The Globe and Mail (Toronto)
July 1, 2002
World Leaders Fail to Strengthen Global Economy
U.S. Leadership Lacking On Trade Disparities
By Richard D. McCormick
President, International Chamber of Commerce
Another G8 summit has come and gone, with leaders of the world’s largest economies successfully dodging demonstrators, posing for photographers, affirming aid to Africa, and talking up trade.
What they didn’t do, it appears, is much to strengthen the world economy.
After two days of talks at Kananaskis, the Group of Eight agreed on additional aid to Africa, outlined a new way of distributing that aid, and called for economic reforms on that continent. But apart from references in the Summit Communiqué to the Doha Development Agenda, the leaders missed an opportunity to comment on general trade matters, particularly removing the trade barriers that threaten economic growth and constrain developing-country exports.
Worst of all, the U.S. made no commitment at Kananaskis to correct the disparity between its pro-trade rhetoric and its recent actions that cast doubt on that commitment. To be fair, neither the Europeans nor the Japanese showed much leadership either.
As recently as last November, the U.S. was showing the right stuff, rising above trade disputes over bananas, beef and various other goods and services, to champion a new round of WTO negotiations. The success at Doha provided a much-needed lift to the spirits of businesspeople, farmers, workers and consumers around the post-Sept. 11 world.
The commitment to make the new trade talks a “development round” was especially encouraging to people in the developing countries, where exports of farm products and textiles will be the key to climbing out of poverty and hopelessness.
But in the months that followed the Doha talks, the U.S. slapped new tariffs on imported steel and on Canadian lumber, while also passing a subsidy-laden farm bill. And now Congress may attach protectionist strings to the president’s long-awaited “fast track” authority to negotiate new trade agreements.
Business and government leaders around the world have made no secret of their irritation with a nation that calls for cooperation against terrorists’ actions, but ignores its neighbors’ cries for help eliminating the poverty that is one of the breeding grounds of instability.
To its credit, the U.S. announced additional aid for Africa during the recent Monterrey conference on financing for development. A mechanism for distributing that aid was outlined at the G8 meeting. But aid is a small bandage for the hemorrhaging economies of Africa and elsewhere.
Africa produces only two percent of the world’s exports, but even that income far outweighs the continent’s aid from all sources. Its only hope for lasting economic growth is through additional exports.
In other words, the best answer to the world’s worst problems is not aid. It is trade.
But the developing countries must have better access to rich-country markets, which means fewer tariffs, duties and market-distorting subsidies.
It’s time for the United States to reaffirm, through its actions as well as its words, leadership in promoting, developing and facilitating the world economy.
Since 1947, the U.S. has been the driving force behind previous trade negotiations, most recently the Uruguay Round that created the WTO.
And the Bush administration has been vocal about the need for “trade promotion authority” and increased trade generally. Commerce Secretary Don Evans has noted that even a one-third reduction in global barriers to trade in agriculture, services, and manufacturing would add $613 billion a year to world economic output.
Observers in the business community, both in the US and abroad, are hopeful that no more surprises, like the steel tariffs, await our trading partners.
And that the U.S. will reassert its leadership in the WTO negotiations, reaffirming the WTO’s authority in trade matters and insisting that member nations resolve their trade disputes through negotiation rather than litigation.
The U.S. and other nations must advance the WTO negotiations with a spirit of flexibility and a commitment to continue to reduce or eliminate tariffs, streamline customs procedures, lower protectionist barriers in agriculture, further liberalize trade in services and agree on principles of direct foreign investment. They must ensure that environmental agreements are consistent with trade rules, permanently remove import duties from e-commerce, reaffirm that labor standards be addressed through the International Labor Organization, and generally support the free flow of goods, services, capital and ideas among nations and peoples.
All of those steps are vital ingredients in opening more markets to developing – and developed – countries.
With renewed U.S. leadership, the world trading system can deliver the kinds of progress that the rich countries’ leaders only hinted at in Kananaskis.
Richard McCormick, of Denver, is an American business leader who is President of the International Chamber of Commerce (ICC). The ICC’s Canadian affiliates are the Canadian Chamber of Commerce and the Canadian Council for International Business.
