U.S. Treasury's Baker Cancels Trip to Australia

Treasury Secretary James Baker has cancelled a trip to Australia because of pressing business at home, including the visit this week by Japanese Prime Minister Yasuhiro Nakasone, a Treasury spokesman said.

The spokesman, who asked not to be identified, said: “I would not draw any conclusion from the cancellation…I would just say it’s the press of business.”

But he added that the visit by the Japanese leader was “part of the press of business.”

The spokesman denied the cancellation was linked to the current turmoil in the financial markets.

Nakasone’s visit is expected to be crucial for the currency markets. Unless the Japanese prime minister brings with him measures to stimulate the Japanese economy by fiscal expansion or lower interest rates, the visit is likely to be considered by currency markets as an outright failure.

In addition, it is thought highly unlikely that Nakasone and Reagan will agree on the removal of U.S. trade sanctions imposed earlier this month on certain electronic goods.

But the participation in the talks by Baker, the administration’s top policy maker on international economic affairs, suggests that hard bargaining between the two sides may be in prospect.

Asked if the trip by Baker, who was to have left April 30 and returned May 6, had been dropped in the last couple of days, the Treasury spokesman replied: “I would think so.”

He described the trip as “purely ceremonial.”

Both Japan and the United States have a lot to lose from an unsuccessful outcome to the this week’s talks.

Tokyo and Washington are aware that nervous currency markets stand ready to bail out of dollars and buy yen, which economists fear could send world interest rates soaring and even lead to global recession.

Baker has been the driving force behind the administration’s efforts to coordinate international economic policies and reduce global trade imbalances.