Playing It Cool
Since the first seven-nation economic summit meeting was held 10 years ago, the annual get-togethers have been long on oratory and short on concrete accomplishment. Still, the summit that will open in Bonn on Thursday could give events a helpful shove in the right direction.
President Reagan, whose serious purposes at the summit have been overshadowed by the uproar over his unfortunate decision to visit the Bitburg cemetery, has two major goals. One is to urge the Japanese and the Europeans to stimulate their economic growth to take up the slack as the U.S. economy loses its vigor. The second is to win a firm commitment to a new round of world trade negotiations beginning early next year.
The other leaders are more interested in talking about the strains that are being imposed on the global economy by the huge U.S. budget deficit and the related phenomena of high interest rates and a bloated dollar.
The concern over the U.S. deficit is justified. If Reagan’s counterparts from Japan, Great Britain, France, West Germany, Italy and Canada can bring effective pressure on Congress and the Administration to do something real about the problem, that alone will make the summit worthwhile.
However, the other heads of state will do themselves and the world a disfavor if they dismiss too lightly the American call for cooperation in maintaining world economic growth and resisting a potentially disastrous slide toward protectionism.
Some influential elements in both Japan and Western Europe support the American call for steps to stimulate economic growth in their countries both as a contribution to world economic health and, in the case of the Europeans, as an antidote to high rates of unemployment.
Unfortunately, from the U.S. viewpoint, the European governments are not prepared to go along, because they fear that expansionary moves would reignite inflation. There is also a concern in some quarters that the chief beneficiaries of economic stimulus would be American exporters rather than their own industries. As seen from Washington, this is understandably considered an opportunity rather than a problem.
France threatens to block agreement on a new round of world trade negotiations unless there is parallel movement toward a new world monetary system. There is indeed a strong case for a less volatile monetary arrangement, and the United States should be willing to address the issue seriously. But the lowering of trade barriers--and, more important, the negotiation of safeguards against new barriers--should not be held hostage to progress in monetary reform.
What the Europeans should comprehend is the strength of the protectionist tide in Washington, arguably no greater than the norm in other countries, and the peril to the international trading system if U.S. industries don’t get a fair shake in world markets.
The new round of trade negotiations proposed by Washington should help diffuse the protectionist pressures. It follows, however, that if the negotiations don’t take place and U.S. industries are foreclosed from enjoying the competitive benefits of a falling dollar, the Europeans and Japanese are going to be the targets of strong, even irrational, reactions in Congress.
If ever there was a time for cool heads and generous hearts, this is it.
