Remarks During a Background Briefing Given by Administration Officials for Reporters on Board Air Force One on the President's Trip to Japan and the Republic of Korea

BILATERAL RELATIONS WITH JAPAN;
TOKYO ECONOMIC SUMMIT

THE PRESIDENT. The bilateral discussions with Japan were no great challenge, because they are so sound and so harmonious now that there was really no deep concern before we arrived.

I think the intense dispute that existed between us and Japan earlier in the year was basically resolved after Prime Minister Ohira's visit in May, followed up by the Strauss visit to Japan. So, in my opinion, the relationships between us and Japan are very good.

The challenge at the economic summit was to try to be substantive and specific on commitments about energy, on conservation in the future, and to try to get a proper balance between individual nations' actions on alternative energy supplies, research, development, production; combined with a mechanism by which we could cooperate on very large projects. For instance, the liquefaction and gasification of coal in the United States—that'll take place in West Virginia—it's already been joined now by Japan and West Germany. So, we'll have, I think, a growing common basis there.

One of the most serious problems as far as the negotiations was concerned was the previous agreement in Strasbourg that the European nations would act in concert and not individually. And this was a very nonsubstantive commitment, because they could pool the increase in production from the North Sea and not be bound by individual commitments. And this was a subject of a very intense discussion.

Q. Can you identify for us the—you made the remark after, I think, the final session, that there were three who supported the amendment. You wouldn't identify them at that time. I don't know what kind of basis we're on, background or what, but can you identify them now? [Laughter]

ADMINISTRATION OFFICIAL. ¹ I tell you what, we'll look at this after we get through, and then I'll decide whether I want to put the remarks on the record or keep it on background.

THE PRESIDENT. A half hour before we adjourned, three of the European leaders put forward a very strong amendment proposal that the European Community go back into a pool.

Q. You still can't identify those three?

THE PRESIDENT. Well, I can tell you that Giscard d'Estaing helped me defeat that amendment.

Q. That was my next question. We heard that he stuck with you on this, so that doesn't leave anybody but Mr. Erhardt [Schmidt], ² Mr. Andreotti, and Mrs. Thatcher. So, we assume that by process of elimination we've got them. [Laughter]

ADMINISTRATION OFFICIAL. There have been press reports on this matter which are, for the large part, accurate. [Laughter]

THE PRESIDENT. I'll only give you one other comment. The Federal Republic of Germany did not participate in that debate.

FOLLOW-UP ACTIONS ON ENERGY

Q. Mr. President, how will all this translate in terms of what you're going to do when you go back home?

THE PRESIDENT. Well, I was going to take a few days off— [laughter] —but I'm pleased with what we've accomplished, and I would like to initiate, immediately, actions to follow up on the energy question. I'll be getting a briefing from my own staff, who have been preparing it now at my direction for the last week. I'll be getting it, as a matter of fact, tomorrow, Monday, in Washington. And then as soon as the congressional leaders come back to Washington, I'll be prepared to meet with a group of Senate and House Members who've already been designated as a special energy task force, and a second group who have been designated as a special inflation task force.

I think it's high time that the Congress proceeded to a final legislative package with the windfall profits tax, the energy security fund, the alternate supplies of energy, as supported by Jim Wright and Moorhead, and also some expeditious way to complete major projects in our country, as proposed by the Energy Committee in the Senate under Senator Jackson.

I think this combination of actions will be very beneficial, and I want to do it without delay.

Q. Do these actions include the multinational facility, Mr. President? Will you make that announcement of a specific proposal in the next few weeks?

THE PRESIDENT. Yes, I would say within the next few weeks. We've done some background work on that already, but it's hard for me to say unilaterally what we will do collectively. That's why I'm hesitant about it.

POSSIBILITY OF RECESSION

Q. Sir, you said at the summit that the OPEC price increases are going to make it more difficult for us to realize our economic goals.

THE PRESIDENT. Yes.

Q. What is your latest assessment about the likelihood of a recession?

THE PRESIDENT. I think the OPEC decision will make a recession much more likely than it was before. We figure that by the end of 1980, this might cost us 2 or 2 1/2 percent in our gross national product increase, and maybe 2 to 2 1/2 percent in the inflation rate. It might cost us as many as 800,000 jobs—just the increase in OPEC prices that have taken place since last December.

