This was a discussion in prelude to the signing of the Treaty on the Final Settlement with Respect to Germany [1]. Baker's is a statement of understanding the "Soviet Union [and] other European countries'" position, not an agreement--not even the hint of one. None of it made it into the final Treaty. Lots of ideas were mooted and abandoned in that transcript; it's revisionist to fixate on that one. (As, again, Gorbachev himself publicly admitted.)
Also, immediately following that statement, Baker says that he does not "have the Germans’ agreement to this approach," and that what he has relayed is "an account of this approach," holding that "maybe something much better can be created." Two men discussing ideas in pursuit of an agreement, which was drafted days and signed months thereafter.
[1] https://en.wikipedia.org/wiki/Treaty_on_the_Final_Settlement...