TOUGH MONEY TALKS

Press, Volume CXI, Issue 32708, 10 September 1971, Page 11

TOUGH MONEY TALKS

(N.Z.P:A.-Reuter—Copyright) 1 WASHINGTON, September 9. A major diplomatic confrontation between the United States and Japan is expected to emerge in bilateral Cabinet-level talks opening during serious dis--1 agreement on trade and monetary policies. American officials have privately disclosed that they will press for further monetary concessions from Japan, although the Tokyo Government already faces a 10 per cent United States import surcharge and an effective revaluation of the floating yen by more than 5 per cent But the Japanese Government has indicated that it will take a tough stand in rebutting American arguments for a steep formal revaluation of the yen. Last night the Japanese Foreign Minister (Mr Takeo Fukuda) said that he was ready to answer any such re-

quest from the United States Secretary of-State (Mr William P. Rogers) with his own counter-points, and said that the import surcharge “may well bring about retaliatory measures on the part of other countries.” By his decision on August 15 to sever the gold convertability of the dollar and to impose the surcharge, Mr Nixon hoped to persuade major industrial countries to revalue their currencies upward, to give the United States a fairer break in international trade and to share more of the international defence burden. Japan is regarded as the key monetary power in this respect,, since other leading nations are unlikely to revalue significantly before Tokyo takes a decisive initiative. The Japanese Government, on the other hand, wants to see suspension of the surcharge and, probably, a small global devaluation of the dol-' lar in terms of gold before agreeing to raise the value of the yen by any significant extent. The N.Z.P.A. staff corres-1 pondent in Washington says ’

that the American bargaining list is reported to include demands for an easing of Japanese import curbs on agricultural products, some forms of heavy machinery and a wide range of “high technology” goods. The United States also wants a major easing of Japanese restrictions on foreign investment. A revaluation of the yen upward by at least 10 per cent is, however, believed to head the list. The issue being pondered by international economists is foe extent to which the United States monetary demands may be scaled down according to the trade concessions the Japanese may offer. The bigger the concessions won by the United States the more New Zealand stands to gain, particularly if the import curbs on agricultural products are to be eased considerably. But diplomatic observers believe that if concessions are too painfully wrung out by the United States a further deterioration in relationships between the two countries could have a marked adverse effect oh stability in the Pacific.