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From Denver 1997 to Birmingham 1998
Country Report

Canada

~ Canada Contents ~ Country Objectives ~

Social, Political, And Economic Overview

Canada's social, political, and economic environment is dominated by the Liberal government's deficit fighting legacy, the ongoing question of Quebec separation from Canada, and the country's strong economic performance and credentials at the end of the 1990's. Socially, federal and provincial government spending cuts have contributed to public criticism of the current perceived state of Canada's health and education systems; to higher university tuition fees; to doctors' strikes in Alberta; and to overcrowded emergency rooms in Quebec and Ontario. Recent new spending has sought to address these concerns.

The Quebec separatist movement, and the national political scene, were shaken recently by the announcement that popular federal Progressive Conservative leader, Mr. Jean Charest, would be moving to Quebec to lead the provincial Liberal Party in the next election against the governing separatist Parti Quebecois. With Mr. Charest as the provincial premier, 59% of Quebecers would choose to maintain the status quo while 31% would prefer independence.

Economically, 1997 was a stellar year for the Canadian economy, highlighted by the elimination of the country's fiscal deficit. Canada also recorded the fastest economic growth in the G7 with GDP expanding by 3.8%. Inflation remains low at 0.9%, and unemployment has fallen from approximately 9.3% in March 1997 to 8.5% in March 1998.

Canada's Priorities For The Birmingham Summit

Canada will have four top policy priorities at the Birmingham Summit: 1) establishing a secretariat to supervise international financial transactions; 2) gaining consensus on measures to reduce domestic unemployment; 3) securing resources to implement the international treaty banning landmines; and 4) pushing forward negotiations to create a permanent International Criminal Court.

In securing these goals, Canada has as assets a high level of economic and fiscal credibility, as well as a leader that is enjoying significant popular support at home, and a growing international presence and respect. Canada's performance in eliminating its deficit and in maintaining solid economic credentials gives the Canadian delegation strong credibility in speaking on such issues from a base of experience and success. Furthermore, Canada's strong economic performance, and Mr. Chretien's relatively uncontroversial term as prime minister have contributed to a general satisfaction with the government's performance as demonstrated by a strong endorsement of Mr. Chretien's leadership at a recent Liberal Party convention, as well as by a Liberal victory over the favored Reform Party candidate in a recent by-election.

Internationally, Mr. Chretien's and Canada's profile are on the rise as a result of the widely acclaimed signing of a Canadian-sponsored treaty banning the use of anti-personnel landmines, because of Canada's leadership in seeking the creation of a permanent international criminal court, and because of the country's welcomed leadership in pursuing a Free Trade Area of the America's.

Mr. Chretien may also be regarded as somewhat of a senior statesman within the G7. Not only will the Birmingham Summit be his 5th as Prime Minister, but he has also had a long career as a senior Canadian politician. He has held a number of positions including finance minister, secretary of state (external affairs), deputy prime minister, and official opposition critic for external affairs.

Canada's top priority at the Birmingham Summit will be to prevent future Asian crises through the establishing of better instruments for regulating global financial transactions. The recent crisis in Asia, pushed the Canadian dollar to historic lows and is expected to take anywhere from 0.2% to 0.5% off of Canada's economic growth in 1998. The potential affects of the Asian and future crises on the global economy will mean that dealing with the issue is the top priority for discussions at Birmingham.

The "international supervisory surveillance secretariat" that Canada envisions would utilize existing International Monetary Fund and World Bank structures and expertise in order to supervise, rate, and report on the soundness of national banking systems in order to discourage investment in countries that have poor regulatory instruments. Governments, therefore, would have a motivation to improve their systems. Canada's chances for success are fair. The US and the UK favor similar proposals, but Japan and Germany question the advisability of any major reforms to the international financial system. Nonetheless, there appeared to be a consensus on the need to have some sort of new mechanism in place.

Second, Canada will contribute to the finding of concrete measures to reduce unemployment within the G7. Canada's unemployment rate is currently sitting at 8.5%, which places it in the middle of the G7 pack, with the United States and Japan having lower unemployment rates, and the continental European countries having significantly higher rates.

At Birmingham, Canada will likely frown upon any approach that advocates a direct role for government's in job creation (i.e., make-work programs). Rather, Canada will support measures, such as labour force training and research and development spending, that create a favorable environment for private sector job creation. Gaining a strong consensus or commitment on how to reduce unemployment, however, may be difficult. Canada and the United States favor aggressive actions, whereas France, Germany and Italy may be held back by cultural, political, and structural factors at home. Structural reforms in Japan's private and public sectors, as well as Japan's ongoing economic troubles will also make it difficult for Prime Minister Hashimoto to credibly commit to adopting measures that will prevent Japan's unemployment rate from growing.

Next, Canada will also seek to rally G7 support and resources behind a coordinated landmine removal agenda. An initiative to support international de-mining efforts is a natural extension of Canada's work in bringing about an international ban on landmines last December, and would represent the necessary follow-up that will demonstrate the practical value of the treaty and prevent it from becoming obsolete. Canada will encourage the G7 members to demonstrate the political will to make progress on the removal of anti-personnel landmines by adopting responsibility for regional mine clearing efforts and by providing cash to local de-mining teams and to the United Nations Voluntary Trust Fund for Mine Clearance.

Most G7 countries have signed the treaty banning landmines, and some have undertaken changes to domestic policies in order to stop the production, sale, or purchasing of anti-personnel mines. Nonetheless, the ongoing battle against budget deficits in Japan, Europe, and to a lesser extent, in the United States may make them reluctant to follow Canada's recent $14 million contribution to international mine clearance with specific commitments of financial resources for de-mining. The Canadian initiative could be discussed at the summit, but may not receive more than broadly-stated support for the need to implement the landmines treaty as rapidly as possible.

Finally, Canada is likely to push its G7 partners on the need to overcome existing obstacles to the creation of an effective and independent permanent International Criminal Court (ICC). Foreign Affairs Minister Lloyd Axworthy has recently advocated strongly in favor of creating an ICC. Furthermore, Canada has the credibility to advance this cause given its recent success with the landmines treaty, and given that Madam Justice Louise Arbour, of the Ontario Court of Appeal, is the chief prosecutor for the international war crimes tribunals in Rwanda and the former-Yugoslavia.

To ensure the court's independence, Canada will try to gain agreement on establishing an ICC that does not require the approval of the UN Security Council or of any state before proceedings can begin. Germany would likely act as an ally in this effort, with the UK being sympathetic as well. The US, France, and Russia, however, are opposed, with the former two countries expressing concern for how such a structure may be used to harass their peacekeeping and other nationals abroad. Overcoming these divisions is becoming crucial as the July 17, 1998 deadline for negotiating the establishment of an ICC approach. The issue, however, has not received much media attention, and is likely to be overshadowed by the importance, within Canada and its G7partners, of the need to address the Asian crisis, and to create jobs for their people.

Prepared by Jason Krausert, Wendy Kwok, Thalia Lidakis, Eleni Maniatis, and Mike Youash, University of Toronto G8 Research Group, May 1998.

~ Canada Contents ~ Country Objectives ~

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