Section 2. Contributions to the Harmonious Development of the World Economy
1. The world economy in 1975 experienced the most serious recession since the end of World War II. The abnormal inflation of the preceding year although somewhat abated still persisted, and in the field of the international balance of payments, the international disequilibrium continued, centering around huge current account deficits of the non-oil-producing developing countries.
Many nations came to recognize anew the increased inter-dependence of all countries and the need for greater international cooperation as a result of the global effects of such economic difficulties, and, in consequence, made various efforts at the international level in such fields as trade, finance, energy and the problems of developing countries, with the aim of securing the recovery of the world economy as well as establishing the foundation for its stable growth in the future. Japan continued efforts for controlling inflation and stimulating economic recovery, actively taking part in such international efforts.
2. Among international cooperation activities in 1975, the summit meeting at Rambouillet Castle, in the suburbs of Paris, for three days from November 15 was of epochal significance in that the leaders of Japan, the United States, Britain, the Federal Republic of Germany, France and Italy gathered together for the first time since the war and exchanged views on various problems of the world economy and also on the challenges with which the free economic system was faced.
At the meeting, the leaders of the participating countries confirmed that their countries were responsible for the maintenance of a free and democratic society and agreed on ways to cope with various problems of the international economy, such as on means to achieve a prompt recovery of business to ensure sustained growth, while preventing are kindling of inflation, and adopted the Rambouillet Declaration which expressed the spirit of cooperation among the nations.
As the only Asian country participating in the meeting, Japan pointed up the special importance of the various difficulties with which the developing countries, especially non-oil-producing ones, were faced regarding the world economy as a whole.
3. The Conference on International Economic Cooperation held in Paris in December 1975, which was attended by 27developed, oil-producing developing and non-oil-producing developing countries, was another important move for international cooperation. The conference stemmed from moves aimed at realizing a dialogue between oil-producing and oil-consuming countries following the oil crisis of 1973. At first, there was a difference of opinion between the developed and the developing countries, including the oil-producing countries, on how to conduct the dialogue, and the preparatory meeting, opened in April 1975, was suspended temporarily without realization of the dialogue. However, an atmosphere in which a North-South dialogue could be held was created in the latter half of the same year as a result of efforts by the countries concerned. At the preparatory meeting in October, it was agreed to create a forum for discussion that would take up not only the energy problem but also the whole range of matters related to the North-South problem, including raw materials, development and financial affairs. The Conference held from December 16 through 19 decided to establish under the Conference four separate commissions for energy, raw materials, development and financial affairs. The commissions have been in operation since February 1976.
Japan has from the beginning strongly supported the dialogue between the oil-producing and oil-consuming countries, as it has supported the promotion of international cooperation. At the Conference on International Economic Cooperation, which took up not only the energy problem but also the whole range of problems between the North and the South, Japan, together with the United States and the EC, joined all of the four commissions and has been actively engaged in various activities while acting as co-chairman of the Commission on Raw Materials.
4. The Rambouillet summit meeting and the Conference on International Economic Cooperation were important moves for promoting dialogue and cooperation among the nations aimed at the stable expansion of the world economy, and these steps brought about several important developments in trade, monetary and other fields. The major developments were as follows:
(1) In the field of trade, various countries have shown their determination, in view of the problems of the world economy and trade stagnation, to refrain from adopting a policy whereby the domestic economic difficulties of a nation would be solved at the expense of other countries. Efforts were thus made to exercise self-restraint in order to avoid taking measures for the artificial promotion of exports or following the easygoing way of imposing import restrictions.
This determination was clearly reflected in the decision made, in May 1975, by the OECD Council at the ministerial level to extend for one more year the "Trade Pledge" adopted at its meeting in May 1974, and also in the reaffirmation of the principles of the pledge at the summit meeting at Rambouillet in November. These moves, together with constant efforts made within the framework of GATT, should be highly valued, being conducive to the stable expansion of world trade.
In 1975, substantive negotiations for the Tokyo Round of Multilateral Trade Negotiations which had been pending for some time, were started in earnest, beginning with the meeting of the Trade Negotiations Committee in February. The summit meeting at Rambouillet in November also agreed that the Tokyo Round be held, with a view to bring it to completion within 1977.
(2) In the monetary field, continued discussions were held throughout 1975 on such problems as the exchange rate system, the handling of gold and an increase in IMF quotas, in such forums as the IMF Interim Committee. At the summit meeting of the principal countries in November, it was affirmed that monetary stability was indispensable to the stable growth of the international economy. As a result of these moves broad agreement was reached on the immediate monetary problem, thereby providing a framework for the revision of the IMF Agreement at the IMF Interim Committee meeting in Jamaica in January 1976. It brought to a close for the time being deliberations on the reform of the international monetary system which had been continuing since the collapse of the Smithsonian monetary system in February and March1973 when the currencies of principal countries were allowed to float.