MILITARY BASES AND
POLITICAL DEVELOPMENTS

Paper by Leo Ryan

U.S. INTERESTS IN THE MEDITERRANEAN
Since the end of World War II, U.S. interests in the Mediterranean derive
from the premise that no area of the world is of greater importance to the
security of the United States than is Western Europe. Conversely, a viable
partnership with the United States is essential to the security of the nations of
Western Europe. The framework of that partnership is the North Atlantic
Treaty Organization (NATO), a body whose strength and effectiveness during
its 27-year existence has depended heavily on Western Europe's southern tier
of countries adjacent to the Mediterranean.
In addition to the importance of the Mediterranean area to NATO's collective
security mission, the United States and Western Europe also share a common
interest in the region due to its proximity to the volatile but oil-rich Middle
East and the vital Indian Ocean area.
Clearly, the interests of the United States and those of Western Europe in
the Mediterranean are not divisible. In spite of our independent interests, how-
ever, recent events in Western Europe's Mediterranean countries have raised
serious question as to whether our common interests in the area can be pro-
tected and promoted under the NATO umbrella.

POLITICAL DEVELOPMEqTS A.N-D U.S. MILITARY ROLE IN SOUTHERN EUROPE
A significant part of the United States' contribution to NATO's mission in
the Mediterranean area-and to its own unilateral security interests as well-
is the presence of U.S. military bases and installations from the Azores to
Turkey. During a tour of NATO countries last August, I found, in discussions
with government officials, that they appear to regard the heavy U.S. commit-
mient to defense of Western Europe and the stationing of U.S. forces there as
vital to their own security. In fact, nowhere in Europe, including non-NATO
countries such as Spain and neutral SwMen, did government leaders express
any feasible alternative to NATO or to the predominant role of the United
States in NATO.
However, despite the apparent agreement among the partners of the alliance
with respect to NATO's relevance, recent pressures and upheavals in NATO's
southern tier have cast doubt on whether the U.S. military presence can continue
in some locations. These same pressures now bring up the quetion of whether
the 1lliawie is structured to (deal with internal dissension and political disparity.

TIE CONFLICT BETWEEN GREECE AND TURKEY
Th I conflict between Greece and Turkey over Cyprus- as well as their simmer-
tnw dispute over the Aegean islands has severely damaged NATO's south-
e:Istern flank.
As part of the complex problems emerging from the Greek-Turkish hostilities
over Cyprus, Greece announced in August 1974 its withdrawal from the NATo
integratd military structure. While, in fact, Greece Ires maintained participa-
tion in some NATO military activities, the long-terin Greek role in the Alliance
is now open to speculation, both within the Alliance and outside of it.
Reacting sharply to a cutoff in U.S. military sale and assistance on Feb-
rary 5, 1975, and the subsequent rejection of legislation in the Congress to
lift the embargo, Turkey in July 1975. suspended its bilateral defense arrange -
meaits with the United States. While Turkey has taken no action to change its
NAt) role. its dispute with Greece over Cyprus and the bitterness engendered
by the embargo impacted a(lversely on the security interests of the United
States as well as those of Western Europe.
Specifically. the suspension of VI.S. access to imlpolrtant intelligence gathering
facilities in Turkey has deprived the United Statwes and its NATO allies of
( (4 )






67

sorely needed information, with respect to the Soviet Union's military activ-
ities-particularly with respect to monitoring the extent of Moscow's compliance
with strategic arms limitations agreements.

COMMUNIST INVOLVEMENT IN WEST EUROPEAN GOVERNMENTS
Movement to the left in Portugal and the recent rise in the electoral capabili-
ties of the Communist Party of Italy (CVI) 'have created considerable alarm
within both the Executive and Legislative Branches of the U.S. government and
the American media with regard to the potentially adverse impact ommunist
participatioi in NATO governments would have on the security interests of the
United States and West Europe. Such alarm was expressed by Secretary of
State Kissinger when he ,recently stated in an address before an, American
audience:
"* * we must be concerned about the possibility of Communist parties
coming to power-or sharing in power-in governments in NATO countries.
Ultimately, the decision must, of course, be made by the voters of the countries
concerned. But no one should expect that this question is not of concern to this
government. Whether some of the Communist parties in Western Europe are, in
fact, independent of Moscow cannot be determined when their electoral self-
interest so overwhelmingly coincides with their claims. 'Their internal pro-
cedures-their Leninist principles and dogmas-remain the antithesis of demo-
cratic parties.
'By that record they would inevitably give low priority to security and West-
ern defense efforts, which are essential not only to Europe's freedom but to
maintaining the world balance of power. They would be tempted to orient their
economies to a much greater extent toward the East. We would have to expect
,that Western European governments in which Communists play a dominant
role would, at best, steer their countries' policies toward the positions of the
nonaligned. The political solidarity and collective defence of the West-and thus
NATO-would be inevitably weakened if not undermined."
STATEMENT OF PRESIDENT FORD
President Ford summed up this fear more succinctly when he asserted:
"I don't think you can have a Communist government or Communist officials
in a government and have that nation be a viable partner in NATO."
From my own point of view as a Member of Congress which has a different
and more populist orientation, I would suggest a slightly different view. The
American people believe in the process of free elections-almost passionately.
If they did not invent this idea, they certainly perfected it in war and peace
for the last 200 years. Americans just don't understand the people of countries
who advocate the overthrow of a government which is freely elected.
Furthermore, they find it difficult to understand how other Western European
nations can be quite so passive, or perhaps noncompetitive toward the Soviet
bloc and toward those nations that advocate totalitarian philosophy. We rejoice
that Portugal seems to be moving toward freedom for its people. We rejoice for
Spain as it moves in some agony to open up its society, without finding itself
overthrown again by a coup from the left or the right.
We wonder if freedom can survive in Italy. We wonder if the free enterprise
system which has given so much to the average man can survive the Communist
promise of total equality for all-and which only means the destruction of a
system. of manufacture and distribution that has brought new meaning to the
lives of working men and women of Western Europe.

WHERE DO WE GO FROM HERE?
In view of the deteriorating situation on NATO's south-eastern flank, and in
view of the rise in Communist Party power in NATO governments, we must
seriously ask ourselves where do we go from here vis-a-vis protecting our com-
mon interests in the Mediterranean.
Specifically, we parliamentarians must come to grips with the following
Issues:
1. Can the NATO Alliance remain viable if local Communist parties achieve
a role in certain NATO governments?
2. What can the members of the Alliance do in concert to heal the Greek-
Turkish split and insure that future internecine conflicts do not boil over within
NATO?






