EC Calls for U.S. to Cut Deficits and Japan to Open Its Markets
The European Community pleaded strongly on Tuesday for the United States to cut its budget and trade deficits and for Japan to help boost the world economy by opening its markets to foreign goods.
Willy de Clercq, EC external relations commissioner, made the appeal at a news briefing called as ministers and senior trade officials began a three-day meeting of the 95-nation General Agreement on Tariffs and Trade.
Major countries should coordinate economic policies to restore confidence after the turbulence in the markets over the last six weeks, he said.
“It is a crucial moment. We must give a clear signal to restore confidence,” he said. “The United States must make a serious effort to eliminate the disequilibrium in its budget and trade positions.”
The U.S. trade deficit may top the record $156.2-billion deficit of 1986 and the budget gap may exceed the $148-billion deficit of last year, experts say.
“Japan must integrate itself better into the international economy and assume responsibility for the economic power it has become,” De Clercq said. “It must open its markets.”
He also said that as the United States grappled with its deficits, the 12-nation EC trading bloc should be prepared to step in and pick up the slack in economic growth.
U.S. Special Trade Representative Clayton K. Yeutter and Japan’s Foreign Minister Sosuke Uno were among the speakers in the morning session who called for strengthening GATT, which governs about 80% of world trade.
Ministers were reviewing progress in the first year of the four-year Uruguay Round of trade negotiations. More than 100 countries are taking part in the ambitious negotiations to reduce trade barriers in 14 areas, including agricultural and manufactured goods as well as service industries.
Yeutter told delegates that GATT had to “relentlessly pursue the objective of a more free and open trading system for all.”
He called for vigorous surveillance of trade policies to ensure that countries do not adopt protectionist measures. Ministers should play a more active role in the trade talks, he said.
Yeutter said the pace of GATT’s dispute mechanism for settling bilateral trade rows should be quickened, and added: “Governments cannot and will not sit idly by when actions by other governments disrupt vital commercial interests.”
Japan’s Foreign Minister Uno said GATT was being undermined by protectionism, including excessive export subsidies. “What we must do today is to make concrete efforts, step by step, to build up a steadfast free trading system that will be able to repel all the threats emanating from the present crisis,” Uno said.
Japan Promises Action
He called for accelerating the Uruguay Round of negotiations so that firm results would be visible by the end of 1988.
Uno also said Tokyo will make a formal proposal later this month on breaking down barriers to free trade in agriculture. “The principle lying in the core of the prospective Japanese proposal is to make the market mechanism more effectively operate in agricultural trade in the long run.”
Mahbub Ul Haq, Pakistan’s minister for commerce and planning and development, sharply criticized U.S. economic policy. “The real message of the recent stock exchange crash is that the U.S. dollar is likely to be phased out as an international currency over the next decade,” he said. “The search for a new international central banker must begin.”
Ul Haq, a former senior World Bank official, said the United States had played that role. But, he added: “Growing budget and trade deficits, high interest rates, reckless borrowing from the rest of the world were certainly not acceptable as virtues in a central banker, and the consequent loss of confidence in the U.S. dollar and its quiet demise as an international currency were, therefore, quite predictable.”