Surprise US shift on economic policy could ease world trade ties
Prospects for major improvements in trade relations among the world's nations improved last week as the Reagan administration announced what many believe to be an important and surprising shift in economic policy. United States Treasury Secretary James A. Baker, seeking to resolve a long-simmering conflict with the European Community, said at a meeting here that the US would be willing to organize a conference of industrialized countries later this year on reforming the international monetary system.
Some EC countries, notably France, have warned that they will not participate in a relatively new US-led initiative to liberalize the world's trading system, governed within the General Agreement on Tariffs and Trade (GATT), unless the US agreed to discuss changes in the international monetary system established at the so-called Bretton Woods Conference 41 years ago.
Some European officials at the meeting, however, took a cynical view of the US move on monetary reform, saying that it represented no shift in US policy but only a ``tactical ploy'' -- as one senior British official put it -- to take the psychological initiative and prevent the French from turning the discussions into a ``new Bretton Woods.''
This view, in fact, was buttressed to some degree by Baker himself at the two-day meeting here last week of ministers from the 24 North American, European, and Pacific countries belonging to the Paris-based Organization for Economic Cooperation and Development (OECD). Baker repeated previous administration assertions that progress in new talks on liberalizing world trade should not be tied to forward movement on monetary reform. He also rejected the French view that the existing international monetary system is in need of major overhauling.
``The current system has served us well in many respects over the last turbulent decade,'' Baker said. ``Trade negotiations can and must proceed on their own merits.''
Until now, according to the Europeans, the Reagan administration has been reluctant to admit serious flaws in the system and to acknowledge the international repercussions of its economic policies.
French Social Finance Minister Pierre B'er'egovoy welcomed the US decision to host a monetary conference later this year. He said it could represent a first step toward an overall reform of the Bretton Woods system as proposed by French President Franois Mitterrand two years ago focusing on developing ``the greatest stability'' in world currency exchange markets.
Extreme fluctuations in the value of the dollar have caused havoc with economic planning, many Europeans argue, suggesting that this has in part been the fault of the existing system of agreements on international monetary policy embodied in the Bretton Woods accord.
Some policymakers said that the US decision announced here last week could make it possible for the six countries attending the economic summit in Bonn next month to agree on a starting date for a new round of multilateral negotiations within GATT. The talks would be aimed at liberalizing trade among the world's developed and developing nations. The US has suggested that the talks begin in January or February of next year.
The OECD ministers agreed to begin the GATT talks as soon as possible, but they did not set a date.