STANDBY GASOLINE RATIONING AUTHORITY

Q. Will you go forward with a new gas rationing—

THE PRESIDENT. Yes, that will be part of the result of the joint study by my people, the House and Senate small ad hoc committee.

Q. On a standby basis?

THE PRESIDENT. On a standby basis.

Q. In other words, you anticipate, despite what you said earlier, going back to Congress now and trying to get standby rationing authority again?

THE PRESIDENT. The Wednesday before I left home, I think it was—the morning we had the leadership breakfast, I think it was Wednesday—Bob Byrd and Tip O'Neill and I had a private meeting before the breakfast. And we agreed to go ahead and move on these two special groups, one purpose of which would be to devise an acceptable rationing plan on a standby basis.

OPEN DECISION ON OIL PRICES

Q. It's very early; of course the summit has just ended. But have you any indication as to what might be OPEC's reaction to the collective criticism that was in the Communiqué?

THE PRESIDENT. No. It's obvious that there has been an excessive amount of timidity on the part of the consuming nations. Both the industrialized nations, up until this week, and especially the developing nations of the world—for instance, the Republic of Korea imports almost all of its energy; it has only a tiny amount of coal and oil.

And Helmut Schmidt made a very interesting report. I won't call the name of the countries, but one major European .Country, one of our NATO Allies, according to Chancellor Schmidt, spends a hundred percent of all its external earnings now on oil.

Another major ally of ours in South America, in 1973, was only spending 10 percent of their external earnings on oil; now they spend 40 percent.

Q. That's Brazil.

THE PRESIDENT. That's Brazil.

Q. The external earnings, what they earn from—

THE PRESIDENT. Their net earnings from what they export.

So, the devastating blow to the world is really most acutely felt in the developing nations, the very poor nations, who have very little cash reserves and are deeply in debt and who've seen their energy prices go up so extraordinarily high. It's obviously serious to us; it's much more than an inconvenience. But it can be devastating to a country that's so vulnerable as they.

Q. One of the things that we heard, Mr. President, about the collective criticism that the summit issued, was that in addition to the price increase the previous Thursday, the leaders of the summit were also affronted and indignant about what OPEC had had to say about the LDC's [less developed countries], or lack of what they say was our lack of aid to the LDC's. Was that correct? Was that a factor in the decision to criticize the increase?

THE PRESIDENT. Yes, I think so, because the OPEC Communiqué was highly inaccurate and was designed, obviously, to mislead the developing countries.

Q. Was it you who brought the statement to the summit and read it to them? Someone on our side actually brought this to their attention? Or was it one of the Europeans who brought it up?

THE PRESIDENT. All of us were familiar with the Communiqué. As a matter of fact, we discussed the Communiqué of the OPEC nations that morning at the private breakfast with the so-called Berlin group: ourselves, the Germans, the French, and the British. And I think we four then took it to the others.

Q. Sir, what do we hope to gain by talking tougher at OPEC?

THE PRESIDENT. Well, I don't see how the rest of the world can continue to sit back in a quiescent state and accept unrestrained and unwarranted increases in OPEC oil prices. I think there's no doubt that all seven of our nations agree very strongly with this deep concern. We also all agreed that the 60-percent increase in 6 months is unnecessarily high and completely unwarranted.

Q. But given all of that, given the fact that all of this is unrestrained and unwarranted, what can we do besides making strong statements?

THE PRESIDENT. I'd rather not go into that. [Laughter]

Q. You mean there are things we can do?

THE PRESIDENT. Well, I'd just rather not go into that.

Q. Besides going in with just—taking the oil-

THE PRESIDENT. I'll let the press speculate on what can be done. The first thing, I think, is to let all the consuming nations on Earth, both advanced, industrialized nations and those who are semideveloped, and those who are very poor and poverty stricken, realize the serious threat that already has been mounted to the world economy and what more serious threats can be mounted in the future unless there's some public, concerted statement of concern toward the OPEC nations. It's very difficult for a single nation like Japan, or like Germany, or like France, maybe like the United States, to let a lonely voice be mounted against the OPEC countries, because they can single that country out with punitive withholding of oil or some other action.

