As leaders of the seven major industrial democracies gathered today for an economic summit in Versailles, American officials said that the United States has moved "toward an agreement" with the other nations on all economic issues except the thorny problem of subsidized Western credits to the Soviet Bloc.
President Reagan joined the other heads of government tonight for informal discussion over dinner at the heavily guarded palace of French kings, 12 miles south of Paris. The leaders--Reagan, British Prime Minister Margaret Thatcher, French President Francois Mitterrand, West German Chancellor Helmut Schmidt, Italian Prime Minister Giovanni Spadolini, Japanese Prime Minister Zenko Suzuki and Canadian Prime Minister Pierre Elliott Trudeau--are meeting this weekend in an effort to find a way to revitalize their recession-plagued economies. Also joining in the dinner tonight was Common Market Commission President Gaston Thorn and Belgian Premier Wilfried Martens, the current president of the Common Market Council of Ministers.
Secretary of State Alexander M. Haig Jr. told reporters that based on the discussions he had in the past few days, "the Versailles summit will give evidence of Western solidarity in the days ahead."
But officials did not pretend that the summit could achieve such solidarity except by resorting to general language and by bypassing contentious problems. No one should expect, said Treasury Secretary Donald T. Regan, that the summit could do anything to solve the unemployment problem in Detroit.
"This summit is not going to remake the world in two days," added Assistant Secretary of State Robert Hormats. But officials argued that they were content with "progress in a few areas" that will pay dividends over the longer term.
One of these areas, which is of symbolic importance, is being touted by the Americans as heralding a new era of economic policy coordination. It is to be achieved primarily through a form of "peer pressure" applied by the International Monetary Fund.
For example, if the IMF recommended to a member nation that the nation change its economic policies, the IMF would report its conclusions not only to that country--as it now does--but to the others.
At a briefing late tonight after a dinner with his colleagues at Versailles, French Finance Minister Jacques Delors said that agreement had been reached on this new system.
"The new fact . . . is the political will of all the participants at the summit not just to study the problem, but to try to obtain results," Delors said.
He revealed that deputies to the large nations' finance ministers would begin work immediately on details of the system and had been instructed to report back by the end of July. Delors predicted that a final report would be ready in time for the annual meeting of the IMF in Toronto, Canada, in September.
The Reagan administration has not abandoned its policy of intervening in the exchange markets only to help correct "disorderly" conditions. But the American initiative was welcomed by the Europeans as a step in the right direction. Secretary Regan said today "that in the area of monetary policy, we are suggesting that more cooperation is needed."
To Europeans, who long have complained about American "benign neglect," the U.S. willingness to solicit other views on international monetary affairs represents a step forward by the Reagan administration. Europe expects, moreover, that Americans will soften their rhetoric about economic intervention.
The Japanese decision before the summit to drop more trade restrictions ends the threat of what could have become an acrimonious--even a nasty--debate on Japanese trade surpluses. President Reagan and Japanese Prime Minister Suzuki had a one-hour meeting today, and Reagan--through Haig--went out of his way to praise the Japanese step.
On other trade issues, the summit declaration is expected not only to incorporate generally standard antiprotectionist language but to endorse--at least in broad terms--widening of the scope of the General Agreement on Trade and Tariffs at its meeting this fall. U.S. officials concede, however, that the communique will not be as specific as they would have liked, "because these are not easy issues."
For example, the American pressure on Europe to quit dumping surplus sugar on world markets is not expected to be resolved here. Nor is the United States expected be able to persuade its partners to drop some of the international restrictions they now apply to such services as data-processing.
An inoffensive paragraph or two on energy is expected in the final communique, in which the leaders will praise their own earlier wisdom in curtailing oil imports, coupled with a warning that despite the oil glut, the energy problem is far from solved.
Despite a published report that the United States would go along with "global negotiations" to stimulate Third World progress as a "trade-off" for progress on the issue of export credits to the Soviets, a high official said flatly that there would be nothing of substance on North-South matters in the communique.
On the export credits issue, the United States continues to argue that by lending the Soviets money at below commercial market rates, European countries--notably France--are subsidizing the Soviets at the expense of Western taxpayers.
Treasury Secretary Regan went as far as referring to this process as "propping up your enemy."
There was a hint that if the Europeans agree to abandon their policy of subsidizing loans to the Soviet Bloc, the United States might relax the ban it has imposed on compressors and related equipment for the Soviet gas pipelines to Europe.
"The president will make no decision on the equipment for the pipeline until after the summit," Regan today said. "He wants to see what the other leaders say [about export credits] at Versailles. Then he'll make up his mind."
Reagan's intention reportedly is to make that decision only after returning home, following his trip to Britain, Italy and West Germany next week.