U.S. and West German economic officials yesterday warned Congress against taking retaliatory steps in response to perceived Japanese protectionism, arguing that it would endanger the multilateral trading system.
Allen W. Wallis, undersecretary of State for monetary affairs, told the U.S. Council for International Business in New York that "bilateral efforts are of limited effectiveness" in rolling back protectionism and negotiating greater market access.
A major theme of the heads of government economic summit in Bonn May 2 to 4 will be securing "a clear commitment to a new round of formal, multilateral trade negotiations" with the General Agreement on Tariffs and Trade (GATT) that might begin by early 1985, Wallis said.
Much the same view, but in even stronger language, was outlined to reporters by West German Economics Minister Martin Bangemann, who said that congressional efforts to direct President Reagan to retaliate against Japan could start "a trade war."
Bangemann is here for talks with Secretary of State George P. Shultz, U.S. Trade Representative William E. Brock and other top officials, prior to next week's meeting of finance ministers at the Organization for Economic Cooperation and Development in Paris.
"It is very sad to see the congressional effort at retaliation against perceived Japanese protectionism," Bangemann said. He argued that the congressional moves come at a bad time. "It's a pity, because it's not the right atmosphere in which a new round can be launched," he said.
Bangemann conceded that it is difficult for foreign manufacturers to get into the Japanese market, but he said that West German exports to Japan increased 20 percent last year.
Where Japanese access is made difficult, "we have to look for other measures," he said. He suggested that it is wrong to blame the Japanese government for "what takes place in the market" as a consequence of Japanese cultural and other differences with the West.
But the views of Wallis and Bangemann appeared to diverge sharply on another issue. While Wallis called on the four major European summit countries to step up their economic growth, which lags behind that in North America and Japan, Bangemann indicated that West Germany will resist new efforts at the summit or elsewhere to undertake further stimulation.
He said that West German economic growth last year, this year and next year will be about 2 1/2 to 3 percent annually in real terms, and that the growth rate represents "a stable upswing" that satisfies the Kohl government.
"We've already done a lot, and we don't want huge deficits in the budget," Bangemann said firmly.
Wallis, the U.S. representative on a committee that is making preparations for the summit, indicated that Reagan will tell his counterparts at Bonn that the economic goal of the United States "is to do more of the same -- there is no point in backsliding into unsound policies when the policies we are pursuing are working."
The two main items on the agenda will be eliminating "structural barriers" -- especially in the labor market -- that the United States feels are holding back European growth, and launching a new trade round.
Other issues will include the need to promote Third World growth, further possible action to help sub-Saharan Africa, international cooperation to protect the environment, efforts to develop a manned space station and discussion of how to minimize the impact of potential disruption of energy supplies.
Wallis was critical of the "fact that the summit countries themselves have left a great deal of unfinished business in their efforts to ensure a sustained, noninflationary recovery." The United States "must cut excessive spending," reform the tax system and pursue further deregulation of markets, he conceded.
Wallis said that Japan "has a particular need to accept more fully the responsibilities of western economic leadership" and to honor its commitments to open up its markets.
But, Wallis said, "the most serious structural barriers to vigorous economic growth are in Europe," where the number of jobs hasn't grown at all since 1970, in comparison with a gain of 27 million jobs in the United States.
This long-term stagnation "contains the seeds of political and economic instability, of weakness to the alliance and damage to the world economy," Wallis said.