aid to and the problems of developing nations, linking the price of oil to global inflation and to the price of manufactured goods, monetary reform, the protection of oil producer's investments in the West, and measures to counter threats against oilfields.1 However, the April preparatory meeting in Paris of representatives of producers, consumers and developing countries reportedly broke down over the failure to obtain agreement on the agenda of the proposed international conference, with consuming countries supporting confining such a conference to energy questions, and oil producers and developing countries supporting the expansion of such a conference to consider other raw materials and other forms of development assistance to the lesser developed countries. However, we are looking forward to these hearings to a fuller analysis today of all the factors contributing to the breakdown of the conference. In addition, we are hoping to receive some insight into the followup to Attorney General Levi's March 28 opinion, responding to a Presidential request under section 708 of the Defense Production Act, for approval of immunity from antitrust laws and the Federal Trade Commission Act with respect to acts by participants-the petroleum industry-in the voluntary agreement and their designated affiliates, which are undertaken in order to implement the terms of the agreement on the international energy program. Our witnesses today are: Hon. Charles W. Robinson, Under Secretary for Economic Affairs, Department of State; Hon. Melvin A. Conant, Assistant Administrator for International Energy Affairs, Federal Energy Administration, and Martin Lobel, an attorney with the firm of Lobel, Novins and Lamont. Our leadoff witness is Hon. Charles W. Robinson, who headed the U.S. delegation to the recent Paris talks. Mr. DIGGS. Mr. Robinson, you have a prepared statement, and you may proceed. STATEMENT OF HON. CHARLES W. ROBINSON, UNDER SECRETARY FOR ECONOMIC AFFAIRS, DEPARTMENT OF STATE Charles W. Robinson of San Francisco, California, was sworn in as Under Secretary of State for Economic Affairs on Jan. 3, 1975. Since 1965. Mr. Robinson has served as President and Manager of Marcona Corporation of San Francisco, California. In 1961, he became President and Managing Director of the Marcona Mining Company after having served as Executive Vice President and General Manager since 1959. From 1952 to 1960 he was with the Utah Construction Company, serving as Assistant Treasurer, Assistant Secretary and Vice President. In 1951 he was named Manager of the Monterey Trading Company in Panama. From 1950 to 1951 he was an Associate with the management consulting firm of McKinsey & Company, Inc. In 1947 he was Assistant to Production Services Manager for the Golden State Dairy Products Company, serving until 1950. Mr. Robinson was born on September 7, 1919, in Long Beach, California. He received his A.B. (cum laude) in 1941 from the University of California. He received his M.B.A. in 1947 from Stanford University Graduate School of Business Administration. He served with the United States Navy from 1941 to 1946. From 1941 to 1942 he attended the United States Naval Academy Post Graduate School. From 1942 to 1943 he was an Engineering Instructor at the United States Naval Academy Post Graduate School and from 1943 to 1946 he was an Engineering Officer (Lieutenant) at sea. He is married to the former Tamara Lindorna and they have three children. 1 Soo Declaration of OPEC meeting in append * See letter in appendix at p. 100. Mr. ROBINSON. Thank you very much, Mr. Chairman. I am pleased to have this opportunity to appear before your subcommittee to provide testimony on the recently concluded preparatory meeting between the oil producing and consuming nations and to discuss in broad terms the relationship of this meeting with our overall energy policy. I would like to digress for a moment to confirm, as you stated, Mr. Chairman, that I did serve as chairman of the U.S. delegation at that meeting, which extended over a 10-day period, and I assumed reponsibility for the performance of the U.S. delegation at that conference. At the Washington Energy Conference in February 1974, the United States and 12 other industrialized nations agreed that, at the appropriate time, they should meet with developing consumer states and producing countries to explore possibilities for mutually acceptable solutions to the energy problem. The International Energy Agency (IEA), created 9 months later, has as one of its goals the institution of contacts and dialog with the producing nations. We realized, however, that meaningful discussions could take place only after consuming nations had proved that they would not remain helpless over time to the arbitrary manipulation of the world oil market by the OPEC states. Before we could negotiate effectively, or even gain the necessary respect for serious discussions, we had to undertake unified actions in the energy field that would demonstrate strength and consistency of purpose. Consequently, our international energy efforts since the Washington Energy Conference have concentrated on the creation of a framework of close, consumer country cooperation. Through this effort, we seek to reduce and eventually eliminate our vulnerability to manipulation of our oil supply and oil prices. Substantial progress has been made in building consumer solidarity over the past 14 months. In the IEA, we have agreed on emergency provisions that will enable a unified and coordinated response