Cautious start for summit

Press, 17 July 1978, Page 8

Cautious start for summit

NZPA-Reuter Bonn President Jimmy Carter and representatives of the six other leading industrial democracies have opened their fourth economic summit in a cautious mood, aware they can offer no easy solutions to the world’s monetary and trading crisis. The seven — the United States, West Germany, France, Britain, Italy, Canada, and Japan — agree on basic objectives. These are to reduce inflation and unemployment, increase economic growth, restore currency stability, fight trade protectionism, and help developing countries. But the seven disagree about the contribution each should make to get early results. The West German Chancellor, Helmut Schmidt, and the French President, Valery Giscard d’Estaing, want President Carter to overcome American Congressional resistance to his plans to cut down his country’s huge oil imports bill, >w running at about $40,000 million a year. Japan’s partners will press the Prime Minister, Takeo Fukuda, to op m up his country’s market to their imports in order to reduce the huge Japanese trade surplus, which they regard as a sig-

nificant cause of instability in international economic relations. - Mr Schmidt will also come under pressure to boost demand in West Germany by cutting taxes „o the West German market can take more products from abroad. The seven recognise each has a complementary part to play in reviving economic growth withi t fuelling more inflation.

They have abandoned the so-called “locomotive theory” under which West Germany and Japan, which alone have big trade surpluses, would pul! the est of the nonCommunist world out of recession.

The new concept is the “convoy approach” in which all seven countries would move together towards higher economic growth rates capable of reducing unemnloyment. The summit leaders are aware that their countries collectively fell well short of the 5 per nt growth target they set themselves at their previous meeting in London in May last year.

Officials said they would not make the same mistake again, Mr Schmidt in particular thinks it is folly to lay down specific growth targets, because failure to attain them damages confidence and leads to currency upheavals.