The G8 plans for industry

Magazine Article, Source : The Manufacturer US
Zone : Leadership and strategy

It’s been called a “paper tiger,” but the US tends to keep its resolves. So what does the G8 want from industry?

“Nobody expects much from this increasingly outmoded talking shop of the complacent rich,” wrote a Financial Times pundit. It looked much like these summits do. The 33rd Summit of the Group of Eight (G8) Nations (the eight wealthiest industrialized nations, including Canada, France, Germany, Italy, Japan, Russia, the UK, and the US, as well as the European Union as a group), met from June 6 to June 8 in Heiligendamm, Germany, a remote and pastoral setting selected to discourage protestors. German Chancellor Angela Merkel hosted US President George W. Bush, UK Prime Minister Tony Blair, Italian Prime Minister Romano Prodi, French President Nicolas Sarkozy, and Russian President Vladimir Putin, among others.

Time will tell if the meeting was effectual or not, but the summit covered a wealth of topics affecting manufacturing and global trade. The German Presidency office described the summit’s motto as “Growth and Responsibility,” focusing on “Investment, Innovation, and Sustainability.” Topics covered transparency of financial markets, intellectual property, energy efficiency, and climate change.

The most conspicuous news was political, e.g., relating to aid to Africa, combating terrorism, and advancing common interests in troubled regions like Iran and North Korea.

Most conspicuous in global trade was the G8 leaders’ commitment to “open markets, transparency, and investment opportunities.” The G8 pledged to strengthen open investment regimes and to fight investment protectionism, while reaffirming limited investment restrictions on national security grounds.

The leaders also recognized innovation as a driver of economic growth and agreed that, as the White House wrote, “Assurance of intellectual property rights will encourage innovation.” Thus the G8 agreed to:

• strengthen cooperation to combat counterfeiting and piracy of intellectual property rights both among the G8 and with developing countries; and

• ask the Organization for Economic Co-operation and Development (OECD) to make recommendations on how to better enforce intellectual property rights.

The leaders went on to emphasize what they called “good governance” and its importance in promoting investment and development. Thus the G8 agreed to support continued systematic monitoring of the OECD Anti-Bribery Convention to ensure effective implementation of international anti-bribery obligations. Key to this is denying safe haven to “corrupt individuals” and developing measures to prevent them from using the international financial system to park and access money.

These wealthiest nations answered the developing nations’ cry for a more level global playing field and committed to help developing countries recover stolen assets and train those countries in such recovery.

What will likely affect industry most, and most quickly, is the G8’s pledges on climate change. The G8 agreed with President Bush’s initiative to convene major energy-consuming and greenhouse-gas-emitting economies to agree on a new international framework by the end of 2008, including a long-term global goal for reducing greenhouse gas emissions. This Bush conceived as a US alternative to the Kyoto Protocol of 1997 to perhaps ease criticism of the US, which, under Bush and former President Bill Clinton, declined to enact the Protocol.

The G8 reaffirmed commitment to work toward the reduction or, where appropriate, elimination of tariff and non-tariff barriers to environmental goods and services; to develop and implement national energy efficiency programs; and to advance international energy efficiency cooperation.

In all, there was a surprisingly heavy emphasis on industry and trade, when aid to Africa and US/Russian bickering took center stage. But will it add up to any action?

Yes and no. The Guardian, the London-based newspaper known for its keen political analysis, estimates that G8 countries comply with 50–65 percent of G8 resolutions, with the US gaining high marks.

Thus, in the next few years US industry can expect to make world trade easier with itself, but not for itself. US industry is covered in “good governance,” largely by the sometimes too-stiff Sarbanes-Oxley requirements, which will likely serve as a model for the remaining seven nations that choose to comply. And climate change? The Summit’s conclusion largely mirrored Bush’s initiatives.

In short, little will change for US industry.

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