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The Diplomacy of Concert: Canada, the G-7 and the Halifax Summit
by John Kirton[1]

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Prospects for Halifax

Taken together, these factors point to a relatively strong Canadian performance, at what is likely to be a reasonably successful Summit. The trend toward the equalization of economic capability among Summit members, detailed in Table 1, has gathered substantial strength during the spring of 1995, driven by the sharp fall in the value of the U.S. dollar, and substantial rise in the currencies of Japan and Germany.[30] Canada's position as the G7 leader in GDP growth in both 1994 and in projections for 1995, reinforced by the advent of a strengthening Canadian dollar in April 1995, a strong record on inflation, and an improving performance in employment creation, deficit reduction, and balance of international payments should increase Canada's influence. Canada's role as host, which brings burdens as well as benefits, on balance strengthens Canada's position as well.[31]

Politically, Prime Minister Chrétien, virtually alone among his prospective Halifax colleagues, is in the early stages of a broadly-based majority mandate, and has maintained historically high party and personal approval ratings. Moreover, he is making visible progress in coping with the national unity challenge that has distracted Canada from the very start of its Summit involvement, as sovereigntist forces within Quebec suffer stagnant support and growing internal divisions. Jean Chrétien's three decades of political experience and two decades of ministerial experience, his extensive contacts abroad, his participation in two Summits, and his relatively successful performance at Naples, make for an accomplished host. Moreover, since assuming office he has moved toward closer and more skilful co- operation with the Clinton administration, engaged in intensive Summit diplomacy with the Britain and France, worked extensively with Canada's extended constituency in leading developing countries, and begun to prepare intensively for the complex economic issues he will face at Halifax.[32]

The process selected for the Halifax Summit favours Canada as well. Prime Minister Chrétien, despite a major effort, has not secured the leaders-only Summit he strongly desired. However the choice of two working dinners among leaders rather than formal banquets for a larger group, and the reduction in time allocated to plenary sessions with ministers present, increases the prospects for genuine dialogue and consensus, and advantages a Canada led by a politically-secure leader and Summit veteran with finance minister experience. The presentation of a less expensive Summit, with national delegations up to one-half as small as those at Naples in 1994, should increase the ratio of results over investments, in ways that the 2,000 plus attending media representatives will applaud.[33] Moreover the steadfast decision to confine Russian participation to a post G7 dialogue that begins with a working dinner and proceeds through a working session on political issues the next morning, will allow the G7 itself to concentrate without distraction on the core economic and political decisions they face together, and conclude with a statement announcing the continuation of the Summit for a fourth round beginning in France in 1996.

The Summit agenda presents Canada with more of a challenge. Its centrepiece subject of international financial institutional reform deals with an area - monetary policy - where Canada's relative capability among the seven, and the members' record of compliance, with G7 decisions is weakest. The focus on reforming international institutions, however, allows Canada to approach this topic from an area of traditional national strength, especially as the topic may expand to embrace economic and social dimensions of the subject and the institutions of the United Nations. Moreover the seven have accepted Canada's proposal to broaden the international institutional reform agenda to give strong second place attention to sustainable development, based on the twin pillars of environment (where Canada leads the G7 in capability) and development (where Canada ranks among the top seven in the world). Canada has also promoted, with reasonable results, several initiatives in international trade, an area where past Canadian success and Summit compliance have been high. In most of this agenda-setting activity, Canada has obtained strong support thus far from at least the U.S.[34]

There is thus a remarkably full agenda for the twenty four hours the seven heads and President of the European Commission will have together at Halifax. However a productive preparatory process to date suggests that several meaningful collective agreements will result. On the reform of international financial institutions, the G7 will probably announce several measures, including improved monitoring and an early warning system to cope with the sudden shifts in capital and underlying financial and economic conditions that precipitated the Mexican peso crisis of December 20, 1994. Moreover, in keeping with Canada's consistent emphasis on broadening the coalition behind G7 leadership, the heads themselves at Halifax, drawing in part on the work of their finance ministers and deputies, should initiate a process for reforming the international financial institutions that involves more than the G7 members and that includes the Executive Directors of the International Monetary Fund (IMF).

