G8 Must Exert Leadership on Trade

May 26, 2003

The world is approaching one of those crossroads when governments have to make decisions that will affect people’s lives for generations. Governments can take the road to greater liberalization of international trade for the good of all, or risk sliding back into a world governed by narrow and short-sighted protectionism and self-interest.

Where business stands is clear. The chairmen of six leading business organizations*, all of us heads of major companies, have addressed an open letter to the heads of state and government attending the G8 Summit at Evian on Lake Geneva. We have appealed for them to show leadership in securing a successful outcome for the Doha Round trade negotiations in the World Trade Organization (WTO).

As the most trade-dependent industrialized country in the world, Canada has much to gain or to lose from what happens in the WTO. Earlier this month, therefore, the Canadian Council of Chief Executives (CCCE) released a major paper recommending 12 priorities for Canadian negotiators including the total elimination of tariffs on industrial goods.

Canadian leadership in driving an ambitious WTO agenda will be essential both to rebuild the credibility that has been lost through past failures to meet deadlines and to reinforce confidence in multilateral institutions and processes. As we said in the CCCE paper:

"Only a multilateral rules-based system can provide the predictability and security that Canadian businesses need in order to flourish both at home and in the global economy. And especially at a time when sharp divisions on issues of security are undermining the effectiveness of other international institutions, it is vital to demonstrate that the multilateral path is indeed the best way to advance the human condition around the world."

When trade barriers go up everybody ultimately suffers, the poor as well as the rich. The world’s most powerful industrial nations therefore should exert their collective political will to ensure that the Doha Round fulfils its promise, despite recent missed deadlines and strains between the European Union and the United States. There is still time to get the negotiations back on track for a crucial meeting of WTO trade ministers in Cancún, Mexico, in September.

In the words of the open letter signed by the heads of all six organizations: "We reject the pessimism and scepticism expressed in recent months about the prospects for the key mid-term meeting in Cancún, and for concluding a successful negotiation by the 2005 target date."

For the past half century, trade has driven economic growth, stimulated by the progressive opening of markets over eight trade rounds. Capital, goods, ideas and people move more freely than ever before. The volume of world exports rose 20-fold while world output rose sevenfold in the past half century. And a recent World Bank study predicted that pursuit of dynamic trade liberalization could raise world income by an additional US$800 billion annually by 2015.

Furthermore, the expansion of trade is not just an economic issue, especially in less developed countries. Societies become more stable and more moderate when living standards are rising, when people can feel that the future will be brighter and that they have a stake in it. The multilateral trade agenda has a fundamental impact not just on the economy, but also on social progress and global security.

As the CCCE said in our recent WTO paper: "The battle against terrorism will not be fought with weapons alone. The benefits that flow broadly around the world from the expansion of trade and investment flows have had, and will continue to have, a powerful positive impact on the world’s collective security."

For all of these reasons, it is vital for the Doha Round to culminate in greatly improved market access in the industrialized world for the goods and services, and especially agricultural products, that developing countries export.

Business leaders across the industrialized world are ready to do our part in building a better world. And as we say in our joint letter to the G8 heads of state and government: "We are counting on your leadership to make sure that the WTO negotiations advance on schedule and you can count on our support to help achieve that goal."

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* Richard L. George is Chairman of the Canadian Council of Chief Executives and President and Chief Executive Officer of Suncor Energy Inc. Leaders of the following business organizations also signed the letter: John T. Dillon of the Business Roundtable (Chairman and CEO, International Paper Company), Jean-René Fourtou of the International Chamber of Commerce (Chairman and CEO, Vivendi Universal), Gerhard Cromme of The European Round Table of Industrialists (Chairman, ThyssenKrupp), Hiroshi Okuda of Nippon Keidanren (Chairman of the Board, Toyota Motor Corporation), and Georges Jacobs of UNICE, the Union of Industrial and Employers’ Confederations of Europe (President of the Executive Committee, UCB S.A.).