to any future embargo. Along with other OECD countries, we have agreed to create within the OECD a $25 billion support fund to act as a lender of last resort to industrialized countries suffering severe balance of payments costs because of high oil prices. These efforts, basically short-term insurance policies, are complemented by essential longer term programs to reduce IEA members collective dependence on imported oil. We have established as a conservation target the reduction of IEA oil imports by 2 million barrels a day by the end of 1975, and similar objectives will be established for later years. We have agreement in principle on a series of interrelated measures to accelerate the development of indigenous energy supplies; it is anticipated that implementation programs will be developed and approved by July 1. The Paris Preparatory Meeting of April 7-15, or "Prepcon," took place as a result of a French initiative. Last fall, the French President proposed a meeting of a small number of industrialized, developing, and producing countries to meet in Paris to plan a multilateral conference on energy; invitations to such a meeting were issued in March. The French proposal was similar to one made earlier by Saudi Arabian Oil Minister Yamani, and the French invited the same coun tries to the Prepcon that Minister Yamani had originally proposed. The Shah of Iran had also shown interest in a producer/consumer conference. In December at Martinique, President Ford conditioned the participation of the United States in a producer/consumer conference on a sequential four-stage approach, which the IEA subsequently endorsed. In the first stage, consumer cooperation would be strengthened in the financial, conservation and accelerated-development-of-energy areas. As I mentioned earlier, concrete programs in these areas have been agreed to. The second stage was to be the Prepcon. Stage three would involve intensified consumer cooperation and the development of common consumer positions. Stage four would be the holding of the conference. In the light of progress made toward consumer solidarity, we agreed, in late March, to proceed with the preparatory meeting. PREPCON The task of the Prepcon was to agree on the procedures and participants for the energy conferences to be held later this year. The 10 participants included representatives from the industrialized countries United States, Japan, and the nine members of the European Community, represented through a single spokesman-the developing consumer countries-Brazil, India, and Zaire-and the OPEC nations-Saudi Arabia, Iran, Venezuela, and Algeria. As host, France, which has declined to join the IEA, provided the "technical chairman;" the French were also represented in the EC delegation. We went to Paris determined to be cooperative and constructive. We believed that the conference should be one in which rhetoric was minimized and real work toward concrete solutions was maximized. Therefore, it was essential, in our view, to have an agenda for the conference that was manageable in size and which offered the promise of real progress. Despite 9 days of intense and grueling negotiations, the 10 delegations at the Prepcon could not reach agreement on the procedural issues for the conference. The talks failed to resolve the fundamental question of what type of conference it would be. The United States, European Community, and Japan, unanimously supported by other members of the IEA, maintained that the conference should focus on energy and energy-related matters as proposed in the French invitation. The OPEC and LDC representatives were willing for the conference to discuss energy, but only if equal status were given to a wide range of problems relating to the economic relations between developing countries and the rest of the world. Specifically, they insisted that the conference treat raw materials, monetary reform, and assistance to most seriously affected countries on the same basis as energy. The industrialized countries demonstrated considerable flexibility in the negotiations, offering to interpret quite broadly the topics that could be considered under the general energy rubric. We offered, in addition, to treat all nonenergy related subjects in other appropriate fora where work on them was already underway. We were not willing, however, to agree, as the OPEC and LDC representatives seemed to want, to create another unproductive forum to discuss the new interCational economic order. Even though the talks adjourned because of disagreement over this basic issue, several other issues were left undecided. The OPEC/LDC representatives sought specific agenda references to maintaining the purchasing power of export earnings and the real value of investments—that is, indexation of prices and investments. We argued that we could not accept such references, since they prejudged the outcome of the conference. We said, however, that we were prepared for them to raise these subjects for discussion at the conference under an agenda formulation that was neutrally cast. Since the Prepcon's mandate was only procedural, we did not attempt to engage in substantive debate over indexation. Spearheaded by Algeria, the OPEC/LDC states also opposed IEA attendance as an observer at the full conference. They maintained that IEA was a confrontational organization whose existence is not recognized by the OPEC nations. They argued that the presence of the IEA would give the conference too much of an energy orientation and that OECD presence at