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Financial Post, Weekly edition, Wed 22 Jun 88, page 16. Editorial.


Summit part of larger process

As summit communiques go, the Toronto version fits the pattern of most of them: wordy, imprecise on most points and self-congratulatory. Allowing for the esoteric world of summitry, where ''progress'' can be measured by where a comma is inserted, the leaders did move forward in some areas.

On Third World debt, the summiteers agreed on the widely bruited menu approach, whereby the creditor countries may select an appropriate method of dealing with the debt of the poorest countries. The creditors may choose among concessional interest rates on shorter maturities, longer repayment periods at commercial rates, partial writeoffs of loan payments during a consolidation period, or a combination of these options.

Under the rules of the Paris Club, a larger group of creditors including the summit seven, there is supposed to be uniformity among countries in their terms of debt rescheduling. This is to help ensure that the creditors maintain a relatively equal sharing of the burden when concessions are made to debtors.

The summit, while not disregarding the Paris Club convention, has allowed for a more flexible approach to debt relief. Choosing from the menu of options properly recognizes that each creditor country has different priorities, and indeed, different legal and budgetary constraints on its Third World lending. The Paris Club will work out a system under which the different approaches can be compared. With a comparison standard before them the idea is that some equity will be maintained.

On the thorny issue of agricultural subsidies, the leaders agreed to send a message, muted though it is, to the General Agreement on Tariffs & Trade negotiators to get on with the task of reducing subsidies. ''Continued political impetus is essential to underpin the politically difficult efforts at domestic policy reform and to advance the equally difficult and related process of agricultural trade reform,'' the communique said.

Although an early draft of the communique avoided the dreaded word, ''subsidy,'' in the final draft the big-subsidizing Europeans finally gave way enough to get the word in: ''Our negotiators in Geneva must develop a framework approach which includes short-term options in line with long-term goals concerning the reduction of all direct and indirect subsidies and other measures affecting directly or indirectly agricultural trade.''

On the broader issue of trade, the summiteers paid their annual obeisance to the principle of freer trade. Prime Minister Mulroney must also have convinced them to be more forthcoming in their support of the Canada-U.S. Free Trade Agreement; an early draft of the communique that said the summiteers ''welcomed'' the FTA, was later changed to ''strongly welcome.''

So, they came, they talked, and they agreed to do a little. The whole thing shouldn't, however, be judged solely by the communique. The summit is part of a package of international forums that try to inch the world's economies forward. Toronto was a useful part of that process.

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Revised: June 3, 1995

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