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Coming of Age: The European Community and The Economic Summit

Susan Hainsworth

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3. The EC at the Economic Summits: 1978-89

i) EC Commission President Roy Jenkins' Summits

1978: BONN (16-17 JULY)

This 1978 summit has been classified as a major victory of economicpolicy harmonisation; Putnam and Bayne refer to its results asthe "textbook case of international policy coordination". The European Community participated at the summit for the secondtime as a full member in issue areas which fell within its competence,cementing its right to be included in the elite forum. The ECwas represented by West German Chancellor Helmut Schmidt in his capacity of President of the European Council and by the President of the Commission, Roy Jenkins.

Ten days prior to the Bonn Western Economic Summit, the European Council had convened in Bremen (6 and 7 July 1978). This European Council meeting was expressly held in advance of the Bonn Summit with the intention of discussing and forming a European consensus on items on the summit agenda. The Bremen European Council, and had produced several specific proposals and policy guidelines which were carried directly onto the agenda of the Bonn Summit. These included, in particular, the European Monetary System (EMS) initiative and a European 'concerted action' package for the coordination of macroeconomic policies. Indeed, certain sentences of the Bremen document were reproduced unchanged on the final communique in Bonn.37

At Bonn, a package of reciprocal concessions in key sectors ofeconomic cooperation was constructed, founded upon the 'convoy (or locomotive) theory' to stabilize and stimulate the world economy and to promote continual non-inflationary growth and alower level of international unemployment, whereby each country adopted measures compatible with its own specific situation. Theaccord was premised upon an agreement among the three leadingeconomic powers the U.S., Japan and West Germany in the domainsof growth, inflation, international trade, debt and energy. The objectives to which West Germany and the other EC summitteers pledged were consistent with the targets which had been established at the Bremen European Council, demonstrating the cohesivenessof the EC in this particular domain and the strength of the EuropeanCouncil consensus which was carried directly forward to Bonn. Among these provisions was an understanding providing for a 50% reduction in Community energy imports by 1985. 38

In 1977, the President of the Commission, Roy Jenkins, had put forth a strong plea for the Community to pursue the objective of European Monetary Union, initially envisaging movement towards a single European currency and monetary authority. While not espousing such an ambitious objective, Chancellor Schmidttook up the initiative to make progress in the European monetary sphere. Supported by President Giscard of France, he presentedhis ideas at the Copenhagen European Council in Spring 1978. Herea political consensus was reached to create a European exchangerate system defended by common reserves. Giscard and Schmidt then presented their finalised version of the EMS proposal at Bremen.

Basically, the EMS was intended to establish a zone of monetary stability in Europe through the consolidation of agreement on exchange rates and the intensification of consultations and monetary policy convergence among member states, while reserving the states' national prerogative to make major monetary decisions. The EMS proposition was accepted by seven EC member states, while Britainand Italy expressed substantial reservations.

At the ensuing Bonn Summit, then, the EMS could not be presented to the U.S. and Japan as a definitive and unified accord amongall Community members, although it received quiet encouragement from U.K. Prime Minister Callaghan, and Giscard, Schmidt, and Jenkins were interrogated at length regarding its functioning 39. Consequently, the EMS received only very vague and cautious sympathy from the summit group, while not receiving the desired endorsement The final communique of the Bonn summit declared: "The representatives of the EC informed the meeting of the decision of the European Council at Bremen on 6 and 7 July to consider a scheme for closer monetary cooperation. The meeting welcomed the report and noted that the Community would keep other participants informed" 40.

Whereas Jenkins had only been allowed to attend some working sessions of the 1977 London meeting, at Bonn he was permitted to participate in all economic discussions, reflecting the termination of the rather arbitrary delineation of the EC's economic competences which had occurred at the 1977 gathering. This upgrading was primarily due to the Commission's involvement in intra-Community discussions that culminated in the creation of the EMS, which extended the Community's competence to partially include monetary affairs.

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