PORTO CERVO SHERPA MEETING APRIL 30-MAY 2, 1987

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92T00533R000100060015-9
• Release Decision: RIFPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: October 8, 2010
• Sequence Number: 15
• Publication Date: April 30, 1987
• Content Type: REPORT

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PORTO CERVO SHERPA MEETING
April 30-May 2, 1987
Summary Record
The third preparatory ("Sherpa") meeting for the Venice
Ecnomic Summit took place April 30-May 2, 1987 in Porto Cervo,
Sardinia. Allen Wallis, the President's Personal Representa-
tive, represented the U.S. He was assisted by David Mulford,
Assistant Secretary of the Treasury for International Affairs
and by Stephen Danzansky, Senior Director for International
Economic Affairs, NSC.
1. Macroeconomic Situation
There was general consensus (reflected in Section I, p. 3
of the May 2 version of the thematic paper) on the current
global macroeconomic situation. Since Tokyo, there is a
stronger consensus among Summit countries on the need for
continuing, close coordination of economic policy with a view
to ensuring consistency of domestic policies and their
international compatibility and ultimately achieving greater
convergence of positive economic performance.
2. Economic Coordination
Sherpas were agreed on the measures which would promote
sustained growth and external adjustment:
o correction of world payments imbalances is the key
medium-term objective;
o surplus countries should strengthen domestic demand
and open markets;
o deficit countries should reduce fiscal deficits and
strengthen competitiveness;
o NICs with large external surpluses should reduce trade
barriers and allow their currencies to reflect more
fully underlying fundamentals;
o budgetary discipline remains a valid medium-term
objective - and a necessity for some Summit countries
(e.g., U.S. and Italy);
COMF T TENT T T T
DECL: OADR
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o structural adjustment is necessary to sustain
non-inflationary growth and expand employment (notably
in Europe) ;
Sherpas agreed that the policy coordination process, as
outlined at Tokyo, is proving durable and effective. Further
refinements will be carried out by Finance Ministers and
Central Bank'Governors with the technical assistance of the IMF
Managing Director.
They also agreed that the G5-G7 issue should not be
discussed by Heads of State/Government at Venice. The EC
delegate said the EC Commissioner might absent himself from
Summit discussions on financial matters in protest of the EC's
exclusion from the G7. He added that the EC is considering
whether to attend the Summit at all. From the discussion, it
is clear that none of the Summit countries is willing to
include the EC in the G7.
3. Trade
There was general consensus on the urgent need to resist
rising protectionist pressures and dismantle trade-restrictive
measures. The important role of the Uruguay Round in
maintaining and strengthening the multilateral trading system
was acknowledged. However, France and the EC resisted U.S. and
Canadian suggestions that next year there be a Ministerial
review of the progress in the negotiations. France and the EC
argued that such a meeting would be used as an excuse to delay
substantive negotiations; we and the Canadians feel a
Ministerial review will give a necessary and timely political
boost to the technical negotiations. This point will have to
be reviewed further.
4. Debt
The Sherpas endorsed as the only acceptable approach the
growth-oriented strategy launched by the U.S. in October 1985.
This entails:
o adopting comprehensive macroeconomic and structural
reforms by debtor nations;
o enhancement of lending by IFI's;
o increased commercial bank lending.
While some debtor countries have made important,
politically courageous progress, much remains to be done
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structurally by debtor countries to promote growth. In
addition, commercial banks and debtors should work together to
develop a menu of options for financing the debt.
The Sherpas recognized that some of the poorest countries,
particularly in Sub-Saharan Africa, need special treatment for
their debt, largely held by governments. They will examine
possible solutions in the IBRD, IMF and Paris Club. Most
countries favored supporting a general capital increase for the
World Bank but we resisted this on the ground that there is not
yet a clearly demonstrated need, and that it would complicate
our current efforts to obtain funding for IDA-VIII.
5. Agriculture
Sherpas accepted the analysis prepared by the OECD.