68

3. Should post-Franco Spain he included in the Alliance?
4. Should the Alliance be more concerned with problems and events heretofore
considered by the West European member governments to be outside NATO's
mis sion?
In my personal view, with respect to the issue of Communist influence in
NATO governments, I believe it is much too early to panic. Events in Portugal
have not shown, thus far, that NATO is in imminent danger of losing that gov-
ernment's participation. As for Italy, I recommended in a report to the House
Committee on International Relations that:
"US policy in Italy must take into account the growing political significance
of the Italian Communist Party in the fact of the continued inability of the
other political parties to make any meaningful progress toward solving Italy's
worsening economic and social problems. We can no longer pretend that the PCI
does not exist, officially. The attitude of the PCI toward the United States just
might be influenced to some extent by our attitude toward the PCI. A long hard
and honest look should be given to the PCI to determine their true degree of
independence from the Communist Party of the Soviet Union (CPSU)."
In the final analysis the Italian electorate must make these decisions and
determinations themselves.
With respect to NATO's apparent inability to deal with such destructive
intramural conflicts as the Greek-Turkish dispute, I have long been concerned
with the inability of the Alliance to have a positive influence on problems out-
side the military sphere. Its institutional inertia has virtually hamstrung the
Alliance's ability to cope with the Arab oil embargo, for example. If the Alliance
is to remain a credible force in today's world, this inertia and narrowness must
be overcome.
On the question of Spain, it is my view that, with the passing of Franco, the
emergence of a more moderate government, and the signing of a US-Spain base
rights treaty, Spain should be brought in to NATO to shore up the Alliance's
southern tier.
JOINT ACTION NEEDED
Finally, I believe very strongly that the NATO parliamentary members, as
a bloc, and as individual delegations should become more conscious of a respon-
sibility to praise those activities of governments or of popular movements that
move a country toward freedom, and condemn those actions that the Alliance
sees as hostile to their stated beliefs. It is not enough for you to expect the US
to be a leader in such fashion, and to fail to take such actions yourself.
In a democracy such as exists in the US. you are quick to note the opposing
policies of the Ford Administration and Mr. Kissinger on one side, and the
Congress on the other.
President Ford wants to help Angola. The Congress does not. The Congress
does not like some of the more peculiar digressions of the CIA. The President
tries to defend them. In a country the size of ours, whatever else all this means,
it at least means this:
(a) We mean to protect our hard won liberties even from our own excesses
on occasion.
(b) In a truly free society, other nations may look through wide open windows
to see the way we live.
I am not overly embarrassed by our internal bickering. You should not be
either. In fact, it would he good for Third World nations to see that we can do
this and still remain strong. The American voter would like to be sure that
NATO countries share those beliefs. Proof does not necessarily come from in-
ternal example, but by being more active in openly questioning Soviet bloc
failures, for example.
I have heard from many of my distinguished colleagues at these conferences
that you need America to provide an example. A noble and challenging thought-
may I reply in the same vein? American citizens need to hear Europeans pro-
claim their belief In free enterprise and free elections. This is not to say that
you do not do so now, and have not done so. But like any Jealous lover, we
need constant reassurance of your affections, too. Perhaps It Is just that you need
to slak up more loudly for those of us who live on the far side of America. Dis-
tance may make us slightly deaf--but still In need of reassurance, too.
I put forth these ssues and views for the consideration of my fellow parlia-
mentarans and welcome your reactions.













Friday, April 23, 1976, Morning

FINAL SESSION
Before the press conference the two Delegations evaluated the results of the
Working Sessions during this Ninth Interparliamentary Meeting, and unani-
mously expressed their satisfaction with both the organizational and substan-
tive parts of the programme.
The American Delegation renewed the formal invitation to the European
Parliament to send a Delegation to Washington for the next, and Tenth, Inter-
parliamentary Meeting. It also renewed Congressman Paul Findley's (Repub-
lican, Illinois) invitation for this Delegation to participate in the celebrations
of the bi-centennial of the Independence of the United States, by visiting Spring-
field, Illinois, the city where Abraham Lincoln was active before he was elected
President of the United States. The time for the next meeting would be
September 1976.
(69)

















APTPENDIX-C



DECL.ATI0' OF OECDM GOvERMENTS ON INTERNATIONAL
...... NVESMTENT AND MULTINATIONAL ENTERPRISES,

(As approved by the member governments on June 21, 1976 in Paris)

THE GOVERNMENTS OF OECD MEMBER COUNTRIES

CONSIDERING
That international investment has assumed increased importance in the world
economy and has considerably contributed to the development of their countries;
That multinational enterprises play an important role in this investment
process;
That co-operation by Member countries can improve the foreign investment
climate, encourage the positive contribution which multinational enterprises can
make to economic and social progress, and minimize and resolve difficult ties which
may arise from their various operations;
That, while continuing endeavours within the OECD may lead to further inter-
national arrangements and agreements in this field, it seems appropriate at this
stage to intensify their co-operation and consultation on issues relating to inter-
national investment and multinational enterprises through inter-related instru-
ments each of which deals with a different aspect of the matter and together
constitute a framework within which the OECD will consider these issues:
Ir.

DECLARE
That they jointly recommend to multinational enterprises operating in their
territories the observance of the Guidelines as set forth in the Annex hereto
having regard to the considerations and understandings which introduce the
Guidelines and are an integral part of them.
II.

(1) That Member countries should, consistent with their needs to maintain
public order, to protect their essential security interests and to fulfill commit-
ments relating to international peace and security. accorded to enterprises op-
erating in their territories and owned or controlled directly or indirectly by
nationals of another Member country (hereinafter referred to as "Foreign-
Controlled Enterprises") treatment under their laws, regulations and admini-
strative practices, consistent with international law and no less favorable than
that accorded in like situations to domestic enterprises (hereinafter referred to
as 'National Treatment").
(2) That Member countries will consider applying "National Treatment" in
respect of countries other than Member countries.
(3) That Member countries will endeavor to ensure that their territorial sub-
divisions apply "National Treatment".
(4) That the Declaration does not deal with the right of Member countries to
regulate the entry of foreign investment or the conditions of establishment of
foreign enterprises.
III.

(1) That they recognize the need to strengthen their co-operation in the field
of international direct investment.
(71)


73-026---76- 7






72


(2) That they thus recognize the need to give due weight to the interests of
Member countries affected by specific laws, regulations and administrative prac-
tices in this field (hereinafter called "measures") providing official incentives
and disincentives to international direct investment.
(3) That Member countries will endeavor to make such measures as trans-
parent as possible, so that their importance and purpose can be ascertained and
that information on them can be readily available.
IV.
That they are prepared to consult one another on the above matters in con-
formity with the Decisions of the Council relating to Inter-Governmental Consul-
tation Procedures on the Guidelines for Multinational Enterprises, on National
Treatment and on International Investment Incentives and Disincentives.

V.
That they will review the above matters within three years with a view to
improving the effectiveness of international economic cooperation among Mem-
ber countries on issues relating to international investment and multinational
enterprises.
ANNEX

GUIDELINES FOR MIULTINATIONAL ENTERPRISES

1. Multinational enterprises now play an important part in the economies of
Member countries and in international economic relations, which is of increasing
interest to governments. Through international direct investment, such enter-
prises can bring substantial benefits to home and host countries by contributing
to the efficient utilization of capital, technology and human resources between
countries and can thus fulfill an important role in the promotion of economic
and social welfare. But the advances made by multinational enterprises in or-
ganizing their operations beyond the national framework may lead to abuse of
concentrations of economic power and to conflicts with national policy objectives.
In addition, the complexity of these multinational enterprises and the difficulty
of clearly perceiving their diverse structures, operations and policies sometimes
give rise to concern.
2. The common aim of the Member countries is to encourage the positive con-
tributions which multinational enterprises can make to economic and social prog-
ress and to minimize and resolve the difficulties to which their various operations
may give rise. In view of the transnational structure of such enterprises, this
aim will be furthered by cooperation among the OECD countries where the head-
quarters of most of the multinational enterprises are established and which are
the location of a substantial part of their operations. The guidelines set out here-
after are designed to assist in the achievement of this common aim and to con-
tribute to improving the foreign investment climate.
3. Since the operations of multinational enterprises extend throughout the
world, including countries that are not Members of the Organization, interna-
tinal coMoperation in this field should extend to all States. Member countries will
give their full support to efforts undertaken in cooperation with non-Member
countries, and in particular with developing countries, with a view to improving
the welfare and living standards of all people both by encouraging the positive
coitrilutions which multinational enterprises can make and by minimizing and
resolving the problems which nmy arise in connection with their activities.
4. Within the Organization, the program of cooperation to attain these ends
will be a continuing, pragmatic and balanced one. It comes within the general
ai1as of the Convention on the Organization for Economic Cooperation and De-
velopment and makes full use of the various specialized bodies of the Organiza-
titn, whose terms of reference already cover many aspects of the role of multi-
national enterpries, notably in matters of international trade and payments,
competition, taxation, manpower, industrial development, science and technology.
In these bodies, work is being carried out on the identification of issues, the
improvement of relevant qualitative and statistical information and the elabora-
tion of proposals for action designed to strengthen inter-governmental coopera-
tion. In some of these areas procedures already exist through which issues related






