Surviving a boycott by the French, an American-sponsored meeting of trade and finance ministers and other representatives of eight major nations ended here this morning. As expected, it reached no conclusions, but was labeled a success by its sponsors.
"It was a remarkable meeting, and one that was long overdue," U.S. Trade Representative William E. Brock told reporters. Along with Treasury Secretary Donald T. Regan, Brock has been arguing that trade, finance, debt and interest rate policies are closely interrelated, but that trade and finance ministers normally have little communication with each other.
Regan said the meeting, which included a dinner Tuesday night, was "unusual" for an international session in terms of its informality and candor. "It proved that finance and trade ministers can sit down at the same table without contaminating each other," Regan said.
But some of the Europeans who attended appeared puzzled by the American initiative. In European bureaucratic practice, a meeting is seldom called by one country unless it has something specific to propose to the others.
Regan and Brock, however, merely wanted to get a consultative process started, and said they believe enough interest was evidenced at the first session to warrant further meetings. But no specific schedule for additional conferences was called.
For some time, Brock has voiced feelings that trade is being disrupted by the wide swings in exchange rates, and that the impact of this is sometimes not fully understood by all trade ministers. Regan has said that Third World debt problems cannot be solved by financial bailouts alone. He sees the need for Third World countries to have increased opportunities to sell their goods to the developed nations.
The two American cabinet-level officials brought these matters up to representatives of all seven summit countries except France. They were joined by representatives from Holland and Switzerland, as well as officials from the Organization for Economic Cooperation and Development, the General Agreement on Tariffs and Trade, and the International Monetary Fund. IMF Managing Director Jacques de Larosiere took part in this morning's session, explaining the critical nature of the Third World debt problem, and how it affects the task of trade ministers.
Regan said that "these relationships are particularly important at this juncture because we have quite a few debtor countries whose ability to continue in the international trading arena has been questioned because of constrictions they have had to impose on themselves, as far as trade is concerned."
Both Brock and Regan said that considerable time was spent on the question of exchange rate volatility. One trade minister, whom he wouldn't identify, suggested "target zones" to keep exchange rates closer together, Regan said, "but he quickly got batted down."
They both agreed, however, that the "high valuation of the dollar is creating a trade problem."
Regan, as he has many times before, said that in the short run, coordinated intervention can be successful, but that intervention over the long run is not the basic solution to underlying economic problems.
Brock quickly interjected at a press conference today that trade ministers "understand that intervention doesn't change fundamental market reality. But there is a feeling that excessive swings in exchange rates can have a damaging effect on the trading opportunities that we collectively have."
Brock also said that there was agreement that in making macro-economic policy, countries must take into account the potential impact of their policies on their trading partners. This was also reiterated in the communique of the ministerial session of the 24-nation OECD that concluded yesterday.
The specific question of the dollar's overvaluation against the Japanese yen and the West German mark "and what could be done to get the dollar down" was raised at this morning's session, Regan said.
"We do agree in the United States that high interest rates are causing the dollar to remain unusually strong, and whether there's evidence or not, there is a perception that this is caused primarily by our high budget deficit," Regan said. He said he and Brock "agree that we should be working with the Congress in order to get those deficits down, particularly in 1984, and in the out years."
Brock added, "There is another side of the coin to the high interest rate problem: other countries can and should take steps to alter the mix of their fiscal and monetary policies."