POLITICAL ACTIVITIES

I think a more specific body of rules relating to the political activities of multinationals should be developed. This is an area which can be considered by our organisation and should be. We should be able to develop a body of rules that would eliminate the current grey areas.

Amendments of the type I have suggested will improve the draft code but will not, in my opinion, cure its basic failure to fully protect the rights of sovereign governments, owners of MNE's and individual employees. The protection of these rights and the prevention of burdensome and costly administration requirements are an absolute essential in my view.

Thursday, April 22, 1976,

SUMMARY OF DISCUSSION

SESSION IV-POLITICAL ASPECTS OF THE WORLD FOOD SITUATION

(Working Documents: Mr. Houdet, Mr. Nolan and Mr. Symms) 1

Mr. Nolan apologized for Mr. Symms' absence and presented the latter's report as well as his own.

The central topic of Mr. Symms' report concerned the best methods of exploiting the earth's resources and means of production. According to Mr. Symms, private property was the cornerstone in a program to fulfill the world's nutritional requirements. The Western world ought to put an end to its policy of food aid and subsidies. Only private ownership of the means of production would lead to rational conditions of production.

In his report, Mr. Symms quoted comparative figures for the USSR and the USA which highlighted the non-profitability of land in countries where there was no private ownership.

U.S.-U.S.S.R. GRAIN TRANSACTION

Mr. Nolan then passed on to his own report in which he described the grain agreement signed between the USA and the USSR covering shipments amounting to between six and eight million tons per year for five years. Those in favour of this agreement considered that it should lead to a better balance in feeding the world's population. He wondered, however, if this agreement would not also have undesirable effects on the market, in that it in some way withdrew from free circulation grain which until now had found a buyer on the "world market". He feared that in time of shortage, this agreement would remove from the market these quantities fixed in this bilateral agreement.

Apart from this, the USA had abandoned its attempts to influence the USSR in other sectors; this could have been a reciprocal concession in the grain agreement.

What else could be done at world level? The World Food Conference had planned an aid program amounting to 10 million tons of grain, of which the USA would supply 60%. Agreements between the developed countries might jeopardize this plan.

FAVORABLE U.S. AGRICULTURAL TRADE BALANCE

Mr. Houdet noted that in his report Mr. Nolan was in favour of world agreements and this was also the European Community's view. Passing on to bilateral relations, Mr. Houdet recalled the difficulties

1 See pp. 43, 47, and 50, respectively.

encountered because of the U.S. attitude to certain imports coming from the Community (cheeses, Irish meat) although the balance of trade in agricultural products between these two countries seemed very largely favourable to the United States.

As for refunds, had the United States itself not granted subsidies to exporters for the sale of grain to the USSR in 1972? The Europeans for their part had been particularly badly hit by the 1973 restrictions on soy exports, and European agriculture had suffered from this for some time. As he mentioned in his report, Mr. Houdet considered that the European Community countries were fortunate to be in a temperate zone and to possess large tracts of arable land. It was therefore quite natural that they should be among the exporting countries and that they should contribute towards safeguarding world supplies.

It could be argued that in one sense the Lomé Convention was an extension to Article 29 of the Treaty of Rome, in that for certain imports, a price close to that obtaining in the EEC was granted to the ACP countries for particular products.2 This was especially so in the case of sugar.

MULTILATERAL AGREEMENTS BACKED

The rapporteur ended by referring to the conclusion of his report in which he pointed out that multilateral agreements, together with certain medium-term contracts, formed a logical solution, even if this gave rise to certain difficulties of implementation.

Mr. Ryan established a link between the previous political debate and the present agricultural debate. Like Mr. Jahn, he pointed out that the world political situation was uneasy and noted that arms sales were increasing rapidly. Should we not be seeking a form of security other than one based on armaments? In fact, the number of countries which could be agriculturally self-supporting was decreasing. Could we not try to establish more positive links than armaments, for example, foodstuffs? Productive capacity was sufficient, the problem was rather one of distribution. Trade with certain countries could be increased without prejudice to a food-aid programme.

EXPORTING IDEOLOGY OPPOSED

Mr. de Koning agreed with Mr. Symms that private ownership was the basic concept for agriculture in Europe and the USA. But it was not necessarily the only method in the world. Everything was relative. The USA, New Zealand and Australia were at the top of the production league. In Europe we were trying to restructure our agriculture but this would take us until the end of the century. However, in other areas of the world, private initiative would certainly not be sufficient. Agricultural progress in China provided an example of a different approach. He could therefore not agree with Mr. Symms' idea of exporting our ideology.

Coming to Mr. Nolan's report, he commended the valuable information given in this document, even if he did think that the rapporteur

2 The Lomé Convention of 1975 covered trade and development aid to 46 countries of Africa, The Caribbean and The Pacific areas (ACP) and The European Community.

had perhaps overstressed the drawbacks and underrated the advantages which the Soviet grain agreement could bring to the American economy.

Mr. de Koning thought that "Agricultural Power" could only be used to a limited extent. He welcomed, however, the attitude adopted by Mr. Nolan to the Community policy and finished by recommending that efforts should be made to coordinate the policies of the two giant partners in world trade.

HELSINKI ACCORD NEGLECTED

Mr. Stanton regretted that the détente preached in Helsinki was not being put into effect to the extent that it ought to be. He was sorry that Mr. Symms and Mr. Nolan had not taken greater account of the efforts made by the United States towards solving world food problems; positive steps had been taken here, although the percentage of farmers in the USA was very small compared with other economic groups. It was true that at world level trade in food was hampered by the basic problem of transporting foodstuffs.

Mr. Scott-Hopkins suggested that "Agricultural Power" was a twoedged sword. If the USA had not signed the grain agreement with the USSR the situation would have been even more serious. He simply thought that the USA could have obtained concessions from the Russians in other areas. As for Mr. Houdet's point of view on building up butter stocks, this would be real progress, though he doubted if this could stimulate agricultural production. Stocks should be held against a possible crisis. Food aid was not a permanent solution and we ought to be thinking in terms of sending machinery or seed or even technological aid to the developing countries.

CAUTION ON CONTROLS

He voiced some doubts on multilateral agreements, since he feared these might lead to a situation where the markets were too closely controlled. A first stake might be bilateral agreements, particularly between the USA and the EEC, for strategic food products.

Mr. Ryan replied by stressing that agricultural trade was indeed a true political weapon. He would have preferred not signing the grain agreement with the USSR, which was very expensive for the United States, but rather that the USA should have been a member of a world consortium.

According to Mr. Fraser, many Americans were not in favour of the grain agreement. However, it must be taken into account that if the Americans had refused the USSR would have signed this agreement with other countries.

He pointed out the inflationary effect of the large purchase of cereals by the USSR in 1972. For this reason resolute steps had to be taken towards building up world stocks which could be used in time of crisis, but the main point for discussion was whether a prices policy clause was necessary or whether the quantitative element was the most important consideration.