Roundtable discussion on Economic Growth with Equity

On September 19, 2003, Assistant Deputy Minister (Americas) Marc Lortie led an information exchange session with representatives from civil society, at the Latin American Research Centre of the University of Calgary. The discussion was productive and substantive in nature and focussed on the "Growth with Equity" theme to be addressed at the Special Summit of the Americas (January 12-13, 2004, Monterrey).

Mr. Lortie opened the session by outlining recent developments in the hemisphere since the Quebec City Summit in 2001 and emphasizing the need for Leaders to regroup and discuss some of the challenges the hemisphere has faced over the past two years, politically, socially and economically. Economies are stagnant and there is a lot of political unrest in the region. Leaders need to come together to address these issues and find ways to restore confidence in the region.

Although there will be no new Plan of Action coming out of the Special Summit, certain key initiatives will give impetus to hemispheric cooperation as the region prepares for the IV Summit of the Americas, in Argentina, in 2005. Substantive preparations for the Special Summit formally began at a meeting of the Summit Implementation Review Group (SIRG), September 21-22, 2003. The Special Summit, meant to reinject momentum in the Quebec City Summit Plan of Action, will touch on the three main themes: Economic Growth with Equity, Democratic Governance, and Social Development. It is intended to focus on specific themes such as Health and Education and the reaffirmation of the Inter-American Democratic Charter. The Free Trade Area of the Americas (FTAA) will not be part of the formal agenda.

Mr. Lortie reiterated that this Special Summit was not scheduled originally and demonstrates that the Summit of the Americas can be and is responsive to the real problems faced by the citizens of the hemisphere. As an example, he mentioned that the Special Summit may look at agenda items such as the strengthening of small and medium-sized enterprises (SMEs) and ways to facilitate their development and access to micro-credit. Another theme is that of remittances, which are an important source of income and savings (evaluated at US$40 billion per year in the hemisphere), and the high cost of transferring funds. The Summit could explore options to reduce the cost of transferring money. These are some of the issues that governments may want to address at the time of the Special Summit.

A discussion paper was distributed by Professor Eugene Beaulieu, from the Department of Economics of the University of Calgary. Mr. Beaulieu outlined the following 4 items with respect to free-trade:

• Liberalized international trade (trade openness) is a necessary but not sufficient condition for economic growth.
• Economic growth is the single most important factor in reducing poverty.
• There is overwhelming evidence that a positive relationship exists between trade openness and poverty reduction.
• Every economic policy, including trade policy, produces "winners" and "losers." The appropriate response is to take targeted action to compensate those adversely affected by a policy rather than deny the benefits to the larger majority.

Participants inquired about the impact that the WTO meeting held in Cancun (September 10-14, 2003) would have on the negotiations of the FTAA. It was reiterated that the FTAA will not be a formal item of discussion for Leaders at the time of the Special Summit.

A concern that was shared by most participants was the "Summit fatigue" that is discernible civil society groups and the public in general, and the importance for the agenda to remain results-oriented and to focus on a few key areas. The danger in wanting to tackle a broad range of issues is that little substantive discussion could then be achieved. The Special Summit will need to be specifically targeted to initiatives that will respond to the challenges faced by the citizens of the hemisphere if it is to retain the credibility it has established through the Quebec City Plan of Action.

The following points were also raised:

• Trade liberalization results in winners and losers, although the gains are greater than the losses. Therefore, the issue is to find appropriate mechanisms to ensure that the needs of those that are left out are addressed. Participants agreed that the Summit of the Americas process could achieve a political commitment to this effect.
• Only social equity will bring true stability to the region. Democratic institutions are stronger, as was demonstrated during the Argentine crisis. However, it takes more than democracy to satisfy the needs of the citizens. Governments also need to put in place policies that will permit greater redistribution of wealth and that will address specific development needs, such as poverty reduction, access to health and education, and so forth.
• Poverty and inequity, although widespread in the hemisphere, remain domestic issues and need to be addressed by national policies. Therefore, while it is important to continue focussing on capacity-building for the smaller economies, it is equally key for countries to set specific targets to reduce poverty and income inequalities and to foster cooperation among hemispheric Summit partner to achieve these goals.