Financial Post G7 Record

[ Help |  Search |  Year |  Country |  Subject |  G7 Centre ]
[Financial Post G7 Record]

Financial Post, Weekly edition, Tue 06 Jun 95, page 6

Keywords: International finance Unemployment Job creation Economic summits World International Chamber of Commerce

Global business demands stability

Alan Toulin

The world business community wants the G-7 leaders to stabilize currencies, reduce unemployment and enhance international trade, International Chamber of Commerce president Rahmi Koc said yesterday.

ICC officials met yesterday with Prime Minister Jean Chretien to present an agenda for next week's G-7 Economic Summit in Halifax, which Chretien will chair.

The ICC said the volatility in currency markets is an increasingly worrisome feature of international finance but it didn't recommend any immediate or specific actions that governments could take.

''Turbulence in financial markets makes investments extremely difficult, causing indecision, uncertainty and it prevents the growth of the world economy,'' said Koc, who is also chairman of Koc Holding AS, Turkey's largest industrial conglomerate.

Part of a solution to smooth international markets could lie in revamping multilateral financial institutions such as the World Bank and the International Monetary Fund. But, specific proposals such as a tax on currency transactions, the so-called ''Tobin tax,'' were rejected by the business group.

''The Tobin tax is difficult and impractical to implement,'' Koc told a news conference.

Instead, governments should continue to work to reduce their own borrowing requirements by reducing deficits, he said.

The scale of international currency trading is now so large - about US$1 trillion a day - that governments can only moderate but not control the volatility.

''The size and the amount is so big that no one central bank, no group of central banks, no one government or no one ring of banks can affect this enormous amount of currenices changing hands everyday. Measures must be brought so that it's self-checking,'' he said.

Governments must also do more to relieve unemployment, the ICC told Chretien. About 820 million people worldwide are unemployed or underemployed, 30% of the employable population.

Unemployment has become endemic and not just a problem of developing countries, said Hari Shankar Singhania, an ICC executive member and president of the JK Organization, India's fourth-largest industrial group.

But, the business leaders said job creation should be based on sound economic growth and governments can help business create employment by reducing rigidities in labor markets and creating a better economic climate for investment.

''The problem is one of continuous training and retraining, of education and also tackling the problem of over-burdening industry sometimes with social costs,'' Singhania said.

In the area of trade, the business leaders said governments should follow the new rules established under the General Agreement on Tariffs and Trade and should make use of the new trade organization to resolve disputes. Governments should also move on the unfinished trade agenda by negotiating new rules for the financial services industry.

''We hope that governments will make use of the rules, of the institutions to solve possible disputes,'' said Arthur Dunkel, director of Nestle and former GATT director general.

Dunkel said business is concerned about the propensity of governments to use environmental laws and labor standards as a hidden form of protection for their own industries.

''Protectionism is still very much with us, therefore the fight against protectionists should go on,'' Dunkel said.

This information is provided by the Financial Post.
Please send comments to:
Revised: June 3, 1995

All contents copyright ©, Financial Post. All rights reserved.