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Impressions of the Denver Summit

by Sir Nicholas Bayne

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Economic Subjects

The opening paragraphs of the communiqué has reflective passages on “active aging” and small and medium enterprises. But these new subjects for the summit are really aspects of the debate on employment, which emerged as the leaders' real concern. The summit agreed to the British proposal to make ‘growth, employability and inclusion' a major theme for 1998, with a ministerial meeting beforehand, as at Detroit and Lille.

This decision shows that the summits have not lost their economic vocation. Nor have they given up on this intractable problem, which is the sort of structural economic issue suitable for summit treatment. But it will be no easy task for Birmingham to show better results than Naples 1994 or Lyon 1996. The employability and inclusion language is already embedded in the Lyon communiqué. Employment ministers' meetings could simply add to the summit apparatus, without advancing the substance.

The treatment of Africa in the communiqué was on balance a disapointment. It is a welcome innovation for the summits to discuss Africa and it will be picked up again in 1998, as officials are charfed to report. But the extensive communiqué paragraphs are an uneasy blend of the US approach, which requires all beneficiaries to meet conditions, and the European and Canadian approach, which focuses on greatest need. It is hard to find anything specifically African in this passage, which would not equally apply to other developing countries.

There are no precise commitments on new trade access for African countries. The sentence “We will each continue to improve, through various means, access to our markets for African exports” gives a very vague signal. (The same sentence widened to include all least developed countries, re-appears in the G7 statement.) The international financial institutions are urged to give more attention to Africa. But there are no promises of additional aid from the summit participants, though the US has aat least recognised that aid is needed as well as private finance.

The G7 statement reintroduced the practice of national economic commitments, which has been in abeyance since a sketchy paragraph at Tokyo (1993). These commitments require, for example, the US to be vigilant on inflation; Japan to deregulate and hold down its trade surplus; France, Germany and Italy to reduce budget deficits and promote job growth. This is a welcome move. The commitments reflect what each country intends to do already. But these collective commitments are useful in getting public acceptance of difficult policies.

The exclusive language on financial regulation in the G7 statement and the financiemeinisters report shows that a lot of work is being done on this byzantine subject. But progress is slow and is hampered by the dense tangle of institutions, national as well as international. There is still much to do; and I suspect some of the key problems have not yet been cracked. The subject deserves sustained G7 attention.

In IMF-related subjects, Denver did not make much progress in settling outstanding issues. While the scheme for highly-indebted countries is now running, the question of financing it by IMF gold sales - which was active in Lyon - seems to have been shelved. The Americans did not accept a deal on IMF quotes or on new SDR's; these issues go forward unresolved to the IMF annual meeting in Hong Kong.

On trade the G7 commended current WTO activities and called for a good result from the financial services negotiations. But Denver had nothing to say about the future direction of the WTO's work. The Americans again held back, being unsure how far they can get new ‘fast-track' authority from Congress.

The paragraphs on Chernobyl in the G7 statement are the only ones in all the summit documents to contain quantified commitments.

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