Financial Post G7 Record

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[Financial Post G7 Record]

Financial Post, Weekly edition, Thu 18 Jul 91, page 12. Editorial.

Keywords: INTERNATIONAL FINANCE ECONOMIC SUMMITS TRADE GATT Uruguay Round General Agreement on Tariffs and Trade Mikhail Gorbachev George Bush

G-7 must live up to trade pledges

Mikhail Gorbachev's pitch to the economic summit leaders tended to overshadow the main agenda of the G-7, but the leaders did manage to achieve a degree of agreement on the important issues they were in London to discuss.

The most important economic priority was trade. On that key issue the summiteers did pledge to pursue ''elimination or enhanced discipline in subsidies that have distorting effects, since such subsidies lead to inefficient allocation of resources and inflate public expenditure.''

In particular, the G-7 acknowledged the need to complete the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade. They expressed the same sentiment last year and the talks remain in limbo. But this time they have added a note of urgency.

''We commit ourselves,'' the leaders said, ''to an ambitious, global and balanced package of results from the Round, with the widest-possible participation by both developed and developing countries. The aim of all contracting parties should be to complete the round before the end of 1991.''

Clearly, U.S. President George Bush would like to get approval of a GATT deal through Congress before the complications of an American election campaign. In an election year, the protectionists have a better chance of rallying the forces against liberalized trade.

In fact, despite the language of the summiteers, there is some doubt about whether Bush can give priority both to a GATT deal and the trade talks with Mexico. For those in Congress who are under pressure from organized labor and its fear of job losses resulting from freer trade, two deals that would open markets may be too much to stomach.

If Bush has a choice, it may be a deal with Mexico rather than a GATT agreement. That flies in the face of the G-7 pledge to ''move forward urgently'' in the areas of market access, agriculture, services and intellectual property. If he falters, the other summit leaders should remind him of what he committed to this week in London.

On market access, the summiteers pledged to, where necessary, ''cut tariff peaks for some products while moving to zero tariffs for others, as part of a substantial reduction of tariffs and parallel action against non-tariff barriers.''

On agriculture, the G-7 said ''a framework must be decided upon to provide for specific binding commitments in domestic support, market access and export competition, so that substantial progressive reductions of support and protection may be agreed in each area, taking into account non-trade concerns.''

This does leave some outs, but the principle is clear: more open markets. The next step is for the summit leaders - including Prime Minister Mulroney - to show the required leadership in their own governments to implement these noble sentiments.

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Revised: June 3, 1995

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