The Heads of State and Government of Canada, the Federal
Republic of Germany, France, Italy, Japan, the United Kingdom
of Great Britain and Northern Ireland and the United States of
America met in Bonn on 16th and 17th July 1978. The European
Community was represented by the President of the European
and by the President of the European Commission for discussion
of matters within the Community's competence.
We agreed on a comprehensive strategy covering growth,
employment and inflation, international monetary policy, energy,
trade and other issues of particular interest to developing
We must create more jobs and fight inflation, strengthen
trading, reduce payments imbalances, and achieve greater
in exchange markets. We are dealing with longterm problems,
will only yield to sustained efforts. This strategy is a
whole, whose parts are interdependent. To this strategy, each
of our countries can contribute; from it, each can benefit.
We are concerned, above all, about worldwide unemployment,
because it has been at too high a level for many years, because
it hits hardest at the most vulnerable sections of the
because its economic cost is high and its human cost higher
We will act, through measures to assure growth and develop
skills, to increase employment. In doing this, we will build
on the progress that has already been made in the fight against
inflation and will seek new successes in that fight. But we need
an improvement in growth where that can be achieved without
inflation in order to reduce extremes of balanceofpayments
and deficits. This will reduce destabilizing exchangerate
Improved growth will help to reduce protectionist pressures.
We need it also to encourage the flow of private investment,
on which economic progress depends. We will seek to reduce
to private investment, both domestically and internationally.
Better growth is needed to ensure that the free world is able
to develop to meet the expectations of its citizens and the
of the developing countries.
A program of different actions by countries that face
different conditions is needed to assure steady noninflationary
growth. In countries whose balanceofpayments situation and
rate do not impose special restrictions, this requires a faster
rise in domestic demand. In countries where rising prices and
costs are creating strong pressures, this means taking new
Canada reaffirmed its intention, within the limits permitted
by the need to contain and reduce inflation, to achieve higher
growth of employment and an increase in output of up to five
As a contribution to avert the worldwide disturbances
of economic equilibrium, the German delegation has indicated that
by the end or August it will propose to the legislative bodies
additional and quantitatively substantial measures up to one
of GNP [Gross National Product], designed to achieve a
strengthening of demand and a higher rate of growth. The order
of magnitude will take account of the absorptive capacity of the
capital market and the need to avoid inflationary pressures.
The President of the French Republic has indicated that,
while pursuing its policy of reduction of the rate of inflation,
the French Government agrees, as a contribution to the common
effort, to increase by an amount of about 0.5 percent of GNP the
deficit of the budget of the State for the year 1978.
The Italian Prime Minister has indicated that the Government
undertakes to raise the rate of economic growth in 1979 by 1.5
percentage points with respect to 1978. It plans to achieve this
goal by cutting public current expenditure while stimulating
with the aim of increasing employment in a noninflationary
The Prime Minister of Japan has referred to the fact that
his Government is striving for the attainment of the real growth
target for fiscal year 1978, which is about 1.5 percentage points
higher than the performance of the previous year, mainly through
the expansion of domestic demand. He has further expressed his
determination to achieve the said target by taking appropriate
measures as necessary. In August or September he will determine
whether additional measures are needed.
The United Kingdom, having achieved a major reduction
in the rate of inflation and improvement in the balance of
has recently given a fiscal stimulus equivalent to rather over
one percent of GNP. The Government intends to continue the fight
against inflation so as to improve still further the prospects
for growth and employment.
The President of the United States stated that reducing
inflation is essential to maintaining a healthy U.S. economy and
has therefore become the top priority of U.S. economic policy.
He identified the major actions that have been taken and are
being taken to counter inflation in the United States: tax cuts
originally proposed for fiscal year 1979 have now been reduced
by $10 billion; government expenditure projections for 1978 and
1979 have been reduced; a very tight budget is being prepared
for 1980; steps are being taken to reduce the direct contribution
by government regulations or restrictions to rising costs and
prices, and a voluntary program has been undertaken to achieve
deceleration of wages and prices.
The meeting took note with satisfaction that the common
approach of the European Community already agreed at Bremen would
reinforce the effectiveness of this program.
In spite of some improvement, the present energy situation
remains unsatisfactory. Much more needs to be done.
