Unless the major nations agree to a new concept of "organized free trade," the world is threatened with a return to protectionism and trade wars, French Prime Minister Raymond Barre said in an interview yesterday.
Barre said that he had outlined the French view that there must be some limits on totally free trade in conversations with President Carter and Treasury Secretary W. Michael Blumenthal on Thursday and Friday.
"I found them reassured by the fact our proposal is not a disguise for protectionism," he said in a lengthy conversation on world economic affairs in the Truman Library at Blair House.
Barre, who is minister of economy and finance in addition to being Prime Minister, also:
Warned that the world "for years to come" will suffer from "the depressive effects" of the high cost of oil. He said that until now, massive international borrowing "has been masking" the need for realistic adjustments in the oil-consuming countries.
Bluntly suggested that the proposed economic expansion measures recently announced by West Germany, France's principal trading partner, may have come "too late" to be effective this year. He said he would rather have "more modest measures," such as those he recently announced for France, that could take effect immediately.
Said the "modest" French stimulus program is now taking effect, with the goal of achieving a 4.5 per cent growth rate next year. But if the German reflationary program is not effective, the French economy is unlikely to grow more than 4 per cent, he said.
The French proposal for "organized free trade," which has been made in the past few months by Barre and French President Valery Giscard d'Estaing, worries some trade partners, who fear it is a euphemism for cartelization, or a division of markets.
Barre brushes this off as "ridiculous," saying that France, the world's fourth-largest exporter, strongly supports multilateral trade negotiations and a steady growth in world trade.
At the same time, he acknowledges that France seeks some "collective rules" that will allow "orderly" growth of trade, and limit the ability of some nations to succeed in a "massive penetration" of other countries' domestic markets. A French background paper on the subject notes "that to apply the principle of free trade as an absolute dogma can be very harmful."
To those who fear that "collective rules" imply some sort of restraint, he pointed out that the General Agreement on Tariffs and Trade (GATT) - the overall guiding set of principles for world trade - is itself "a set of collective rules."
He believes, in fact, the French demand for "organized free trade" on a multilateral basis is less protectionist than the American device of unilateral "orderly marketing agreements" (OMAs). To stem the influx of Japanese television sets and Korean and Taiwanese shoes, the United States earlier this year signed OMAs with the three Asian countries.
In his best diplomatic manner, Barre smiled that the OMAs might be considered "a lesser evil" than ever more restrictive action that might have been taken, but said it would be "very dangerous" if OMAs multiply because that would lead to "disorganization of international trade."
France's main industries hit by import competition, he said, are shipbuilding, steel and textiles. He told a sympathetic President Carter that in the first six months of 1977, textile imports from South Korean, Taiwan, East Asia and India has increased from 60 to 100 per cent over imports for all of 1976.
"We've asked the GATT for relief on textiles," Barre said. "We would accept a 10 to 15 per cent annual increase, why not? But we want an orderly growth of trade, not an anarchic growth that would have disastrous effects."
In shipbuilding, he complained that France has a staggering unused capability because other nations subsidize their builders. "We need to talk to Sweden, Japan and Great Britain on this question," he said. As for steel, he argued that the entire European steel industry is in disarray and needs some sort of relief.
He plans to talk to the U.S. main trade negotiator, Special Trade Representative Robert Strauss, in Paris on Monday on textile and other trade matters.
The protectionist question has arisen with new urgency in the past year because of the persistence of balance of payments surpluses earned by the oil cartel.
The ability of many developing as well as industrial nations to concentrate on a given product - like textiles or small appliances - has given them a competitive edge over the often older and less efficient industries in larger countries.Shoes in the United States and textiles in France are good examples.
Barre said that where there is "massive penetration" of a domestic market by importers, the question might raised whether or not there is a "monopoly" that could be dealt with on the international level in a manner similar to monopolies in the national economies. This "antitrust" approach is one of many possibilities in the "organized free trade" concept, Barre said.
On the question of West German expansion, Barre said the matter of timing is all-important. "If the German measures are decided [upon] in October, but enter in application next year, it will be too late. I like better, more modest measures, implemented at once."
After tense internal debate, the Bonn government last week proposed to pump an additional $5 billion into a weakening economy. Even so, the preponderant opinion in Germany is that economic growth will be limited to 4 per cent against the promised target of 5 per cent.