G8 results I: The Summit Declaration ‘Growth and Responsibility in the World Economy’

Behind the screens of chatter about a “climate policy breakthrough” the German government published the summit declaration Growth and Responsibility in the World Economy. This corresponds largely to the prognoses published in this weblog and at wdev.eu since the first draft trickled through (>>> German G8 Politics on the Eve of Heiligendamm). Along with the chapter about energy security and climate protection, the declaration holds firmly to the hard economic interests of the G8 pursued against the rest of the world — growth and stability, investment freedom and conditions, promotion and protection of innovation and intellectual property.

Although the German government originally announced the actual focus of the summit to be new elements in world economic growth, even with a magnifying glass one won’t find anything new in this declaration. The G8 celebrate global economic growth and praise themselves for their respective economic policies. Whereas the G8 promise “to keep going”, the emerging countries are encouraged by every means to exert more exchange rate flexibility, reduce their foreign reserves or reduce imbalances. In the matter of financial market stability and in particular with regard to transparency and control of hedge funds, the German government was unable to impose more than had already been announced in the finance minister’s communiqué.

However, the declaration devoted even more attention to the G8 interest in “investment freedom” and increased promotion and protection of innovation and patents. The former also pertains to the “social dimension of globalisation”. Here, for the first time in a G8 document, some things are emphasised — from the OECD guidelines for multinational corporations to the Decent Work Agenda of the International Labour Organization (ILO) — but only just emphasised. There are no new practical initiatives for implementation. For the second point, the innovation issue, the G8 have adjourned to a new dialogue with the major emerging countries, also because meanwhile it has become clear that the latter are no longer prepared to accept the Northern agenda whereby more patent protection is supposed to mean more development. Here the G8 will need patience and commitment, like in other areas, even if after the document the “Heiligendamm Process” is only scheduled for the next two years.

G8 Labour Summit: Social rules on investment and trade, and effective regulation of hedge funds needed

At a Labour Summit taking place on 6 and 7 May, leaders from the G8 trade unions and Global Unions organisations have been calling on the G8 Labour Ministers and German Chancellor Angela Merkel to put the need for social rules around global trade and capital flows at the centre of their discussions. The union delegation, led by OECD-TUAC (Trade Union Advisory Council) and AFL-CIO President John Sweeney and Michael Sommer, President of the German DGB, was taking part in the G8 Labour Ministers' meeting in Dresden on 6-7 May and also meeting Chancellor Angela Merkel in Berlin. The unions renewed their call for the G8 to establish an international regulatory task force on private equity.

In a statement released ahead of the Summit, Global Unions called upon G8 Labour Ministers to act upon a series of policy issues to build a proper social dimension of globalisation. On employment, it called upon ministers to ensure active growth-orientated economic policy management, decent minimum wage floors and balanced labour market "activation policies". On social protection, Ministers should affirm the right to affordable universal social security systems and work to build strong and well functioning labour inspectorates. Concerning corporate social responsibility, they should work for the integration of core labour standards across all international institutions. The unions will also maintain pressure on the G8 countries to do more to tackle the HIV-AIDS pandemic.

The Global Unions also brought to light the alarming consequences of private equity and hedge funds who have in a short period become owners of significant swathes of the economy and of employment across G8 economies. Ministers should consider policy responses so that the expanding activity of private equity buy-out investment does not jeopardise long term responsible business conduct and workers’ rights to collective bargaining, information, consultation and representation within the firm.

On 1 and 2 June, the ITUC, together with the DGB and its partners in the Decent Work Campaign, will be holding a "Youth Action for Decent Work" Conference in Berlin. The Conference will bring together young people from trade unions, NGOs and political movements to discuss the challenges young people face in the world of work. The Conference will formulate policy and action proposals to achieve decent work for youth, which will be presented to the German Government as G8 host. A meeting of the ITUC Youth Committee immediately after the Conference will build on these proposals in the development of the ITUC's own policies and action plans.

Guest Comment: Four points for the G8 to act on finance

By Martin Khor

1. Curb speculation. The world is on the brink of a new global financial crisis. There has been not action by the G8 to regulate the speculative flow of funds, and new dangerous forms of speculation, carried out by hedge funds and through derivatives etc, have emerged. The G8 must now act to control hedge funds and derivatives, and regulate the flows of hot money and speculative funds. Hedge funds should not removed from the agenda.

2. Fundamental changes to the Bretton Woods institutions should be initiated. The IMF should not involved in policy-based lending to developing countries. It has a very bad record with the adverse effects of its conditionalities. The World Bank should also be reformed by lending only for projects with sustainable development criteria for its project loans. The governance system of both institutions must be fundamentally reformed, so that the developing countries have fair voice and representation. The September 2006 measure relating to the IMF is clearly insufficient and in some ways detrimental.

3. Deepen and widen debt cancellation. The move to cancel debts of some developing countries should continue. The G8 must not lose momentum on debt relief and cancellation. Debt cancellation must be extended to more countries including middle-income countries. Also, a mechanism for debt restructuring and rescheduling should be set up for countries facing debt-repayment problems, in which these countries can suspend their debt payment until a debt rescheduling scheme is worked out.

4. Aid should be reformed to really serve development needs, and the volume of aid should increase, as promised in previous G8 summits but not realised. Aid volume has instead declined in the past year. There should be an increase in aid for example for R and D and innovation for medicines for diseases that especially affect developing countries. Such R and D funds should be linked to medicines that will not be patented as the funding comes from the public sector. The medicine prices can be controlled to a low level so that they are accessible to the poor.

Martin Khor is director of the Third World Network, Malaysia. This comment is taken from his presentation to the Civil G8 Dialogue (25-26 April) in Bonn. We will report.