We are committed to reduce our dependence on imported
We note that the European Community has already agreed
at Bremen the following objectives for 1985: to reduce the
dependence on imported energy to fifty percent, to limit net oil
imports, and to reduce to 0.8 the ratio between the rate of
in energy consumption and the rate of increase in gross domestic
Recognizing its particular responsibility in the energy
field, the United States will reduce its dependence on imported
oil. The U.S. will have in place by the end of the year a
policy framework within which this effort can be urgently carried
forward. By year-end, measures will be in effect that will
in oil import savings of approximately 2.5 million barrels per
day by 1985. In order to achieve these goals, the U.S. will
a strategic oil reserve of 1 billion barrels; it will increase
coal production by twothirds; it will maintain the ratio between
growth in gross national product and growth in energy demand at
or below 0.8; and its oil consumption will grow more slowly than
energy consumption. The volume of oil imported in 1978 and 1979
should be less than that imported in 1977. In order to
excessive consumption of oil and to encourage the movement toward
coal, the U.S. remains determined that the prices paid for oil
in the U.S. shall be raised to the world level by the end of
We hope that the oilexporting countries will continue
to contribute to a stable world energy situation.
Looking to the longer term, our countries will review
their national energy programs with a view to speeding them up.
General energy targets can serve as useful measures of the
Private and public investment to produce energy and
to use it more efficiently within the industrial world should
be increased. This can contribute significantly to economic
The further development of nuclear energy is indispensable,
and the slippage in the execution of nuclear power programs must
be reversed. To promote the peaceful use of nuclear energy and
reduce the risk of nuclear proliferation, the nuclear fuel cycle
studies initiated at the London Summit should be pursued. The
President of the United States and the Prime Minister of Canada
have expressed their firm intention to continue as reliable
of nuclear fuel within the framework of effective safeguards.
The President intends to use the full powers of his office to
prevent any interruption of enriched uranium supply and to ensure
that existing agreements will be respected. The Prime Minister
intends that there shall be no interruption of Canadian uranium
supply on the basis of effective safeguards.
Coal should play an increasingly important role in the
Joint or coordinated energy research and development
should be carried out to hasten the development of new, including
renewable, energy sources and the more efficient use of existing
In energy development, the environment and human safety
of the population must be safeguarded with greatest care.
To help developing countries, we will intensify our
national development assistance programs in the energy field and
we will develop a coordinated effort to bring into use renewable
energy technologies and to elaborate the details within one year.
We suggest that the OECD will provide the medium for cooperation
with other countries.
We stress the need for improvement and coordination
of assistance for developing countries in the energy field. We
suggest that the World Bank explore ways in which its activities
in this field can be made increasingly responsive to the needs
of the developing countries, and to examine whether new
particularly to financing hydrocarbon exploration, would be
We reaffirm our determination to expand international
trade, one of the driving forces for more sustained and balanced
economic growth. Through our joint efforts we will maintain and
strengthen the open international trading system. We appreciate
and support the progress as set forth in the Framework of
on the Tokyo Round of Multilateral Trade Negotiations made public
in Geneva on July 13, 1978, even though within this Framework
of Understanding some difficult and important issues remain
The successful conclusion of these negotiations, the biggest
yet held, would mean not just a major tradeliberalization program
extending over the 1980s, but the most important progress yet
made in the GATT in relation to nontariff measures. Thus the
GATT rules would be brought more closely into line with the
of the next decade particularly in relation to safeguards in
ways which would avoid any weakening of the world trading system
and be of benefit to all trading countries, developed and
alike. A substantially higher degree of equity and discipline
in the international trading system would be achieved by the
of new mechanisms in many fields for consultation and dispute
settlement. Uniform application of the GATT rules is vital and
we shall move in that direction as soon as possible.
In all areas of the negotiations, the Summit countries look
forward to working even more closely with the developing
We seek to ensure for all participants a sound and balanced
which adequately takes into account the needs of developing
for example, through special and differential treatment, and
brings about their greater participation in the benefits and
of the world trading system.
At last year's Downing Street Summit we rejected a protectionist
course for world trade. We agreed to give a new impetus to the
Tokyo Round. Our negotiators have fulfilled that commitment.
Today we charge them, in cooperation with the other
to resolve the outstanding issues and to conclude successfully
the detailed negotiations by December 15, 1978.
We note with satisfaction the renewal of the pledge
to maintain an openmarket oriented economic system made by the
OECD Council of Ministers last month. Today's world economic
problems cannot be solved by relapsing into open or concealed
We welcome the statement on positive adjustment policy
made by the OECD Ministers. There must be a readiness over time
to accept and facilitate structural change. Measures to prevent
such change perpetuate economic inefficiency, place the burden
of structural change on trading partners and inhibit the
of developing countries into the world economy. We are
in our industrial, social, structural and regional policy
to help sectors in difficulties, without interfering with
competition and trade flows.