73


to the operations of multinational enterprises can be taken up. This work could
result in further agreements and arrangements between governments.
5. The initial phase of the cooperation program is composed of a Declaration
and three Decisions promulgated simultaneously as they are complementary
and interconnected in respect of guidelines for multinational enterprises, national
treatment for foreign controlled enterprises and international investment in-
centives and disincentives.
6. The guidelines set out below are recommendations jointly addressed by
Member countries to multinational enterprises operating in their territories.
These guidelines, which take into account the problems which can arise because
of international structure of these enterprises, lay down standards for the activi-
ties of these enterprises in the different Member countries. Observance of the
guidelines is voluntary and not legally enforceable. However, they should help
to ensure that the operations of these enterprises are in harmony with national
policies of the countries where they operate and to strengthen the basis of mutual
confidence between enterprises and States.
7. Every State has the right to prescribe the conditions under which multi-
national enterprises operate within its national jurisdiction. subject to interna-
tional law and to the international agreements to which it has subscribed. The
entities of a multinational enterprise located in various countries are subject to
the laws of these countries.
8. A precise legal definition of multinational enterprises is not required for the
purposes of the guidelines. These usually comprise companies or other entities
whose ownership is private, state or mixed, established in different countries and
so linked that one or more of them may be able to exercise a significant influence
over the activities of others and, in particular, to share knowledge and resources
with the others. The degree of autonomy of each entity in relation to the others
varies widely from one multinational enterprise to another, depending on the
nature of the links between such entities and the fields of activity concerned. For
these reasons the guidelines are addressed to the various entities within the multi-
national enterprise (parent companies and/or local entities) according to the
actual distribution of responsibilities among them on the understanding that they
will cooperate and provide assistance to one another as necessary to facilitate
observance of the guidelines. The word "enterprise" as used in these guidelines
refers to these various entities in accordance with their responsibilities.
9. The guidelines are not aimed at introducing differences of treatment between
multinational and domestic enterprises; wherever relevant they reflect good
practice for all. Accordingly, multinational and domestic enterprises are subject
to the same expectations in respect of their conduct wherever the guidelines are
relevant to both.
10. The use of appropriate international dispute settlement mechanisms, includ-
ing arbitration, should be encouraged as a means of facilitating the resolution of
problems arising between enterprises and Member countries.
11. Member countries have agreed to establish appropriate review and consulta-
tion procedures concerning issues arising in respect of the guidelines. When multi-
national enterprises are made subject to conflicting requirements by Member
countries, the governments concerned will cooperate in good faith with a view
to resolving such problems either within the Committee for International Invest-
ment and Multinational Enterprises established by the OECD Council on 21st
January 1975 or through other mutually acceptable arrangements.
HAVING REGARD to the foregoing considerations, the Member countries set
forth the following guidelines for multinational enterprises with the understand-
ing that Member countries will fulfill their responsibilities to treat enterprises
equitably and in accordance with international law and international agreements
as well as contractual obligations to which they have subscribed.
GENERAL POLICIES
Enterprises should-
(1) Take fully into account established general policy objectives of the Member
countries in which they operate;
(2) In particular, give due consideration to those countries' aims and priorities
with regard to economic and social progress, including industrial and regional
development, the protection of the environment, the creation of employment
opportunities, the promotion of innovation and the transfer of technology;






74

(3) While observing their legal obligations concerning information, supply
their entities with supplementary information the latter may need in order to
meet requests by the authorities of the countries in which these entities are
located for information relevant to the activities of those entities, taking into
account legitimate requirements of business confideniality,
(4) Favor close cooperation with the local community and business interests.
(5) Allow their component entities freedom to develop their activities and to
exploit their eompetitive advantage in dome tic and foreign kets Consistent
with the need for specialization and sound commercial pra;ti;
(6) When filling responsible posts in each country of operation, take due
account of individual qualifications without discrimination to, nationality,
subject to particular national requirements in -this respect;
(7) Not render-and they should -not be solicited or expected to render-any
bribe or other improper benefit, direct or -indirect, to any public servant or
holder of public office;
(8) Unless legally permissible, not make contributions to candidates for public
office or to political parties or other political organizations ;
(9) Abstain from any improper involvement in local political activities.

DISCLOSURE OF INFORMATION
Enterprises should, having due regard to -their nature and relative size in the
economic context of their operations and to requirements of business confidenti-
ality and to cost, publish in a form suited to improve public understanding a
sulfjfient body of factual information on the structure, activities and policies
of the enterprise as a whole, as a supplement, in so far as is necessary for this
purpose, to information to be disclosed under the national law of the individual
countries in which they operate. To this end, they should publish within reason-
able time limits, on a regular basis, but at least annually, financial statements
and other pertinent Information relating to the enterprise as a whole, compris-
ing in particular:
(i) The structure of the enterprise, showing the name and location of the
parent company, its main affiliates, its percentage ownership, direct and indirect,
in these affiliates, including shareholdings between them;
(ii) The geographical areas 1 where operations are carried out and the princi-
pal activitits carried on therein by the parent company and the main affiliates;
(iii) The operating results and sales by geographical area and the sales in the
major lines of business for the enterprise as a whole;
(iv) Significant new capital investment by geographical area and, as far as
practicable, by major lines of business for the enterprise as a whole;
(v) A statement of the source and uses of funds by the enterprise as a whole;
(vi) Tle average number (of employees in eac:h geographical area;
(vii) Research and development expenditure for the enterprise as a whole;
(viii) The policies followed in respet of intra-group) pricing;
(ix) The accounting policies, including those on consolidation, observed in
compiling the published information.

COMPETITION

ETnterpris4es should, while conforming to official competition rules and estab-
lished policies of the countries in which they operate.
(1) Refrain from actions which would adversely affect competition in the
relevant market by abusing a dominant position of market power, by means of,
for example,
(a) Anti-competitive acquisitions,
(b) Predatory behavior toward competitors,
(c) Unreasonable refusal to deal,
(d) Anti-conpetltive abuse of industrial property rights;

For the pirioses of the guideline on disclosure of information the term "geographcal
aroa" means groups of countries or individual countries Ls evach enterprise determnies is
appropriate in Its particular circumstances. While no single method of grouping is
appropriate for all enterprises, or for all purposes, the fact ors to be eonnidered by an
enterprise wmild include the significance of operations carried out in Individtial countries
or areas as well as the effects on its competitiveness, geographic proximnity economilc
affinity, sinilrities in business environments and the nature, scale and degree of inter-
relationship of the enterprise's operations in the various countries.






