Prime Minister
Ladies and Gentlemen, you will be aware of the main points of our communique so I will not go over them in detail. Suffice it to say that this has been a very productive and workmanlike Summit and I am very grateful to President Bush for his firm and friendly chairmanship of our discussions. We have achieved important, practical results which meet the needs of the times.
Let me select just three main areas for comment. First, international trade. I said at the beginning that the success of this Summit would be judged by whether we were able to continue to free up world trade. I think the conclusions which we have reached—in particular on agriculture—open the way for a successful conclusion of the Uruguay Round of trade negotiations later this year. That will give a clear signal that we are determined to go on with the liberalisation of world trade which has contributed so much to growth and prosperity. We had some quite tough discussions on this but there has been movement on all sides and we have set a clear framework for a solution and that is very good news for everyone. [end p1]
And the second point, we have agreed on a positive response to President Gorbachev 's letter about assistance for the Soviet Union. We put the emphasis on our willingness to give technical assistance and know-how which will enable the Soviet Union to make the best use of their own extensive resources. We pointed to the need for the Soviet Union to introduce more radical steps towards a market economy, to shift resources away from the military sector and to cut support to nations which promote regional conflict. And we asked the International Monetary Fund, who have the greatest expertise in this area, to conduct an in-depth study of the problems and needs of the Soviet economy. We also asked them to establish the criteria for any assistance so that we can ensure that it is properly targeted. We hope they will report at the end of the year.
And the third point, we have established important common ground on international action to deal with the environment, we agreed that the lack of full scientific certainty about the threat of irreversible environmental damage is no excuse for postponing actions which are justified in their own right. We therefore all support the negotiation of a framework convention on global climate change by 1992, we also agree on the importance of action to save tropical forests. I believe that as a result of this Summit there is now much better understanding and sense of common purpose in environmental issues between the G7 countries.
We issued our main political declaration yesterday, I do not think I need to comment on that save to say that we acknowledge the recent progress which has been made in China and agreed that we would relax measures in response to further positive steps towards [end p2] political and economic reform. We also welcomed the great progress which has been made by President de Klerk in South Africa.
I said at the outset that the great achievement of these Summits has been to make it easier for all of us to reject short-term soft options in favour of longer-term solutions. The world looks to these Summits for a lead on these longer-term issues and I believe that we have once again provided that lead, particularly on trade.
Coming after last week's very successful NATO Summit in London, which took a major stride towards a more peaceful world, the results of our meeting in Houston are an important step towards a more prosperous world for everyone.
Lastly, may I just use this occasion to say thank you to the people of Houston. The welcome we have all received has been marvellous and the effort which everyone has made to make your great city appear at its very best has been most impressive. We can all sense how proud you feel of your city and that has helped to make this a particularly happy and successful Summit. We would like to say thank you for everything. [end p3]
Question (Robin Oakley)
Prime Minister, how important do you regard the EC endorsement of the communique here in terms of scaling down of farm subsidies and what kind of timetable do you see for the start of effective scaling down of farm subsidies in the EC and in Britain?
Prime Minister
I think it is very important, I do not think we could have reached that conclusion had we just talked among ourselves in the EC. There are three great groups of nations at the Summit, one based on the dollar, one based on the yen and one based on the deutschmark, each of us heavily subsidises our agriculture. We had to agree together to reduce those subsidies and that is what we have done. It is I think very significant indeed, it was one of the most hardly fought parts of the communique and we succeeded in getting a result and based also, as you know, on negotiations on the de Zeeuw report which were very helpful indeed.
I think that we shall just have to start straight away on working out measures to try to fulfil our undertaking but it will not be quick because they are quite fundamental and of course they will have to go in detail before Agriculture Ministers at the relevant meetings in Europe.
Question (Peter Norman, Financial Times)
Are you satisfied with the provisions on the environment because although it seems to take up a quarter of the communique, there seems to be very little that is specific, it is all pushing [end p4] work off to other fora and we understand that you were pushing for much stronger language?
Prime Minister
Yes, I am satisfied with it. First there is a new urgency to maintaining the tropical forests, which you see, and an urgency which we match with joint action instead of the individual action which some of us had been taking. As you know, we in Britain have already allocated £100 million over the next three years to maintenance of the tropical forests.
With regard to the most difficult thing to get agreement on, which is the global agreement on the CO2 and other greenhouse emissions, that is the part we have not really tackled yet and that is the part which is much more difficult than the one on the ozone layer. We have, as you know, reached agreement, we have indicated that it is not only the carbon dioxide gases which are responsible for the greenhouse effect but also others are equally important—the methane, some of the nitrous oxides and also some of the chlorofluorocarbons and other factors such as the formation of clouds and water vapour.
