Introduction

Since its emergence in 1975, the annual Summit of the world's seven major industrial democracies and the European Union has provided a regular forum for their heads of state and government to address the most pressing international issues of the day, and advance the process of finding solutions to them.

For the past 20 years, the members of the G7 have focussed primarily on the core economic issues of macroeconomic management, microeconomic modernization, multilateral trade, NorthSouth relationships, and, more recently, assistance to postcommunist countries. Yet they have also dealt with an expanding array of more political issues, including those related to the global environment. While at times the Summit has generated specific collective decisions, it has reliably provided a privileged forum for political leaders to hold private discussions among themselves, and together establish policy directions for the most powerful countries, international organizations, and the international community as a whole. With a yearlong process to prepare, and the presence of thousands of journalists onsite to report the results, the Summit has done much to set the agenda, define the priorities, establish the parameters, and catalyze collective action in the international community.

During the past few years, the Summit has concentrated on the participation of, and financial assistance for, Russia (which first attended in 1991 at London as the USSR, and became a full participant in the G7's political discussions at Naples in 1994). It has also focussed on completing the Uruguay Round of multilateral trade negotiations and mobilizing assistance for Ukraine.

The 1994 summit in Naples, however, defined a new agenda. In identifying the subjects for discussion and decision at the next gathering, being held in Halifax, Canada, June 1517, 1995, it placed the focus on two questions:

1.How can we assure that the global economy of the 21st century will provide sustainable development with good jobs, economic growth and expanded trade to enhance the prosperity and wellbeing of the peoples of our nations and the world?

2.What institutional changes may be needed to meet these challenges and to ensure the future prosperity and security of our people?

In addition, leaders agreed that Halifax would review progress on trade issues, specifically, continuing trade liberalization, cooperation among the World Trade Organization (WTO), International Monetary Fund (IMF), International Bank for Reconstruction and Development (IBRD), or World Bank, and the Organization for Economic Cooperation and Development (OECD), competition policy (in the OECD), investment rules, environment (in the WTO) and employment and labour standards. They further promised to report on their achievements in speeding up implementation of their national plans flowing from the UN Framework Convention on Climate Change. And they called for a "more flexible and less formal Summit."

Sustainable development, international institutional reform and related issues of trade and environment were thus clearly chosen as the centrepiece subjects of a leadersdriven, businesslike Halifax Summit. The first crucial question for Halifax is thus how to encourage environmentally sustainable development (a goal which includes good jobs and economic growth) through investments in appropriate technologies, energy efficiency improvements, cleaning up polluted areas, and job creation through enhanced environmental protection. The second critical question is how sustainable development can best be fostered through institutional reform of such organizations as the IMF, the World Bank, the WTO, the OECD, and various UN agencies.

Preliminary intergovernmental consultations among Summit governments during the autumn of 1994 and early 1995 confirm that their focus continues to be on international institutional reform, particularly as 1995 marks the 50th anniversary of the United Nations. The restoration and acceleration of economic and employment growth among virtually all G7 countries in 199495, the absence of serious exogenous economic crises in postcommunist societies, the conclusion of the Uruguay Round of international trade negotiations, and the Mexican peso shock of December 20, 1994, further suggest that Halifax will indeed centre on those priorities specified at Naples. In addition, G7 governments held the third standalone meeting of their environment ministers in Hamilton between April 29 and May 1, 1995. Here the ministers discussed environmenteconomy integration, global environmental priorities, and relevant international institutions.

It was natural that such critical topics and potentially historic processes would engage the energies of Canada's National Round Table on the Environment and the Economy (NRTEE). The NRTEE is an advisory body to the Prime Minister of Canada on sustainable development. It has a legislated mandate to act as a catalyst for change in Canadian society. Conscious of Canada's particular responsibilities as host of the 1995 G7 Summit, the NRTEE on February 27, 1995, convened a workshop in Montreal to examine ways to integrate sustainable development considerations more fully into the Halifax Summit, in ways consistent with, and supportive of, the priorities established by the G7 at Naples.

