Brussels, 10/06/2004 (Agence Europe) - The G8 Heads of State and Government (Germany, France, United Kingdom, Italy, United States, Canada, Japan and Russia), meeting from Tuesday to Thursday on Sea Island, a vacation resort for billionaires on the Atlantic coast of Georgia, USA, said they were pleased with the prospects for the global economy, the best since the late seventies, despite the uncertainty caused by the sharp rise in oil prices and the large US trade and budgetary deficit. The G8 also threw all its political weight into bringing the Doha Round out of deadlock by the end of July.
The International Monetary Fund (IMF) predicts a 4.6% rise in Gross Domestic Product (GDP) this year and a 4.4% rise in 2005. The Eight said there was clearly cause to be optimistic about growth in Europe, with "each giving the figure of 2% as a minimum figure for European growth", French President Jacques Chirac said during a press conference. By way of comparison, the US GDP is expected to climb by 4.6% this year, according to the IMF.
Jacques Chirac voiced concerns on the subject of the "eventual impact that the strong American budgetary and trade deficit could have on the future and mainly on exchange and interest rates". German Chancellor Gerhard Schröder above all stressed the risk entailed by the sharp rise in oil prices. The G8 does not for now consider the price of oil a problem but rather a "potential problem", Mr Schröder said. He added that the leaders had called upon their Energy Ministries to make proposals within the next six months to make the market more transparent.
The G8 leaders said they would do all they can to bring the Doha Round at the WTO out of deadlock by end July. "We are determined to move forward rapidly between now and July to finalise a framework agreement on the key issues", it is stated in the G8 official press release. The release also underlines the fact that trade liberalisation is a key element for prosperity. It is one of the most effective ways to generate economic growth, and represents considerable potential for the development and improvement of living standards. The climate of negotiations became a little more heated mid-May after the European Union agreed to question its export subsidies for agricultural products, on condition that the other industrialised countries do the same with their own forms of support for farm exports. A US official, Jim Wilkinson, Deputy National Security Counsellor, affirmed that the G8 countries agreed to focus on the key points of negotiation, namely farm subsidies which have a distorting effect on trade as well as market access (reduction of customs barriers). The G8 declaration specifically mentions the problem of cotton, which is crucial for African countries. It is a problem, they say, which must be settled in an ambitious manner in the context of talks on agriculture, the G8 press release explains. In a recent decision, the WTO's dispute settlement body ruled that Brazil was right to accuse the United States of illegally subsidising its cotton production.
Clash between Romano Prodi and Silvio Berlusconi over ECB and euro
The head of the Italian government, Silvio Berlusconi, and Romano Prodi, President of the European Commission, clashed at Sea Island over the euro and the role of the European Central Bank (ECB). Mr Berlusconi opened fire by publicly criticising the policy of the Central Bank and the strong euro which, he said, "makes our products bought in dollars dearer and places our exports in difficulty". "It is not evident that the exchange rate level of the euro is a negative factor", Mr Prodi retorted before the press. He was of the opinion that "a strong euro helps to keep inflation under control".
Silvio Berlusconi called for the creation of a political committee for advising ECB governors in their decisions regarding cuts in interest rates. Mr Prodi reacted to this by defending before the press the "independence of the ECB, the cornerstone of the European Union's economic policy". "I simply put forward a hypothesis that has been going round the European Union and on which the French Economy Minister has commented", Silvio Berlusconi said to justify his comments. Also criticising the ECB, French Minister Nicolas Sarkozy again raised the possibility of setting up a "European economic government" that would be the ECB's interlocutor. "It appears necessary to give the ECB a broader mission than that assigned to it - control of inflation - as, in a period of stagnation or weak growth, the problem is not that of rising prices but of growth", Mr Sarkozy explained.