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Apr 29, 2010 - Harper to push on for global financial reform

David Akin, Canwest News Service  Published: Thursday, April 29, 2010
/www.financialpost.com/news-sectors/financials/story.html?id=2966029#ixzz0mtaDOhu3

GATINEAU, Que. -- Prime Minister Stephen Harper said Thursday he will push the world's leading industrialized nations to follow through on commitments to global financial reform and a return to balanced budgets but rejected calls, increasingly coming from Europe, to establish a tax on the world's largest financial institutions.

He also said he holds out little hope that nearly decade-old negotiations to reduce global trade barriers through the World Trade Organization -- the so-called Doha round of trade talks -- would make any progress this year.

Canada is chair of the G8 this year and is co-chair of the G20 and, as a result, will play an influential role in setting the agenda for discussions of world leaders when they gather in southern Ontario this summer.

"June's discussion must be less about striking new agreements than establishing accountability for existing ones," Mr. Harper said at an international conference here hosted by the Canadian Chamber of Commerce.

Expanding on ideas he's talked about at other international gatherings, such as the World Economic Forum in Davos, Switzerland, earlier this year, Mr. Harper said G20 nations must provide a clear road map to a return to balanced budgets, the elimination of restrictive foreign trade practices and some new forms financial regulation.

"Understandably, there have been calls for rigourous, even punitive measures to be taken against those responsible," Mr. Harper said. "You'll know one refrain is a global bank tax. You will also know that Canada is not part of that chorus. Just as you can't tax an economy into prosperity, you can't tax the financial sector into stability."

Instead, Mr. Harper said he will push G20 members to adopt national systems of financial institution regulation that mirror Canada's. As Mr. Harper and many other cabinet ministers have been saying for more than a year in speeches around the world, Canada's banking system was the only one in the industrialized world that did not require a bailout from the national government.

"The key for our banks, apart from their own strong management decisions, has been strong, active supervision with a regulatory framework designed to avoid reckless risk and ensure transparency," Mr. Harper said.

Mr. Harper expanded on that point in a panel discussion after his speech.

"While the market is the best tool we have for harnessing growth and creating long-term prosperity, a completely unregulated, ungoverned market -- a market without governance -- is unstable. And to the extent we now have a truly globalized economy, we need some semblance of global governance," said Mr. Harper. "That's what the G20 is so if the G20 doesn't work, something else will have to fill that gap. We're not talking about world government. No one is prepared to surrender their sovereignty to the G20 or some other body but what they are going to see in practice is that we are going to need to co-ordinate our policies to create stability for all of us."

One key goal for Canada at the G20 and elsewhere is fighting protectionism, Mr. Harper said. Canada's prosperity depends heavily on exports; tarrifs and other trade barriers can threaten that prosperity.

Canada is participating in the Doha Development Round, a series of negotiations that began in 2001 through the World Trade Organization to lower trade barriers. Those talks have stalled because of an impasse between developed nations like Canada and the developing world, largely over agricultural subsidies.

Although Canada argues for free trade in most products, it protects certain agricultural sectors such as the dairy industry from international competition. Agricultural exports are often the chief means for developing nations to earn any export revenue and want agricultural markets in developed countries opened up while keeping their own protected from outside competition.

"We'll not see completion of the Doha round in 2010. I don't think we'll see significant movement in 2010," Mr. Harper said. "I don't think the economic or political circumstances in some key countries are right for that."

Mr. Harper has also said 2010 will be a transition year -- and possibly an historic one -- for both the G20 and the G8. The G20 is setting itself up as the pre-eminent international forum to deal with global economic and financial issues. Mr. Harper said that leaves the G8 free to pursue a broader and, possibly more ambitious agenda.

Mr. Harper also announced that the federal government will provide $25-million over four years to establish the Canada Centre for Global Security Studies at the Munk School of Global Affairs at the University of Toronto.

Canwest News Service




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