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95/06/09 Briefing on Presidentís Trip to G-7 Summit, Halifax
Bureau of Public Affairs

                              THE WHITE HOUSE
                      Office of the Press Secretary
For Immediate Release                                       June 9, 1995


                            The Briefing Room

11:15 A.M. EDT

MR. MCCURRY:  Good morning, everybody.  As you know, next week, 
Thursday, President Clinton will depart for Halifax for his third G-7 
summit since he has been President.  And in advance of that and because 
many of you are preparing to write for this weekend, we thought it would 
be good if you could meet with some of the team that will work with the 
President at the summit.

I've asked Sandy Berger, the Deputy National Security Advisor, to kick 
off this briefing, to tell you a little bit about some of the 
President's thinking and objectives as we head for Halifax.  And he will 
be joined by Dan Tarullo, who is the U.S. sherpa.  He is the Assistant 
Secretary of State for Economic and Business Affairs.  Joan Spero, who 
is the Undersecretary of State for Economic Affairs -- didn't they 
change your title at some point?  Business and Agriculture -- right.  
And she is one of the sherpas; as is Larry Summers, the Under Secretary 
of the Treasury for International Affairs.  And Bo Cutter is with us, 
too, the Deputy Assistant to the President for Economic Affairs.  They 
are all available for questions.  I'll let them divide up their 
presentation as they see fit, but we'll start with Sandy.

Thanks for all of you being here today.

MR. BERGER:  Thank you, Mike.

Let me take just one minute at the outset before asking Dan to walk 
through the substance of the G-7 meeting to talk a bit about the context 
of the meeting.

Halifax is another building block in a sweeping enterprise that 
President Clinton has been engaged in since the beginning of his 
administration -- that is leading the international community to build 
the international economic architecture that will propel prosperity into 
the 21st century.

The pillars of that structure that the President has been working on 
since the early days of this administration are, first, opening and 
expanding the markets; second, assisting in the transformation of the 
former communist world into the mainstream of market economies; third, 
promoting economic reform in the developing world where five-sixths of 
the population resides; and, fourth, promoting the process of reform of 
the international financial institutions to meet the new challenges of 
the global economy.

We've made enormous progress in building those structures over the past 
two and a half years.  Through NAFTA we've created the largest free 
trade area in the world, with 370 million consumers and a $6.5 trillion 
GDP.  After seven years the President brought to a conclusion the 
Uruguay Round, which will add $100 billion to $200 billion a year to the 
U.S. economy when it's fully implemented.

Looking ahead to regions of the fastest growing economies, the President 
launched a process in Asia with the APEC countries toward free and open 
trade in that region, and at the Summit of the Americas last year 
launched a process for a hemispheric free trade agreement by the year 
2005.  And we've been working over two and a half years for reform of 
the international financial institutions to meet the new challenges that 
we face.

Last year in Naples, the President suggested, and the other leaders 
agreed, that one focus of Halifax would be to review the international 
economic institutions to determine what further changes were necessary 
to meet new challenges.  And that is a very important part of what the 
leaders will do at Halifax.  They will address arrangements to prevent 
and deal with financial crises like Mexico. They will focus on 
streamlining U.N. economic and social agencies so that they can fulfill 
their mission more effectively and more efficiently.  And they will 
address the priorities that they see for the multilateral development 
banks as we head into the 21st century.

This is a process Bob Rubin described this week of building modern 
institutions for a modern economy.  It's a long-term process. Halifax is 
an opportunity to take stock of where the international community is in 
this process and to set some directions for future reform.

Let me ask Dan Tarullo now to go through more specifically the agenda of 
the G-7.


As all of you know, last year at Naples the G-7 leaders agreed to a 
proposal to review the international economic architecture to see where 
we are, to see where we need to be going.  Obviously, this isn't a job 
for a single meeting, not even for a single year's review. And I think 
Sandy's introduction has put this in some perspective.

In the intervening months, the Mexican peso crisis, and indeed, to a 
lesser extent, the Barings Bank problems have focused particular 
attention on financial stability and the world financial structure.  And 
I think what you'll be seeing in Halifax is agreement on a package of 
measures which will respond quite directly to what was clearly the most 
pressing problem in the international economic system, which is the need 
to avoid international financial crises and to respond effectively if a 
crisis does occur.

