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U.S. DEPARTMENT OF STATE
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
DEPUTY NATIONAL SECURITY ADVISOR SANDY BERGER,
ASSISTANT SECRETARY OF STATE DAN TARULLO,
AND UNDERSECRETARY OF TREASURY LARRY SUMMERS
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
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
ASSISTANT SECRETARY TARULLO: Thanks, Sandy.
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
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
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
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
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
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
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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