ARCHIVED  May 1, 1997

Summit of the Eight addresses global trade

Although no agenda has been made public for the Denver Summit of the Eight, economic experts say the leaders of eight world superpowers that will meet in Denver in June will probably address issues ranging from expanding the forum’s membership to exchange rates to global unemployment.

The leaders of Canada, France, Germany, Great Britain, Italy, Japan, Russia and the United States will gather for the summit June 20 to 22.

With the event this summer, Denver will become the third U.S. city to host the summit of economic superpowers. Denver’s Central Library will be the site of the closed meetings.

Generally, the summit is focused on discussions of the international macroeconomic situation, said Keith Maskus, a professor of economics at the University of Colorado in Boulder and a consultant to the World Bank and World Trade Organization.

At the top of the agenda this year may be the value of the dollar relative to the Japanese yen and the German mark, he said.

“It’s probably appreciated 50 percent in the last 15 months,” Maskus said, noting the huge impact that has made on business transactions. “The issue is whether these countries will choose to do anything about this.”

The summit participants could issue a statement at the end of the summit declaring that the dollar is overvalued and should be lowered.

“But I don’t think they will,” he said. “The United States doesn’t think it’s out of line.”

Along that same economic line, the forum also could ask Russia to take a more aggressive stance in deregulating its economy, Maskus said. The leaders also may address the ongoing recession in Japan and could presumably issue a statement at the end of the summit asking Japan to spend more to beef up its economy, he said.

Another hot topic could center on the dire unemployment situation in parts of Europe. Maskus pointed out that Britain has the lowest unemployment rate of major European powers, with only a 7 percent to 8 percent jobless rate.

However, Germany’s unemployment has risen to 10 percent, while the rate in France averages about 16 percent. And in Spain, unemployment has reached 25 percent, he said.

Employers are reluctant to hire new workers because labor laws are not as flexible in Europe as in the United States.

“The strong job-protection systems in these countries make it hard to fire anyone,” Maskus said.

This session of the summit may be more devoted to trade issues than past gatherings, Maskus said, noting that the United States probably will push for more free trade for the Americas.

While Chile and several other South American nations have applied to join the North American Free Trade Agreement, the approval process has been held up by the United States because Congress has yet to give President Clinton the authority to negotiate the country’s admission.

Meanwhile, European issues also may be addressed at the summit. European powers are committed to the Maastricht Treaty, signed in 1991, which aims for a common currency in the European Community by the end of this decade.

However, major obstacles hinder progress. To arrive at a common currency, each country needs to be on the same page in terms of inflation and interest rates, Maskus said.

Another hot issue for the summit may be the terms by which certain Eastern European countries – Poland, Hungary and the Czech Republic – join the European Community.

Maskus pointed out that the United States favors generous terms for the admission process, and the summit could issue a statement exhorting the EC to that effect.

Also on the agenda may be the admission of China into the World Trade Organization. China is the only major country besides Russia that is not a member of the WTO.

However, the United States is holding up China’s admission because of human-rights concerns and China’s practice of selling sensitive military technology to countries such as Iran, Maskus said.

“The Europeans generally support China joining with no conditions attached,” he said.

A subtle issue in this controversy is the U.S. desire to see China liberalize its economy while China tries to maintain its trade restrictions, he said.

Frank Schuchat, chairman of the trade policy/advocacy council of the Denver World Trade Center and a lawyer in Denver, said he expects the forum will focus on aid to less-developed parts of the world and actions that the wealthier nations can take to maintain momentum in trade negotiations.

“The issue of what each country does in respect to corruption for business in other markets” also could be an issue of discussion, he said. “It’s growing in importance.”

For example, many companies have found that the easiest way to do business overseas is to pay off local officials who open the way for the foreign firm.

Trade negotiations and agreements also are bound to be discussed by the superpowers.

“The great debate is whether to insert workers’ rights and environmental concerns in trade agreements,” Schuchat said. “The United States has a greater appetite for this as part of trade negotiations than the others do.”

Expanding the summit group beyond even the addition of Russia also might come up, said Doug Allen, a professor of management at the University of Denver.

He pointed out that China, with 1.2 billion people and an economy that has quadrupled in the last 20 years, can’t be ignored. “China is emerging as a giant economy,” Allen said.

Although no agenda has been made public for the Denver Summit of the Eight, economic experts say the leaders of eight world superpowers that will meet in Denver in June will probably address issues ranging from expanding the forum’s membership to exchange rates to global unemployment.

The leaders of Canada, France, Germany, Great Britain, Italy, Japan, Russia and the United States will gather for the summit June 20 to 22.

With the event this summer, Denver will become the third U.S. city to host the summit of economic superpowers. Denver’s Central Library will be the site of the closed meetings.

Generally, the summit…

Related Content