The United States today proposed holding a new high-level international conference in Washington to improve the world's monetary system.
The proposal, made by Treasury Secretary James A. Baker III, represents a departure for the administration and may indicate a new concern with the instability of the foreign exchange markets under the floating-rate system that has prevailed since the early 1970s.
Meanwhile, the ministerial meeting of the Organization for Economic Cooperation and Development (OECD), where Baker offered his idea, agreed to a new round of global trade talks, which the French had attempted to link to a conference on the international monetary system. Baker insisted that his proposal was not related to the French demand.
Baker told the OECD meeting that the monetary conference would consider issues raised in a study by the Group of Ten industrial countries. The study, which grew out of the Williamsburg Summit in 1983 and is to be released this summer, has concluded that no major reform is necessary but that some concrete steps should be taken to strengthen the monetary system.
The administration's timetable contemplates a conference after the International Monetary Fund/World Bank annual meeting in Seoul in October or early in 1986.
But Baker emphasized that "this will not be a Bretton Woods-type conference, because it will not deal with major reform, but rather a number of improvements in the present system." The IMF, he pledged, would continue to play "the central role" in the international monetary system. Bretton Woods, N.H., was the setting in 1944 for a global monetary conference that established a monetary system keyed to a $35 price for gold. The Bretton Woods conference, years in the planning stage, also set up the IMF and World Bank.
U.S. officials privately acknowledged that the monetary conference proposal is a shift from recent statements, such as those made by President Reagan March 25, that no new monetary review was needed.
They said they had gradually become convinced that the work of the Group of Ten should be implemented. Baker made the decision here in Paris to broach the idea, prompted by the notion of countering the French, after clearing it with Reagan. Meanwhile, the OECD ministers unanimously agreed that the new round of multilateral trade negotiations "should begin as soon as possible."
These negotiations would be held under the auspices of the General Agreement on Tariffs and Trade (GATT), a multilateral treaty that sets rules under which the bulk of world trade is conducted. The United States hopes such negotiations would lead to lower tariffs and a reduction in nontariff barriers, such as quotas and technical standards that are used to block imports. It also wants to include in the GATT rules new safeguards to ensure the freest possible trade in services, which generally are not now covered.
Baker emphasized that his proposal for monetary talks "would not in any way be linked to negotiations to liberalize the international trading system."
But France, to the disappointment of the American delegation, held out against fixing a specific date for the beginning of the new trade round.
Tonight's communique said only that "some felt this should be in early 1986." Nonetheless, all 24 nations, including France, agreed that a preparatory meeting of senior officials should take place within the GATT before the end of the summer. And American officials will try to get French President Francois Mitterrand to agree to a date at the Bonn Economic Summit May 2 to 4.
Concern over major and rapid changes in the relative values of currencies is the primary factor behind pressure for a monetary conference. The dollar, the center of the world's currency system, has gained more than 60 percent against other major currencies in the last four years. This has created enormous trade and financial disturbances in the United States and abroad.
For American exporters, the soaring dollar rates have been the equivalent of a tax on goods sold abroad, making them less competitive. On the other hand, foreign countries, although benefitting from cheaper currency rates that stimulate their exports, have been worried that their declining currencies would lead to higher inflation as the cost of their imports rose.
Meanwhile, their central banks have had to keep interest rates higher than they would have liked, hurting investment, in order to defend their currencies.
On most other issues, the ministers reached the "package deal" envisioned in advance by OECD Secretary General Claude Paye, smoothing the way to similar general statements in Bonn. This incorporates generalized language by which the countries pledged to resist protectionist pressures; reduce government-budget and international deficits; and reduce old-style labor and business rules that inhibit job creation. Japan also agreed that "an essential priority" is to facilitate further access to its markets and to encourage greater imports.
The ultimate economic goal of a U.S.-hosted conference would be to promote closer cooperation -- "convergence" -- of the major industrial economies, leading to noninflationary growth. Baker made clear that the United States thinks the way to get such convergence is by following the economic choices of the marketplace.
However, convergence also implies that countries not place undue reliance on a single policy tool, as other industrial nations have accused the United States of doing by seeking to control inflation entirely with a tight monetary policy.
Reagan administration officials were anxious to counter a French desire to control exchange rate movements by such techniques as heavy intervention in foreign exchange markets, and also did not want to see the monetary reform process guided by French politicians. "It's appropriate that the world's leading economic power play a lead role in monetary issues," Baker said.
The first French reaction to Baker's proposal was cautiously favorable. French Minister of Economy Pierre Beregovy said he considered Baker's proposal "a step forward," although he would prefer to have discussions of monetary reform in the IMF Interim Committee, which includes developing nations, rather than the Group of Ten rich industrial nations. But he said he did not object to a preparatory s
ssion in the Group of Ten.
"I think Mr. Baker and I could agree," Beregovy told reporters. "I am not an advocate of 'give me everything or nothing.' " But in formal remarks to the OECD ministerial session following Baker's address, Beregovy stressed that Mitterrand does not regard monetary reform as a process of merely improving the present system.
He cited Mitterrand's 1983 speech to the OECD, when he said the time had come "to think of a new Bretton Woods," and warned that the process had the "scale" that takes a generation to achieve.