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G7 hails globalization, sustained economic growth

Paul Taylor Reuter

Financial Post, Weekly edition, Sat 29 Jun 96

The world's seven leading industrial democracies, hailing globalization as an opportunity, not a threat, issued an optimistic message of sustained economic growth Friday and agreed to ease the poorest nations' debt.

At their annual summit, Group of Seven leaders pointed to low inflation, near record low interest rates, better aligned currencies and booming trade as healthy signs.

The leaders of Canada, the U.S. Japan, France, Britain, Germany and Italy recognized that a recent slowdown in Europe and unacceptably high unemployment in many countries were dark spots but said that even in Europe, "we are confident that growth will pick up in the second half of the year."

After debating the relentless advance of the global economy, they said: "We are convinced that the process of globalization is a source of hope for the future.

"History shows that rising living standards depend crucially on reaping the gains from trade, international investment and technical progress."

But they said the benefits of globalization would only arise if countries adjusted to increased competition, and acknowledged that inequality could increase and some of the poorest countries could be marginalized without a special effort.

Meeting around a bright yellow table at the Contemporary Art Museum in Lyon, in central France, the leaders agreed to a package of debt-relief measures for the world's 40 poorest countries.

Bridging differences between Germany, guardian of financial orthodoxy, and the six other states, they agreed relief should be subsidized largely by International Monetary Fund resources.

But at Bonn's insistence, they stopped short of endorsing outright a plan for the IMF to sell part of its gold reserves to underwrite debt relief.

They also urged creditor nations to go beyond a two-thirds writeoff of the bilateral debts of the poorest countries.

The leaders praised the US$'s slow recovery from record lows on currency markets since last year's Halifax summit.

"We welcome the broad movements in the major currencies since April 1995," the statement said.

"These are positive and promising developments and have helped to improve the conditions for sustained growth across the G7."

On another disputed issue, making freer trade conditional on the adoption of basic labor standards by emerging nations, the leaders agreed that the World Trade organization should discuss the question in Singapore in December.

U.S. and French insistence on core standards to bar prison labor and child labor and to allow free unions led to a lively debate, a Canadian official said.

This information is provided by the Financial Post.

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