Substantial differences remain on the appropriate policies to
be advocated by the Summit. The French Sherpa is most
resistant to a Summit call for expeditious and comprehensive
negotiations on agriculture in the GATT, or indeed any
separation of agriculture from other trade issues. The
President will have to intervene personally if we are to
achieve our objectives. (At the Tokyo Summit, Mitterand did
not support his Sherpa's adamant position on agriculture.) The
next Sherpa discussion on agriculture will be influenced
heavily by the discussion at the OECD Ministerial May 12-13,
where we will be represented by Secretaries Lyng, Baker, and
Baldrige, Ambassador Yeutter and Deputy Secretary Whitehead.
(a) Ene : Italy, UK and Germany are--extremely reluctant
to discuss nuclear energy at Venice, fearing adverse political
reactions at home. Rather than weaken the Tokyo statement on
nuclear energy, these countries would prefer to say nothing.
Japan submitted a text on energy which reflects many of the
U.S. proposals. After the IEA Ministerial May 11 (where we
will be represented by Secretary Herrington and Under Secretary
Wallis), we will need to decide whether and how to raise the
subject at Venice.
(b) Environment: To be discussed at May 15-18 Sherpa
meeting.
(c) AIDS: To be discussed at May 15-18 Sherpa meeting.
There were some suggestions that this is not an appropriate
topic for an economic summit. The French Sherpa argued that
cancer, cardiac disease, and tropical diseases, among others,
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are more important. It was asserted strongly that the high
incidence of AIDS in certain areas of Africa should not be
alluded to for fear of offending African sensibilities.
(d) Human Frontiers: Nakasone will raise his Human
Frontier proposal at Venice. If there is sufficient interest,
Japan will undertake a year-long feasibility study and report
back at the 1988 Summit.
(e) Technology Cooperation: There was no interest among
other countries in raising the issue of international
cooperation in high energy physics at Venice. The consensus
was that adequate mechanisms exist, as evidenced by on-going
international collaboration.
II. POLITICAL TOPICS
It was agreed that the Heads of State/Government would
discuss political issues during dinner Monday, June 8.
East-West relations (Soviet internal and foreign policies and
arms control) will be the main topics. None of the Sherpas
would commit to having a political statement until the results
of the June 8 discussion were known. The French Sherpa
emphasized that France will not endorse any negotiations to
which it is not a party, and would not accept any "we think"
statements, only "each of us thinks". Heads may wish to
discuss other political topics, such as South Africa, although
regional issues in the main will be reserved for discussion by
Foreign Ministers at their separate dinner June 8. Only Canada
favors a Venice statement on South Africa. The UK felt such a
statement would be "inopportune and counterproductive." This
view was shared by other countries.
The regional political issues suggested for discussion by
Foreign Ministers include (not in ranked order):
Terrorism
Afghanistan
Cambodia
Middle East (prospects for peace conference)
Iran-Iraq
South Africa
Latin America
Korea
Philippines
China (suggested by Japan)*
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On terrorism, all Sherpas accepted the work of the Experts'
Group on refining and enlarging the Bonn Declaration. Their
work is considered complete and the Group disbanded unless it
gets a further mandate (possibly from Heads at the Venice
Summit). Most countries agreed to consider sympathetically at
Venice an additional declaration on terrorism. The U.S. agreed
to send the Italian Political Director suggested language; the
UK will also submit its ideas to the Italian Political
Director. Italy has agreed to incorporate U.S., UK and Italian
views into a draft to be discussed by Summit Political
Directors May 15 in Venice.
At their meeting May 15, Political Directors will draft any
statements they wish to propose to the Sherpas. Sherpas and
Political Directors will discuss these over dinner May 15. The
French Sherpa objected to the terrorism experts meeting with
the Political Directors, or meeting again without a new
mandate. The Italian Sherpa (as Chairman) ruled that any
Political Director who wishes to may bring an expert to the May
15 meeting, and that any of the experts who wish to meet
informally before the Political Directors' meeting may do so.
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