TFR 32 – Conditions for Partnership in International Economic Management

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A primary purpose of the trilateral partnership is to provide constructive leadership for the world economy. For the first 20-25 years after World War II, the broad trend was upward in this regard. Cooperation and how to improve it between allies was a political priority, not only on the international scene, but on the domestic one also. Immediate policy tried to implement a larger strategy or at least tie in with the high priority given to cooperation, which can be defined as a collective attempt to tackle problems of concern to partners.

The years which followed were less happy ones. To be sure, the deterioration of international economic order 'in the 1970s was not nearly as profound as the collapse of the 1930s. Skillful crisis management and a healthy pragmatism helped prevent the worst. But pragmatism and crisis management are not enough over time. We need a leap forward in the extent of cooperation.

The foundations for such a leap forward have strengthened considerably. Price stability has improved greatly in the trilateral countries in recent years. General philosophical orientations have converged, with more emphasis on market orientation in economic policies. Some growth is underway in all three regions. The remarkable Group of Five meeting at the Plaza Hotel in September 1985 indicated that the outlines of appropriate economic strategy are widely recognized, and led to changes in exchange rates that helped restore a degree of confidence in the abilitv of governments, acting together, to influence events. The American role in the G-5 meeting and the "Baker initiative" on Third World debt announced a few weeks later indicated that the United States the largest economy among the trilateral countries is interested again in multilateral approaches.

We must not overestimate what the G-5 meeting and other recent events have accomplished, however. What was essentially crisis management must be turned into systematic cooperation on a continuing basis. Improved international arrangements are particularly critical in three areas, to which we will return in our conclusion: macroeconomic policy and exchange rates, trade, and Third World debt.

Improved international arrangements must rest upon and themselves serve to reinforce improved performance on the part of each partner. The heart of this report is in the following essays that examine a central challenge for each partner. C. Fred Bergsten analyzes the wide swings in American participation in management of the world economy. Isamu Miyazaki shows how the correction of Japan's external imbalance requires correction of domestic imbalances. Etienne Davignon examines the dilemmas of a European Community which is more dependent than others on an effective multilateral system running smoothly within the Community and globally but has great difficulty focusing its energies as an initiator and driving force for concerted action. In his essay at the end of the report, R. William Lawson analyzes the relatively passive approach of Canada to international economic management, in contrast to its leadership role in the early postwar years.

Authors

C. Fred Bergsten, Director, Institute for International Economics, Washington; former U.S. Assistant Secretary of the Treasury for International Affairs
Etienne Davignon, Member of the Board of Directors, Société Générale de Belgique, Brussels; former Vice President of the Commission of the European Communities
Isamu Miyazaki, Chairman, Daiwa Securities Research Institute, Tokyo; former Vice Minister of the Economic Planning Agency

R. William Lawson, former Senior Deputy Governor, Bank of Canada (Special Consultant)

Table of Contents

I. Introduction
II. America's Unilateralism
C. Fred Bergsten
III. Reorienting Japan's Economic Structure
Isamu Miyazaki
IV. Re-starting Europe
Etienne Davignon
V. Conclusion: A Return to Systematic Cooperation
VI. A Canadian View
R. William Lawson

  • Topics: Economics, Multilateral Cooperation
  • Region:  North America, Europe, Africa
  • Publisher:  The Trilateral Commission
  • Publication Date:  © 1986
  • ISBN:  0-930503-01-5
  • Pages:  56
  • Complete Text: Click here to download
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