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Frames No Frame

Interview with Dr. John Kirton

University of Toronto

by Joan M. Veon

Birmingham, England

May 17, 1998

Note: Dr. Kirton is a professor at the University of Toronto and heads up the unofficial Group of Seven(Eight) secretariat. He is an expert on the Group of Seven/Eight.

Veon: Dr. Kirton with regard to this G-8 meeting could you give me your comments with regard to how it has gone, the structure and areas covered.

Kirton: We think it was a very substantial summit, a summit of substantial achievement. It went very well. It was a bit of a risk, the new innovations, welcoming Mr. Yeltsin as a full member of the G-8, having the heads meet alone, doing a retreat, having the preparatory ministerial go a week before, this new format-membership has proven to be a striking success. It did allow the leaders to bear down directly on a number of important topics, respond to some breaking crises and also to bring mr. Yeltsin ever more securely into the fold, into an understanding of the issues we have long been facing as a G-7 and to feel part of the club so that he was willing to accept responsibility and move along with us. That payoff you can see in several economic issues to our peoples. The macro-economic situation, particularly the state of the Japanese economy handled very well by the G- 7, saying "Yes its a good domestic growth program you have put in place but we hear you the Japanese telling us you finally understand that more is needed--taking care of the bad debts of your banking institutions, privatizing, deregulating and opening up your economy."

Similarly good job and employability. The old debate--is the American model be the best or the heavily statist model of continental Europe or the life-time employment of Japan. That debate is gone. We have agreed on seven principles that we all share, and it's not just words but converted them into specific actions plans so that each country is saying in some detail that this is what we will do consistent with those principles, consistent with what we know to be consistent the best practices on this very important issue.

Also, in crime and drugs, typically a topic we dealt with as a matter of domestic politics with law enforcement agencies ensconced in a cult of secrecy, reluctant to cooperate with other parts of their own government let alone .internationally.

Now the habit of cooperation is firmly enshrined in the G-7 and in a number of specific areas--- we are now at the point of conducting joint operations--combined operations--so we can act as the Group of Seven against transnational crime and combat crime that has gone global.

Veon: John, with regard to the new format, does it say something with regard to a new structure which is emerging for the 21st century in the G-8 process?

Kirton: Very much--the G-8 is emerging as the center of global governance in the new era. What we see are so many subjects that were dealt with domestically like crime, like employment, now at the center internationally with the G-8 being the club that looks at them in a way that the UN can't or won't. But not only looking at them but making decisions that will count in the lives of individual citizens that will make it easier for all our peoples to get better jobs and go to bed feeling more safe at night knowing that 7 - 8 powerful governments are actively cooperating to stem the flow of drugs into the U.S. to make sure that its harder to get illegally smuggled firearms, make sure for law abiding Americans action is being taken to prevent the illegal smuggling of people from Asia and elsewhere into the US to perpetuate a cycle of crime once they arrive given the illegality of which some of them come in. We are at a world wherein most of the members of President Clinton's cabinet are actively engaged in the work of the of G-7--right across the agenda--infectious disease, climate change, nuclear safety, trade, you see the G-7 acting in ways that will determine the lives of Average Americans over the next year and beyond.

Veon: Do you think that this conference birthed in a new way global governance or did it hatch the egg?

Kirton: It hatched the egg. What it did, the new format, was double the capacity of our elected leaders and their ministers to govern the system--govern in the sense of setting--steering new cooperation and we need to deal with processes once domestic but now which are deeply transnational. We had the leaders meeting here in Birmingham this weekend, but before that last week in London meetings of our finance and foreign ministers--meeting alone, meeting together--for the first time internationally on a sustained basis, with a wide agenda, and thus deciding--disposing of--a lot of issues that could best be dealt with by them. So the G-7/G-8 was in action last week in London and did a great deal. Here we have had a second shot where leaders were really free to focus on things that only they could best determine, so their timing here has been used very well indeed.

Veon: Let' talk for a moment about the new international economic infrastructure. Could you give me your comment on the need for the countries of the world to adopt rules and regulations coming from the Bank for International Settlements (BIS)?

