Cologne -- The major industrialized countries ended their 25th annual summit by reaffirming economic policies for increased trade liberalization, a more stable global financial system, and debt relief for poorer countries and Russia if they adopt economic reforms.

"We took critical steps to make the economy of the world more resilient, to moderate the cycles of boom and bust," said President Clinton, speaking June 20, shortly after the conclusion of the three-day Group of Eight (G-8) Summit, held this year in Cologne.

The G-8 members are the G-7 -- United States, Germany, Japan, the United Kingdom, Italy, France, and Canada -- plus Russia, which only recently joined, but does not participate in the financial discussions.

In a statement issued June 18, the first day of the summit, the G-7 leaders noted "with satisfaction the recent improvements in market confidence and in the prospects for growth of the world economy as a whole."

Continued strong growth in the United States is a major feature of the world economy, the leaders noted. They also cited "important policy actions" to promote recovery in Japan, the successful launch of the European single currency and progress and low inflation in East Asia and Latin America.

However, to maintain and expand the economic success, certain important steps must be taken, the G-7 leaders said.

Among the most prominent of these is the launch of a new round of multilateral trade negotiations in November at the World Trade Organization (WTO) ministerial meeting in Seattle.

The G-8 communique, released June 20, reiterated the leaders "strong support" for the WTO and open trade and investment, and it called on "all nations to resist protectionist pressures and to open their markets further."

It also said that an effective round of market-opening trade negotiations "should help pave the way for the further integration of developing countries into the world economy." The new trade round will seek "to spread the benefits of trade more broadly," said Clinton.

While the leaders unanimously expressed support for the upcoming round, French President Jacques Chirac succeeded in getting the G-8 in its communique to endorse a study of food safety and biotechnology by the Organization of Economic Cooperation and Development (OECD). U.S. trade negotiators have argued that unfounded claims about biotechnology and food safety are used as trade barriers. The G-8 also inserted into its communique a commitment to "a science-based, rules-based approach" to these issues.

The G-7 and the G-8 endorsed additional measures to strengthen the global financial architecture and to sharply expand the Highly Indebted Poorer Countries (HIPC) debt relief initiative, which is operated jointly by the World Bank and the International Monetary Fund (IMF).

The effort to reform the global financial architecture has been on the G-8 agenda for several years, but got underway in earnest after the eruption of the financial crises in Asia in July 1997.

The reforms, agreed to by the leaders, include measures to strengthen the international financial institutions by giving them more power to prevent and respond to crisis and to enforce greater disclosure by governments and financial institutions of crucial data and transparency in their operations. The reform measures would also help emerging market economies deal better with risk by encouraging better financial practices, requiring a sharing of responsibility by the private sector when crisis occurs and placing greater focus on programs to protect the most vulnerable at times of crisis, according to a White House Fact Sheet.

"Cumulatively this represents probably the most far-reaching set of reforms proposed to the system in the last couple of decades," said Timothy Geithner, under secretary of the Treasury for international affairs, who briefed reporters June 18.

The enhancement of the HIPC debt relief initiative garnered the greatest praise from Clinton. "Our plan will more than triple the amount of money available for debt reduction, reducing up to 70 percent of the outstanding debt of the poorest nations," Clinton said.

Under the new "Koln Debt Initiative," the number of poorer countries eligible to seek to enter into World Bank/IMF HIPC debt relief programs increases to 33. Under the new program countries would get relief faster and the funds freed up can be used directly for social spending such as health care, child survival, AIDS prevention and improved government operation and services.

Most of the beneficiaries are in Africa. To obtain the debt relief a country has to enter into a World Bank/IMF-supervised economic reform program, then stick with it to show that the debt relief will support sustained reforms.

The debt being forgiven is owed to international financial institutions and to governments, with a small amount owed to banks, said Geithner. The 33 HIPC countries' have HIPC-type debt of about $127,000 million, according to the White House. The new initiative could help reduce up to 70 percent of this amount.

The G-8 also supported debt relief initiatives for Russia, conditioned on the Russian government and the IMF reaching an agreement on a Russian reform program that would be supported by IMF loans. Once that agreement is in place, the G-8 communique urged the Paris Club, the forum where government-to-government debts are negotiated, "to act expeditiously to negotiate a debt rescheduling agreement with Russia."

The summit communique also included important education and labor rights initiatives. The G-8 endorsed the "Koln Charter" in which the leaders supported the need to place emphasis on education, vocational training, academic qualifications and lifelong upgrading of skills as crucial to the future of the industrial countries, according to the communique. The leaders also committed to the "effective implementation" of the International Labor Organization's Declaration on Fundamental Principles and Rights at Work.

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