The United States today criticized other western industrialized nations at the annual ministerial meeting of the Organization for Economic Cooperation and Development for failing to move toward eliminating export subsidies known as "tied-aid credits."
The two-day meeting ended with a statement urging the 24-nation group to take advantage of falling oil prices and lower inflation to coordinate trade and macroeconomic policies. The statement also called for a comprehensive agenda for a new round of trade talks to begin in September under the auspices of the General Agreeement on Tariffs and Trade.
U.S. Secretary of Commerce Malcolm Baldrige described the general support for the new GATT talks and the agreement to coordinate long-term growth policies as "major accomplishments" of the meeting. He said that the United States was "profoundly disappointed" that the ministers had not made progress on the controversial issue of tied-aid credits.
Tied-aid credits mix loans and direct subsidies to encourage exports. In a typical deal, France might encourage exports of airliners by giving the buyers loans to finance the purchase and throwing in direct grants to sweeten the deal. The United States has sought to discourage the use of such mixed credits by insisting that the grant should be at least 50 percent of the deal. Smaller grants are little more than hidden rebates, U.S. trade negotiators contend.
In response to the use of tied-aid credits, the United States last year offered highly subsidized financing to win export sales for American companies battling French and other European competitors. The Export-Import Bank of the United States said last week that U.S. companies had won two of those contracts, and appeared likely to win a third.
In an unusual gesture, Baldrige singled out Japan and the European Community countries for blocking discussion on the credit question. He said that Japan refused to discuss the very low interest rates it charges on credits, while the European Community would not raise the proportion of compulsory aid.
"Much more work needs to be done in future to bring this predatory practice under control," Baldrige said.
U.S. Trade Representative Clayton Yeutter said he was pleased by the broad agreement on the need to include agricultural protection problems in the new GATT round. The United States and the EC countries have warned of the danger of a trade war over subsidized agriculture.
Expressing concern over the "recent escalation of tensions" in the international grain trade, the joint OECD statement called for efforts to bring down subsidies on agriculture and to correct market imbalances.
The ministers said they supported a "comprehensive agenda" for the new GATT round, including the issues of trade in services, foreign investment and intellectual property rights such as patents.
This year's OECD meeting -- whose chairman was Turkish Premier Turgut Ozal -- took place against a background of falling interest rates, lower oil prices and lower inflation in the major industrialized countries. Revising its annual projections, the OECD secretariat forecast that economic growth among its members will average 3 1/4 percent this year and next, up from the previous projection of between 2 1/4 and 2 1/2 percent.
The OECD said that, on the assumption of a $15-a-barrel price for oil, the average inflation rate in the industrialized countries would fall to below 3 percent next year for the first time in two decades. This compares with the previous prediction of 4 1/2 percent this year and next.
The joint statement said that countries with large current-account surpluses, such as Japan, would take steps to increase domestic demand and imports. It repeated a call made last year for the United States to take action to reduce its deficit by cutting public spending.
U.S. officials said they hoped that the meeting, along with the western economic summit in Japan, would lead to action to close the "growth gap" between the United States and its major trading partners.
The ministers called for the intensification of efforts to "improve the functioning of the international monetary system." They said that concerted action had helped make exchange rates "more consistent with economic fundamentals" -- but refused to say whether they thought the dollar should fall further.
The final communique did not set a date for the GATT talks, but OECD Secretary-General Jean-Claude Paye said it was "common wisdom" that they would be held in September.