Baker Says G-7 Wants to Halt Dollar Fall

Treasury Secretary James Baker said the Group of Seven leading industrial nations is fully committed to halting a further decline in the dollar.

“Let me emphasize that all seven major industrial nations remain fully committed to strengthening policy coordination, promoting growth and cooperating to foster stability of exchange rates,” he told the American Enterprise Institute.

“We all believe a further decline of the dollar could be counter productive to our efforts (to promote growth),” he said.

Baker also said that after meeting Japanese special envy Shintaro Abe, “it’s clear that Japan intends to take strong steps to stimulate its economy to meet its committments under the Louvre Accord.”

Baker said in the past two years he has worked to promote greater coordination of economic policies and important progress has been made.

“Substantial exchange rate adjustments have also been accomplished over the past two years so that today we are better positioned to promote growth and reduce external imbalances,” he said.

Baker pointed out that in February the seven agreed to foster stable exchange rates and those commitments were renewed recently.

In a speech largely devoted to discussing trade and competitiveness, Baker again warned of the dangers of protectionist trade legislation, saying it would harm the U.S. standard of living.

Baker stressed adminstration trade policy sought to remove foreign barriers to trade and via forthcoming GATT talks will focus on agriculture, services and intellectual property.

The Treasury Secretary said that as well as trade issues he had to focus on macroeconomic issues as well which encompass the trade picture.

“The world economy today is really one constantly flowing circle of capital and goods. Trade accounts catch and measure that flow at only one spot on the circle,” he said.