As Canada proposed, Halifax will also deal with reform of the international institutions involved in promoting sustainable development as an integrated goal. Despite the political considerations surrounding this subject, Canada is pressing for the Summit to take an ambitious approach, including the enhanced attention to environmental considerations in IMF and International Bank for Reconstruction and Development (IBRD) structural adjustment programs, improved co-ordination among the World Bank Group and regional development banks (and reform of the African Development Bank), improved co-ordination among the United Nations Environment Program (UNEP), United Nations Development Program (UNDP) and similar UN agencies, and greater effectiveness for the United Nations Commission on Sustainable Development. In regard to the international trade institutions, Canada is seeking to increase the strength, effectiveness, and early work of the World Trade Organization. Moreover, together with the Japanese it is promoting a uniform transregional approach to the new trade issues, notably investment, standards, deregulation, by supporting the recently adopted work program of the OECD Trade Committee. Canada's approach to managing international conflict and tension centres on a more proactive use of peacekeeping. And Canada is seeking effective G7 action, without creating new bodies or an inner G7 directoire, in the areas of crime and drugs.

Beyond international institutional reform several other subjects will be advanced by the Halifax discussions and decisions. The leaders will review their national and the global macroeconomic situations and produce a positive assessment, notwithstanding concerns about the falling U.S. dollar. As part of their microeconomic concerns they will endorse the concept, pioneered by their private sectors, of an Information Technology Agreement, and refer positively to the work flowing from their successful Brussels ministerial conference on the global informations society.

In the field of international trade, Halifax will approve the process begun, and based on analytic work, at the OECD and launched at the June OECD ministerial, designed to produce a multilateral investment agreement. Here Canada is seeking to include non-OECD members in the negotiating process and offering its bilateral investment agreements as a basis for building the multilateral regime. The Summit will also deal with deregulation, standards and mutual recognition agreements, with Canada proposing to multilateralize mutual recognition agreements, on a sectoral, pilot project basis, among the G7 or Quadrilateral countries. Despite persistent Canadian efforts to use Halifax to produce more market access and trade liberalization agreements, in keeping with the spirit of the Naples' Summit "Open Markets 2000" initiative, caution in some places in the United States, and fatigue in Europe and Japan, make any Summit action here uncertain.

One of the more important achievements will continue the G7 tradition of promoting humane internationalism in relations between north and south. Here Halifax will address and could well complete the process begun at Toronto in 1988, of eliminating the debt burden of the Severely Indebted Low Income Countries concentrated in Sub-Saharan Africa, perhaps through a sale of IMF gold to finance the transaction. Depending on the result of the Hamilton meeting of G7 ministers responsible for the environment, the leaders at Halifax should, as the Naples Communique directed, provide an impetus toward action to deal with climate change.

An important challenge for Halifax will be to define a program to make more safe the nuclear reactors in the former USSR, Ukraine in particular, and above all at Chernobyl. Here approaches among Summit members differ, with the European seeking to replace the Chernobyl reactors with substitutes from Europe, while Canada, the United States, and Japan, favour a less selective approach. As Summit host and chair of the G7's Nuclear Safety Working Group, Canada will be called upon to provide an effective compromise.

Finally, amidst the focus on economic subjects, several political subjects will be dealt with. Questions about Bosnia, Burundi, Algeria, and Islamic fundamentalism are of concern to G7 members, and will be discussed with the Russians during the second day. This session will also deal, as its Naples equivalent did, with the transnational issues of crime, money laundering and nuclear safety, as well as other issues, including those dealing with the global economy, that the Russians might wish to raise.[35] In the bilateral meetings held on the margins of the Summit, strengthening the trans-Atlantic link and prospects for the Mexican economy are subjects that Canada could well wish to discuss.

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