75


(e) Discriminatory (i.e. unreasonably differentiated) pricing and using such
pricing transactions between affiliated enterprises as a means of affecting ad-
versely competition outside these enterprises;
(2) Allow purchasers, distributors and licensees freedom to resell, export,
purchase and develop their operations consistent with law, trade conditions, the
need for specialization and sound commercial practice;
(3) Refrain from participating in or Otherwise purposely strengthening the
restrictive effects of international or domestic cartels or restrictive agreements
which adversely affect or eliminate competition and which are not generally
or specifically accepted under applicable national or international legislation;
(4) Be ready to consult and cooperate, including the provision of information,
with competent authorities of countries whose interests are directly affected
in regard to competition issues or investigations. Provision of information should
be in accordance with safeguards normally applicable in this field.

FINANCING
Enterprises should, in managing the financial and commercial operations of
their activities, and especially their liquid foreign assets and liabilities, take
into consideration the established objectives of the countries in which they
operate regarding balance of payments and credit policies.

TAXATION
Enterprises should,
(1) Upon request of the taxation authorities of the countries in which they
-operate, provide, in accordance with the safeguards and relevant procedures
of the national laws of these countries, the information necessary to determine
correctly the taxes to be assessed in connection with their operations, includ-
ing relevant information concerning their operations in other countries;
(2) Refrain from making use of the particular facilities available to them,
such as transfer pricing which does not conform to an arms-length standard, for
modifying in ways contrary to national laws the tax base on which members of
-the group are assessed.

EMPLOYMENT AND INDUSTRIAL RELATIONS
Enterprises should, within the framework of law, regulations and prevailing
labour relations and employment practices, in each of the countries in which
they operate,
(1) Respect the right of their employees to be represented by trade unions
and other bona fide organizations of employees, and engage in constructive nego-
tiations, either individually or through employers' associations, with such
employee organizations with a view to reaching agreements on employment
conditions, which should include provisions for dealing with disputes arising
over the interpretation of such agreements, and for ensuring mutually respected
rights and responsibilities;
(2) (a) Provide such facilities to representatives of the employees as may be
necessary to assist in the development of effective collective agreements;
(b) Provide to representatives of employees information which is needed for
meaningful negotiations on conditions of employment;
(3) Provide to representatives of employees, where this accords with local
law and practice, information which enables them to obtain a true and fair
view of the performance of the entity or, where appropriate, the enterprise as
a whole;
(4) Observe standards of employment and industrial relations not less favor-
able than those observed by comparable employers in the host country;
(5) In their operations, to the greatest extent practicable, utilize, train and
prepare for upgrading members of the local labour force in co-operation with
representatives of their employees and, where appropriate, the relevant govern-
mental authorities;
(6) In considering changes in their operations which would have major effects
upon the livelihood of their employees, in particular in the case of the closure
of an entity involving collective lay-offs or dismissals, provide reasonable notice
of such changes to representatives of their employees, and where appropriate
to the relevant governmental authorities, and co-operate with the employee






76

representatives and appropriate governmental authorities so as to mitigate to
the maximum extent practicable adverse effects;
(7) Implement their employment policies including hiring, discharge, pay,
promotion and training without discrimination unless selectivity in respect of
emp'.oyee characteristics is in furtherance of established governmental policies
which specifically promote greater equality of employment opportunity;
(8) In the context of bona fide negotiations 2 with representatives of employees
on conditions of employment or while employees are exercising a right to or-
ganize, not threaten to utilize a capacity to transfer the whole or part of an
operating unit from the country concerned in order to influence unfairly those
negotiations or to hinder the exercise of a right to organize;
(9) Enable authorized representatives of their employees to conduct negotia-
tions on collective bargaining or labour management relations issues with rep-
resentatives of management who are authorized to take decisions on the matters
under negotiation.
SCIENCE AND TECHNOLOGY
Enterprises should
4 1) Endeavour to ensure that their activities fit satisfactorily into the scien-
tific and technological policies and plans of the countries in which they operate,
and contribute to the development of national scientific and technological capaci-
ties, including as far as appropriate the establishment and improvement in host
countries of their capacity to innovate;
(2) To the fullest extent practicable, adopt in the course of their business
activities practices which permit the rapid diffusion of technologies with due
regard to the protection of industrial and intellectual property rights;
(3) When granting licenses for the use of industrial property rights or when
otherwise transferring technology do so on reasonable terms and conditions.


DECISION OF THE OECD Cor-\nyL ON INTER-GOVERNMENTAL CONSULTATION
PROCEDURES ON THE GUIDELINSE FOR MULTINATIONAL ENTERPRISES

THE COUNCIL
Having regard to the Convention on the Organization for Economic Co-opera-
tion and Development of 14th December, 190 and, in particular, to Articles
2(d), 3 and 5(a) thereof;
Having regard to the Resolution of the Council of 21st January, 1975 estab-
lishing a Committee on International Investment and Multinational Enterprises
(hereinafter called the "Committee'") and, in particular to paragraph 2 thereof,
[C(74) 247(Final) ];
Taking note of the Declaration by the Governments of OECD Member coun-
tries of 21st June, 1976 in which they jointly recommend to multinational enter-
prices the observance of guidelines for multinational enterprises;
Recognizing the desirability of setting forth procedures by which consulta-
tions may take place on matters related to these guidelines;
On the proposal of the Committee for International Investment and Multina-
tional Enterprises [C(76)9(9] ;
DECIDES
1. The Committee shall periodically or at the request of a Member country
hold an exchange of views on matters related to the guidelines and the experience
gained in their application. The Committee shall periodically report to the
Council on these matters.
2. The Committee shall periodically invite BIAC and TUAC to express their
views on matters related to the guidelines and shall take account of such views
in its reports to the Council.
3. On the proposal of a member country, the Committee may decide whether
individual enterprises should be given the opportunity, if they so wish, to express
their views concerning the application of the guidelines. The Committee shall not
reach conclusions on the conduct of individual enterprises.
4. Member countries may request that consultations be held In the Committee
on any problem arising from the fact that multinational enterprises are iade

2 Bona fide negotlationq may include labour disputes as part of the procems of negotla-
tion. Whether or not labor disputes are so Included will be determmined by the law
and prevailing employment practices of particular countries.





77

subject to conflicting requirements. Governments concerned will co-operate in
good faith with a view to resolving such problems, either within the Committee
or through other mutually acceptable arrangements.
5. This Decision shall be reviewed within a period of three years. The Com-
mittee shall make proposals for this purpose as appropriate.


