High-level U.S. trade officials have spent the better part of the last two months putting the arm first on West Germany and more recently, and more importantly on Japan.
The U.S. aim is clear: the Germans and the Japanese, who have been racking up massive trade surpluses should do their part to help out the world (and not so incidentally, the U.S.) economy by taking steps to stimulate their economies and their demand for foreign goods as well.
Officials have long attributed the massive 1977 trade deficit to a $45 billion oil bill the U.S. could do nothing about and an unexpectedly slow recovery from the 1974-75 recession by the nation's major trading partners.
The United States has long felt that Japan and West Germany - which, like most of the rest of the industrial world, has grown faster than the United States for most of the postwar years - could do something about their slow economic growth.
After all, the United States had. After suffering the worst recession since the Great Depression, beginning in the spring of 1975, the United States began an economic recovery that has created millions of jobs.
But now, even as diplomatic missions crisscross the globe in an attempt to get the Germans and Japanese to stimulate their economies, at the Treasury and elsewhere have become concerned that a fundamental change in the economic relationships among Western nations might have occurred.
It may be that the United States, long the laggard in economic growth, might now possess a more stable, faster-growing economy than its industrial neighbors.
"It's too early to tell yet," according to Assistant Secretary of the Treasury C. Fred Bergsten, but the historical trend of the rest of the industrial world growing faster than the United States may have been reversed.
"In the last couple of years," notes Bergsten, the United States has been growing at a 5 per cent rate, while the rest of the industrial countries that belong to the Organization for Economic Cooperation and Development have been growing at about a 3.5 to 4 per cent pace.
That growth differential goes some way toward explaining why U.S. exports have lagged while U.S. imports have leaped, but it also explains why the international value of the dollar has not declined as much as might be expected with a $30 billion trade dificit.
The massive deficit (it was a $2 billion deficit in 1976) means that Americans are putting a lot of dollars into the world markets as they exchange them for yen, Deutschemarks and other foreign currencies to buy the Japanese, West German and other goods they desire.
Since Japanese, German and other consumers do not want nearly as many American goods (and by extension not nearly as many American dollars), the value of the dollar should have been falling precipitously all year as the deficit mounted.
But, as Bergsten noted, the dollar did not really begin to decline until November. In large part, that occurred because foreigners were taking those dollars and making investments in the United States.
That, the former Brookings economist said, is the second effect of a greater growth rate in the United States than abroad.
While the trade account suffers, the capital account is helped. If the United States is perceived as enjoying a rapidly growing, steady economy, foreign firms will be eager to invest here. Perhaps equally importantly, U.S. companies will invest more of their money at home and less abroad.