I think you will also see attention, as Sandy intimated, to development 
institutions, to the multilateral development banks to the U.N. economic 
institutions more generally.  There has been, particularly with respect 
to the development banks, a good deal of progress, much of it spurred by 
the United States and U.S. requests and proposals for reform and change 
of orientation in the MDBs.  There has been discussion in the 
preparatory work leading up to Halifax of what directions that the banks 
have now started to take should be ratified, should be moved forward, 
and what future steps are needed.

Third, I think what you'll see at Halifax is increasing attention by the 
leaders to some new problems which are emerging in the global economy.  
Environment is something that you're all aware of, but it is an issue of 
continuing concern and one which is increasingly global.  Terrorism and 
international organized crime are not things that normally have been 
thought of as byproducts of a global economy, but, in fact, they are.  
And the leaders will be addressing those as well, coming to grips with 
the fact that these are transnational phenomena which need a 
multilateral cooperative response.

I'll give a bit more detail on some of the things that we expect at 
Halifax.  With respect -- and I'll go down the little three points that 
I just gave you.  With respect to the financial crisis, as Secretary 
Rubin stated earlier this week, our sense of what is needed has really 
focused on four kinds of factors.

First, we need a new emphasis on transparency.  We need to make sure 
that economic and financial data is published in a timely and adequate 
fashion by countries throughout the world.  Why is this important?  Most 
obviously because if data and information are continuously available, 
the market has an early opportunity to see growing problems and to react 
to them.  If the market reacts soon because it has information, the 
chances of a crisis developing over time are much lower.  Bad policy 
cannot continue when there has already been a market reaction.

Second, crises will occur.  We think they will be rare-- if the kind of 
transparency and surveillance proposals that we would like to see 
adopted are adopted, they will indeed be rare.  But crises will occur.  
And it's important that the multilateral financial community have 
adequate resources that are available in a timely fashion with proper 
conditionality upon potential recipients so that when a crisis does hit 
there will be a quick and effective response.

Those are what we think are the two immediate needs which should be met.  
But there are also the need to look forward some, to look forward to 
potential new measures which might be taken to respond further or to 
elaborate upon our responses to international financial problems.

One of those is exploration of possible orderly workout mechanisms to 
deal with international debt crises.  There is not -- let me hasten to 
add -- a proposal on the table which has been discussed within the 
sherpa process.  So you should not anticipate that there will be any 
sort of discussion or agreement of such -- on such a proposal.  But what 
I think and hope that you will see is some sense from the leaders that 
this is an exploration, this is an inquiry which ought to move forward.  
We ought to see whether there is a way to deal with debt problems and 
short-term liquidity problems that have arisen in a fashion that makes 
adjustment easier on all sides.

Finally, as I mentioned at the outset, there are private financial 
challenges that are posed, as well as sovereign financial challenges.  
There is a good deal of cooperation in the world today among bank 
regulators and among securities regulators.  But as the Barings Bank 
incident showed, it is vital that the financial regulators in the world 
be vigilant about potential gaps in the system, and inquire once again 
as to whether there are gaps or weaknesses in the web of regulatory 
systems that exist for financial institutions.

So I expect again that there will be some discussion of these issues and 
I would hope some charge to our financial and securities regulators to 
pay further attention and enhance their cooperation to make sure that 
the safety and soundness of the world financial system is protected.

As I said, achieving these kinds of results, meeting these kinds of aims 
will mean that we will have been able to address the most pressing 
problem in the world economic system today.  But we also have been 
trying to pay attention to development issues generally, the importance 
of promoting development in a sensible fashion to ensure continued 
growth around the world, continued growing markets for U.S. exports.

The multilateral development banks, as I said, have made real progress.  
And what we are hoping for at Halifax is that we can gain agreement on a 
kind of set of principles or guidelines for the operation of the MDBs as 
we move towards the 21st century.  As many of you know, we have promoted 
an agenda at the MDBs to put people first -- more emphasis upon basic 
human needs on things like education, to make sure that one is really 
fighting the root sources of poverty and providing a better possibility 
of long-term development.

