updated 2/27/2004 10:36:58 AM ET 2004-02-27T15:36:58

Their arguments over Iraq set aside, President Bush and German Chancellor Gerhard Schroeder now have another brewing dispute to discuss, the weak American dollar.

Schroeder arrived for a U.S. visit on Thursday with a plan to warn Bush of the global implications of the dollar's weakness against the euro, Europe's main currency.

He and Bush were meeting at the White House on Friday.

In a speech before the Council on Foreign Relations in Chicago, Schroeder warned that world trade could be harmed by further shifts in the exchange rate. "Major imbalances in the global economy and fluctuations in exchange rates give us cause for serious concerns," Schroeder said.

He also called for ending export subsidies "on both sides of the Atlantic," in both Europe and North America. "Germany is prepared to do so," he said.

Before making the trip, Schroeder told the Financial Times that he intended to express his dissatisfaction with current exchange rates and remind Bush that the United States and Europe have a "common responsibility" for the world's economy.

"I would just say that I believe the European Central Bank has recognized that this relationship between the euro and the dollar is not helping the export sector, to put it very mildly," Schroeder said.

The euro has risen by more than 50 percent against the dollar, from a record low of 82 cents nearly four years ago. The euro reached an all-time high of more than $1.29 last week, and it was trading at around $1.25 Thursday.

Schroeder also said he expects to discuss ways Germany can help in Iraq, but his refusal to send troops there still stands.

"Germany is ready to cooperate, but our readiness to cooperate naturally has limits," Schroeder told NDR radio in Germany before departing for the U.S. visit. "We've got nothing to give away. But we're ready to consider substantial debt relief."

Friday's meeting brings Schroeder to the White House for his first visit in two years. He and Bush were at odds over Schroeder's fierce opposition to the Iraq war. The two leaders met twice last year, at the Group of Eight summit and at the U.N. General Assembly.

Schroeder also plans to meet with Senate leaders in Washington on Friday before traveling to Jackson, Miss., to open an art exhibit, "The Glory of Baroque Dresden."

Copyright 2004 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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