This report was prepared by members of the G8 Research Group at the University of Toronto.
|The Summit of the Seven
and the Economic Communiqué
Kohl indicated that Germany can count on economic recovery in the second half of 1996 - growth is predicted to increase from a current 0.75% to 2-2.5% next year. Kohl indicated that although jobs and growth are an absolute priority, the G& will have to implement their own individual programs for jobs and economic recovery. The Germans emphasized that labour markets must remain flexible. Kohl also stressed that the social security structures of the G7 would have to be stabilized in order to maintain a level of economic growth and prosperity.
Kohl was pleased that the G7 agreed on a framework for doubling the resources currently available by the IMF under the General Agreements to Borrow (GAB). Kohl further indicated that he was pleased with the G7's decision to not sell IMF gold reserves and noted that if all Summit/OECD members continued to make their contributions to the Fund, that there would not be a need to sell the Fund's existing gold reserves.
As a country largely dependent on international markets for goods and services, the Germans were pleased that the G7 endorsed the concept of globalization in the communiqué. According to Kohl, globalization offers great opportunities for the further liberalization of markets. In return, open markets will serve to strengthen the multilateral trading system. Moreover, Kohl stressed that support for reform in Central and Eastern Europe would depend more and more on open markets to the West.
Kohl was pleased that the G7 committed itself to continuing its support of Russia's ongoing political reform and commitment to democratic development. Kohl noted that Russia was treated "respectfully, yet carefully" by the leaders in the communiqué, but also noted that there was more emphasis placed on issues dealing with Russia at Lyon than at previous summits. The fact that U.S. President, Bill Clinton, made reference to a "G8" was also pleasing to Kohl, who has strongly supported Russian participation within the G7 in the past.
Japan received a high grade because it achieved all of its economic objectives at the Lyon Summit. Notably, Japan's success is due to Prime Minister Hashimoto's active participation. Prime Minister Hashimoto has made significant contributions at the Lyon Summit by bringing forth his own initiatives to the G7 forum, which were discussed by the G7 members, and ultimately recognized in the Communiqué. Rather than merely reiterate well-rehearsed government policy like some of his predecessors, Prime Minister Hashimoto was not shy about expressing Japan's concerns on global economic issues. He seemed enthusiastic about actively participating in and contributing to the G7 forum. At the June 29th press conference, he projected a strong presence and was also quite expressive in his responses to questions.
Globalization was a predominant theme in the Economic Communiqué but, more importantly for Japan, it achieved its objectives on this issue - close cooperation on macro economic policies and to avoid protectionist measures. Accordingly, the Communiqué emphasized the need for close cooperation on economic policies by the G7 nations to encourage the positive impact of globalization on economic growth and progress. The Communiqué also mentioned "a will to address the question of the relationship between trade and internationally recognized core labour standards." This would imply that there was a collective will to recognize the problem but no resolution was reached by the G7 nations. Nevertheless, the essence of globalization and Japan's objective on this issue was recognized and captured in the Communiqué.
Japan has generally viewed globalization as "a good challenge" for economic growth and progress, according to the June 28th briefing. Some countries approach globalization in a positive way because "they are flexible in adapting themselves to a new environment." On the other hand, Japan also recognized that globalization for poorer nations would mean additional difficulty and uncertainties. As a result, the essence of Prime Minister Hashimoto's Initiative for a Caring World, to help cushion the uncertainties of coping with the impact of globalization, was incorporated in the Communiqué.
Development has been an important issue for Japan, and one in which Japan has a vested interest. According to the June 28th briefing, Japan bears one-quarter of the total development assistance in the world, and Japan continues to increase its contribution to development assistance. Accordingly, Japan was very pleased that President Chirac made development an important theme of discussion at the Lyon Summit. Taking this opportunity, Japan has put forth its own proposals on development with a particular focus on Africa. In response to skeptics at the June 27th briefing, the Japanese government claimed that it has no "particular commercial interest in the continent of Africa"; rather, its interest in Africa stems from Japan's history of "extending substantial aid in Africa." Japan has already been "advocating a series of packages in relation to African assistance."