And I think we've all recognized that so far, and we've been timid. And I think the statement in Tokyo, collectively, might have some special significance in the future. We'll just have to wait and see.

ENERGY SUPPLIES AND ECONOMIC GROWTH RATE

Q. What does the 8.5 million barrels a day for U.S. mean to the Americans?

ADMINISTRATION OFFICIAL. In means that the level of imports that we, experienced in 1977 and the level of import that we're experiencing this year will be obtained as a goal. We'll have to asses our progress each year. All of us agreed to that. It'll be our goal that we will not exceed that amount of imports in 1985.

This could be accomplished by three basic means: One is to maximize production of oil in our own country; secondly, to conserve energy in all its forms; and, third, what might be considered a rational basis to develop alternative sources: of energy—solar; coal; nuclear, with special attention paid to safety and environmental considerations; oil derived from tar sand, shale. These kinds of energy sources must be aggressively developed.

And I think that all of the countries assembled in Tokyo recognized that we have a special advantage in our country in having some reserves. Germany has no oil. France has no appreciable oil or coal. Germany has pretty good coal supplies. Great Britain has both coal and oil. We have coal, oil; obviously, we have tremendous resources in shale. Canada has diminishing, rapidly diminishing supplies of oil, tremendous potential in tar sands. So, each country is so different, one from another—Japan, almost completely dependent on imported energy. So, we had a very serious problem to address.

Also, our country this year ought to have roughly a zero growth rate. Germany's will be in the neighborhood of 4 percent; Japan's even higher. And we, in the past few years, have had a very high growth rate compared to the other nations.

We had a need to accommodate that wide disparity in the characteristics of nations. I think we successfully did it. But all the nations took a very difficult stand in setting a restrictive target.

ADMINISTRATION OFFICIAL. May I interject one thing here? With regard to what we said earlier on what we will need to do to reach our goal by 1985, it seems to me that it's worth noting that had the 1977 national energy plan been passed as it was submitted, that we would now have in place programs that would guarantee that we would not only meet that goal in 1985 but that we would be significantly below it.

You can get different arguments about how many hundreds of thousands of barrels below it it would be, but there's no doubt that if that had been done in 1977, 8.5 million barrels in 1985 would be no problem.
ADMINISTRATION OFFICIAL. And I might say that we cannot meet the 1985 goal if we don't have the windfall profits tax and the energy security fund, because we won't have the capability of developing the alternative energy supplies.

POSSIBILITY OF TAX CUTS

Q. Could I go back to something that you said at the outset? You said that the OPEC price increase, the cumulative increase made the possibility of a recession a good deal stronger.

ADMINISTRATION OFFICIAL. Yes, not only for us but for all nations.

Q. In the light of that, have you begun to do any rethinking or do you plan to do any restudying on the question of a tax cut?

ADMINISTRATION OFFICIAL. No, not anytime soon. I can't say that we'll never do that, but that's not in my immediate—

POSSIBILITY OF RECESSION

Q. You mentioned a moment ago that there would be a zero growth rate for the United States this year. That means there will be a recession?

ADMINISTRATION OFFICIAL. We don't know yet.

ADMINISTRATION OFFICIAL. We're just recalculating now, but it will certainly for the rest of the year—and in fact, the new estimates will come out in about 10 days. And we'll have the definite numbers then. But for the rest of the year, the growth rate is, I think it's going to be around zero, I can't imagine below that.

Q. That's the first time I've heard you say that.

Q. It's not recession until we have actual negatives for two quarters.

ADMINISTRATION OFFICIAL. Yes, but that's the average for the year. We will have to see how—it may well go into negative numbers. We just don't know.

ADMINISTRATION OFFICIAL. Well, I don't want to be that specific. I've got to get back and go over this with OMB and Charlie Schultze to get an exact figure. But I would say that we'll have just about a level growth rate this year, plus or minus—

Q. Is that all brought around by the OPEC increases?

ADMINISTRATION OFFICIAL. I can't say all, no. But it's obviously a very major factor.

