THE "DENVER SUMMIT OF THE EIGHT"
A TUAC EVALUATION
- The Denver Summit was essentially a political rather than economic summit, dominated by the first formal involvement of President Yeltsin
in almost all of the discussions by the Heads of State and Government.
Two final statements were produced:- a ninety paragraph communique from
the "Summit of the Eight"; and a separate summit economic statement
from the seven major industrial democracies (excluding Russia) on "Confronting
Global Economic and Financial Challenges".
- On the central points of discussion the Summit :
|reached agreement on integrating Russia into the multilateral system
through participation in "sherpa meetings"of the "G8",
immediate membership of the "Paris Club" of creditor nations,
early accession to the WTO, and progress towards OECD membership (§2);|
|lacked focus in the discussion on employment (§3-5) - the
G7 economic statement (§5) complacently states that growth
is "solid" or "increasing" and says that more needs
to be done "to increase labor and product market efficiency".
The media gave great attention to the false debate between the "triumphal"
proponents of North American "labour market flexibility" and
the more critical continental European voices. Two more G7 Employment Conferences
are to be held before the 1998 Birmingham Summit;|
|on the environment (§12-30), failed to reach agreement
on specific targets for reducing greenhouse gas emissions, which would
have increased significantly the chances of progress at the Kyoto Conference
on the Climate Change Convention to be held in December;|
|commented extensively on Sub-Saharan Africa (§54-66), with (non-quantified) commitments for trade access for products from the poorest
countries and continued aid. The G7 economic statement called for more
debt relief for " the poorest reforming countries" (§24).|
|on global and political issues, said that global integration has resulted
in "complex problems that defy unilateral solutions" (§11)
and went on to mention these exhaustively in the Communique's ninety paragraphs.
As a result the outcome of the summit lacked a clear focus or political
Growth and Employment
- The trade union delegation meeting with President Clinton the week
before the Summit had urged the Summit leaders to focus the meeting on
the need to attack the "social deficits" of unemployment, wage
inequality and economic insecurity in the G7 countries. They pointed out
that the political changes in several G7 countries provided a unique opening
to begin to put in place a "social dimension" to the globalisation
process. The G8 Communique does have a section on economic and social issues
which states that governments "-- must ensure that all segments of
society, and indeed all countries across the globe, have the opportunity
to share in the prosperity made possible by global integration and technological
innovations" (§4) and that they "-- must take advantage
of the possibilities for growth to address unemployment and economic insecurity."
However the G7 economic statement, drawn up by the G7 Finance Ministers
and discussed only briefly by the G7 Heads of Government, restates the
existing consensus of finance ministries, central bankers and financial
markets of "sound" macro-economic policies and structural reform.
This does not amount to a global growth initiative. The economic policy
guidelines (§7) restate Finance Ministers existing priorities:
guarding against inflation and deficit reduction in the US, "structural
reforms" in Europe, and encouraging domestic demand in Japan through
- The leaders' discussion in Denver on employment took place over lunch
and focused on education and training and a presentation from Italy on
the role of small and medium size enterprises in job creation. However
recent strong US economic performance and unjudicious boasting by US representatives
on the eve of the Summit led to the media coverage focusing on the false
debate which juxtaposes US and European labour market models as choices
between efficiency and equity.
- Discussion on employment will be resumed a series of other G7/G8 meetings
- a "high level" Conference on Employment in Kobe (Japan) in
November, a further meeting of Finance and Social Ministers on "growth,
employability and inclusion" in the UK in early 1998, and the Birmingham
Summit in May 1998. These G7/G8 meetings will be preceded by separate OECD
and European Union Ministerial meetings on Employment in October 1997.
The British Chancellor of the Exchequer stated that the focus of the UK
meetings would be to elaborate a "third way" avoiding the problems
in Continental Europe of structural unemployment and in North America of
"working poverty". This was the same term President Chirac used
at the Lille G7 Jobs Conference in April 1996 to define his employment
- This "avalanche" of summit meetings must be used to redefine
the much misused notion of "labour market flexibility" and build
consensus on practical measures that can be taken. Too much of the past
discussion has focused on deregulating labour markets, widening wage inequalities
and reducing the security of workers with jobs, whilst doing little to
assist the unemployed to find jobs. It is time to shift the debate and
focus on developing institutions that promote high skill workplaces, worker
involvement and lifelong learning. At the same time information could be
exchanged on what works in terms of integrating the unemployed and excluded
into active employment. The goal must be to achieve growth with equity
with the help of adaptable labour markets. The presence of the social partners
at these meetings could increase their practical relevance.
