Financial Post G7 Record

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[Financial Post G7 Record]

Financial Post, Weekly edition, Mon 22 Jul 91, page 7. Editorial.


Welcome pledge on freer trade

Those who expect a gathering of leaders of the major industrial countries to produce instant solutions to the world's woes are always doomed to disappointment. So it was with the meeting of the G-7 this week in London; problems exist still.

But far better that these leaders meet and try to work together rather than work at cross purposes. The summit provides an opportunity for the leaders to exchange views and improve their knowledge of each other. More than that, the very existence of the annual summit requires officials to meet regularly to prepare for it. This all contributes to a better understanding of issues in each country and region.

The most encouraging result of this week's meeting was the renewed commitment to more liberalized world trade. It is facile to dismiss the summit's trade declaration on the grounds that last year's meeting produced a similar commitment and the Uruguay Round of discussions under the General Agreement on Tariffs and Trade remains in limbo. This time the leaders injected a note of urgency by saying the GATT negotiations should be completed before the end of this year.

Furthermore, the G-7 leaders pledged to ''each remain personally involved in this process, ready to intervene with one another if differences can only be resolved at the highest level.''

The leaders made a clear commitment to ''an ambitious, global and balanced package of results from the Round, with the widest possible participation by both developed and developing countries.''

As the G-7 noted, knocking down tariff and non-tariff barriers is key to ''stimulating non-inflationary growth'' and is also ''essential to encourage the integration of developing countries and central and east European nations into the multilateral trading system''

A summit declaration, no matter how firm, is no guarantee of action. But the more committed leaders should have no hesitation in calling the laggards to account if they respond too readily to the siren call of protectionists at home. For example, if France, Germany and Japan retreat in the face of their agricultural lobbies, the other leaders at least have a summit mandate to ''intervene personally.'' Indeed, the leaders who face domestic protectionist pressures can use the summit commitment as reason to press ahead.

The economic distortions created by protectionism and the huge costs it loads on taxpayers and consumers give both the developed and the developing world a big stake in achieving freer trade. The more often the G-7 acknowledges the advantages of knocking down trade barriers, the more inevitable the day when freer trade becomes a reality. The commitment in London this week moves that day closer.

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Revised: June 3, 1995

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