As President Reagan flies to Germany today for the annual conference on the world's economy, his administration's views seem to be changing. In his first term, the United States didn't see the need to pay much attention to international trade and growth. It assumed that American prosperity would keep rising comfortably, thanks to the Reagan tax cuts, and would draw the other countries along with its own momentum. But now there's a gigantic American trade deficit, accompanied by warnings that the economy here may be slowing down.
The United States is becoming more receptive than at any time in the past four years to the idea of working cooperatively with the other large industrial democracies -- the six that will also be represented at Bonn. Earlier this month Secretary of State George P. Shultz drew the connection between this country's internal budget deficit and its unbalanced foreign trade. Then Secretary of the Treasury James A. Baker proposed a conference on the international monetary system -- a subject that the United States had been avoiding because it did not wish to get drawn into arguments about the relationship of the budget deficit to the sky-high exchange rate of the dollar. The United States is now acknowledging its responsibilities for the distortions that run from its domestic economy to those of its trading partners.
What are the other industrial countries' responsibilities? Just as the United States has to get its trade deficit under control, Japan has to get its trade surplus under control. There, too, progress is coming slowly.
Europe's growth rates currently depend heavily on exports to the United States.
As the American economy decelerates, Europeans -- and especially the Germans, whose economy is the European powerhouse -- need to find other ways to keep their own expansion going. A lot of Europeans understand that they have become too dependent on a temporary export boom across the Atlantic. But there's not much indication that they are looking for other ways to keep their engines running.
The past three of these annual summit conferences have been only modestly useful. They all gave great emphasis to the push for lower inflation, which was an important contribution. They also gave great attention to unemployment, with very mixed results -- lower unemployment here since 1982, but steadily higher unemployment in Europe. These conferences never got much farther into the management of the highly complex system of money and trade that the industrial powers share, because the Americans were convinced that everything was fine and nothing needed to be done. Now, among the Americans, second thoughts are becoming audible. That makes possible at least the beginnings of serious conversations at Bonn.