Second, we hope for some increased attention and ratification of the 
need to incorporate environmental considerations into all the activities 
of the MDBs.  Sustainable development is not just a catch phrase, it's 
an imperative for countries as they move forward in the development 

And finally, but by no means least importantly, it's very -- it's almost 
indispensable that what the multilateral development banks do is to 
support private sector growth and to help create the conditions for 
sustained private sector growth, not to supplant it or not to compete 
with it.  I think helping with basic human needs and with education and 
health is a way in which the banks can do that.  But again, all of their 
operations need to be keyed towards that guideline and that end.

And with respect to the United Nations economic and social institutions, 
here, too, our expectation is that there will be a set of guidelines for 
adjustment of these institutions and, hopefully, some sense of internal 
adjustment of these institutions because they have a vital role to play.  
And it's important for the countries which are the recipients of their 
aid and for those of us from countries which provide resources that 
these institutions be as effective and as efficient as possible.

If I can turn to the third point that I began with new issues.  These 
almost by definition are not issues or areas that are susceptible to 
some grand new multilateral structure.  As I said, this is a process.  
It's not a single meeting.  It's the need, really, for continuous 
adjustment to meet a continuously changing world economy.

But in areas like the environment, like terrorism, like international 
organized crime, it's important that the leaders themselves focus on 
these issues and, in essence, charge their national governments, their 
administrations to come to grips not just by themselves, but in 
cooperation to deal with what are, after all, international problems.  
What we would anticipate is a fairly lively discussion on these kinds of 
issues and a charge to specific expert groups to deal with problems, to 
deal with crime issues that cross national boundaries, and to be able to 
produce some concrete measures over the course of the next year or 
proposals for measures to deal with those problems.

If I can sum up, this is a step forward, but it's an important step 
forward.  It's almost an unprecedented occasion, I think, certainly 
within the last 15 or so years, for leaders to try to step back and to 
say, where do we need to take some action now and how can we think about 
an ongoing agenda for reform, which necessarily is going to involve more 
discussion, bringing in governments from the rest of the world and 
operating within the institutions themselves.

But I think what you'll see at Halifax is a resolve to address these 
issues in an ongoing basis.  I think you will see a financial 
stabilization package which ensures that the United States need not be 
left in a position of being the lead or the sole actor to deal with the 
financial crisis.  And I think you'll see increased momentum for 
continuing these kinds of changes and these sorts of reviews on an 
ongoing basis.

QUESTION:  Dan, I want to talk to you for a second about your second 
point, this rapidly deployable emergency fund.  In April, the Europeans, 
particularly the British and the Germans, had some reservations about 
who was going to pay for this.  I wonder if this has been worked out 
already.  And as sort of an adjunct question to that, Secretary Rubin 
mentioned on Tuesday that perhaps you are going to head up the rising 
Asian countries.  And I wonder if there's been any discussions with 
them, whether they've supported this idea and whether they're going to 
be forthcoming with additional funds.

ASSISTANT SECRETARY TARULLO:  Let me give an initial response and then 
let Larry address it as he sees fit.

I think what we are seeing is a convergence of views among all the G-7 
on the way in which we need to have an emergency financing mechanism and 
the need for being able to deploy additional resources.

I hasten to add that, as with everything in the communique that will 
come out next week, these are issues and matters and points which the 
leaders really do look at, and, thus, there are still gaps, there are 
still unresolved questions, and there is still need for the leaders to 
ratify what we at the working level have done.

But the short answer is there is a convergence, and I think that you'll 
see that reflected next week.

QUESTION:  And the agents -- have they been -- they won't be there, 
obviously, but have they been approached on this?

ASSISTANT SECRETARY TARULLO:  Well, in the context -- there have been 
discussions, certainly, in the IMF context.  But, Larry, you should 
address that.

UNDERSECRETARY SUMMERS:  I think you certainly are seeing some 
convergence of opinion.  It's important to understand the role of the G-
7 in this and other contexts.  It's a special group because it is the 
mature industrial democracies who have a whole set of common interests 
in global stability.  But to address many of these issues -- the 
development issues, the question of financial emergencies -- that is 
done through other fora in which they are very -- play a very major 
role, but are not the sole actors -- the G-10, the IMF, the World Bank.

