Economic summit meetings are always part consultation and part ceremony but, all too often, mostly ceremony. Every year the venue changes, but the format is the same. The heads of the world's leading industrial democracies (the U.S., Japan, West Germany, France, Britain, Italy, Canada), joined by representatives of the European Community, gather somewhere pleasant for two to three days of talks in the name of greater economic cooperation. They meet often and dine well in private, with time out for photo opportunities. A communiqué laden with truisms is released. Then the luminaries disperse to follow whatever divergent policies they please.
Maybe not this year. As President Reagan and his aides prepare to fly this week to Bali for a meeting of the Association of Southeast Asian Nations, and then to Tokyo for the twelfth annual summit, on May 4 to 6, the excursion augurs well to be both a practical and a ceremonial success. The reason: as they nudge their economies through a fourth year of sustained growth, the industrialized countries are showing a capacity for cooperation unmatched in recent years. Looking ahead to the three-day conclave in Tokyo's imposing Akasaka Palace, the imperial guesthouse, officials from all participating countries caution that ugly problems could still dampen the summit mood. Among other things, the leaders will be preoccupied with their differing responses to international terrorism in the wake of the U.S. attack on Libya. Nonetheless, a French official predicted that "overall, it could be an exceptionally optimistic and harmonious meeting."
If so, much of the credit will go to U.S. Treasury Secretary James Baker. In 14 months, Baker and his deputy Richard Darman have greatly modified the Administration's previous go-it-alone international economic policies. In September, Baker engineered an agreement with the finance ministers and central bankers of other major nations to push down the value of the U.S. dollar, especially in relation to the Japanese yen. His goal was to cut U.S. imports, spur American exports and head off protectionism in Congress. In recent weeks Baker has been successfully urging other governments to join with the U.S. in reducing interest rates (see chart). That stimulative policy, along with falling oil prices, is expected to help the industrial democracies achieve an average growth rate of 3.3% in 1986, up from 2.7% last year, while inflation hovers at 3.5%.
The sunny economic forecast is clouded, however, by a slowdown in international trade, which grew by only 3% last year, after a robust 9% expansion in 1984. Efforts to boost trade this year could be hurt by growing protectionism. In Congress last week, President Reagan barely defeated a challenge in the Senate Finance Committee, when rebellious legislators fell one vote short of the majority needed to block impending negotiations on free trade with neighboring Canada. Meanwhile, the U.S. and the European Community are holding talks in an effort to resolve an argument over restrictions on American agricultural exports to Spain and Portugal. The U.S. has threatened to retaliate with tariffs and quotas on such imports as French wine and Belgian chocolate. Warned a senior American official: "We are dangerously close to kicking off a trade war."