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Role of Canada

Canada is not a foremost power in the G8. The United States, Japan, and Germany (the “big three”) dwarf Canada economically and politically. However, Canada has been able to play an active role in the G8 in a variety of ways.

G8 Agenda

Canada has been successful in influencing the agenda of the G8 over the course of its history.

• North-South Relations

  • Canada is regarded by many southern Third World nations as their voice at G8 Summits. Early on, Prime Minister Trudeau pushed the issue of North-South relations to the center of the G8 agenda. Canada has also consistently supported G8 policies aimed at reducing Third World debt. In recent times, Prime Minister Chretien has pushed African development issues and has led the G8 in its support of the New Plan for African Development (NEPAD).
     

• Political Issues

  • The G8 began its life as a purely economic forum aimed at tackling issues facing the global economy. Over time, world political issues have found a place in the G8 agenda (i.e. terrorism, nuclear proliferation, and Cold War East-West relations). Canada has been influential in bringing many of these political issues to the G8 table.

G8 Leadership

The G8 tends to be dominated by the “big three” (United States, Japan and Germany). However, Canada has shown itself to be an effective G8 leader during times of global economic crisis.

This leadership was particularly evident during the Asian financial crisis of 1997-99. In the mid-1990s, many Asian economies (including Japan) entered a major economic downturn. This led to the crash of many Asian currencies and a global investment squeeze that threatened the world economy.

Two of the “big three” in the G8 were unable to react effectively to this financial crisis. The United States was paralyzed by the President-Congress conflict and by the financial crisis itself. Japan was part of the problem that led to the crisis.

It was Canada that provided the G8 with effective intellectual, policy and structural leadership during the crisis (Source: John Kirton, Canada as a Principal Financial Power: G7 and IMF Diplomacy in the Crisis of 1997-9).

• Intellectual Leadership

  • Canada provided comprehensive programs and initiatives to cope with the crisis and defined a new international financial architecture.
     

• Policy Leadership

  • Canada provided new policies that were distinct from traditional US and G8 neo-liberal reforms. These policies included controlled capital liberalization, financial system surveillance and peer supervision, private sector burden-sharing, social responsibility in debt-relief packages, state economic stimulus, and enhanced G8 foreign aid.
     

• Structural Leadership

  • Canada provided its share in implementing these new policies. It acted multilaterally as a leading member of:
    • The International Monetary Fund (IMF)
    • The International Bank for Reconstruction and Development (IBRD)
    • The Asian Development Bank (ADB)
    • The Inter-American Development Bank (IDB)
    • The General Agreements to Borrow (GAB)
    • The New Agreements to Borrow (NAB).

Canada also acted unilaterally by contributing national funds directly to the governments of South Korea, Thailand, and Brazil, and by cutting domestic interest rates.

Canadian leadership during the Asian financial crisis had a large impact on the global economy and Canada’s status in the world. As John Kirton states, “Ultimately it [Canada] had a discernible impact in shaping outcomes in the direction of a more humane, socially responsible form of globalization on what were central issues for it [Canada], as for the G-7 and for the global community as a whole. The financial crisis of 1997-9 thus affirmed Canada’s position as a principal power in the face of an acute, genuinely global, systemic crisis.” (Source: John Kirton, Canada as a Principal Financial Power: G7 and IMF Diplomacy in the Crisis of 1997-9).

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