DECISION OF THE OECD COUNCIL ON ATIONAL TREATMENT

THE COUNCIL
Having regard to the Convention on the Organization for Economic Co-opera-
tion and Development of 14th December 1960 and, in particular, Articles 2(c),
2(d), 3 and 5(a) thereof ;
Having regard to the Resolution of the Council of 21st January, 1975 estab-
lishing a Committee on International Investment and Multinational Enterprises
(hereinafter called the "Committee") and, in particular, paragraph 2 thereof
[C (74)247 (Final) ] ;
Takilig note of the Declaration by the Governments of OECD Member countries
of 21st June 1976 on national treatment:
Considering that it is appropriate to establish within the Organization suitable
procedures for reviewing laws, regulations, and administrative practices (herein-
after referred to as "measures") which depart from ~-National Treatment":
On the proposal of the Committee for international Investment and Multina-
tional Enterprises [C (76)99] ;
DECIDES
1. Measures taken by a Member country constituting exceptions to "National
Treatment" (including measures restricting new investment by "Foreign-Con-
trolled Enterprises" already established in their territory) which are in effect
on the date of this Decision shall be notified to the Organization within 60 (lays
after the date of this Decision.
2. Measures taken by a Member country constituting new exceptions to "Na-
tional Treatment" (including measures restricting new investment by "Foreign-
Controlled Enterprises" already established in their territory) taken after the
date of this Decision shall be notified to the Organization within 30 days of their
introduction together with the specific reasons therefor and the proposed duration
thereof.
3. 'Measures introduced by a territorial subdivision of a Member country,
pursuant to its independent powers, which constitute exceptions to "National
Treatment" shall be notified to the Organization by the Member country con-
cerned, insofar as it has knowledge thereof, within 30 days of the responsible
officials of the Member country obtaining such knowledge.
4. The Committee shall periodically review the application of "National Treat-
ment" (including exceptions thereto) with a view to extending such application
of "National Treatment". The Committee shall make proposals as and when
necessary in this connection.
5. The Committee shall act as a forum for consultations, at the request of a
Member country, in respect of any matter related to this instrument and its
implementation, including exceptions to "National Treatment" and their
application.
6. Member countries shall provide to the Committee, upon its request, all rele-
vant information concerning measures pertaining to the application of "National
Treatment" and exceptions thereto.
7. This Decision shall be reviewed within a period of three years. The Com-
mittee shall make proposals for this purpose as appropriate.


DECISION OF THE OECD COUNCIL ON INTERNATIONAL INVESTMENT INCENTIVES AND
DISINCENTIVES

THE COUNCIL
Having regard to the Convention on the Organization for Economic Co-
operation and Development of 14th December 1960 and, in particular, Articles
2(c), 2(d), 2(e), 3 and 5(a) thereof;





78


Leaving regard to the Resolution of the Council of 21st January 1975 Establish-
ig a Committee on International Investment and Multinational Enterprises
(hereinafter called the "Committee") and, in particular, paragraph 2 thereof
[C(74) 247 (Final)] ;
Taking note of the Declaration by the Governments of OECD Member coun-
tries of 21st June, 1976 on international investment incentives and disincentives;
(On the proposal of the Committee on International Investment and Multina-
tion.al Enterprises [C(76) -] ;
DECIDES
1. Consultations will take place in the framework of the Committee at the
request of a Member country which considers that its interests may be adversely
affected by the impact on its flow of international direct investments of meas-
ures taken by another Member country specifically designed to provide incentives
or disincentivess for international direct investment. Having full regard to the
national economic objectives of the measures and without prejudice to policies
deigned to redress regional imbalance, the purpose of the consultations will
be to examine the possibility of reducing such effects to a minimum.
2. Member countries shall supply, under the consultation pr ures, all per-
inissible information relating to any measures being the subject of the
consultation.
3. This Decision will be reviewed within a period of three years. The Com-
uittee shall make proposals for this purpose as appropriate.














BIOGRAPHIES


EUROPEAN PARTICIPANTS
GRRARD BORDU (replacing Mr. Ansart), born April 21, 1928, in Melun,
France. Member of the Parti communiste francais, Assemblee Nationale; Mem-
ber of the Communist Party of the European Parliament. Vice president of the
European Parliament. Member of the Committee on Economic and Monetary
Affairs.
PIERRE-BERNARD COUSTE, born June 29, 1920, in Rochefort-Sur-Mer,
France. Member of the Union des Democrates pour la Republique Party (UDR),
Assembl6e Nationale; Member of the Group of European Progressive Democrats
(DEP) of the European Parliament. Member of the Political Affairs Committee,
the Committees on Economic and Monetary Affairs, on External Economic Rela-
tions, and the Joint Parliamentary Committee of the EEC-Turkey Association.
ACHILLE CORONA, born July 30, 1914, in Rome, Italy. Member of the Partito
Socialista italiano (PSI), Senato della Repubblica; Member of the Socialist
Group of the European Parliament. Vice President of the European Parliament.
Member of the Political Affairs Committee, the Committee on Development and
Cooperation, and the Joint Parliamentary Committee of the EEC-Turkey
Association.
PETER CORTERIER, born June 19, 1936, in Karlsruhe, Germany. Member of
the Sozialdemokratische Partei Deutschlands (SPD), Deutscher Bundestag;
Member of the Socialist Group of the European Parliament. Member of the Politi-
cal Affairs Committee, the Committee on External Economic Relations, and the
Joint Parliamentary Committee of the EEC-Greece Association.
MAURICE FAURE, born January 2, 1922, in Azerat, France. Member of the
Movement des radicaux de gauche, A'ssembl~e Nationale: Member of the Social-
ist Group of the European Parliament. Member of the Political Affairs Commit-
tee and the Committee on Budgets.
AART GEURTSEN, born January 17. 192-6, in Schiedam. Netherlands. Menmber
of the Volkspartij voor Vrijheid en Democratie, Tweede Kamer der Staten-
Generaal; Member of the Liberal and Allies Group of the European Parliament.
Member of the Legal Affairs Committee, and the Committee on Social Affairs.
ROGER HOUDET, born June 14, 1899, in Angers, France. Member of the
R6publicains Ind6pendants, Senate; Member of the Liberal and Allies Group of
the European Parliament. Chairman of the Committee on A-riculture Member
of the Committee on Regional Policy, Regional Planning and Transport.
NORBERT HOUGARDY, born November 1, 1909, in Etterbeek, Belgium. Mem-
ber of the Parti de la liberty et du progr s, Senate: Vice-Chairman of the Liberal
and Allies Group of the European Parliament. Member of the Committees on
Economic and Monetary Affairs, and on Energy and Research.
HANS-EDGAR. JAHN, born November 21, 1914, in Neustettin (Pomerania).
Studied history, law, and political science in Berlin and Graz. Doctorate in
political sciences. War service. Author and publisher since 1947. Chairman of
"Arbeits.em einsch aft Dmokratiseher Kreise" 1951-(19. Viceb hii!an of the
refugee federation. Member of CDU since 1947. CDU Land Chairman for Bruns-
wick and Member of the CDU Land executive for Lower Saxony. Member of
Bundestag since 1965. Member of the European Parliament since .anuary 1970.
LIAM KAVANAGH, born February 9, 1335, in Wicklow, Ireland. Member of
the T~l,our Party. lDfiil Eire.ann : Member of the Socialist Group of tho Euronean
Parliament. Member of the Committee on Soeial Affairs. Employment and Edu-
cation and the Committee on Regional Policy. Regional Planning and Transport.
JAN DE KONIG. born August 31, 1926. in Zw~irtsluis, Netlierl-ind-. Member of
the Anti-revolutionaire partij. Tweede Kamer de Staten-Generaal. Member of
the Christian-Democratic Group of the European Parliament. Meml'er of the
Committee on Agriculture, on External Economic Relations, and the Joint Par-
liamentary Committee on the EEC-Greece Association.
(79)