Financial Market Stability
- The G7 economic statement (§11-14) approves and reiterates
the conclusions of a separate Finance Ministers' report to the Summit on
"Promoting Financial Stability." The Report, requested by the
1996 Lyon Summit, calls for continued reforms in a range of areas covering
global financial market activity:- greater international cooperation among
financial market supervisors, including the appointment of a coordinator
to oversee information exchange when problems occur; the implementation
of measures to strengthen risk management and improve financial market
transparency; the adoption by emerging market economies of a set of "core
principles" covering banking supervision based on strong prudential
standards, to be used as benchmarks for surveillance and advice by the
IMF and World Bank; and further monitoring of developments in electronic
- These reforms are an indicator that governments are at last prepared
to take steps, however small, to initiate a framework governing the activities
of global financial markets. Particularly welcome are the backing for legal
changes to improve co-ordination between financial regulators, and the
possible appointment of co-ordinating supervisor to ease the exchange of
information when "emergencies" occur; the requirement that banks
hold sufficient capital against risks from trading activities; and continued
work governing minimum capital standards, and derivatives trading. However,
in reality, these reforms will merely treat the consequences of financial
market instability and not the causes, and only go part way to meet the
trade union demand for a new International Financial Order to restore the
balance between the real and financial economies, as set out in the TUAC
statement to the 1995 Halifax G7 Summit.
Trade, Investment and Labour rights
- Trade issues did not receive a high profile in the discussions at the
Denver Summit, in a part due to the US domestic climate surrounding Congressional
discussions on the granting of "Fast Track" negotiating authority
to the Administration and on the renewal of MFN status for China. Trade
issues are not treated in the G8 Communique and the G7 economic statement,
in the main, recapitulates broad areas of work agreed at the WTO Ministerial
Conference in Singapore last December (§30-34). The G7 "look
forward" to the completion of the Multilateral Agreement on Investment
negotiations in the OECD in 1998.
- The reference to labour standards in the trade section of the economic
statement (§31) largely repeats the WTO Singapore declaration
language - "While rejecting the use of labour standards for protectionist
purposes, we renew our commitment to the observance of internationally
recognised core labour standards". The G8 Communique however contains
a positive section on democracy and human rights (§68-72) in
general. The G8 say they have a responsibility to "further strengthen
democratic values and fundamental freedoms"(§68), and
that they will "focus on promoting good governance and the rule of
law, strengthening civil society, expanding women's political participation,
and boosting business and labour support for democracy, particularly in
young democracies and societies in conflict"(§'70). They
support the speedy adoption of an ILO Convention on the eradication of
intolerable forms of child labour. They will work with the OECD's Development
Assistance Committee and NGO's to achieve these goals. A report by Ministers
is called for the next Summit. This could give an opening to engage in
a broader discussion of the implementation of core labour standards in
- The economic statement (§'35) raises concern at the effect
of harmful tax competition between states and requested an OECD report
on this to be presented to them at the next Summit.
- A substantial part of the G8 Communique is given over to a broad range
of environmental issues. Despite this the Summit failed to make significant
progress and for the most part the G7 reaffirmed their intention to implement
past commitments. On climate change a proposal by the European Union to
go beyond the 1992 Rio Summit commitment and to reduce the three main greenhouse
gasses by 15 per cent by 2010 was blocked by the United States. Instead
the Summit agreed to "commit to meaningful, realistic and equitable
targets that will result in reductions of greenhouse gas emissions by 2010"
(§16). Moreover, governments would be allowed "flexibility"
as to how these targets are met.
- As regards de-forestation, freshwater related issues, desertification,
oceans, and children's' environmental health, the Summit failed to develop
new policies and targets to tackle associated problems. Turning to the
role of the international institutions, the United Nations and its specialist
agencies was singled out as "the strategic forum for integrating the
social, environmental and economic aspects of sustainable development."
A German proposal that a World Environmental Organisation be set up alongside
the World Trade Organisation was not agreed to.
Development, Africa and the International Financial Institutions
- The inclusion of a special section on Africa in the Political Statement
is to be welcomed. The support for democracy and good governance is particularly
important. While trade will be clearly essential for African growth, the
importance of sustained flows of Official Development Assistance cannot
be underestimated (§'59) as in the current circumstances Africa
is not receiving private investment flows. The G7 countries should match
words with a reversal of the current continuing decline of ODA to its lowest
- Concerning the debt relief question in the Economic Statement, the
concerns raised by trade unions prior to the G7 summit remain unanswered.
In particular, the questions of the number of countries which could be
eligible under the Heavily Indebted Poorest Countries Initiative (HIPC),
the total amount of debt stock to be covered, and the "completion
point" for beneficiary countries have not been satisfactorily resolved.
Further progress must be made on this by the time of the Autumn IMF/World