7-07-09, 10:02 am

Original source: Global Times (China)

The upcoming Group of Eight (G8) summit will be a major test to world leaders on their resolve to shore up economy and fight world hunger and climate change following last year's global financial meltdown.

STRENGTHENING FINANCIAL REGULATION

Efforts to strengthen financial regulation to prevent a recurrence of the current financial crisis are expected to top the agenda of the G8 summit in L'Aquila, Italy from Wednesday to Friday.

The seven major industrialized countries of the G8, which groups the United States, Japan, Russia, Germany, France, Britain, Italy and Canada, have suffered serious economic downturns after a credit crunch in the United States, which quickly dragged the world into its worst recession since the early 1930s.

The root cause of the crisis is free-market capitalism, a model under which speculators could make huge profits from short-term trading and over-financing, while shift risks on to ordinary consumers, analysts noted.

The best cure for the crisis is to set up a fair, transparent and integrated system of global financial regulation. To this end, analysts said, countries worldwide must join hands to formulate as soon as possible widely accepted standards and norms of international financial regulation.

In early April, world leaders reached framework agreements at the G20 London Summit on global financial institution reform and strengthening financial regulation and supervision.

On June 17, the US administration unveiled broad reforms packages to tighten financial regulation in the country to prevent another banking and market crisis. On June 19, the European Union also agreed on the need for pan-European supervision of the banking sector.

However, the efforts are far from enough.

One year after the financial crisis broke out, analysts said, the world's efforts have not achieved any concrete results on its financial regulation agenda. The gambling-addict financiers and speculators have so far not got the punishment they deserve. It is highly possible that taxpayers have to pay the bills for gamblers like these some time in the future.

PUSHING FOR BREAKTHROUGH FOR DOHA ROUND

Another urgent task for the G8 leaders is to push forward the Doha round of WTO negotiations to revive world economy.

The Doha round of negotiations commenced in November 2001 with an objective to lower trade barriers around the world, and enable countries, especially the under-developed ones, to increase trade. As of 2008, talks have stalled over major differences on issues such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies.

The prospect for wrapping up the Doha talks is getting even dimmer since the financial crisis has swept across the world. In economic hard times, countries tend to resort to trade protectionism, which, however, would only hurt the world economy further.

According to a World Bank report released in March, 17 members of the G20and a number of other countries have implemented a total of 47 measures that restrict trade since the crisis broke out, with more trade protective measures likely to be unveiled as the crisis is spreading globally.

Mounting trade protectionism has posed new challenges to the Doha round, which makes it all the more necessary for the G8 leaders to push forward the trade talks with even greater efforts at the upcoming summit.

'The financial crisis should not provide any legitimacy for trade protectionism,' Zhang Yesui, China's permanent representative to the United Nations, said earlier in April.

'On the contrary, in tackling the financial crisis, it is all the more important to consider how to resist trade protectionism, ' the Chinese U.N. envoy said, noting that trade is one of the major engines in driving the world economy to a quick recovery.

TACKLING CLIMATE CHANGE

2009 is a crucial year in the global efforts to address climate change, culminating in the United Nations Climate Change Conference in Copenhagen in December.

The 'Bali Roadmap,' reached in December 2007 during a U.N. Framework Convention on Climate Change meeting, set a two-year deadline for a global agreement on climate change.

The roadmap also envisioned a new draft climate treaty at the Copenhagen meeting to succeed the first phase of Kyoto Protocol which is to expire in 2012.

However, with the deadline approaching, a ratifiable treaty is not yet in sight.

The L'Aquila gathering is the only G8 summit before the Copenhagen meeting. The passive attitude of some developed nations is blamed as a major hinderance for progress in international climate change process.Therefore, whether members of the G8, a group of the world's richest

industrialized countries, could substantially change their stance on the issue if of vital importance.

It would be a failure for the U.N. Climate Change Conference and a major setback for the global climate change process if no breakthrough is made at the summit.

The ground for a breakthrough can only be prepared if the G8 leaders reach consensus on the mid-term binding goals of cutting greenhouse emission and stop asking the developing nations to act first as an excuse for their not committing to the binding goals.

Analysts said a real progress on the issue depends on the political will of the G8 leaders, and their willingness to truly shoulder the 'common but differentiated responsibilities' set out in the United Nations Framework Convention on Climate Change (UNFCCC) and the Bali Roadmap.

FIGHTING WORLD HUNGER

Amid the current financial crisis, food security stands out as an urgent issue facing the international community and is expected to be high on the summit agenda.

More than 1 billion people, or every one in six, are starving, according to a report issued by the U.N. Food and Agricultural Organization (FAO) on June 19. The number of the hungry increased worldwide by about 100 million in 2008 alone, a hike of 11 percent.

'The silent hunger crisis...poses a serious risk for world peace and security,' said FAO Director General Jacques Diouf.

While global economic crisis has worsened food security, flawed international food trading system is another factor to blame, analysts said.

Trade protectionism is a major enemy of food security. Only a fair and rational trade order of world agricultural products can help keep farmers in developing countries well-motivated in production and ensure the sustainable development of the global agriculture, they noted.

As the G8 agricultural ministers failed to reach any agreement on removing the trade barriers at their meeting in April, the world is now expecting the G8 leaders to come up with some effective remedies for the problem.