There is therefore considerable latitude for precisely what causes what effect. There is research under way which will be concluded within the next fifteen years and we shall be able to say then with very greater certainty what is the relationship between precise cause and effect of these various factors, how much of them are due to natural factors and how much of them due to man-made factors. [end p5]
In the meantime, we should be very culpable if we did nothing during this stage because there would be a terrible time-lag and as we know the greenhouse gases are increasing in the atmosphere and we have agreed on the kind of action we shall take and on a global convention in 1992. I think that is a very positive step forward.
Question (Barry Wood, Voice of America)
I wonder if you could tell us if you discussed possible Soviet membership in the IMF and the World Bank and if you saw this diagnostic mission as a first step towards that; and what would you expect to be the result after the mission has made its report?
Prime Minister
First, we did not discuss possible membership of either of those, I think we were much more concerned to try to get a really knowledgeable and competent assessment of the criteria for any help that we gave to the Soviet Union and then we can consider what we give knowing that it would be much more likely to be effective than just giving loans for the purchase of consumer goods. I think you are really putting the cart before the horse if you ask me what we expect to come out of it and what would be the result after we had it. We will wait for, I think, the best assessment that we shall ever get of action which can be taken to help the Soviet Union and I certainly look forward to receiving the report, together with President Bush, at the end of this year or the beginning of next. [end p6]
Helen Whalen (Nightly Business Report)
The United States is very concerned about lowering interest rates, yet the communique focuses on inflation and a tighter monetary policy. Is there a possibility of a rift as the two countries try to meet this communique?
Prime Minister
No, I don't think so. If you read the economic part of the communique, it is all based on what we would call sound economic policy. True, each of us have different problems; some have budget deficits, others have a budget surplus; some have trade deficits, others have a trade surplus. Some have tackled the problem of inflation and learned how to get it down and hold it down, others have not yet done so but we all know, as is quite clear from the communique, that there is a colossal demand for investment and that that must be matched by savings and our savings really are not sufficient to equal the demands made upon them. [end p7]
It took us a long time, as a set of economic countries, to come to the conclusion that you must stick throughout to sound economic policies if you want sustainable growth, sustainable low inflation and with sustainable growth you get increased employment.
I don't think there is any difference between us about the economic principles that we must follow. Each of us will pick up different ones according to the problems that we now have but there is no disagreement about what makes for a sound economic policy.
William Keegan (The Observer)
Did I hear you aright in saying that the European economy is based on the deutschmark and if so, where does the hard Ecu fit into this?
Prime Minister
As we haven't got it yet, it is a bit difficult to say. I don't think it comes as any surprise to you to know that the exchange rate mechanism is based on the deutschmark, that we are pledged to join it and therefore it is just in that context that I was using that.
I hope in the next stage, beyond Delors Stage 1, they will think of going to a hard Ecu. As you know, the John MajorChancellor and his team and the rest of us worked very hard—because we could not accept Delors Stage 2 and Stage 3—to get a stage following on to Stage 1 which we thought would satisfy the ambitions of our partners in the Community for a new European monetary institution which we say should be a European Monetary Fund and also for a common [end p8] currency that could be used in particular for commercial settlements—it might possibly be used for other things as well—but also, like the deutschmark, would be a guarantee against inflation and therefore the Chancellor and his group chose to make it a hard Ecu so that it would take over the role which at the moment the deutschmark is playing.
Trevor Kavanagh
Prime Minister, are you disappointed that three of the seven member states have decided that they will not wait until the end of the year before providing their own form of economic aid to the Soviet Union?
Prime Minister
Certainly not, Mr. Kavanagh! We have a line of credit, our banks have a line of credit to the Soviet Union, backed by ECGD cover, which is of the order of $1.3 billion—£800 million.
There is nothing in the communique which prevents people from taking their own action. As I indicated, certainly we have a line of credit, Germany has a larger one which she has announced recently from her commercial banks backed by a guarantee from the government and also, each of us has been giving technical aid in our own way.
This is not a measure to prevent unilateral action or bilateral action between each country and the Soviet Union; it is a measure to see what we can do together with targeted aid to help to bring about the reform of the economy of the Soviet Union which we wish to see. [end p9]
Question
Prime Minister, to follow on that last question, something of a philosophical question for you:
In the past, the West has closely coordinated its economic dealings with the Soviet Union, sometimes to the point of preventing individual nations from engaging in certain kinds of trade with the Soviets. Does this agreement here at the Summit reflect a fundamental change in the way the West approaches the Soviet Union from now on, allowing nations to essentially go their own way except in special circumstances in which the West will coordinate its response to the Soviets?
