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An Economic Happening in Bonn

May 07, 1985

The controversy over the White House's Bitburg Blunder helped helped obscure the fact that the United States had serious business to conduct at the 11th economic summit in Bonn. Unfortunately, that business did not go as well as either President Reagan or the American people had a right to expect.

The Administration failed to achieve its prime goals: a seven-nation commitment to a new round of world trade talks early next year, or an agreement by the Europeans and the Japanese to pump up their own economies in order to take up the slack that may be created by the slowing of U.S. economic growth.

The Japanese, who had feared that they would be everybody's whipping boy at the summit, got off virtually scot-free. Their pledge of continued efforts to open their markets to imports was accepted with little controversy.

In terms of trade the French were the odd-man-out. President Francois Mitterrand, plainly sensitive to his party's sagging popularity among the voters of his country, is just not prepared to enter world trade negotiations that might reduce the protectionist cocoon for inefficient French farmers. Nor is he prepared to accept American demands for a lowering of barriers to free trade in services and for an elimination of export subsidies.

On non-economic issues the Administration broke about even. Reagan encountered a near-solid wall of criticism of the trade embargo against Nicaragua that was announced just as he arrived in Europe. But the assembled leaders endorsed the U.S. negotiating posture in the nuclear-arms-reduction talks at Geneva, and there was informal support--with France again being the exception-- for the research phase of the American President's "Star Wars" program.

The importance of the trade-negotiations question should not be underestimated.

The massive U.S. trade deficit is due in major part to the high value of the dollar that in effect imposes an export tax on American farmers and manufacturers and grants a subsidy to imported goods and services. But there is also a widespread feeling that U.S. exporters encounter unfair barriers in Japan, and to a lesser extent in Europe.

The resulting swell of protectionist sentiment in Congress is a reality. The Administration rightly feels that the most constructive way to deflate the protectionist pressures is to conduct a new round of world trade talks that would broaden the access of U.S. farmers, manufacturers and service industries to foreign markets.

France was the lone dissenter at the summit, as reflected in the the final communique, which set no date for new trade negotiations but said that they "should begin as soon as possible." Preparatory meetings will be held this summer.

Unfortunately, the French have the power to veto participation by Common Market countries. And Mitterrand, seemingly convinced that his political self-interest lies in Gaullist, nationalistic posturing, may exercise that power.

If all else fails, Washington says that it will proceed with bilateral trade negotiations with countries that share our interest in lowering non-tariff trade barriers and export subsidies. That's a respectable fall-back position, but this country's trading partners--especially France --should understand that their own global trading interests may be adversely affected in that kind of catch-as-catch-can environment.

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