Open Trade, Brady Urges Tokyo, Bonn

Treasury Secretary Nicholas F. Brady said today that U.S. trading partners have reduced their trade surpluses, but he said West Germany and Japan must to do more to open their markets.

Brady, appearing before the Senate Banking Committee, chided West Germany in particular for not stimulating growth in its domestic economy.

“Despite some improvement in overall growth last year, (Germany’s) current account surplus rose to record levels and is expected to rise further this year as growth in domestic demand slows,” Brady said.

“More needs to be accomplished to encourage domestic growth and to remove impediments to investment and job creation,” he said.

Brady commended Japan’s efforts to increase domestic growth but said more must be done to open Japanese markets to U.S. goods and to get the Japanese to buy their own products rather then export them.

“Japan’s trade surplus declined only modestly last year and is expected to be little changed in 1989,” he said.

He also called on Korea, a nation with a large trade surplus with the United States, to stop undervaluing its currency to get a trading advantage with other countries.

Negotiations with Korea resulted in a 16% appreciation in the won in 1988 but the currency still trails the strength of the roaring Korean economy, which registered a $14.3-billion trade surplus last year, including $9.5 billion with the United States, Brady said.

Won Growth Slowed

So far this year, the Koreans have slowed the appreciation of the won as the trade imbalance with America has eased, he said.

Brady said negotiations with Taiwan, another country with a large trade surplus, has led to appreciation of the dollar and a 26% reduction in its trade surplus with the United States to $12.7 billion in 1988.

“Our bilateral negotiations with Korea and Taiwan have achieved important progress that could set the stage for lasting, significant reduction in their external imbalances,” he said.

Brady and another senior Treasury official, sensing growing frustration in Congress about the nation’s trade gap, urged swift action to tackle global economic imbalances and warned of financial instability if no progress is made.

But the officials declined to back suggestions that the dollar should fall further to give U.S. exporters an edge in world markets.

‘Exchange Rates Welcome’

“The exchange rates we’ve had in recent months . . . and the stability in exchange markets, has been welcome to us,” said Treasury Undersecretary-designate David Mulford.

The dollar has been climbing steadily in recent days on the back of high U.S. interest rates. It climbed further today as dealers read Mulford’s remarks as implicitly endorsing the higher levels.

“The dollar is quite competitive at this stage,” Mulford said. But he also stressed that an April 2 statement by the Group of Seven industrial nations opposing a rise in the dollar remains valid.

“That would be our position today,” Mulford said.