80

ERWIN LANGE, born May 10, 1914, in Essen, Germany. Member of the Sozial-
demokratische Partei Deutschlands (SPD), Deutscher Bundestag. Member of
the Socialist Group of the European Parliament. Chairman of the Committee
on Budgets; member of the Committee on Economic and Monetary Affairs.
BRIAN J. LENIHAN, born November 17, 1930, in Dundalk, Ireland. Member of
the Fianna Fail Party, Seaad Eireann; Vice-Chairman of the Group of Euro-
pean Progressive Democrats of the European Parliament. Vice Chairman of the
Political Affairs Committee.
CHARLES B. MACDONALD, born June 11, 1935, in Larchfield, Ireland. Member
of the Fine Gael Party, Dail Eireann; Member of the Restricted Bureau of the
Christian-Democratic Group of the European Parliament. Vice Chairman of the
Committee on Regional Policy, Regional Planning and Transport; member of
the Committee on Agriculture, and the Committee on Rules and Procedure and
Petitions.
ThM NORMANTON, born March 12, 1917, in Rochdale, United Kingdom. Mem-
ber of the Conservative Party, House of Commons. Member of the European
Conservative Group of the European Parliament. Vice Chairman of the Com-
mittee on Energy and Research; member of the Committee on Economic and
Monetary Affairs.
FERRUCCIO PISONI, born August 6, 1936, in Sarche di Calavino (Trento),
Italy. Member of the Democrazia Cristiani, Camera dei Deputati; member of
the Christian-Democratic Group of the European Parliament. Member of the
Committee on Social Affairs, Employment and Education, the Committee on En-
ergy and Research, and the Joint Parliamentary Committee of the EEC-
Turkey Association.
JOHN LESLIE PRESCOTT, born May 31, 1938, in Prestatyn, United King-
dom. Member of the Labour Party, House of Commons; member of the Bureau
of the Socialist Group of the European Parliament. Member of the Committee
on Economic and Monetary Affairs, and the Committee on Social Affairs, Em-
ployment and Eduction.
.JAMES SCOTT-HOPKINS, born November 29, 1921, in London, United King-
dora. Member of the Conservative Party, House of Commons; Vice Chairman of
the European Conservative Group of the European Parliament. Vice Chairman
of the Committee on External Economic Relations. Member of the Political
Affairs Committee, and the Committee on Agriculture.
MARIO VETRONE, born January 26, 1914, in Benevento, Italy. Member of
the Democrazia Cristiana, Camera Die Deputati; member of the Christian-
Democratic Group of the European Parliament. Vice Chairman of the Com-
inittee on Agriculture; member of the Committee on External Economic Rela-
tions, and the Joint Parliamentary Committee of the EEC-Greece Asociation.


AMERICAN PARTICIPANTS
lENJAMIN S. ROSENTHAL, Democrat, of Elmhurst, Long Island, N.Y.;
born in New York City N.Y., JIune 8, 1923; educated in the public schools of the
city of New York; attended Long Island University and City College; L.L.B.
Brooklyn Law School (1949), L.L.M. New York University (1952) ; married Lila
Moskowitz, two children-Debra and Edward: attorney, admitted to New York
Biar 199; a(lmitted to practice before United States Supreme Court 1954; served
in United States Army March 1943 to January 196, 18 months in Iceland; elected
as Denirat-IAberal to the 87th Congress in special election February 20, 196;
reelected to the 88th, 89th, 90th, 91st, 92d, 93d, and 94th Congresses; appointed
iwiember of National Comniission on Food Marketing during 88th and 89th
Congresses.
I )NALI) MACKAY FRASER, Democratic-Farmer-Labor, of Minneapolis,
Minn.; attorney an(l former State senator 1954-62; born in Minneapolis, Febru-
:try 20, 1924; educated in Minneapolis public schools and University of Minnesota,
B.A., cum lude, 1914, L.L.B., 1948; served in Pacific Theater, World War II;
1969-71-chairman, Deniocratic Study Group; chairman, Coninilsion on Party
Structure and DIelegate Selection: Democratic Advisory Council; vice chairman
of the Commission on the Diemocratic Selection of Presidential Nominees, 168;
participating member, Anglo-Amerivan Parliamentary Conference on Africa,
1961 to present ; active in D.F.L. Party since 1947; chairman, Minnesota Citizens
for Kennedy, 1960; former officer, Minneapolis Foreign Policy Association;








Minneapolis Citizens' League; Minneapolis Citizens' Committee on Public Edu-
cation; delegate to 1972 and 1973 Conference on Disarmament; Congressional
adviser on the U.S. Delegation to the U.N. Seabeds Committee; 1973 national
chairman, Americans for Democratic Action; married to former Arvonne Skel-
ton; six children (one deceased) ; partner in former firm of Lindquist, Fraser &
Magnuson; elected to the 88th Congress November 6, 1962; reelected to the 89th,
90th, 91st, 92d, 93d, and 94th Congresses.
LEO J. RYAN, Democrat, of South San Francisco; born in Lincoln, Nebr.,
May 5, 1925; M.S., Creighton University, 1951; enlisted in U.S. Navy, 1943,
served in submarine service; teacher; school administrator; appointed to South
San Francisco Recreation Commission; elected city councilman and served as
mayor; authored book entitled "Understanding California Government and
Politics"; also edited the book "The USA: From Where We Stand"; elected to
California State Assembly, 1962; elected to the 93d Congress, November 7, 1972;
reelected to the 94th Congress.
STEPHEN J. SOLARZ, Democrat, of Brooklyn, N.Y.; born in New York City,
September 12, 1940; attended New York public schools; graduated from Brandeis
University, received master's degree in public law and government from Columbia
University; elected to New York State Assembly, three terms, 1968 through 1972;
ranking minority member, Higher Education Committee; member: Executive
Board of American Jewish Congress, League School for Seriously Disturbed
Children, B'nai B'rith; married to the former Nina Koldin; two children: Randy
and Lisa; elected to the 94th Congress on November 5, 1974; member, Interna-
tional Relations Committee (Subcommittee on International Economic Policy,
Subcommittee on International Resources, Food, and Energy), Post Office and
Civil Service Committee (Subcommittee on Manpower and Civil Service, Sub-
committee on Employee Political Rights and Intergovernmental Property);
member: DSG, Members of Congress for Peace through Law, Environmental
Study.
GUS YATRON, Democrat, of Reading, Pa.; born in Reading, October 16,
1927; son of George H. and Theano (Lazos) Yatron; graduated from Reading
High School; was president of the student body; Kutztown State Teachers Col-
lege; was active in athletics, boxed professionally as a heavyweight while going
to college and lettered in varsity football; was a successful businessman in Read-
ing before elected to the U.S. Congress; entered politics in 1955 with a successful
bid for a 6-year term on Reading School Board, which includes the Reading Pub-
lic Museum and Art Gallery; member of the Reading Hospital Board of Man-
agers; elected to the Pennsylvania House of Representatives, 1956 and 1958;
elected to three consecutive terms to the Pennsylvania State Senate, 1960-66;
elected to the 91st Congress, November 5, 1968; reelected to the 92d, 93d, and 94th
Congresses; spoke before the European Parliament, 1973 and 1974; presented a
major white paper on NATO Burden-Sharing Resolution; resides in Reading;
married to the former Millie Menzies; two children; George (a law student at
Georgetown) and Theana (a junior at the University of Maryland) ; serves on
the House International Relations Committee.
JAMES P. JOHNSON, Republican, of Fort Collins, Colo.; born in Yankton.
S. Dak., June 2, 1930; B.A., Northwestern University, 1952; LL.B., University of
Colorado, 1959; served in the U.S. Marine Corps, 1952-56; prosecuting attorney,
Eighth Judicial District, Colorado; municipal judge, Ault, Colo., 1962-65; mem-
ber, Pondre R-1 School Board,, Fort Collins, Colo., 1969-71; president, Larimer
County Bar Association; elder, First United Presbyterian Church, Fort Collins,
Colo.; member: board of trustees, San Francisco Theological Seminary: board of
directors, Fort Collins, Colo., Chamber of Commerce, 1968-70; charter member,
Dean's Law Club, University of Colorado; married Nancy Brown of Oconomwoc,
Wis., 1952; three children: Dea Lynn, Julie Conner, and Drake Bartel- elected
to the 93d Congress, November 7, 1972; reelected to the 94th Congress, Novem-
ber 6, 1974.
RICHARD M. NOLAN, Democrat-Farmer-Labor, of Waite Park, Minn.;
born in Brainerd, Minn., December 17, 1943; married, the former Marjorie
Langer; four children: Michael, Leah, John, and Katherine; attended St. John's
University, Collegeville, Minn., 1962: B.A., political science, University of Minne-
sota, 1966; postgraduate work in public administration and public policy forma-
tion at the University of Maryland, 1967; educational director of Headstart for
three central Minnesota counties, 1968; curriculum coordinator for Adult Basic
Education for Little Falls School District, 1968; social studies teacher in Royal-






