U.S. Wants 3 Trade Partners to Do More to Cut Surpluses

The Bush Administration on Friday named South Korea, West Germany and Japan as nations that need to do more to cut the huge trade surpluses they are running with the United States.

The Administration’s assessment, delivered by Treasury Secretary Nicholas F. Brady and Undersecretary-designate David Mulford, was particularly critical of West Germany and South Korea.

The officials, testifying before the Senate Banking Committee, indicated that those two countries needed to make significant changes in policy to promote reductions in global trade imbalances.

Mulford said pointedly that discussions with South Korean officials had at times been “quite frustrating.” While some progress has been made in getting the government to allow its currency to strengthen in relation to the U.S. dollar, Mulford said more needed to be done in this area to make U.S. goods cheaper in South Korea.

Earlier this week, South Korean Deputy Prime Minister Soon Cho met with Administration officials in Washington to discuss trade. Cho told reporters he was resisting pressure to allow the Korean currency to appreciate further against the dollar.

In his testimony, Mulford said negotiations with South Korea were continuing and he said he hoped to be able to report progress by Oct. 15, when the law requires the next report on currency negotiations to be presented to Congress.

Mulford said the requirement in last year’s trade law for the Administration to target countries unfairly manipulating their currencies to boost their trade surpluses had been helpful in the ongoing negotiations with South Korea and Taiwan.

Brady said Taiwan had made more progress in the currency area. He said Taiwan’s currency may now be at the proper level, given the fact that it has risen 12% against the dollar since October.

Mulford indicated that the Administration was satisfied with the dollar’s current level against most major currencies.

But Brady said the Japanese need to do more to open their markets to foreign goods, especially in view of the fact that Japan’s trade surplus fell only modestly in 1988 and is expected to be little changed this year.

Brady was more critical of West Germany, stating that progress made by that nation in reducing its trade surpluses “has been less satisfactory” than in Japan.