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Performance Assessment: 1996 Lyon G7 Summit

as of Friday, June 28, 1996, 18:00 Lyon time

[Summit Contents]
Analytical Studies

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


Performance of the Lyon G7 Economic Summit by Priority Changes

Overall Total B+
Russian Participation B+
Globalization B+
Macroeconomic A
Trade A+
Development B+
UN/IFI Reform B
About all issues above
Performance of Participants by National Objectives

Country issues | About grade
Country issues | About grade
Country issues | About grade
Country issues | About grade
Country issues | About grade
United Kingdom
Country issues | About grade
United States
Country issues | About grade
European Union
Country issues | About grade
Country issues | About grade

Unadjusted by Level of Ambition

Canada: A (weighted in order of rank)

  1. Trade Liberalization: A
    Canada raised the issue of Helms-Burton as promised. Together with its allies, Canada achieved agreement that it was better for the G7 countries to take multilateral approach to trade. Communique also affirms Canadian interest in ensuring a successful WTO meeting at Singapore.

  2. Integration of the Developing World: A-
    The development sections of the Communique reflects the Canadian initiatives, priorities and values. While the Canadian initiative to sell IMF gold was not directly in the Communique, increased funding is planned over a five year term.

  3. IFI Reform: A
    The Communique reflects the Canadian effort to continue to push ahead in enhancing the effectiveness of IFI's. Specific recommendations for UN reform, a key Canadian Interest, were also made.

  4. Russian Participation: A
    Canada treated Russia with full respect as a great power, acknowledged that Russia was a democratic country on its way to becoming fully industrialized

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France: B (weighted in order of rank)

  1. Development aid: B-
    Although it occupied a significant portion of teh economic Communique, France and it's allies were able to extract a commitment only to ensure a $1.5b US contribution to the World Bank in addition to the $500 million supplied by the Bank . France's objective to encourage the regional multilateral banks to pusue relief of the unsustainable debts of the severely indebted low-income countries was not realized, the communique represented mostly an extension of Naples without significant commitment.

  2. IFI Reform/Exchange Rate Stability: B-
    France and its allies did get an emergency agreement to sell IMF gold from Germany. In essence, this communique was primarilyan extension of Halifax. France did not fulfill it's objectives pertaining to currency stabilization.

  3. Russian Participation: B
    Russia's increased presence in teh G7 embroiled in it's joining the heads at it's working meeting at 5:45 Friday afternoon and expressing support and approval of the agenda for further Russian participation in the G7 structure was not discussed.

  4. Globalization in the economy: A
    France was successful in promoting a common, concerted effort on combatting unemployment and sharing experiences. France emphasized their version of globalization. The link between trade, social system reform and employment was emphasized in clauses 7 and 8.

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Germany: A- (weighted in order of rank)

1. Employment and Growth ( B ):

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.

2. Development (A+):

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.

3. Multilateral Trade Liberalization (A):

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.

4. Russian Participation (A):

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.

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Italy: B- (weighted in order of rank)

  1. Trade:
  2. International Financial Institution Reform:
  3. Development :

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Japan: A (weighted in order of rank)

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.

1. Globalization: A

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.

2. Development: A+

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.

3. Trade and Bilateral Issues: A

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.

4. WTO: A

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."

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United Kingdom: B+ (weighted in order of rank)

  1. Multilateral debt relief and gold shares:
  2. Trade:
  3. Russian participation and reform:

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United States: A- (weighted in order of rank)

  1. Macroeconomics: A+
    The United States received accolades in the Communique for low inflation and strong economic indicators, although not directly in regard to low interest rates.

  2. Trade: B
    Clause 20 mentions unilateral action and is worded more firmly than the OECD statement.

  3. IFI Reform: B+
    The reform programs of Halifax were extended but not overly expanded. On a side note, Nick Burns, US State Department spokesperson said in regard to UN Secretary-General Boutros Boutros-Ghali, "I don't believe it has come up with the leaders or with the Ministers."

  4. Russian Participation: A-
    The final clause displays support for the Russian reform program although this topic was not as dominant as expected.

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European Union: B+ (weighted in order of rank)

  1. Employment: B+
    There was little direct discussion during the press conferences on the subject of the unempoyment problem in Europe, despite the understanding that the issue was a top priority for Europe. When asked why this was the case, Santer stated that because the issue was specifically dealt with at the Lille Summit, the issue did not receive as much converage at Lyon. However, he added that the Communique discusses at length both directly and indireclty the issue of empoyment in Europe, and embraces an integrative approach to solving the labour problems. The conclusions reached by the Ministers in Lille were also welcomed.

    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.

  2. European Monetary Union: A
    Santer is pleased that the single currency is now "seen by everybody as being a certainty" and that it is accepted as a means to encourage economic growth and prosperity in the EU. The macroeconommic policy which lies at the heart of the European emplyment strategy has also been embraced as being "the right one" by the G7 Communique.

  3. Trade: B
    There was extensive discussion about multilateral trade at the Summit. The Communique states that the multilateral trading system will be strengthened and that taking measures which are in contradiciton to the WTO rules and the OECD codes will be avoided. In this sense, one of the major EU concerns at the G7 Summit was dealt with explicitly in the Communique. Furthermore, the EU is pleased that the Communique included discussion of work in the WTO on trade and investment issues. Regarding the Helms-Burton law the EU was firm with the US in its objection to the extraterritorial nature of the legislation and gave the US a "slap on the wrist. " The EU is confident that the US will soften its stance somewhat on this issue in reponse to the EU and foreign pressure. The EU also feels that its concerns about the bilateral agreement on semi-conductors were also felt at the G7. Regarding labour and environmental standards, the Communique states that there is "a will to address the question of the relationship between trade and internationally recognized core labour standards." However, it is clear that there is still much disagreement on this issue, not only between the US and the EU but within the EU as well. (The UK has very different opinions on the topic than the Germans for example.)

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Russia: C-

  1. Full participation in the economic discussions of the G7
  2. Support From The Seven For Russian Membership in the WTO
  3. Support for Russian Membership in the OECD

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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