Barry Carin is a senior fellow at CIGI and a former Assistant Deputy Minister of Trade and Economic Policy in Canada’s Department of Foreign Affairs and International Trade. He is an adjunct professor of Public Administration at the University of Victoria.

Recent polls indicate Canada's current minority government enjoys 33 or 34 percent of popular support. Almost half of those polled said they were unhappy or very unhappy with what the prime minister had done so far to mitigate the effects of the recession. Without the summit, support might have been dragged down farther by all the troubling economic news. However, the stock market responded positively, closing April 3 at a three-month high, which was an indication of a growing confidence in the markets. The Canadian dollar's value increased.

Some pique was expressed when the British Foreign Office distributed a limited-circulation agenda rating Canada as a "second division" country for G20 summit purposes, along with Russia and Australia, instead of the "First Division with the debt-crunched US, troubled France, China with its soaring unemployment, anxious India and medieval Saudi Arabia." The tabloid press had fun with the "call of nature" that had the prime minister miss the G20 family photo, which had to be retaken.

Economic Interests

Canada's principal economic priority for the London Summit was a "standstill" on new trade barriers to investment or trade measures by countries. Integrated as Canada is with the US economy, there is widespread concern that "Buy America" provisions in the American stimulus package could infect procurement. US protectionist measures are major irritants in Canada, given our dependence on US trade and extensive experience - for example, softwood lumber - and security-driven measures that "harden" the US-Canada border. Reports that "Harper wins key support on trade barriers" - the agreement to extend a 12-month pledge not to raise new trade barriers - is seen as a success for Canada.

Canadians reading the fine print of the Leaders' Statement were reassured by the commitment to refrain from competitive devaluation of currencies. Depreciation of the US dollar spells disaster for our export industries.

Political Interests

The government's position is that Canada has exceeded the targets set out at last November's G20 meeting, and it's now up to other nations to pull their weight. The political opposition characterized the prime minister as "flip flopping on stimulus action."

The Conservative base opposes deficits and government spending - the government has been criticized by supporters for a budget deficit pegged at $80 billion over the next two years. The prime minister noted: "Canada is not ruling out additional stimulus measures in the future ... the government's first priority is to get the current stimulus spending into the economy." The IMF reported Canada's stimulus this year adds up to about 1.5 percent of output. The OECD concluded that Canada had the "fiscal capacity" to do more to stimulate the economy, forecasting 10.5 percent joblessness next year, and urged Canada to provide more stimulus, partly in income support for laid-off workers.

Backing Mr. Obama's call for more stimulus at home would further inflame Prime Minister Harper's critics, and perhaps exacerbate nascent tensions within his conservative core. The opposition, perhaps unfairly, argues that in London Mr. Harper contradicted himself in saying, "... leaders should over act at this point ... I think there would be a risk of under acting. Let's assume that we need dramatic action and let's do it."

International Interests

The main message received was that Canada will be paving the way in banking reform - the Canadian system could be used as a blueprint for the world. Canada co-chaired the working group that built the consensus reached on the recommendations for international financial reforms. A representative editorial opined, "Canada has a record of performance that suggests that the approach we've taken as a country is the one that works and may be relevant to future global solutions. The combination of our macro-economic framework, regulatory oversight of our financial sector and the specific management practices of the private sector has resulted in a strong, well-capitalized and successful banking sector. And while not immune, Canadian banks have weathered this storm relatively well."
Canada agreed to contribute $12 billion dollars to the G20 $500 billon commitment to triple IMF resources for struggling countries. Canadian agreement was characterized as the "search for consensus appeared to nudge Mr. Harper toward embracing the more drastic measures for poor countries."

Global Leadership

There was a sense that the US has conceded power as in the headline "U.S. takes back seat as power balance shifts." One influential commentator noted that the G20 Summit had marked the end of the postwar era, that the role of the Bretton Woods institutions, and the shape of the world, is permanently altered. Until 2009, the fundamental goal of the IMF and its sister organizations was to deregulate the world economy, to remove restrictions from finance capital. Under the April 2 agreement, "those organizations will serve as regulators: As well as keeping the financial system working and rescuing nations from bankruptcy, the IMF and new organizations will aggressively police the worldwide credit, finance and banking systems to prevent a recurrence of the bad-credit spiral that led to the current crisis."

The results were mixed on whether the G20 could tackle the economic crisis. One editorial stated, "If the G20 cannot solve this current financial crisis, it is seen as a positive mechanism to avoid future economic collapse"; "high level damage control"; and "No single problem is likely to be solved at the end of this G20 meeting. But the formation of consensus among nation-states amounts to an ounce of prevention, which in the not-so-long run may be worth a pound of cure."

There is little faith in the G20 Summit to reverse the protectionist tide. There was skepticism that while all 20 governments shared the pledge against protectionism, that it may not mean very much. The Toronto Star's April 3 editorial reads: "G20 leaders put hope before help."

Victoria