The workshop was designed primarily to provide members of the NRTEE's Task Force on Foreign Policy and Sustainability with the analytical background and current information regarding the G7 and the international sustainable development agenda required for them to prepare advice to the Prime Minister for approval at the NRTEE plenary on March 9, 1995. It was also designed to exchange views with policy makers about the role that the G7 Summit system generally has played, can play, and should play regarding sustainable development objectives, with a particular focus on the Halifax Summit and the Hamilton Environmental Ministerial meeting. The agenda for the workshop is reproduced in Appendix A.

Among the participants at the workshop were senior Canadian government officials, academics, NGOs, NRTEE members, and representatives from business. Prominent individuals from Canada's G7 partners in the USA, Europe and Japan were included to provide international perspectives on the subject. A list of participants can be found in Appendix B.

The day's presentations and discussions were of exceptional quality. The dialogue thus prompted the organizers to prepare the proceedings in the form of this report so that the basic substance of the workshop might be made available to a wider audience. This report is based primarily on the presentations of speakers but also incorporates some of the background material that was prepared prior to the workshop.

Chapter 1 was prepared by The Honourable Maurice Strong, Chair of Ontario Hydro, Chairman of the Earth Council, member of the NRTEE, and formerly SecretaryGeneral of the United Nations Conference on Environment and Development. In it, Mr. Strong presents some questions of international institutional reform required to deal with postRio sustainable development issues.

Chapter 2, "Sustainable Development and Canada at the G7 Summit," was written by Pierre Marc Johnson, a former Premier of Quebec, now practising law in Montreal and serving as ViceChair of the NRTEE and Chair of its Task Force on Foreign Policy and Sustainability; and John Kirton, an associate professor of political science at the University of Toronto and member of the NRTEE Task Force on Foreign Policy and Sustainability. This paper traces the deliberations and decisions on environmental and development issues at the Summits from 1975 to 1994, with a focus on Canada's contribution. A record of G7 members' compliance with summit decisions on the environment and development at the three most recent Summits, in Munich, Tokyo and Naples, was prepared by Ella Kokostis, a Ph.D. candidate in political science at the University of Toronto. It is included in this volume as Appendix C.

Gordon Smith, the Prime Minister of Canada's personal representative for the Summit ("sherpa"), and Deputy Minister of the Department of Foreign Affairs and International Trade in Ottawa, opened the conference. Mr. Smith provided the group with a frank and insightful assessment of Canadian preparations for the Summit to date, and an indication of the major agenda items as they were emerging in the preparatory process. His presentation is included as Chapter 3.

In Chapter 4, Mel Cappe, the Deputy Minister of the Environment in Ottawa, suggests some ways that the NRTEE could make a particularly useful contribution to the process of defining the agenda for the G7 Summit. The Deputy Minister highlights the difficulty in framing issues of sustainable development in the G7 agenda, posing the question of whether sustainable development should be integrated into the G7 agenda, or should stand alone as a separate agenda item. In order to frame advice to the Prime Minister, he suggests the NRTEE should, in the short term, focus on developing a concrete web of actions, commence a longer term process, and consider a general statement of principles to guide future work.

In Chapter 5, Ved Gandhi, the Assistant Director of the Fiscal Affairs Department of the International Monetary Fund, in Washington, DC, introduces the participants to the purposes of the Fund and to some of the work that the Fund has undertaken on the environmental implications of its activities. Mr. Gandhi stresses the need for international monetary stability, exchange rate stability, and sound macroeconomic policies, in the achievement of effective environmental protection. Although the Fund attempts to consider some environmental measures that relate to its central task, it does not normally review or comment on national or international environmental policies.

Len Good, the Executive Director for Canada at the World Bank, and formerly Deputy Minister of the Environment in Ottawa, provided Chapter 6. Mr. Good addresses the issue of reform of International Financial Institutions (IFI) from three vantage points: shock management; policy responsiveness; and overlap and duplication. Under the latter category, Mr. Good considers the relationship between the World Bank and the IMF. He concludes that IFI reform can cover a broad spectrum of issues; and that in order to be successful, policy makers must define the problem to be resolved, possibly from one or more of these vantage points.

In Chapter 7, Robert Page, the Dean of Environmental Design at the University of Calgary, member of the NRTEE, and member of the federal government's International Trade Advisory Committee (ITAC), who has a longstanding interest in issues of trade and environment and institutional reform, examines the prospects for the WTO in addressing effectively some of the complex issues of trade and environment. Dr. Page suggests that although the traditions of the trade community have been paramount in the General Agreement on Tariffs and Trade (GATT), with the creation of the World Trade Organization there is an opportunity to build into the structure institutional changes necessary to consider trade alongside other important issues which it impacts, such as the environment.