82


ton, Minn.. 196-69: project coordinator for the Center for the Study of Local
Government at St. John's University in Collegeville. Minn.. 1971; staff assistant to
7.8. Senator Walter F. Mondale. 1966-68: elected to Minnesota House of Repre-
sentatives in 1968 and reelected in 1970; Federal/State coordinator for the Minne-
sota House of Representatives 1973 legislative session; general labor at United
Parcel Services. 1964-66: member of Teamsters Union: administrative assistant
to tie senior vice president of Fingerhut Corp., 1973-74; elected to the 94th
Congress. November 5. 1974.
JOHN WILLIAM STANTON, Republican, of Paineville, Ohio; born in Pains-
vile February 20. 1924: graduated from Culver Military Academy, Culver, Ind..
in 1942: entered the School of Foreign Service at Georgetown University, Wash-
ington, D.C.. in July 1942; left studies to enter the U.S. Army in December 1.42:
served overseas in the Pacific theater for 33 months and discharged as a captain
January 1, 1946; reentered Georgetown University, majored in government
and economics, and received B.S. degree in 149; member. St. Mary's Catholic
Church in Painesville; Lake County commissioner 195G-64; married De 1966, to the former Peggy Smeeton : one daughter. Kelly Marie. born November 11,
1967: elected to the 89th Congress, November 3, 1964 ; reelected to each succeeding
Congresses.
HERMAN BADILLO, Democrat-Liberal, of the Bronx, N.Y. : born in Caglas,
P.R., August 21, 1929, emigrated to New York City ait age of 11: first person of
Puerto Ricn birth to sit with a vote in the Congress of the United States :
educated in Puerto Rico and New York City public schools;: graduated magna cure
laude from City College of New York in 1951 with a bachelor of business adminis-
tration degree (majored in economics and accounting) and cain laude from
B1rooklyn Law School in 1954 where he received the first scholarship prize. was
class valedictorian and a member of the Law Review, admitted to the New
York Bar, 195.5. has practiced law in New York City: became certified public
a(.culntant, 1956; appointed deputy commissioner, New York City Department
of Real Estate by Mayor Robert Wagner, January 1902, Commissioner of New
York City Department of Housing Relocation, November 192 to August 19615;
elected borough president of the Bronx, November 196.5 to December 1969): ad-
junct professor at Fordham University's Graduate School of Urban Education,
1970 to present; board member, Mount Sinai Hospital, as well as other civic
organizations in New York City; recipient, honorary doctor of law degree,
City College of New York; author, "A Bill of No Rights: Attica and the
meric Prion Sytem. 1972; married Irma Deutsch, May 7, I1-1; three
children: I)avid, Mark, and Loren; elected to the 92d Congress November 3,
1970 re-eleoted to 93d and !4th Congresses.
WILLIAM LEONARD HUNGATE, Democrat, of Troy, Mo.; born in
Ientn, 1ll., December 14, 1922; son of the late Mr. and Mrs. L. W. Jiungate of
Bowling Green, Mo.; attended public whools in Bowling Green, Mo.; Central
Methlodist College; University of Michigan ; graduated from Missouri University,
A.B. degree, 1943; and Ilarvard Law School, LL.B. degree, 1918; Culver Stockton
collegee (honorary) ; partner in the law firm of llungate & Grewach, Troy, Mo.,
1)56 CS, admitted to practice in the courts of Missouri. llnois, District of
Columbia, and before the Suplreme Court of the United States reived a Ii-
(centennial award from the St. Louis Bar Association for outstanding achieve-
ient in pul)lic service; served three tennis as prosecutiig attorney of Lincoln
County, and specill assistant to the attorcy general, 195&s (4 a veteianU of
World War II, served in Euirope as a private, first class, with the 9),ith Infantry
I)ivision, pa;ist lieutenant governor of Kiwanis Internnitoirnl 1)ivision.; past
president, H:rvard Iaw School Ass.ciatlion of Missouri, 1962-64 ; past chairman
of the board, First Christian Church, Troy, Mo. ; member, American Legion :
Vet(e rls 4 Foreig Wars : ASCAlP ; Masons : Sh1riners ; IHard of trustees, William
WVods ('ollee, Fulton, Mo. ; in 195( did research work wilb the American iar
J1"1111(1011m ill i "SirveY of he Administra1tion of Criminal Justice", married
lorothy N. Wilson of Cyrene. Mo. : two children. )avid 1nd Kay M ro. l:nson
L. Wod)( Ill) ; elOcted lo the 88th ( ngress, November 3. 19(. to fill +the v:i cany
('flUsed by the death of Cnolarenie Cannon; reeloftedl to the 891th. 9th, 91st. 920d,
!*3d. and 9I+th ( 'ougresses:; member, House J udicliary ('otutittee, chairman, Sub-
(.on-ittee on Criminal Justiee; Committee on Small Busins, chairman, $uh-
(031mnlttee on Uegiihatory Agen(ies.
BILL A CIIER, RepublicanM o1Houston. Tex.: ;orn in Houstmn, Tex,
Miar-lh 22, 192. ; graduated front St. T omas 1igh School, salutatorian, 1915:






