ECONOMIC

Germany grew more in line with output than it had in Japan, there is lessreason to believe that Germany's current account surplus is likely to dimmishsignificantly in the coming year.TABLE 31.—Current account balances for OECD countries, 1974—76(Billions of U.S. dollars; seasonally adjusted]19751976Country1974FirsthalfSecondhalfFirsthalfSecondhalfiOECD: Total.__United StatesCanadaJapanFranceGermanyItalyUnited KingdomOther OECD-_ _-33.0-.6-1 7-4.7-6.09.7-8 0-8.7-13.0-1.05.4-2 5.9.63.31-1.9-6.8-5.56.3-2 3-1.6-.7.6- 6-1.8-5.3-m.8-2.63.5-1.92.3-1.9-1.1-6.5-1%-2H X-4IH- 3 4-2-71 Estimate.Sources: Organization for Economic Cooperation and Development (OECD) and national sources.Because of the strong current account positions of Japan, Germany, anda number of other countries, including Switzerland and the Netherlands,the shift in the combined position of the OECD countries, from a deficit of$55/2 billion in the second half of 1975 to a deficit of more than $15 billion inthe second half of 1976, included substantial increases in the deficits ofOECD countries other than the United States. Particularly large shifts wererecorded for France 1 and some smaller OECD countries. The improvement inthe Italian position reflects in part the adjustment measures taken throughoutthe year, but it also results from the direct actions taken to curtail increasesin imports and to limit purchases of foreign exchange. The positionof the United Kingdom was little changed on a year-to-year basis, but a deteriorationoccurred during the year, partly reflecting an export performancethat was somewhat disappointing, even after initially perverse effects of theexchange rate depreciation were taken into account.Thus, for the OECD countries, 1976 was a year of adjustment difficultiesand of wide disparities. However, measures taken toward the end of 1976to help sustain the recovery, as well as further actions contemplated forearly 1977 in some "strong currency" countries, should help smooththe adjustment process this year. Nevertheless, remaining difficulties mustnot be underestimated, nor must the danger that they could lead to growingpressures for restrictive trade measures be taken lightly. Because suchpressures may be increasingly difficult to resist, it is important that progressin the Multilateral Trade Negotiations (MTNs) be substantial. In particular,aside from the increase in general welfare that would result from tradeexpansion associated with tariff cuts and the removal of nontariff trade barriers,the strengthening of the general framework of the GATT is importantin this context.125224-250 O - 7 7 - 9