Summit closes with economic focus. US wins support for plan to increase monetary cooperation among industrialized nations
As the 12th annual economic summit of industrial democracies drew to a close, the participants finally turned their attention to financial issues, which until yesterday had taken a back seat to political topics. A plan drafted by the United States to increase international economic coordination and thereby decrease wild swings in currency values was the most striking element of the ``Tokyo Economic Declaration'' issued yesterday, the final day of the summit. The plan's success is far from assured, since it relies on peer pressure to force painful policy choices. But if successfully applied, it could have significant effect on the global economy and thus on the average individual.
``The guy on the street should care, because we live in an interdependent world,'' says US Treasury Secretary James Baker III. ``And to the extent that we can have a more cooperative effort at international economic policymaking, policy formulation, and implementation, I think we are all better off.''
Like most economic summits, the three days of meetings in Tokyo are expected to have accomplished less than the inflated rhetoric of Tuesday's final economic communiqu'e would indicate.
But the Tokyo summit was notable in some respects. It featured a greater emphasis on political topics -- chiefly terrorism and nuclear safety -- than previous summits. Terrorism reared its head again Tuesday, when nearly a score of small bombs exploded in subway stations here. And the inevitable policy disputes among leaders of the seven nations were accompanied by less acrimony than at last year's Bonn summit, participants say. In part, Secretary Baker conceded, that is because ``economic conditions worldwide are generally better than usual.''
``It was an extremely successful summit for all of us,'' President Reagan said yesterday.
The summit leaders' support of the US plan for improving the operation of the world monetary system is a victory of sorts for the US. The plan helped the US avoid giving in to calls from West Germany and Japan for intervention in currency markets to keep the dollar from weakening further.
While the US had some success selling its point of view on international economic coordination, it took home half a loaf or less on other issues of importance to the Reagan team. For example:
The US did not get a commitment from Japan or West Germany to take steps to boost their rate of economic growth. The US wants these two partners to allow their economies to grow faster so that they will pull in additional US exports and narrow the US trade deficit. Mr. Baker warned that without higher growth elsewhere, a US recession might be the only way a politically intolerable US trade deficit could be reduced. Trade deficits can fall in recessions because consumers do not have money to buy imports.
The US did not get the firm date it had sought for the start of another round of multilateral trade talks under the auspices of the Geneva-based General Agreement on Tariffs and Trade, known as GATT.
At a briefing for reporters Tuesday, Baker expressed satisfaction that the summit partners had agreed to include the new issues of trade in services, foreign direct investment, and protection of intellectual property rights on the GATT agenda. He said the odds are good that a new trade round will start in September, when GATT ministers are slated to meet.
The partners did not agree on a way to head off the dispute between the US and the European Community over agricultural trade. The EC has announced plans to restrict imports of certain US farm products, and the US has announced plans to retaliate. Baker has warned that the dispute could degenerate into a trade war.
White House chief of staff Donald Regan said on NBC's ``Today'' program that ``there was a big breakthrough in agriculture.'' He explained that ``for the first time, agriculture was not only discussed at the summit in detail, but there was common agreement that the practices of nations in subsidizing is what's causing the problem.''
Other nations also got less than they hoped for. Japan had sought an agreement to intervene to bring down the yen's value, which has soared recently. It did not get such an agreement. [See story, Page 9.] And Italy and Canada, which had sought full membership in the monetary-policy-setting Group of Five, were granted access only when certain topics are discussed.