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The Group of Eight and the European Union: The Evolving Partnership


I. The G8 Summits

G8 Programs

In one sense distinct from the annual summits, the traditional G8 activities are nonetheless dependent on them in terms of receiving direction and continued support. While not often in the headlines, these G8 sponsored activities have nonetheless earned considerable recognition for their achievements. This section examines the major G8 policies including: 1) economic and monetary coordination; 2) trade cooperation; and 3) political and security cooperation.

Economic and Monetary Coordination

Coordination of monetary policy with the objective of encouraging steady growth through stable exchange rates has arguably been the primary purpose of the G7 finance ministers and most definitely of the closely related G5 and G10. The Group of Seven Finance Ministers and Central Bank Governors forum was established at the 1986 Tokyo Summit in order to foster closer coordination through more frequent meetings between summits. The act was the formal enlargement of the G5 to include Canada and Italy. To date neither representatives of Russia nor the European Commission officially participate in this area which has been the cause of irritation in both Moscow and Brussels.31 The group meets several times a year in order to discuss sensitive issues pertaining to monetary policy. Due to the nature of the topics discussed, the results of these meetings are much more low key than S8 summits or even other G8 sponsored meetings.

The finance deputies group, which acts in a similar framework as the S8 sherpas, meet frequently on an ad hoc basis. Between meetings they keep each other personally informed of new developments. Additionally, the central bank governors, varying in the degree of independence from individual finance ministers, share exchange rate policies with each other. This well-established and effective process has been largely responsible for steady progress in monetary coordination.

Working collectively with their partners and in conjunction with the Interim Committee of the IMF, the G7 finance ministers and central bank governors have a history of quietly and modestly progressing in their coordination of macroeconomic and monetary policies.32 However, their recent actions to assist in the relief of the current Asian crisis have made the results of their meetings receive considerable media coverage.

Given the deepening Asian crisis, the G7 Finance Ministers addressed the role of the International Financial Institutions (IFIs) at their meeting in London on 8 May 1998. They stated that "recent events in Asia, combined with the rapid consolidation and globalization in the financial sector, have highlighted once again the need to improve urgently co-operation between supervisors of internationally active financial institutions."33 Their recommendations for a New Financial Architecture, including increased transparency of IFIs and the gathering of sound economic data were endorsed by the S8 in Birmingham.

Responding to the continuing turmoil in global financial markets, the Finance G7 were in close contact over several days and issued a statement on 14 September. The finance ministers and governors encouraged continued cooperation and warned against the dangers of unilateral action to manage government debt. They agreed to "support a cooperative international approach to support those countries which have been adversely affected by recent developments in global markets and which are implementing strong economic programs."34 The following week UK Prime Minister and G7 Chairman Tony Blair called for a sweeping overhall of the international financial system and urged the heads of the G7 to "show the leadership the world so desperately requires."35 He requested the G7 Finance and Central Bank Governors to take the initiative and prepare an action plan to be presented at the Cologne Summit 18-20 June 1999.

With growing responsibility, the Finance G7 will increasingly be looked to for leadership and to prevent (or provide solutions to) global financial crises. However, as their actions increasingly are scrutinized in the limelight, the substance of their actions must not become diluted for the sake of image.

Trade Cooperation

From the start the participating members have pledged themselves to cooperate in working towards a liberalized global trading system. However, their attempts in implementing common trade policies have seen considerable criticism directed at them due to their apparent lack of effectiveness.

While providing impetus for the initiation of multilateral trade rounds under the auspices of the GATT/WTO, the S8 have been less than impressive in having a direct impact on bringing about the successful conclusion of these negotiations. Nicholas Bayne has expressed the view that "the gap between the high-level strategic exchanges at the summit and the complex, detailed and technical discussions in Geneva has proved too wide to bridge."36

Indeed, summit declarations called for completion of the Tokyo Round of GATT talks from 1975-1978 as well as urging progress in the Uruguay Round from 1990-1993. While the efforts of the G7 in bringing about the successful conclusions of the Tokyo and Uruguay Rounds deserve to be recognized, experts of the G8 process have stated that due to making promises that they were not able to keep, the reputation of the Western Economic Summits was tarnished.37 However, given that both rounds were stalled due to bilateral issues between Europe and the US, the S8 should not be faulted for their lack of success but rather commended for their continued determination in bringing about an eventual agreement.

Evidence of this determination can be witnessed even before the official start of the Uruguay Round. At the 1981 Ottawa Summit, the G7 participants established the Trade Ministers' Quadrilateral. Known as meetings of the Quad, this forum allows trade ministers of the US, Canada, Japan and the EU Commissioner to discuss trade-related issues. This forum played a key role in reaching an agreement in the Uruguay Round and continues to actively seek consensus in matters relating to trade. Given the recognized authority of the European Commission to speak for the member states of the EU on trade matters, the Quad is unique in that it is the Commission that attends as full member rather than the four individual EU members of the G8.38

The members of the G8 have recognized the WTO, the successor of the GATT, as the proper forum for negotiation and implementation of multilateral trade policies as well as settlement of trade-related disputes. Illustrating the importance of multilateral trade issues, the Director General of the WTO, Renato Ruggiero, participated in summit meetings in 1996 and 1998.39

Political and Security Cooperation

With its origins based firmly in economic and monetary topics, the G7 at first did not openly discuss or announce declarations on issues involving political or security affairs. However, the interdependence of economic and political matters soon convinced the G7 to include both spheres in their agenda for cooperation. In the case of the summit communiqués, this trend began at the 1978 Bonn Summit with a political statement against air hijacking. Subsequent summits have witnessed increasing discussion of political issues to the point where several summits have produced political declarations covering international political and security issues in greater depth than the economic declarations have for economic issues.

When discussing political issues at the summits, G8 participants,40 including representatives of the European Commission, are known as the Political Eight (P8). While in the past the G8 Foreign Ministers met at the summit along with the leaders, beginning with the 1998 Birmingham Summit, they now meet separately one week prior to the summit in order to allow more time for detailed discussion. The objectives of the P8 are to agree on future policies and strategies in the field of politics and security rather than developing a specific political direction. Working year-round to define these plans and implement them are political directors who report directly to their respective foreign minister. Political directors act under the ultimate authority of the sherpas in preparing and implementing P8 policies. Similar to the S8 sherpas, they meet approximately five times per year on an informal basis. These meetings are not intended for making or implementing decisions but instead serve as a consultative mechanism. In addition, joint economic and political working groups meet from March onwards to discuss the topics for the summits and prepare proposed agenda items for the upcoming summit.41

Actions to prevent transnational organized crime have been emphasized repeatedly in recent years, culminating in the adoption of a report prepared by the Senior Experts Group on Transnational Organized Crime at the 1996 Lyon Summit. Brought together at the 1995 Halifax Summit this group of experts, known as the Lyon Group, continues to work toward the implementation of its 40 recommendations.42 With international crime chosen as one of three key topics at Birmingham, the UK National Crime Squad updated the S8 on current joint G8 activities to fight transnational crime. The presentation included a highly effective video showing the successful apprehension of international criminals.

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Updated: June 25, 1998

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