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Prime Minister Mark Carney, left, and U.S. President Donald Trump. (Credit: POSTMEDIA NEWS ARCHIVES) <\/p>\n Prime Minister Mark Carney, left, and U.S. President Donald Trump. (Credit: POSTMEDIA NEWS ARCHIVES) <\/p>\n
Fifty years ago this month Canada officially joined the Group of Seven (G7) nations that represented the most prosperous economies on the planet. They had come together to find ways to emerge out of recessions brought on by a series of events including a global monetary crisis and an oil crisis, situations that parallel today\u2019s global troubles.<\/p>\n
But there is one major shift that makes the G7 of 50 years ago significantly different from the G7 summit set to take place next week in Evian, France. The economic and trade principles that were initially laid down in 1975 in Rambouillet, France, before Canada became a member, have long been abandoned.<\/p>\n
One lost principle stands out: free trade. In the 1975 \u201cDeclaration of Rambouillet<\/a>,\u201d the six original nations (the United States, Great Britain, Italy, Germany, France and Japan) stood behind the idea that \u201cGrowth and price stability will be maintained by an open trading system. In a period where pressures are developing for a return to protectionism, it is essential for the main trading nations to confirm their commitment to the principles of the OECD.\u201d (See Nota Bene below.)<\/p>\n At the 1976 Summit, the G7 declaration warned<\/a>\u00a0that \u201ccountries yielding to the temptation to resort to commercial protectionism would leave themselves open to a subsequent deterioration in their competitive standing.\u201d<\/p>\n No such declaration has been on the agenda for years, and the best idea the G7 has come up with<\/a> for this year\u2019s summit is to \u201creaffirm the importance of dialogue and co-operation to support economic prosperity through trade, while enhancing economic resilience and economic security.\u201d<\/p>\n Some day somebody will outlaw use of the word \u201cresilience.\u201d But don\u2019t expect it to disappear from Prime Minister Mark Carney\u2019s vocabulary when he joins next week\u2019s summit. Carney has opposed liberal principles of free trade based on market forces such as prices. He has been dismissive of what came to be known as the Washington Consensus<\/a>, an international policy trend that evolved during the 1980s based on the principles of free trade, fiscal discipline, privatization, and moderate tax rates.<\/p>\n Since taking over as the CEO of the Canadian economy, Carney has thrown these principles overboard. Along with U.S. President Donald Trump, Carney has consistently dismissed trade liberalization in favour of government-managed trade and industrial policy. State policy, not the markets, should determine the economic future of a nation.<\/p>\n On trade and economic policy, Carney and Trump share methods and approaches, but not reasons. Carney sides with leftist economists, while Trump aligns his trade and economic policies based on the views of what might be considered right-wing economists.<\/p>\n Story Continues <\/p>\n Among many other influences, Trump has adopted the trade ideas of such economic theorists as former U.S. trade representative Robert Lighthizer, who believes Communist China poses a threat to America in a free trade world. In his 2023 book<\/a> No Trade is Free: Changing Course, Taking on China, and Helping America\u2019s Workers, Lighthizer argues that global free trade and deals such as the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA) created trade imbalances that harmed American workers and the U.S. economy. No more free trade, argues Lighthizer; bring on tariffs.<\/p>\n Trump and Carney are also fans of sovereign wealth funds. In April, Carney announced the formation<\/a> of the $25-billion Canada Strong Fund that will invest government money in private Canadian corporations. Last year in Washington, Trump outlined his own national wealth fund that would use US$5.7 trillion in government assets to invest in U.S. corporations. The objective is to leverage corporate returns \u201cto promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish long-term economic security, and promote U.S. economic and strategic leadership internationally.\u201d<\/p>\n The wealth fund idea was\u00a0endorsed<\/a>\u00a0last week by Bernie Sanders, representing the left-wing socialist branch of the Democratic Party. That Trump and Sanders are on the same page is another demonstration of the fine line that allegedly divides the economic ideas of politicians on the left and right.<\/p>\n One of the influences on Carney has been University of Sussex economist Mariana Mazzucato, the author of books and articles promoting government intervention in the economy. Her books have included The Entrepreneurial State (2014) and The Value of Everything (2018), which Carney has described as \u201cmagisterial.\u201d Mazzucato is one of the world\u2019s leading opponents of free trade, deregulation and fiscal discipline. In 2021 she represented<\/a>\u00a0Italy on a G7 Economic Resilience Panel that called for dismantling all aspects of the Washington Consensus in favour of a new consensus based on accelerating industrial strategies, state interventions and deficit funding.<\/p>\n That, today, has become the dominant G7 economic model. And last year, in a commentary in The Toronto Star, Mazzucato\u00a0urged<\/a> Prime Minister Carney to develop a major series of \u201cmission-oriented\u201d industrial strategies to shake up the Canadian economy. That\u2019s what he is doing.<\/p>\n Carney, Trump and other G7 leaders may debate some issues, but today they are all following the same agenda.<\/p>\n \u2022 Email: tcorcoran@postmedia.com<\/a> <\/p>\n Nota Bene: Growth through open trade <\/p>\n