83


attended Rice University, 1945-46; University of Texas, B.B.A., LL.B.j (with
honors), 1946-51; served in the U.S. Air Force, Korean conflict; captain, USAF
Reserve; councilman and mayor pro tempore, city of Hunters Creek Village,
1955-62; elected to Texas House of Represeintatives, 1966; reelected, 1968;
attorney and businessman; president, Uncle Johnny Mills, Inc., 1953-61; member
of SaInt Anne's Catholic Church; member, Houston and State Bar Associations;
member, Sigma Alpha Epsilon fraternity; chosen Houston S.A.E. Man of the
Year, 1968; St. Thomas High School Alumnus Award, 1971; Houston B'nai
B'rith "Man of the Year" Award, 1972; member, Phi Delta Phi legal fraternity;
life member, Houston IAvestock Show and Rodeo; N.F.I.B. "Guardian of Small
Business" Award, 1972-73; N.A.B. "Watchdog of the Treasury" Award, 1971-72;
National Alliance of Senior Citizens "Golden Age Hall of Fame" Award; presi-
dent, Texas State Society of Washington, D.C., 1974-75; member, Downtown
Exchange Club of Houston; Spring Branch-Memorial Chamber of Commerce
"Most Representative Citizen" Award; married; five children; elected to 92d
Congress, November 3, 1970; reelected to both 93d and 94th Congresses with the
highest vote percentages of any Republican congressional candidate in the United
States; member, Comnittee on Ways and Means; ranking Republican, Subcom-
mittee on Social Security; member, Subcommittee on Trade; member, White
House Commission on Regulatory Reform; chairman, Republican Study Com-
nittee Task Force on Regulatory Reform.
SAM M. GIBBONS. Democrat, of Tampa, Fla.: born, in Tampa, January 20,
1920, son of Gunby Gibbons and Jessie Kirk Cralle Gibbons; educated in public
schools of Tampa; received J.D. degree from the University of Florida; named
to the Univeristy's Hall of Fame and to its honor society Florida Blue Key;
member of Alpha Tau Omega Fraternity; married to the former Martha Hanley;
they have three sons--Clifford, born 1950; Mark, born 1952; Timothy, born
1958; elected to the Florida House of Representatives in 1952 and served for
6 years; elected to the Florida Senate in 1958 and served for 4 years; named one
of 'the top ten members of each body; named Tampa's Outstanding Young Man
of the Year in 1954; received Chamber of Commerce president's award; deacon
First Presbyterian Church of Tampa; first president of and member of University
of South Florida Foundation; served in U.S. Army 5 years during World War II
with 501st Parachute Infantry, 101st Airborne Division; awarded Bronze Star;
was in initial assault force landing 'before D-Day in Europe; took part In other
major combat actions, including operations at Bastogne; released from active
duty as major; elected November 6, 1962. Member of Ways and Means Committee.
JOSEPH E. KARTH, Democrat-Farmer-Labor, St. Paul, Minn.; born in
New Brighton, Ramsey County, Minn., August 26, 1921; was educated in Ramsey
County elementary schools and North St. Paul High School; attended the Univer-
sity of Nebraska School of Engineering; after completing 2 years of college
courses in engineering, education was interrupted by a call to combat duty, dur-
ing the service in the European Theater of Operations received a recommenda-
tion for a battlefield commission; employed by the Minnesota Mining and Manu-
facturing Co.; international representative of the OCAW-AFL-CIO for 10 years;
member of the Minnesota House of Representatives from 1950 through 1958; and
during special session of 1958 was voted "Outstanding Legislator"; member:
V.F.W., American Legion, Indianhead Council of the Boy Scouts, the First Pres-
byterian Church of White Bear Lake, Minn.; married the former Charlottee
Nordgren and they have three sons; elected to the 86th Congress on November 4,
1958, and to subsequent Congresses.
JAMES G. MARTIN, Republican, of Davidson, N.C.: born in Savannah, Ga.,
December 11, 1935; graduate, Mt. Zion High School, Winnsboro, S.C., 1953; B.S.
in chemistry, Davidson College, 1957; Ph. D. in chemistry, Princeton University,
1960, associate professor in chemistry, Davidson College, 1960-72; member.
Mecklenburg County Board of Commissioners, 1966-72, chairman, 1967-68, and
1970-71; founder and first chairman, Centralina Regional Council of Govern-
ments, 1966-69; vice president and trustee, Beta Theta Pi fraternity, 1966-9;
president, North Carolina Association of County Commissioners, 1970-71; vice
president, National Association of Regional Councils, 1970-72; current national
president of Beta Theta Pi, 1975-78; Mason, married Dorothy Ann MeAulay, 1957;
three children; Jimmy, Emily, and Benson; elected to the 93d Congress, Novem-
ber 7. 1972; reelected to the 94th Congress.
GUY ADRIAN VANDER JAGT, Republican, of Cadillac, Mich.; born in
Cadillac, Mich., August 26, 1931; 1945-49 attended Cadillac High School; 1953,
Hope College, bachelor of arts degree; 1955 Yale University, bachelor of divinity






84

degree; 1956, Bonn University, Rotary Fellowship; 1960. University of Michigan,
bachelor of laws degree: 1960, member of Michigan Bar Association; 1960-6-4, law
practice with Warner. Noreross & Judd. of Grand Rapids, Mich.; 1965-W6, Michi-
gan Senate. 36th District; March 1956. Junior Chamber of Commerce Outstanding
Young Man award: married Carol Doom of Grand Rapids, Mich.; daughter,
Virginia Marie. born August 31, 1969; elected to the 89th Congress, November 8.
1966, to fill the vacancy caused by the resignation of Robert P. Griflin; reelected
to 90th. 91st, 92d, 93d. and 94th Congresses; chairman, Republican Congressional
Campaign Committec; member, Ways and Means Committee.













BR-USSELs-DtTBLI-N -STOCKIIOLMNj-ROME


MONDAY, APRIL 19, 1976
0900-Depart from Andrews AFB. Lunch and dinner en route.
2100-Arrival in Brussels. Transfer to Royal Windsor Hotel.
TUESDAY, APRIL 20, 1976
0930-Briefing at U.S. Mission to the European Communities, by Ambassador
Deane Hinton and staff.
1100-Meeting at Berlaymont, headquarters of the European Community with
Henri Simonet, vice president of the Commission and members of the Com-
mission staff.
1300--Luncheon given by the Commission (host: Theo Hijzen, deputy director
general, external relations division).
1530-Briefing at NATO Headquarters by Ambassador Strauz-Hupe and SACEUR
Alexander Haig.
1930-Reception for U.S. Delegation by Ambassador Hinton.
WEDNESDAY, APRIL 21, 1976
1000-Depart for Dublin (lunch en route).
1230-Arrive in Dublin. Transfer to Shelbourne Hotel.
1430-1730--First Parliamentary Session, Dublin Castle-Question Hour, fol-
lowed by "Developments in East-West Relations (US and EP papers).
1830--Reception for both delegations by U.S. Ambassador Curley.
2000-Informal dinner given by EP delegation for U.S. delegation.
THURSDAY, APRIL 22, 1976
0930-1130-Parliamentary Session-Discussion of Draft Code on Multinational
Enterprises (Joint presentation by US and EP spokesmen).
1140-Visit to Irish countryside (with lunch).
1545-Arrival at residence of the President of Ireland.
1630-1815--Parliamentary discussion-Political Aspects of the World Food Situ-
ation (US and EP papers).
2000-Buffet for both delegations given by Foreign Ministry.
FRIDAY, APRIL 23, 1976
0930-1115--Parliamentary Discussion-US and European View on Mediterranean
Problems (US and EP papers).
1130--Summary discussion.
1200-Press Conference.
1230--Farewell luncheon given by EP Delegation.
1430-Depart for Stockholm.
1800-Akrrival at Stockholm airport.
1900--Arrival at Grand Hotel.
2000-Dinner given by Swedish Parliament.

SATURDAY, APRIL 24, 1976
0930-Problems of the Post-Industrial Society (I) : Legal and Criminal Reform:
Future Studies.
1200-1500--Luncheon at Operakallaren (Host: Under Secretary of State, Minis-
try of Foreign Affairs) followed by discussion of Swedish and United States
views of European political developments.
(85)






86
3 1262 09114 0
SUNDAY, APRIL 25, 1976
1C0--Problems of the Post-Industrial Society (II): Visit to Lidingo Hosptal-
Discussion of Swedish health care system. Meeting with Stig Gustafsson,
MP, on work environmental problems in Sweden.
1230-Luncheon (Host: Swedish Parliament).
1430-Visit to Swedish countryside en route to airport.
1530-Depart for Rome.
WOOX--Arrival in Rome-Transfer to Excelsior Hotel.

.MoNDAY, APRIL 26, 1976
100(-1200--Briefing at American Embassy by Ambassador Volpe and country
team.
Afternoon-Free for individual or group appointments with political and govern-
mental officials. .. ...
TUESDAY, APRIL 27, 1976

1230-Depart for Washington.
1400-1500--NATO Southern Command Briefing in Naples.
1800-Arrival Andrews AFB.