Bridges Weekly Trade News Digest • Volume 13 • Number 22 • 17th June 2009

G8 Finance Ministers Pledge Support for Doha, Business Reform

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Finance ministers from the Group of Eight world economic powers meeting in Italy over the weekend renewed their commitment to resisting protectionism and pushing for a global trade deal, but sparred over whether it is too early to start winding down stimulus spending amid the ongoing economic turmoil.

“Of course, the G8 meeting was a stormy one. We discussed all the most heated issues,” Russian Finance Minister Alexei Kudrin told journalists after the conclusion of the talks, according to a report in The Moscow Times. “On the whole, the uncertainty hasn’t gone anywhere - the risks remain on the financial markets as well in certain regions. So it’s too early to start talking about the end of the crisis.”

The ministers butted heads over whether countries should pursue further stimulus spending amid the economic crisis. The US and the UK argue that it is still too early to withdraw any government funds, while Continental Europe, led by Germany, worry about the ultimate consequences of the debt that such measures have already accumulated.

The communiqué released at the meeting’s close concluded that countries should begin considering ‘exit strategies’ for “unwinding the extraordinary policy measures” that were enacted in response to the crisis. But such measures “may vary from country to country,” the ministers allowed.

The ministers also vowed to refrain from implementing trade-strangling protectionist measures, and pledged their support for “an ambitious conclusion” of the Doha Round of trade talks at the WTO. Trade finance - the loans and other forms of credit that oil the wheels of global commerce - also got a mention in the three-page communiqué. The ministers called boosting trade finance support in line with previous G20 commitments “essential” to reviving international trade (see Bridges Weekly, 8 April 2009, http://ictsd.net/i/news/bridgesweekly/44813/).

The ministers also touched on food security and climate change, and outlined the beginnings of a set of standards on “propriety, integrity and transparency” in international business and finance. This initiative, the beginnings of what the ministers dubbed the ‘Lecce Framework’ after the southern Italian town where they met on Saturday, would cover topics ranging from executive compensation and bribery to tax havens, money laundering and terrorism financing. The initiative will aim to build on reform efforts begun by the International Monetary Fund, the World Bank, and other international organisations.

“To ensure effectiveness, we will make every effort to pursue maximum country participation and swift and resolute implementation,” the ministers said.

The meeting of finance ministers from Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States comes a few weeks ahead of a gathering of their heads of state, who are set to meet from 8-10 July, also in Italy.

Additional information

To read the full text of the G8 finance ministers’ communiqué, please click here http://ictsd.net/downloads/2009/06/g8finmin.pdf.

ICTSD reporting; “G8 discusses unwinding ant-crisis measures,” THE MOSCOW TIMES, 15 June 2009.