FROM THE OFFICE OF PUBLIC AFFAIRS

(Paris, France) -- I was pleased this weekend to join – for the first time – the G-7 Finance Ministers and Central Bank Governors.  I enjoyed meeting with my colleagues and valued the opportunity to exchange views and work together on key issues that we face in the global economy.

The strength of the international economy is tied to the performance of the domestic U.S. economy.   As the world’s largest economy, if we grow, if we see improvement in our own economy, that will boost the world economy.  That’s why strengthening our own economic recovery is so important, and why President Bush’s jobs and growth package is so critical - not just to the U.S. economy – but to the international economy.   If we get moving on a higher growth path, two things will happen:  1) more Americans who want work can find a job, and 2) and the economies of Europe, Japan, South America and every other corner of the world will get a lift – therefore employing millions, and raising the standard of living for millions of families across the world.   Within the international community, the United States must lead by example – and we are not growing fast enough or strongly enough.  I am convinced that enactment of President Bush’s jobs and growth plan is important not just for the United States, but for global economic growth as well, and accordingly in each and every meeting this weekend I laid out for my colleagues how President Bush’s economic growth proposals will build on the proven strength of the U.S. economy – generating jobs, encouraging savings and investment, and promoting entrepreneurship.  Each G7 nation must take its own steps – appropriate to its own respective set of conditions – to spur growth. That’s important, since our prosperity is tied to stronger growth outside of the United States. 

In addition to growth, we discussed the key role of sound corporate governance in financial stability, efficient capital markets and sustained growth. I outlined the steps the United States has taken to strengthen corporate governance pursuant to the President’s Ten Point Plan and the Sarbanes-Oxley legislation, and my colleagues described the steps their governments were taking to address corporate governance as well.  We focused on the centrality of market discipline – as well as the quality of corporate financial disclosure and effective regulation – in achieving our shared goals in this area. We extended our strong support for the ongoing work of the various international bodies focusing on auditing, accounting, and related corporate governance issues. 

We also discussed our common unwavering commitment to combating financial crime and terrorist financing as a critical component of the war on terrorism. We agreed to contribute technical assistance to priority countries, and urge the IMF and World Bank, in coordination with the UN, to continue to do so as well.  We encourage the ongoing efforts of FATF to foster the effective implementation of the UNSC Resolutions regarding assets freezing, and we recognize the need for greater oversight of informal financial sectors and the need for total integrity of charities so they don’t unwittingly become vehicles of terrorist financing.

Another subject we addressed was improving the framework for preventing and resolving financial crises in emerging market countries.  This subject remains a priority for the G-7.  We had a good discussion of the role collective action clauses play in advancing this objective, and broad support was reaffirmed for this approach.  Viewing this in conjunction with steps the private sector has taken in embracing collective action clauses – as well as indications of support from other sovereigns -- I am encouraged we are making progress on this important issue.  It is imperative that parties to sovereign debt transactions continue to focus on the use of collective action clauses in their transactions.   

We also had a good discussion about development issues and aid effectiveness.  Our goal is greater economic growth and prosperity in developing countries. Therefore I emphasized the importance of rewarding countries with strong policy performance, measuring concrete results of our assistance, and strengthening management of public resources.  I explained how our Millennium Challenge Account is designed to accomplish these goals.   International financial institutions – such as the World Bank – can improve aid effectiveness for the world’s poorest nations by further embracing these objectives.

I want to note in closing the importance of free trade to the overall goal of global economic growth.  In this light, I am encouraged many of my G7 colleagues agree to work with our trade ministers and the international financial institutions to support the objectives of the WTO negotiations under the Doha Development Agenda, focusing in particular on the financial services and agriculture sectors and the need for results-oriented trade related capacity building.  Reducing barriers to trade is also needed to spur global economic growth.

Thank you.