Prime Minister Hashimoto's initiative, "a new global partnership for development," was recognized and given considerable attention in Section IV of the Communiqué. Another initiative by Prime Minister Hashimoto, "Initiative for a Caring World," was also put forth to the G7 members, discussed by them and the essence which was also incorporated in the Communiqué. At the June 29th press conference, Prime Minister Hashimoto expressed how his "Initiative for a Caring World" stemmed from Japan's own post-war childhood experience, and Japan's willingness to share the lessons it has gained with other countries to reduce suffering, high infant mortality rate, universal child education and other health and welfare programs to alleviate extreme poverty. When asked whether this initiative was new and Prime Minister Hashimoto's main contribution to the Summit, the Japanese spokesman responded: "The Government of Japan has probably never done this before. But, this time, Prime Minister Hashimoto wanted to take the initiative and proposed this on his own." Development may have been in the forefront of all the G7 members at Lyon; but, Japan capitalized on this theme in Lyon to achieve its objective.
Throughout the Summit, the official statement was that Japan and the United States would not discuss the Japan-U.S. bilateral trade issue on semiconductors and insurance. This did not mean that the trade dispute over semiconductors and insurance, which have been brewing for months prior to the G7 Summit, was not in the forefront of Japan's agenda. It seems highly unlikely that Prime Minister Hashimoto and President Clinton would not discuss a matter so important to both countries, especially during a tête-à-tête bilateral meeting. The trick for Japan was to discuss it without raising the topic. A source from Asahi newspaper explained that Japanese etiquette precluded Prime Minister Hashimoto from discussing the subject unless President Clinton raised the subject initially. If President Clinton raised the subject first, Prime Minister Hashimoto would be able to engage in a dialogue on the subject without losing face. Interestingly, Prime Minister Hashimoto stated at the June 29th press conference that he did not expect Japan-U.S. bilateral trade issues (on semiconductors and insurance) to be raised at the G7, particularly at the tête-à-tête bilateral meeting between the two heads of states. He further stated that he and his delegates were surprised and "caught off guard" when President Clinton raised the subject in the elevator when the two parties were on route to their bilateral meeting. It is difficult to believe that the Japanese government did not anticipate the United States to raise the subject. What may have surprised the Japanese was how quickly the subject was raised by President Clinton before the bilateral meeting even officially commenced. Apparently, the two heads of states had "a very in-depth discussion" on semiconductors and insurance; however, they did not reach any resolution other than "to agree to do their utmost to bring these talks to a conclusion by the end of July."
Japan achieved its objective on trade and bilateral issues in two ways: first, by discussing with the U.S. about trade issues at the bilateral talks; and secondly, by winning strong support for the multilateral system and the WTO. Section II of the Communiqué recognized and emphasized the importance of the multilateral system, and the central role of the WTO as a venue to settle bilateral trade disputes. Japan undoubtedly pushed in favour of the multilateral system. Generally, on economic and trade issues, Japan resorted to multilateral venues to resolve disputes, whereas the United States resorted to unilateral measures. For example, during the automobile dispute of 1995, the United States threatened to impose stiff sanctions on Japanese luxury cars, while Japan threatened to take the dispute to the WTO.
Japan managed to achieve most, if not all, of its objectives regarding the WTO. Most important was the recognition in the Communiqué of the central role of the WTO in the multilateral system and as a venue for dispute settlements. Furthermore, as Japan had hoped to achieve, there was a collective commitment by the G7 members to "work for the success of the first ministerial conference of the WTO in December 1996."
Another objective was to express the importance of constructively engaging China into the existing world order. In fact, it was Prime Minister Hashimoto's intention to speak to the G7 members on the "desirability of letting China participate in the World Trade Organization (WTO)," according to the June 27th briefing. Although there was no commitment by the G7 members to admit China into the WTO, there was a veiled reference in the Communiqué to such a possibility based on certain conditionality: "In accordance with the rules of the World Trade Organization and on the basis of significant liberalization commitments, we support the accession of new members to the WTO."
The Communique states that what must be achieved is "economic growth and a widely shared prosperity." Thus, Santer expressed no dissatisfaction with how the issue of employment was dealt with at this Summit. However, how such commitments towards solving the unemployment problem will be put into practice remains to be seen as this issue has been on the agenda for the EU for years without any serious improvement to the situation.
As in previous summits, the Russian Delegation did not participate in the drafting of the Economic Communique, however certain key issues were addressed without their interests in mind. Issues such as UN Reform, usually dealt with in Russian presence, and in the Political Communique, appeared earlier in the Economic Communique. Comments related to Economic Assistance to Russia were replaced by endorsements to deveploment of private enterprise.
Issues that were not addressed in the Economic Communique include; Russian participation in the economic portion of the G7, Russia's bid to join the OECD, and possible Russian membership in the WTO.
Much of the momentum for Russian objectives has been lost due to Yeltsin's personal absence at the Summit. Russian attention is mainly focused on it's domestic political situation.
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