Q. Mr. President, if I'm correct, that's the first time I've heard you use that phrase "zero growth rate." You've been talking 2 1/2 percent, something like that. Are you less optimistic now as a result of the—

THE PRESIDENT. [The President nods affirmatively.] ³

ADMINISTRATION OFFICIAL. Mr. President, I would just interject, without the 60-percent increase from OPEC, we would not face this problem. Clearly, that problem, Mr. President, is in fact due to the 60-percent increase in oil.

ADMINISTRATION OFFICIAL. With regard for inflation, also.

U.S. BALANCE OF TRADE

THE PRESIDENT. What will the OPEC price increase cost us in balance of trade?

ADMINISTRATION OFFICIAL. We estimate now that next year the cost may be around $70 billion; this year, $58 billion, which compares to $42 billion last year. So, it's a substantial increase in the bill we have to pay for imported oil.

ADMINISTRATION OFFICIAL. It's a very serious economic problem. The only thing I would hesitate to—the only thing I'd like for you not to do is to pin me down specifically to a zero growth rate. Until we see the final figures run through the computer, I won't know.

ADMINISTRATION OFFICIAL. It'll be about 10 days.

THE PRESIDENT. We'll issue that new estimate on the 15th, I think.

ENERGY AND INFLATION TASK FORCES

Q. You mentioned the inflation task force a little while ago. Is that something new?

THE PRESIDENT. Yes.

Q. And are they studying controls as one of the options at this point?

THE PRESIDENT. The inflation task force is something new.

Q. Would you like to talk a little bit about it?

THE PRESIDENT. No, I don't want to presuppose anything. I think the Congress Members would resent my saying what we collectively are going to do. The essence of it is that Bob Byrd and Tip and all recognize that we have some special problems economically, and instead of the executive branch developing a program or the Congress developing programs and just having proper consultations, that we'll work much more closely on a continuing basis with a few key people.

Before I left Washington, Bob Byrd called me on the phone and gave me the list of the Members of the Senate that he had recommended. And I understand that after I left, Tip O'Neill has submitted his list of the House Members—two lists, one for energy and one for inflation. Both Democrats and Republicans could be designated by the leaders.

Q. Do you anticipate that they will suggest mandatory controls at all?

THE PRESIDENT. I don't want to presuppose that.

Q. How would you feel if they did?

THE PRESIDENT. I would say no.

Q. Are controls one of the options that the task force will consider?

THE PRESIDENT. I'm opposed to mandatory controls.

Q. When do you expect to have a report or a recommendation?

THE PRESIDENT. This is in the embryonic stage. We've set up the mechanism, and I can't—

Q. Is it an all-congressional group—the task force?

THE PRESIDENT. If I remember right, Bob Byrd gave me about seven or eight names from the Senate. I presume Tip will do about the same on the House, and then I'll appoint members representing my own administration. Mike ⁴ will undoubtedly serve, along with Schlesinger, maybe Stu Eizenstat, Charlie Schultze, and others—Juanita Kreps—depending on—I haven't decided on specific names, but those would be, obviously.

PRESIDENT'S SUMMARY OF TRIP

I might say, in summary, that I think the trip has been a very good one. I'm pleased with the results. We accomplished all the goals that we established for ourselves. Many of the commitments that were made still have to be carried out-in Japan, at the economic summit, and also in my visit with President Park and Korean leaders.

I think that the alleviation of tension between South Korea and North Korea, if we can accomplish this, will be of great benefit. I would like to see trade open up between South Korea and the People's Republic of China; between ourselves and North Korea on the same time basis.

I think that our genuine concern about human rights has been imparted very dearly to President Park and all the members of the Government of the Republic of Korea. My belief is that the military' relationship has been much more actively clarified. accommodate the recent We will development of the buildup in North Korea adequately. We will not abandon our commitments to the Republic of Korea.

So, I think all those issues that we studied and worked on so long have been successfully concluded.

Q. Have you pretty well formed a decision in your mind on troop withdrawals?

THE PRESIDENT. A general framework, yes.

Thank you all very much

REPORTER. Thank you.