And so what the G-7 is able to do is express an opinion that provides -- 
has historically and will continue to provide very important guidance, 
but not to take final decisions.  I expect that there will be, as I say, 
some convergence on both the G-7's own efforts and on their preparedness 
to mobilize -- and I think they will succeed -- support from countries 
outside the G-7.

QUESTION:  -- Mexico will play such a major role of the G-7, how do you 
visualize at this moment the Mexico situation?

UNDERSECRETARY SUMMERS:  Secretary Rubin has really addressed that a 
number of times recently, and he's indicated that he is encouraged by 
the policy changes, the budget surplus, monetary policy that's resulted 
in a reduction in the money stock in Mexico and the signs that 
adjustment is taking place -- in particular, the move to a trade surplus 
and the more developments in markets.  It's a long road in Mexico, but 
the signs recently have been encouraging.

QUESTION:  In previous G-7 summits, President Clinton has been able to 
boast about his progress on reducing the deficit.  But this year you 
have a lot more of the action being taken by Republicans in Congress. 
Will that undercut his ability to take some type of a leadership role at 
the G-7?

UNDERSECRETARY SUMMERS:  I think the President will go to this summit as 
the leader of the economy that has had the strongest performance in the 
G-7 over the last two and a half years, that has the smallest budget 
deficit in the G-7, and that every day shows its dynamism and its 
ability to compete around the world.  And I think that will put him in a 
very strong position.

QUESTION:  On the point of the Asians are on board, I didn't get clear 
on what your answer is.  Are they on board for this, or not?  Have you 
made some kind of agreement or is that --

UNDERSECRETARY SUMMERS:  At this point the G-7 is going to indicate the 
direction in which we'll move and the question of involvement of the 
other countries will be pursued through the appropriate fora.

ASSISTANT SECRETARY TARULLO:  Let me supplement the answer to that by 
saying this is something that applies to all of the institutional 
recommendations and proposals.  The G-7 is an important entity for 
giving some leadership and some direction to the global economy, but 
it's by no means the only relevant entity.  And as I indicated, for each 
set of proposals we will be going to other countries and working with 
specific international institutions within the integrity of their own 
processes to try to realize these proposals and recommendations.

QUESTION:  Last year in Naples the President came in with a proposal to 
rev up a post-Uruguay Round of global trade talks, and that didn't 
occur.  Is that suggestion going to be renewed in Halifax?  Where do we 
stand on that?  And, also, could somebody give us some indication of the 
bilaterals the President is going to have?

ASSISTANT SECRETARY TARULLO:  On the issue of proposals for future trade 
initiatives, I think what you'll find is that, in fact, these proposals 
have been accepted.  They've either been done -- there's been more 
attention given to financial services and other kinds of negotiations to 
try to make more progress and liberalizing services trade.  That was an 
important element of our proposals.

We also -- we're very keen on trying to get international investment 
negotiations started in the OECD.  As you may have seen in this year's 
OECD ministerial statement, we are moving quite forthrightly in that 
direction.  So the major components of what we were proposing a year ago 
have actually occurred, or in some cases I think you may some reference 
to those components in the outcomes of the summit itself.

QUESTION:    But you don't foresee a new round?

ASSISTANT SECRETARY TARULLO:  No, there was never a proposal for a new 
round of negotiations as such.  There's no talk of which I'm aware of a 
new what would now be called WTO round of negotiations.  These were some 
proposals for some discreet areas of liberalization and investment, 
government procurement and services which we continue to pursue and we 
think are very much worth pursuing.  But that's a different thing from a 
large round of negotiations.

MR. BERGER:  On the question of bilaterals, the President, in addition 
to time that he will spend with Prime Minister Chretien, will have two 
other bilaterals -- one with Prime Minister Murayama.  As you know, we 
meet -- the two country's governments have agreed to meet twice a year.  
And so there will be a meeting between the President and Prime Minister 

That will be a general session reviewing a range of issues in the 
relationship -- clearly, political strategic issues involving North 
Korea and other issues on the strategic agenda.  Clearly, on the 
economic side, I am sure the trade areas will be discussed, although I 
would emphasize this is not a negotiating meeting.  There's no intent or 
expectation that they will be negotiating on trade disputes, including 
autos, although clearly, I'm sure, it will come up in the meeting 
between Murayama and Clinton and the range of other issues on our 
bilateral agenda.

