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Deficits and dollars

It was perhaps to be expected that as the ''crisis dates'' regarding the deployment of US missiles in Europe gradually receded, economic differences would once again come to the forefront of relations between the United States and its NATO allies. The strong showing of the dollar vis-a-vis weaker European currencies has only accelerated that emphasis on economic differences.

What is now vital is that both sides of the Atlantic community ensure that the economic debate remains free of rancor - and that appropriate measures are taken to ease concerns.

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The Europeans are troubled by the soaring value of the dollar in relation to their currencies. Last week, for example, the dollar reached new highs against the Italian lira and the Belgian franc. And it continued to climb just about everywhere else as well, rising against French francs, German marks, British pounds, Swiss francs, and Danish, Swedish, and Norwegian crowns. The dollar was temporarily checked after the German Bundesbank intervened to support the mark.

In expressing concerns about the steep rise of the dollar, British Prime Minister Margaret Thatcher was surely stating what is now on the minds of many European leaders.

She urged the US to reduce budget deficits to help bring down high interest rates, which lure European capital to the US while impelling European central banks to raise their own interest rates to try to keep capital at home.

But rising interest rates in Europe can hinder private-sector borrowing, which works against that continent's still tepid recovery.

The economic dispute, however, is not one-sided. Many US business, farm, and political leaders are disturbed by what they feel is the deliberate dumping of European steel products on the domestic US market in violation of existing international trade agreements as well as the subsidizing of European commodity sales in third-world nations, thus undercutting US farm exports. In addition, some Common Market officials are calling for new trade barriers to US agricultural commodities, such as feed grain.

Surely there is little gain for either side in perpetuating trade and economic rifts. The US should move on the tax hikes and spending reductions necessary to reduce deficits. An overly rampaging dollar is hardly conducive to long-range US interests. For one thing, the soaring dollar means that US exports are priced out of competition abroad. And millions of jobs in the US are dependent on exports.

Washington would seem on best ground in moving to defuse such economic issues , before they intensify during the weeks and months ahead.

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