The Multinational Monitor


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Williamsburg: Western Leaders Show Unity But Skim Over the Hard Questions

by Allan Ebert-Miner

The ninth annual economic summit of the industrialized countries that took place in Williamsburg over the Memorial Day weekend brought together the heads of state of the U.S., Canada, Japan, the United Kingdom, West Germany, Italy, France, and the head of the European Common Market. True to form, they showed little understanding of the global interdependence between their economies and those of the developing world and completely avoided the contentious issue of U.S. restrictions on trade to the Soviet Union.

After two days of wining and dining, the leaders could only agree on the need for a world-wide recovery. In a joint statement read by President Reagan, the heads of state said they would continue their existing anti-inflation policies, ease up on protectionist measures, and try to reduce domestic deficits to reasonable levels. And in an attempt to give a public image of amity, the leaders also paid little attention to the issue of East-West trade, particularly the transfer of technology with potential military uses.

Anticipating that little attention would be given to the problems of the developing countries, several third world leaders, including Belasario Bentacur of Columbia and Indira Ghandi of India, sent letters to the participants, calling on them to deal concretely with debt and trade issues as they affect the poorer countries.

Bentacur's letter summarized recent discussions which took place between Latin American and Caribbean countries. Noting that Latin America and the Caribbean are not bankrupt, the letter stated that "human and natural resources and our formation of capital represent an asset several times greater than the $300 billion owed by the region. What is required is to expand its access to technology, capital and markets and to strengthen the basic product agreements" already in place.

U.S. Treasury Secretary Donald Regan told the summit participants and the press that the administration expects a growth rate of six percent for the next three quarters. This would translate, according to economist William Cline of the Institute of International Economics, into an 18 percent rise in developing countries' exports.

However, these indebted developing countries constitute 75 percent of the world's population. There are 500 million malnourished people in these regions, 1.6 billion drinking impure water, and 1.2 billion without adequate clothing or housing. Unemployment in the industrialized countries is estimated at 32 million. But the rate is almost immeasurable in the developing countries, sometimes rising to 60-80 percent of a country's workforce.

Deepak Vorhra, press officer at the Indian Embassy in Washington, pointed out that there is a serious gap between the North and the South, and that India "would like to see concrete measures taken to deal with the gap. It's no longer an economic, but a world security problem. All these rich nations have responsibility to the developing countries."

The other salient world issue which received scant attention at Williamsburg was East-West trade relations. In the past, and especially at the summit in Versailles, France last year, this issue sparked the most division between the U.S. and its allies.

The administration's foremost fear is that the growing interdependence of Western and Eastern Europe will cause irreversible fissures in the Western Alliance. Just as important to Reagan, however, is the transfer of technology with potential military uses to the East. The administration has introduced legislation in Congress aimed at controlling more closely the flow of technology to the Soviet Union. Reagan wants the authority to exercise trade sanctions against multinational corporations for foreign policy reasons; such a provision would apply to existing contracts as well as future ones.

The most controversial aspect of this proposal is that the U.S. president would have extraterritorial authority to impose sanctions on corporations working out of European countries. This issue deeply divided Reagan from his European allies when he tried to stop the construction of the Soviet's gas pipeline by placing sanctions on American companies with affiliates in France, Great Britain, and West Germany. His efforts eventually failed. European allies, however, said they would consider stricter sanctions on the sale of sensitive military technologies to Eastern bloc countries.

A spokesperson at the Soviet Embassy, Michael Lysenko, complained that "transfer of technology is a two way street. We pay for technology in cash and we also transfer technology ourselves, developed by Russia and shared with the United States. If restrictions are imposed it will hurt both sides." Lysenko didn't care to speculate as to why the issue of technology transfer was given so little attention, at least publicly, at the summit. "Our position is," he concluded, "that we are for broadening trade if the other side has the same in mind."

A study by the Organization for Economic Cooperation and Development (OECD), begun after last year's summit, concluded that the Soviet Union and Eastern bloc countries didn't necessarily gain an economic advantage through a decade of expanded trade with the West. It argued for a politically flexible approach in trade with the East, in order not to close off markets there.

In addition, the study estimated that two-way trade between the East and OECD members rose from $63 billion in 1970 to $325 billion in 1981, yet the United States accounted for only a tiny share of that. In 1982, U.S.-Soviet trade totalled $3.4 billion, with 80 percent of that in agricultural products.

The dilemma facing Reagan is clear. He came to office determined to expand the role of multinational corporations. But his rigid anti-communism has led to a commitment to restrict sales of high-tech equipment to the Soviets. This directly affects the investments and profits of his political backers whose support he needs for next year's presidential election.

But at least the $8 million extravaganza on the manicured lawns of colonial Williamsburg provided about 47 of these political backers a chance to sell their wares to the world's leaders and their staffs.

IBM Corporation, for instance, loaned the staffs of each summit participant all the typewriters and copy machines they needed, promoting in their own industrial manner more free trade and Western unity.

Chrysler Corporation, General Motors, and the Ford Motor Company provided the heads of state with their own limousines, which were mainly used to drive on the small winding roads from their residences to meetings.

And the 5,000-member press corp were amply supplied with food and drink by the Independent Bakers Association, The Virginia Diner Inc., Dunkin Donuts Inc. and others.

For such corporations, one economic summit a year is just not enough.

Allan Ebert-Miner writes regularly for Inter Press Service and In These Times.

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