the conference should suffice for IEA representation. With unanimous support from other IEA members, the United States, European Community, and Japan were prepared to condition their attendance at the conference and acceptance of any agreed agenda on IEA presence as an observer with the right to speak. We believed that to agree on IEA's exclusion would be to accept implicitly the confrontational charge. Furthermore, IEA's exclusion would prevent representation at the conference, via IEA, of many important consuming countries. This issue was not settled before the conference adjourned. Let me note, parenthetically, that it was clear early in the first week that compromise on these fundamental differences was unlikely. Nevertheless, the participants continued their negotiations for several extra days and nights in order to explore all possibilities for accommodation. The adjournment of the Prepcon was not accompanied by recrimination among the participants. Mr. Chairman, it is not correct, I think, simply to characterize the Prepcon as a failure. It is true that the main purpose of the meeting was not achieved. On the other hand, all participants gained a much greater appreciation of the others' views, which may have a salutary effect on future bilateral and multilateral relations. What are the major conclusions we have drawn from the Prepcon? First, the OPEC states have succeeded in linking their interests. with those of the LDC's even though high oil prices are seriously damaging the economies of many developing nations. Some LDC nations, unfortunately, find attractive the idea that they can help solve their economic problems by following the OPEC's example, that is, cartelizing and demanding higher prices for all raw materials. We expect the OPEC/LDC bloc under OPEC leadership to be a strong and vocal force in future international fora, at least until developing countries come to recognize that widespread cartelization will be neither practical nor productive. Second, the industrialized nations demonstrated strong consumer solidarity, proving the tremendous progress that has been made in the IEA over the past 14 months. During the Prepcon, we coordinated our positions closely with other IEA members. The decision to hold firm in insisting on an energy conference and on IEA participation received unanimous endorsement from the IEA Governing Board, which is composed of representatives from the 18 member countries. Finally, it appears that the timing is not yet right for a multilateral dialog on key energy issues. The producers at the Prepcon showed little willingness to engage in serious discussion on energy unless the industrialized nations would consider at the same time the broader issues of LDC relations. EFFECT OF PREPCON ON U S. ENERGY POLICY We regret that the Prepcon did not succeed. We remain willing to participate in a multilateral conference, if one can be arranged that concentrates on energy. But we do not expect our own energy policies to be affected in a major way by the suspension of the Prepcon talks. Our overall energy policy, pursued both in the United States and in coordination with other IEA countries, will continue to be to bring about a basic shift in the supply/demand balance in the world oil market. This will reduce our vulnerability to foreign supply disruptions, reduce the ability of a small group of countries to manipulate world oil prices arbitrarily and enable prices to approach their longterm equilibrium level. The focus of our international efforts will remain in the IEA. We intend to insure that momentum is maintained as we press ahead to implement the conservation and accelerated development programs. The Prepcon proved that other IEA members share our belief in the necessity of consumer solidarity. They, too, believe the IEA has a key role to play in dealing with the energy problem. They will, we think, work with us to insure that the IEA's importance and influence will increase in the future. Given the leading role which the United States has played in the development of the International Energy Agency, it is most important that the United States accede to the agreement on the international energy program without reservation. The United States is now applying the agreement provisionally pending adoption of the requisite implementing legislation by Congress. Unfortunately, the legislation currently under consideration in the House of Representatives would not permit us to adhere to the international energy program without reservation. Specifically, this legislation does not fully meet vital IEA requirements relating to demand restraint, that is, conservation, the allocation of petroleum in case of another embargo and the establishment of a petroluem reserve. The antitrust provisions of the legislation under consideration are also deficient. While this subcommittee is not immediately concerned with this legislation, may I take this opportunity to urge you and your colleagues in the House to make every effort to promptly approve legislation which will permit the United States to accede to the agreement on the international energy program. In the months ahead, we will also seek to intensify our cooperative bilateral relations with producing governments. We have many common interests, which provide important opportunities to work together. For instance, our Joint Commissions with Saudi Arabia and Iran are making significant progress in identifying key areas for cooperation. As we build on and broaden the scope of our activities |