In the process, it might seek to deepen these trends by widening the reach of free trade to areas left relatively untouched by the 7-year Uruguay trade round, from audio-vision and telecommunications to investment and air transport. The ultimate goal must be to enlarge the tradeable goods sector of the global economy, which in turn will pump up growth as the world moves into the next century.
Group of Seven summits work as a kind of steering committee for the global economy. They have no decision making power per se. However, they provide one of the few opportunities where heads of government from the richest industrial countries can get together and show some leadership.
Summit declarations on a range of issues from money laundering to wiping out debt in the world's poorest countries, eventually lead to action. But the participants always tread a difficult line. If they are too firm in their declarations they risk alienating the 170 or so nations, including influential countries like India, which are absentees. So their declarations tend to be general in nature suggesting gently that certain global institutions should take certain actions.
The tone of the Halifax communiqué was set a year ago in Naples, when G7 committed itself to an overhaul of international economic and security arrangements, including the United Nations and the Bretton Woods institutions, the IMF and World Bank. This agenda has now broadened to look at the whole issue of trading relationships - in effect setting in motion a new, rather different style of trade round. It is designed, in some respects, to correct the impression in Europe that, as American troops leave NATO duties behind, and as the US turns its commercial attention towards the Pacific, Atlantic trade relations do not matter so much any longer. Hence, the birth of the so-called Atlantic free trade area.
The idea is that the Paris-based Organisation for Economic Development (OECD), which brings together some 26 of the larger industrial economies, start to think about how they can prise open those markets left untouched by the Uruguay round. Hence the thought that multimedia and ultimately open skies could eventually be discussed: that is if the old bilateral system in the air could be safely abandoned.
The advantage of this would be that world trade volumes, already heading for a sharp lift of 6.3 per cent in 1995 (after average growth of 4 per cent in the decade 1976-85), could be put onto a permanently higher trend as the most advanced countries open each other's markets to services, which with certain exceptions (such as cable television in the UK), remain largely closed. They were considered too difficult to deal with in GATT, without jeopardizing the whole round. Now there is the chance to deal with them, in a different, low key way which could enhance the Trans-Atlantic relationship.
That will form the core of the approach of the West on trade. Equally important, however, is what to do about the UN and the Bretton Woods institutions. The UN is more tricky because it is the only global security organisation and has a good reputation.
However, it is run appallingly.
It has far too many economic offshoots, such as UNCTAD, where the mission is still being defined and there is duplication with work already being done, of a much higher quality, by the World Bank and the OECD. Moreover, whereas government oversight of most national and global institutions is quite strong through organisations such as the Central Accounting office and Inspectors General in the US, the Audit Office in the UK and the Inspection Panel at the World Bank, the UN has no such oversight traditions. So the Halifax goal is to move in that direction, hoping that greater accountability will eventually reflect itself in closing some of the UN's less valuable offshoots.
At the IMF, the world's financial policemen since the second world war, the goal is re-empowerment, and making it more fleet of foot. The IMF's reputation took a dive recently when it failed to spot that Mexico, Latin America's showpiece economy, was heading for difficulties.
The aim now is to increase what is known in IMF parlance as its 'surveillance' powers - the right to interfere in other people's economies. If it is known that the IMF is taking a particularly strong interest in a country, and keeping it under close surveillance, then private sector investment might be perceived to be safer in that place - so it should be good for private sector expansion, foreign investment and business travel. Similarly, the IMF's sister organisation, the World Bank, is seeking to shift its role from simply lending banker to all developing countries to that of great facilitator and it will advise countries like India on how best to develop infrastructure projects from airports to roads and power stations, and how to price the services provided competitively and correctly.
Essentially, the updating of the global institutions is designed to bring them into the 21st century and match changes taking place in the marketplace; increase globalisation of trade and capital movements; expand free trade areas; increase the availability of private finance for development, introduce more transparency into global economies and create adequate crisis management systems. All of these, if implemented and accepted post Halifax, will create the opportunity for increased trade and gross domestic product.
Source: Airline Business