Kirton: We clearly need rules and regulations but the problem is so new and so broad that we clearly see the BIS cannot do it by itself. In fact they may not be the best institution to burden with the responsibility of this critically new priority. One debate is now. Over this past year as the Asian financial crisis burgeoned whether or not we simply needed more transparency to tell the markets what the financial situation of this country really is and all will be well.. The decision at Birmingham is that transparency is a vital first step but before you give markets information, you have to give them information markets can trust---high quality information--and the people who provide that information --the national supervisors of banks, financial institutions, brokerage houses, insurance companies, have to be supervised according to the highest global standards now we need a system of supervision--an international system--peer review so that bank supervisors in the U.S. can periodically have a look at how we do it in Germany, Canada or Britain to see if we are up to snuff.

Veon: John, is there any statement on employability and what they have determined there, other than the individual statements? Is there one concise document on employability?

Kirton: It's in the individual action plans.

Veon: What do you see going forward?

Kirton: There are a number of issues that the leaders said to their minister who said to report back by the time of the summit in Cologne (99), Germany next year. Certainly energy, nuclear safety--so this is an on-going process-a vital process--I think next year given the international agenda, we will see far more attention to an issue that took a second position here--the issue of multilateral trade and investment. It's really next year that we have to decide when and how to launch a new range of multilateral trade negotiations and one that picks up the new issues-- -of trade and service, issues of intellectual property so we can protect Americans against goods being pirated abroad and then being e-mailed into the U.S. in ways that wrongfully deprive the American owners and inventors of the rewards of their innovative genius.

Secondly, we need a multilateral code for investment and our attempts to get one through the OECD in Paris--the MAI--has proven to be impossible at the moment. We need high level of energy from the G8 to reinvigorate that process where we can find a way to get one that will be more productive than the one we have relied on over the past few years.

Veon: How do you think it needs to be different from the one shot down this year?

Kirton: Well--the emerging architecture at the MAI was one where there were too many people at the table so we were always being held hostage to the lowest economic denominator--everybody had their own laundry list and it was impossible to come to an agreement. Alternatively, if the G8 were to sit down, they would say, 'We all need direct foreign investment. We all have immense amounts of foreign investments but above all it is concentrated in the G8 countries. Many of us have bilateral investment treaties with one another, some of those have very high standards. So can't we, given that its our investment with one another, given that we have broadly similar agreements and sit down and make sure if they are consistent. It would be fairly easy to come to an agreement on what is the best regional investment agreement--that between Canada, the U.S. and Mexico, as part of the NAFTA agreement. One of the advantages is that not only guarantees the Core principles, national treatment for example that investment has obligations to respect environmental protection and workers right at home. If we could build on that foundation, we could easily arrive at an agreement whereas if done through the OECD, with three or four times the members, you have countries like Korea who say, "we need the investment but don't impose more burdens on us to worry about the environment or workers rights at home." That may be the proper trade off for South Korea at the minute if not their future, but amongst the G8 we have far more compatibility and are far more able to afford to build in to environment and labor protections. So the smaller group can do it more easily and do it better.

Veon: Comment on Free Trade Areas of the Americas (Summit of the Americas) and how it impacts the dynamics last two comments

Kirton: That process has been launched and should go forward as quickly as it can but the greatest anxiety hanging over this summit was "Do we have an America back at home in the bowels of the Congress that is capable of acting in a cooperative international fashion. The failure to give Clinton fast track authority was a death blow, the failure to approve US contributions to the IMF, to the new arrangements to borrow, puts a cloud on America's ability to cooperate. The difficulties the US is having moving forward on the agreements at Kyoto is another sign, the sluggishness of the ability of the US to move forward with things the Administration knows are on the whole desirable for the United States and which the world badly needs. It is good that Clinton is trying to work in the Americas on areas where he has continued to be hamstrung globally and we do hope that the cooperation of the Americas will be the foundation catalyst for broader cooperation in the years ahead.