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Canadian Foreign Policy and the Seven Power Summits

Timothy Heeney

Country Study Number One
Centre for International Studies
University of Toronto
May 1988

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The major change since the Bonn summit was the role the new US Secretary of the Treasury James Baker had taken in promoting international economic policy coordination through the use of the G-5. The Plaza Accord of September 1985 engineered a fall in the value of the US dollar. This process was reaffirmed at a subsequent meeting of the G-5 in January 1986. Baker, wanted to extend coordination through the G-5, and the newly created G-7 (see below) beyond just exchange rates. This signified a major change in approach of the USA to international economic policymaking.(113 )This coordinated effort would continue to take place at the finance minister level, however. This was a further indication of the fundamentally 'non-economic' nature of the summit seven leaders in the second generation of Seven Power Summits. At Tokyo, there were no new leaders, except Chirac from France (due to cohabitation). The economic situation continued to be positive. This allowed the leaders to focus on the 'hot' political issues of terrorism and the Chernobyl nuclear disaster. There had been many high profile terrorist incidents since Bonn, some of Welch had prompted the US bombing raid of Libya in April 1986. The Chernobyl accident had occurred only one week prior to the Tokyo summit.

After long hours of negotiation the summiteers reached an accord which called for concrete measures to improve cooperation in fighting terrorism. The economic discussions at the leaders level were relatively brief and focussed on endorsements of the work of the G-5 and the problems of agricultural trade. This was the first time agricultural trade had been an official topic and mentioned in the communiqué. Although no specific decisions were made, agriculture would be firmly established as part of the new GATT round (for which no date was yet set) and as an enduring subject on the summit agenda. Generally, this was a summit which endorsed the work of other institutions and focussed on immediate political topics.

The Mulroney government was under severe domestic pressure during the spring of 1986 due to the Sinclair Stevens affair and assorted other scandals. When Mulroney arrived at Tokyo he was obviously intending to use the summit to boost his popularity at home as he strolled around the airport putting his arm around other leaders while they frowned disapprovingly.(114)

The most important aspect of the Tokyo summit was its admittance to a new "son of summits' - the G-7 group of finance ministers. As more and more of the real economic policy coordination was taking place at the finance minister level, primarily under Baker's leadership, Canada's entry into this select group was extremely important. Some have said that Canada was not a driving force behind the creation of the G-7 at Tokyo, and that Italy did most of the work.(115) While it may be true that our representatives did not take their lobbying efforts to the media or threaten to withdraw from the summit if not included, as Italy did, the close personal relationship between Canadian finance minister Michael Wilson and James Baker was essential to the creation of the G-7 in 1986.(116 ) The Italian finance minister, Giovanni Goria, was seen by other summit participants as a "clown", but Wilson's more balanced approach Welch recognized that the G-5 would continue to exist was appreciated to a greater extent at the summit.(117) In fact the G-5 does still exist, but it was agreed at Tokyo that the G-5 would invite Canada and Italy whenever "the management or the improvement of the international monetary system and related economic policy measures were discussed'' (118).

The creation of the G-7 was resisted by Britain and France not because they had anything in particular against Canada or Italy, but because they genuinely feared that this would cause the development of an unofficial G-3 (the USA, Germany, and Japan) which would leave them out of the apex of international economic decision-making.(119) In retrospect, although the G-5 continued to meet periodically it has not made any attempt to exclude Canada or Italy from any important decisions. The trend has been toward a phasing out of the G-5, although it is often difficult to tell who exactly is secretly meeting who at any time.

Another issue which the Canadian government has claimed it took the lead on at Tokyo was agricultural trade.(120) Mulroney claimed that "we decided it was important to raise agriculture ... for the first time as a group"(121) but did not mention that it was as much a British and American initiative as Canadian. There were no solutions reached to the problems of agricultural subsidies, but Canada, the USA, and Britain did press hard enough to insert the general objective of including negotiations on agriculture in the upcoming GATT round that was to be launched in September 1986.

Source: Centre for International Studies, University of Toronto.

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