NATIONAL INTELLIGENCE BULLETIN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00975A030200010055-5
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 12
• Document Creation Date: December 16, 2016
• Document Release Date: June 16, 2005
• Sequence Number: 55
• Publication Date: July 5, 1977
• Content Type: REPORT

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Tuesday July 5, 1977 CG NIDC 77-154C
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NATIONAL SECURITY INFORMATION
Unauthorized (Disclosure Subject to Criminal Sanctions
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National Intelligence Daily Cable for Tuesday, July 5. 1977
T he NID Cable is for the purpose of informing
senior US officials.
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DEVELOPED COUNTRIES: Textile Imports
FINLAND: New Economic Program
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A//Beliaean Premier George Price will be in
Was zngton on my 6-8 to observe the negotiations between
Guatemala and the UK over Guatemalan claims to the British
colony. Price is probably eager for the US to become actively
involved in the controversy.//
//The 58-year-old Price has headed the majority
People's United Party since 1956 and has been Premier since
the thinly populated colony--only 145,000 persons--was granted
internal self-government in 1964. Since then, his goal of an
independent Belize has been frustrated by Guatemala's century-
old territorial claim.//
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//Price's lengthy stewardship has been under in?-
creasing domestic criticism in recent years. Although his cur--
rent term runs until 1979, his party's majority was reduced in
nationwide elections in 1974, and the party has subsequently
lost several municipal elections. Inflation, inadequate public
services, corruption,, and unsuccessful agricultural policies
have diminished Price's popularity.//
//The Premier's attitude toward the US has varied
wi is perceptions of US policy toward his country. Because
Price's dream of independence is conditioned on securing suit-
able international backing, he has at times been unhappy that
the US has not agreed to be a party to a defense guarantee for
Belize. Price has called for the US to enter the discussions
as a mediator. He has also attempted to internationalize the
dispute with notable recent success. The UN' General Assembly
has overwhelmingly passed two resolutions backing Belizean
self-determination and territorial integrity.//
//Ironically, the UN resolutions may complicate
settlement of the Guatemalan claim. The support for territorial
integrity bolsters Price's reluctance to cede any land, but the
Guatemalans will undoubtedly continue to demand at least a slice
of territory to salvage their national pride.//
//The Belizean leader publicly denied late last
year t at a was planning to trade a territorial cession for
independence. His waning popularity and consequently increased
political vulnerability, combined with recent explorations for
oil in the part of Belize that Guatemala might accept if it
cannot get the whole territory, have undoubtedly hardened his
stand on the territorial issue.//
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DEVELOPED COUNTRIES: Textile Imports
Developed countries are becoming increasingly concerned
about the loss of jobs caused by a rise in clothing imports.
Many are blaming at least part of the penetration of local mar-
kets on the Multifiber Agreement, which will expire at the end
of this year. Even when a new agreement is worked out, the pres-
sure of increased production from developing countries will
persist.
The Multifiber Agreement establishes guidelines for
bilateral textile and clothing trade arrangements. It was ne-
gotiated in 1973 under conditions of rapid economic growth and
low unemployment in the major countries, and it was intended to
foster controlled expansion of textile exports from the devel-
oping countries.
I Most developed countries did not see the potential
for rape growth in textile and clothing imports and failed to
negotiate bilateral agreements sufficient to cover the broad
and shifting range of products produced by the developing coun-
tries. Since 1973, clothing has led the surge of imports into
the developed countries, where clothing sales have jumped 17
percent and textile sales have grown 7 percent annually.
political problems for many developed countries--particularly
Canada and the EC members. Textile and clothing employment ac-
counts for 5 to 9 percent of total industrial employment in
these countries. Many clothing workers are relatively unskilled
and are not in demand in other industries. In many countries,
textile and clothing firms are located in areas that already
have high unemployment. In Canada, the industry is centered
in Quebec, where unemployment is a particularly sensitive po-
litical issue.
At the same time, employment in the textile and cloth-
ing industries of developed. countries has been falling; in
the US, Japan, Canada, and the EC, it has dropped at an average
annual rate of 4 percent. Declining employment poses serious
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Exports of textiles and clothing from developing coun-
tries have jumped 160 percent over the last four years, reach-
ing an estimated $14 billion last year.
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ing advantage in labor costs over the developed countries. Ac-
cording to a Japanese study, garment workers in South Korea
earn only about one sixth as much as their counterparts in Ja-
pan--long the example of a low-wage country.
The East Asian exporters--Hong Kong, Taiwan, and
South Korea--have the greatest advantage; they account for 60
percent of developing country foreign sales of clothing and
textiles and more than half the increase in sales since 1972.
