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Baker Institute for Public Policy, Rice University
James Baker is calling for a new international agreement to combat threats to the global economy. The former treasury secretary says volatility in China and slow growth in Europe pose risks to a U.S. economy still recovering from the effects of the Great Recession.
Baker issued his call in a speech at Rice University marking the thirtieth anniversary of the Plaza Accord. That agreement helped bring down the value of a too-strong dollar and head off trade wars with both Japan and West Germany.
"Ladies and gentlemen, I submit that we definitely should embark once again upon a sustained, regular, and comprehensive effort to coordinate international economic policy," he said.
Baker himself helped negotiate the Plaza Accord with the finance ministers of what were then the world's next four largest economies. He acknowledged it would be much tougher to reach such a deal today.
"Yes, we are living in a new economic world," Baker said with a lot more players, with more complex markets, and with gigantic capital flows, but I don't think that's any reason not to make the effort. We ought to make the effort."
The former treasury secretary says that such cooperation, which would now involve twenty major economies, is necessary to reduce the risk of protectionism as global growth slows.