In Chapter 8, Richard Eglin, the Director of Trade and Environment at the World Trade Organization in Geneva, highlights three areas for consideration by the NRTEE in preparing advice to the Prime Minister on trade and environmental issues for the G7. Mr. Eglin first sets out the WTO's internal schedule and agenda on trade and environment. He then points to the dangers of examining trade and environment issues as a divisive NorthSouth issue. Finally, Mr. Eglin notes some institutional characteristics of the WTO and its process which play into the trade and environment debate.

Dan Esty, a Professor of Environmental Law and Policy at the Yale School of Forestry, a Professor of Environmental Studies at the Yale Law School and Director of the Yale Centre for Environmental Law and Policy, contributed Chapter 9. Mr. Esty draws on his considerable experience in government (with the US Environmental Protection Agency) and law, to argue that the international environment is not adequately managed under the present system of treaties, conventions, agreements, agencies, programs and institutions. This system, he concludes, is riddled with overlap and confusion. He suggests that the international system requires a new Global Environment Organization to adequately manage and ensure stewardship of the world's environment.

In Chapter 10, Jim MacNeill, the Chairman of the International Institute for Sustainable Development, Senior Advisor to both the Administrator of the United Nations Development Programme (UNDP) and the International Development Research Centre (IDRC) and formerly the SecretaryGeneral of the Brundtland Commission, takes issue with Mr. Esty's proposals. While Mr. MacNeill agrees with the need for reform in the international management of the environment, he argues that one should strengthen and build on existing institutions, in particular United Nations Environment Programme (UNEP), rather than construct new bodies.

Chapter 11 was prepared by David Hale, the Chief Economist for Kemper Financial Companies in Chicago. He advises the group's investment advisory division on the economic outlook and a wide range of public policy issues. Mr. Hale identifies three characteristics of the post ColdWar era that have set a new international context for the G7 and will have a bearing on the issues that are considered in Halifax. Among these characteristics are the relative poverty of the public sector visàvis the private sector, changes in capital flows to emerging and new economies, and the resurgence of ethnic warfare. All of these characteristics frame the immediate political and economic agendas of this and future Summits.

Chapter 12 was contributed by Rudolf Dolzer, the Ministerial Advisor in the Office of the Chancellor of the Federal Republic of Germany. Dr. Dolzer considers the political realities of the prospects for reform of international institutions and the UN system in the short term. He concludes that it may be unrealistic and overambitious to expect substantive reform at Halifax. Yet the G7 Summit in June can begin a process to consider some of the specific questions that need to be addressed, including the roles of current environmental institutions, as well as the mandates of the international economic and financial institutions. The initiation of that process would represent a success for Halifax.

In Chapter 13, Masao Kawai, the Head of Chancery of the Japanese Delegation to the UN in New York, summarizes his perspective on the main issues underlying the debate over international institutional reform for Halifax. These include international economic globalization and a consideration of whether the Bretton Woods Institutions are equipped to deal with these new economic realities. A related, contextual issue is the absence of a coherent global strategy for economic development. Finally, international institutions have as yet been unable to respond adequately to emerging global issues, of which the environment is only one. The need for increased coordination at the international level is clear. The political will must exist to carry out some of the necessary reforms.

In Chapter 14, Sarah Richardson, Foreign Policy Advisor at the NRTEE, and John Kirton, present the main conclusions of the Task Force on Foreign Policy and Sustainability. These conclusions reflect many of the important observations, comments and questions arising out of the presentations and discussions at the workshop. They also take into account the other preparatory work and analysis of the Task Force. The comments set out in Chapter 14 reflect closely the substance of the advice that the NRTEE sent to the Prime Minister of Canada on March 21, 1995.

The views expressed in this report are those of the authors alone and do not necessarily reflect the positions of their respective organizations, the National Round Table on the Environment and the Economy or the Government of Canada. Rather, they represent an intellectual contribution, from a diverse array of distinguished experts, to the important deliberations on sustainable development and international institutional reform which G7 leaders and governments will have, before, during and after the Halifax Summit.