The meeting with President Yeltsin will be a continuation of the 
discussions that took place in Moscow.  It will be a brief meeting in 
which there will be some further discussion of both bilateral and 
European issues.

QUESTION:  What would be the political point -- I mean, the point of the 
political agenda from the U.S. point of view?  What point --

MR. BERGER:  At the summit?

QUESTION:  At the G-7 itself.  Particularly, what kind of prominence do 
you plan to give to Iran?

MR. BERGER:  There will be -- as you know, Prime Minister Yeltsin joins 
the summit after the G-7 meeting is over.  He will join on Friday for 
dinner and then meetings on Saturday at which there will be some further 
political discussion.  There will be political issues both at the 7 
level and when Yeltsin is there.  I would expect the President to raise 
Iran to be discussed and a very, hopefully, clear and strong statement 
the unacceptability of Iran's behavior with respect to terrorism and 
subversion of the peace process and the other issues that we have 
continually raised with Iran -- I suspect that the leaders will discuss 
that, and there will be some statement on Iran.

QUESTION:  What do you think -- the comment by Japan that they will not 
apply and embargo against Iran -- is it something that is a 
disappointment here?

MR. BERGER:  Well, we will continue to urge our trading partners and the 
other leaders of the international economy to exercise the greatest 
possible restraint with respect to their trade with Iran. We believe 
that it is a regime that is the number one state supporter of terrorism, 
a regime that is sabotaging the peace process or seeking to in the 
Middle East, and not one that should be supported or reinforced by broad 
economic relationships, certainly in the nuclear area.  And, in 
particular, we will continue to press our allies not only for general 
trade restrictions, but specifically with respect to concessional trade 
programs with Iran that gives them actually export credits or other 
kinds of financing that they could not otherwise get.

QUESTION:  You touched earlier on the constant goal at every one of 
these summits of more open and free trade with Asia.  What kind of a 
backdrop is the current dispute with Japan going to provide when that 
discussion comes up?

MR. BERGER:  Well, I think it is -- this is a President who goes to this 
summit with probably the most extraordinary credentials as a proponent 
of a strong multilateral open trading system of any President or any 
leader in recent history.  This is the President who drove home the 
Uruguay Round after seven years, who initiated the idea of free and open 
trade in APEC, hemispheric free trade in this hemisphere.  So this is an 
administration and a President whose commitment to a multilateral 
trading system, I think, is unquestionable.

As part of that, obviously, we insist that our trading partners open 
their markets.  And where we have problems with closed markets, we've 
made it clear all along, including in the Uruguay Round, that we will 
reserve the right to try to take action within U.S. law to open those 

We've made a lot of progress with Japan on a number of issues.  We've 
signed a number of agreements over the last two years. We have not made 
progress on the auto issue, the auto parts issue.  It is a serious 
issue; we've been negotiating for 20 months.  We would like to get back 
into substantive negotiations with Japan, but if there is no agreement 
by June 28, as the President and Ambassador Kantor have indicated, we 
will move ahead.  I think that's perfectly consistent with a President 
who is insisting upon open markets.

QUESTION:  Again, what effect will that dispute, that current dispute, 
have on this area when it comes up at the summit table?

MR. BERGER:  I don't think it will have -- as I say, there will be no 
negotiations on autos at Halifax.  That will be -- those issues will be 
dealt with by our USTR and by Miti.  There may be some technical 
discussions that take place next week around Geneva. Hopefully, there 
can be further substantive discussions after Halifax. This will not be 
on the agenda at Halifax, and I don't expect it to divert from the 
fundamental objectives that Dan and Larry and others have laid out.

QUESTION:  Are you concerned -- and perhaps Mr. Summers can respond -- 
about Japanese retaliation into these sanctions?  And there's some 
concern in the bond market that perhaps the Japanese will withhold from 
buying U.S. Treasuries in retaliation.  Are you concerned about that?

UNDERSECRETARY SUMMERS:  No, I don't think that is a serious concern.  
As we've said often, a more open Japanese market and a reduced Japanese 
current account in balance would make an important contribution to the 
healthy evolution to the world economy.

THE PRESS:  Thank you.

             END                          11:45 A.M. EDT

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