We note the need for countries with large current accounts
deficits to increase exports and for countries with large current
accounts surpluses to facilitate increases in imports. In this
context, the United States is firmly committed to improve its
export performance and is examining measures to this end. The
Prime Minister of Japan has stated that he wishes to work for
the increase of imports through the expansion of domestic demand
and various efforts to facilitate imports. Furthermore, he has
stated that in order to cope with the immediate situation of
surplus, the Government of Japan is taking a temporary and
step of calling for moderation in exports with the aim of keeping
the total volume of Japan's exports for the fiscal year of 1978
at or below the level of fiscal year 1977.
We underline our willingness to increase our cooperation
in the field of foreign private investment flows among
countries and between them and developing countries. We will
intensify work for further agreements in the OECD and elsewhere.
In the context of expanding world economic activity,
we recognize the requirement for better access to our countries'
markets for the products of the developing countries. At the
same time we look to increasing readiness on the part of the more
advanced developing countries to open their markets to imports.
Success in our efforts to strengthen our countries'
economies will benefit the developing countries, and their
progress will benefit us. This calls for joint action on the
basis of shared responsibility.
In the years ahead the developing countries, particularly
those most in need, can count on us for an increased flow of
assistance and other resources for their development. The Prime
Minister of Japan has stated that he will strive to double
official development assistance in three years.
We deeply regret the failure of the COMECON countries to
take their due share in the financial assistance to developing
countries and invite them once more to do so.
The poorer developing countries require increased
aid. We support the soft loan funds of the World Bank and the
three regional development banks. We pledge our governments to
support replenishment of the International Development
on a scale that would permit its lending to rise annually in real
As regards the more advanced developing countries, we
renew our pledge to support replenishment of the multilateral
development banks' resources, on the scale needed to meet the
growing needs for loans on commercial terms. We will encourage
governmental and private cofinancing of development projects with
The cooperation of the developing countries in creating a
good investment climate and adequate protection for foreign
is required if foreign private investment is to play its
role in generating economic growth and in stimulating the
We also refer to our efforts with respect to developing
in the field of energy as outlined in paragraphs 15 and 16.
We agreed to pursue actively the negotiations on a Common
Fund to a successful conclusion and to continue our efforts to
conclude individual commodity agreements and to complete studies
of various ways of stabilizing export earnings.
The erratic fluctuations of the exchange markets in
recent months have had a damaging effect on confidence,
and growth throughout the world. Essentially, exchange rate
can only be achieved by attacking the fundamental problems which
have contributed to the present large balanceofpayments deficits
and surpluses. Implementation of the policies described above
in the framework of a concerted program will help to bring about
a better pattern of world payments balances and lead to greater
stability in international exchange markets. This stability will
in turn improve confidence and the environment for sustained
Although exchange rates need to respond to changes in
underlying economic and financial conditions among nations, our
monetary authorities will continue to intervene to the extent
necessary to counter disorderly conditions in the exchange
They will maintain extensive consultation to enhance these
effectiveness. We will support surveillance by the International
Monetary Fund to promote effective functioning of the
The representatives of the European Community informed
the meeting of the decision of the European Council at Bremen
on 67 July to consider a scheme for a closer monetary
The meeting welcomed the report and noted that the Community
would keep the other participants informed.
It has been our combined purpose to attack the fundamental
economic problems that our countries confront.
The measures on which we have agreed are mutually reinforcing.
Their total effect should thus be more than the sum of their
parts. We will now seek parliamentary and public support for
We cannot hope to achieve our purposes alone. We shall work
closely together with other countries and within the appropriate
international institutions; those among us whose countries are
members of the European Community intend to make their efforts
within this framework.
We have instructed our representatives to convene by the
end of 1978 in order to review this Declaration. We also intend
to have a similar meeting among ourselves at an appropriate time
Source: U.S., Department of State, Bulletin, No. 2018 (September 1978): 2-4; Great Britain, Foreign and
Commonwealth Office, Declarations of Annual Economic Summits, 1975-1986 (London, 198-): A4, Bonn, 1-8 [unpublished]; Economic Summits, 1975-1986: Declarations (Rome: Istituto Affari Internazionali, 1987):