THE VENICE SUMMIT : Protectionist Trend Assailed : But Leaders Fail to Take Steps to Counter Pressures

The seven leading industrial democracies wrapped up their three-day economic summit conference Wednesday by strongly condemning increased protectionist pressures, but they were unable to agree on strong steps to counter the trend.

The seven leaders placed their hopes of preventing a global economic downturn in establishing a stronger “early warning system” for coordinating international economic policy and in a new round of trade negotiations focused on the need to reduce farm subsidies.

Leaders of the United States, Japan, West Germany, France, Britain, Italy and Canada agreed to continue efforts to stabilize currency rates but avoided endorsing any specific new policies to help ease trade imbalances.

They called for extending special help to relieve the debt situations of the world’s poorest nations, primarily in Africa, but the United States was instrumental in watering down any endorsement of a minimum goal for the seven governments’ own aid to Third World countries.

Despite only modest progress in overcoming the international economic policy impasse, top officials praised the conference as a success. British Foreign Secretary Geoffrey Howe said the annual meeting is important as a form of “international group therapy” for the participants.

Few Signs of Breakthrough

But there were few signs of any breakthroughs in resolving long-standing differences over economic policy.

Several leaders expressed concern about slow growth in West Germany, but Chancellor Helmut Kohl dug in his heels at Tuesday’s session by insisting that West Germany has “gone to the limits” in stimulating its economy.

And President Reagan, rather than concede to critics that his Administration needs a stronger approach to reducing the U.S. budget deficit, countered by pointing out that the United States has made more progress in cutting its deficit in the past four years than any other country.

The leaders, while citing “a number of positive developments since we met a year ago” in Tokyo, conceded that new economic measures may be needed to promote further growth.

“You shouldn’t look for major macroeconomic policy initiatives every two or three . . . months,” Treasury Secretary James A. Baker III told reporters after the conference ended. “But the commitment is there . . . of taking additional action if growth falters.”

The participants papered over their differences on farm subsidies and on aid to developing countries. Although Reagan, in a speech last Friday upon arriving in Venice, had called for a commitment to end farm subsidies in the seven countries by the year 2000, the final statement issued Wednesday mentioned no date and only urged a “progressive and concerted reduction of agricultural support.”

“There was not sufficient additional support for putting a fixed date in there,” Baker said. “I think it’s probably an objection coming from the European Community.”

In the past few years, farm subsidies have risen to record levels both in Europe and in the United States, producing a worldwide glut of farm products and depressed prices. European political leaders are worried about the political consequences of major cuts in the traditional subsidies paid to their farmers.

Canadian Prime Minister Brian Mulroney, who had pressed for a strong statement on farm subsidies, warned that “this ongoing war between the United States and the Community” over farm support payments threatens to wreak budgetary havoc in other major agricultural countries.

On aid to the Third World, French President Francois Mitterrand complained that the final statement, which merely “recalls” an old U.N. target of 0.7% of gross national product for official development assistance to developing countries, “is not sufficient.”

A French spokeswoman said that a stronger statement, which received widespread support in nearly an hour of discussion at Wednesday’s final session, was vetoed by Reagan even though he did not take part in the discussion.

U.S. officials, explaining their opposition to endorsing a minimum level of aid, said the Reagan Administration believes it has made a more valuable contribution to helping the Third World by keeping its markets more open to goods from developing nations than the other countries reresented here.

While urging consideration of special concessions to the poorest developing nations in Africa, the participants deferred endorsement of various proposals to substantially increase multilateral aid through the International Monetary Fund.

Praise for Japan

Japan, which has often been the target of criticism at these meetings, this time was the only nation singled out for praise in the formal statement, winning support for its proposed $20-billion aid package to developing countries.

The seven leaders, endorsing the work of their monetary officials over the past year, put their stamp of approval on a plan to monitor each major nation’s economic performance by using certain indicators. Although they refused to identify the indicators, it is expected that the seven nations’ finance ministers and central bankers will meet at least three times a year to review various economic performance standards, including growth rates, inflation, fiscal deficits, trade balances, monetary growth and exchange rates. The mix of indicators could vary from year to year.