The US buys nearly one third of all of East Asia's textile and
clothing exports. Most of the remainder is shipped to the EC,
Canada, and Japan.
In large part, the export surge reflects an overwhelm-
The only strong support for renewal of the Multifiber
Agreement has, come from the US, Japan, and the major textile-
exporting developing countries. Japan, because of its own po-
sition as a textile and clothing exporter and its close eco-
nomic ties with East Asian producers, is committed to avoiding
protectionist measures. It has resigned itself to the movement
of Japanese textile and. clothing production to lower wage areas.
Developing country exporters have been trying to or-
ganize a united front at the negotiations. So far, only the
East Asian countries are united. On the more radical side, Pak-
istan wants to use the discussions as a platform to push for
broader developing country preferences. At a meeting in Hong
Kong in May to develop their stance, smaller producers pushed
for global quotas that would guarantee their market shares.
Some producers in Africa and Latin America fear that the East
Asian export drive could induce importers to adopt tighter con-
trols.
I ICanada and the EC object strongly to the present sys-
tem an are unlikely to approve any plan that does not provide
greater latitude in imposing restrictions. Canada has virtually
ignored the MultifiberAgreement by imposing global import quo-,
tas. The strong objections of France and the UK delayed agree-
ment on an EC negotiating mandate until last week.
Even under a revised agreement, the developed coun-
tries would continue to feel pressure from increased develop-
ing country exports. The East Asian countries are expanding
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their production capacity and will find ways of marketing their
increased output despite any future bilateral agreements.
FINLAND: New Economic Program
//Finnish Prime Minister Sorsa's new five-year
economic program reflects the broad political drift to the
right that has been taking place in Finland. In recent months,
trade union elections have favored the Social Democrats at the
expense of the Communists, and the Conservative Party has in-
creased its showing at the expense of center parties.//
//The economic program of the new Socialist-led,
five-party coalition--which includes the Communist Party--calls
for an increase in employment by improving the profitability
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and the international competitiveness of Finnish private in-
dustry. Communist endorsement of the program did not come easily.
The Communists' proposals for stimulating economic growth and
job opportunities through additional public spending were largely
ignored, although a few of their recommendations were included
as minor elements in the program.//
I IThe hard-line minority faction of the Communist Party,
which is not represented in the government, has criticized the
program as too business-oriented and neglecting workers' in-
terests. The majority Communist group, on the other hand, des-
cribes the program as the best possible compromise given the
current conservative trend in Finland.
The economic program initially calls for aid to busi-
ness. It provides for a temporary reduction in employer contri-
butions for health insurance, child allowances, and pensions
and a sales tax exemption for plant construction. Special busi-
ness loans would be extended for six months. The plan also pro-
vides for an increase in government child allowances and an ex-
tension of the special youth unemployment program.
I IThe government forsees only moderate increases in
public spending and foreign borrowing over the next five years.
Federal spending is projected to grow by 2 percent annually,
compared with an average annual rise of about. 23 percent in the
previous half decade. Over. the next five years, the government
hopes to limit foreign borrowing to $250 million, down from
nearly $400 million during the most recent five-year period. It
also hopes to hold the current-account deficit below 2 percent
of gross national product, compared with 4 percent in 1976.
I I The government believes that its program of stimulating
private investment--while keeping the lid on public spending--
will stimulate jobs and reduce inflation substantially by 1982.
The plan calls for a reduction in unemployment from a record 6
percent this past spring to 2.5 percent by 1982 and for a seven-
percentage-point cut in the inflation rate to 5 percent over the
same period.
//Economic: growth probably will remain below the 25X1
a.storical average of 5 percent annually for some time. The eco-
nomy is highly. dependent on exports, which have not grown rapidly
because of the sluggish increase in world demand.//
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I IIsraeli Prime Minister Begin, according to Jerusalem
ra 2o, yesterday told Senator Javits that Israel is prepared
for a reconvening of the Middle East peace conference in Geneva
on October 10. Begin said that Israel is prepared to negotiate
every subject at Geneva with each of the Arab states without
preconditions.
I Egyptian President Sadat, who had been attending the
summit meeting of the Organization of African Unity in Gabon,
said that he welcomed Begin's remarks and t
ready on and even before" October 10.
hat Egypt "will
be
I
Neither Begin nor Sadat referred
to the
issue of
Pal-
estinian
participation in a resumed peace c
onferen
ce or to
any
of the other parties involved except the US
be looking forward to an exchange of views
. Both
with US
professed
leaders
to
dur-
ing the coming month.
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