Prime Minister
Bearing in mind the enormous changes that have come about in the Soviet Union, the enormous political changes being followed now by enormous economic changes, the economic changes being more difficult to bring about, we are in fact together taking a different view. That does not prevent each of us from giving our own help. When it came previously to criticism of the Soviet Union for such things as going into Afghanistan which I remember we dealt with at the 1980 Summit, then of course we acted together in criticism just as now we are going to act together in helping the Soviet Union if there is help properly targeted which we can give but individually we will still, in the new era, try to give our own help and our own technical aid and have our own contacts.
I don't think you will find that there is very much change with regard to that from, for example the last Summit to this because we would not have been giving lines of credit and the [end p10] technical help that we have, had there been any major change, but we are looking to see if there is joint help that we can give—that is the new factor.
Question (Japanese Newspaper)
We heard that there are lots of disputes about the decision of the Japanese Government on resumption of Yen credit to China and I heard that France and Germany oppose this measure. What is your position on this matter?
Second question: when you decided to invite G7 to London next year in July, did you have a general election in your mind? (laughter)
Prime Minister
With regard to the first question, if you look in yesterday's communique, you will see the approach we are taking to China: that we acknowledge some of the changes that have taken place in the past year, for example the release of political prisoners and the release, for example of Mr. Fang Li (phon) who is now in London; that we hoped that there will be further changes and moves towards political and economic liberty and that when those occur we certainly shall be prepared to look with regard to further relaxation on the part of the World Bank; that is clearly set out in the communique. With regard to the latter half of your question, which I think had some reference to general elections, I can assert with confidence that there will be a general election within the next two years! (laughter) [end p11]
Alastair Campbell (Daily Mirror)
Prime Minister, can I ask you your reaction to a story in today's “Financial Times” arising from Sir Alan Walters ' book, which states that he is coming to present his alternative to the hard Ecu and that it will be called the “Thatcher standard based on world commodity prices” . I wondered if that was unfair purloining of your name.
Prime Minister
I have not in fact seen today's “Financial Times” . I have not read Sir Alan Walters ' book. I am sure that it will be very interesting and I would advise you to read it too!
It is a good thing to read something before you comment on it usually!
Question
The Polish Prime Minister, Mazowiecki, asked the Seven if they would go along with reducing the Polish debt yet the final communique only suggests that for the middle-income countries debt payments be stretched out. Is there any chance for debt relief for middle-income countries like Poland or are they just out?
Prime Minister
That is dealt with in the communique and in reality, as you know, in the Paris Club and under certain circumstances where measures of economic reform of the kind we wish are taking place, there are provisions, as you say, to reschedule on a longer-term basis. We have gone no further than that. [end p12]
Bob Newton (Press Association)
You said earlier that some members of the G7 had not learned how to bring down inflation and keep it down. Does that include Britain?
Prime Minister
Of course! (laughter)
Martin Walker (The Guardian)
Prime Minister, in your opening remarks, we are told that you warned against the danger of the world dividing into three blocks or spheres of influence—of Europe, Asia and the United States.
Given the agreement to disagree in effect upon aid to the Soviet Union and given what you described as the “hard-fought talks on trade” , do you think this Summit has done anything to prevent the emergence of those blocks or has that process in fact been accelerated?
Prime Minister
First, we did not agree to disagree—we agreed—and the terms on which we agreed are set out in the communique and, as you know, we agreed in Dublin on the European end of it and that also was an agreed communique, so we have not disagreed, we have agreed.
The trade talks—yes, of course it was hard fought because each of us has a certain amount of protectionism and each, if we were going to give it up, wanted in fact to make certain that others were going to give it up too but each of us knew that the signal the world required was that we must go to more open and free trade [end p13] because protectionism is not really good for anyone. It is, in fact, popular sometimes on a short-term basis but protectionism means that your industries are going to become uncompetitive, they are therefore going to lose the spur to modernise and compete in the wider export world, so protectionism is a very temporary thing which is very very damaging in the long run. We knew that but we wanted, all of us, to reject protectionism, to make it clear that we were doing so and making much more progress together to more open trade and we pointed out at one stage—or at any rate I did, I am sure it was quite right—that we must consider further, after the present Uruguay Round, how to go even further to reduce protectionism and further to open trade.
As a matter of fact, the European Community does have one of the lowest external tariffs and so we are quite good in that respect.