Canada Joins the G7 Summary

  • Last updated on November 10, 2022

By including Canada in the annual meetings of the Group of Seven, or G7, the other member nations signaled their recognition of the importance of the Canadian economy, with its strong resource base, in the economic health of the developed world.

Summary of Event

The inclusion of Canada in the June, 1976, meeting of the Group of Seven, or G7 (originally the G6), marked the recognition of Canada as a major factor on the world stage. This event was the second in a series of summits held by the leaders of the developed nations that became a standard feature of world diplomacy from 1975 forward. To be sure, Canada’s relatively small population meant that it had somewhat less influence than other G7 members, but given that Canada is a major source of the natural resources that fuel the developed world’s economies, its inclusion in the group made sense. That it had been a democracy for more than a century also marked it as an appropriate member of the group. Group of Seven;Canadian membership [kw]Canada Joins the G7 (June 27-28, 1976) [kw]G7, Canada Joins the (June 27-28, 1976) Group of Seven;Canadian membership [g]West Indies;June 27-28, 1976: Canada Joins the G7[02400] [g]Puerto Rico;June 27-28, 1976: Canada Joins the G7[02400] [c]Diplomacy and international relations;June 27-28, 1976: Canada Joins the G7[02400] [c]Economics;June 27-28, 1976: Canada Joins the G7[02400] [c]Trade and commerce;June 27-28, 1976: Canada Joins the G7[02400] Ford, Gerald R. [p]Ford, Gerald R.;Group of Seven Giscard d’Estaing, Valéry Mulroney, Brian Reagan, Ronald Schmidt, Helmut Thatcher, Margaret Trudeau, Pierre [p]Trudeau, Pierre;Group of Seven

The role of the G7 had its origins in the troubled world economy of the 1970’s. The collapse in 1971 of the Bretton Woods Agreement, Bretton Woods Agreement (1944) which had controlled the world economy through fixed exchange rates since World War II, introduced elements of uncertainty into world trade even as such trade was growing substantially. The oil crisis of 1973-1974, when the Organization of Petroleum Exporting Countries Organization of Petroleum Exporting Countries (OPEC) dramatically increased the price of the oil its members exported, produced a major economic shock in the developed countries, and warfare in the Middle East added to the crisis. The emergence of the European Common Market, which came to balance the international economic importance of the United States, added to the economic instability.

The leaders of the major developed countries decided to hold an economic summit in an attempt to deal with the crises then affecting the world economy. The first such meeting occurred at Rambouillet in France in the summer of 1975. The president of France, Valéry Giscard d’Estaing, invited the leaders of the world’s major economically developed nations—the United States, the United Kingdom, France, Germany, Japan, and Italy (known as the Group of Six, or G6)—to join him for a discussion of ways their governments could work together to avoid a major economic recession resulting from the turbulence in international markets. In particular, there was concern that the pressures caused by the sharp increase in the price of oil could lead to protectionist movements that in turn could reverberate through all the developed economies, as had occurred in the 1930’s. Such movements had played a major part in the events leading to World War II.

Canada was not invited to the meeting at Rambouillet; despite active campaigning by Canadian political leaders and a push for Canada’s inclusion from the United States, France steadfastly refused to extend an invitation to Canada. The fact that the meeting at Rambouillet was prompted by a world leader, however, set the stage for Canada’s inclusion in 1976. When President Gerald R. Ford of the United States invited the same leaders to a second world economic summit in San Juan, Puerto Rico, he also invited representatives from Canada. Despite the objection of France, Canada was represented at the 1976 summit by Prime Minister Pierre Trudeau as well as by Canada’s finance minister.

The early world economic summits were on the whole cooperative affairs. The Germans, then led by Helmut Schmidt of the Social Democratic Party, a socialist, had nightmare visions of a repetition of the hyperinflation of the 1920’s and the damage it did to Germany’s democracy. Other countries were concerned that the inflation unleashed by oil price spikes could unleash recession. The goal at the early meetings was to ensure that the world economy did not suffer from the instabilities these economic uncertainties threatened. The French socialists, led by François Mitterrand, Mitterrand, François were eager to cooperate with the Germans, and the election of Jimmy Carter, Carter, Jimmy [p]Carter, Jimmy;presidential elections a Democrat, to the U.S. presidency in 1976 installed a congenial partner in the United States.

As political developments in the participating countries led to the election of governments with differing economic philosophies, cooperation at the G7 meetings suffered. The election of Prime Minister Margaret Thatcher in Great Britain and President Ronald Reagan in the United States brought into the discussions two leaders who disapproved of using government action to tame economic fluctuations, which were particularly severe in the early 1980’s as the effects of the second oil disruption in 1979 ricocheted through the world economy. Oddly, Prime Minister Trudeau, although the leader of Canada’s Liberal Party, signed on to the retrenchment philosophy advocated by Reagan and Thatcher.

The policy the Canadian government adopted to deal with the worldwide rise in oil prices led to political turmoil, however. Although Trudeau accepted the pressure of other world leaders to undertake a gradual dismantling of the oil price controls the Canadian government had instituted to protect Canadian consumers, this policy proved highly unpopular in Canada and had the effect of toppling Joe Clark, Clark, Joe the Progressive Conservative Party leader who had briefly replaced Trudeau as Canadian prime minister in 1979. In an election at the end of 1979, Trudeau regained the premiership, after which he instituted a system in which Canada’s domestic oil prices would only gradually rise from the low, capped, price to the world level by 1985. This affair limited the ability of the Canadian government to respond to international pressures exerted at the G7 summits.

Canada’s election of 1984 brought the Conservatives back into the Canadian government under the leadership of Brian Mulroney. Mulroney felt a real kinship with Ronald Reagan, and he tried to model Canadian government policy on that of the United States. Mulroney supported Reagan’s initiatives at the G7 summit meetings of the later 1980’s and early 1990’s, until internal issues led to his political downfall in 1993. Mulroney’s successor as prime minister of Canada, the Liberal Jean Chrétien, Chrétien, Jean found the Democrats under U.S. president Bill Clinton Clinton, Bill more to his taste, and he cooperated readily with Clinton at the summit meetings of the 1990’s. During the 1990’s, the pressure from underdeveloped countries for trade policies resonated with both the Clinton and the Chrétien governments, but serious concessions on trade issues raised the question of the protectionist policies toward agriculture that were political necessities for Canada, the United States, and members of the European Union (especially France and Germany), so that cooperation of the developed countries on trade liberalization became difficult if not impossible.

Significance

Throughout the first quarter century of G7 summits, Canada cooperated mostly with the United States, an economic necessity given that more than 80 percent of Canada’s trade was with the United States. The Canadians, however, did occasionally attempt to mediate during periods of sharp differences between U.S. representatives and the leaders of the European countries; although rarely successful, such attempts helped to maintain the comity of the summit meetings. On several occasions, Canadian leaders hosted G7 summit meetings, cementing Canada’s claim to membership in this important group of nations. Group of Seven;Canadian membership

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Bothwell, Robert, Ian Drummond, and John English. Canada Since 1945: Power, Politics, and Provincialism. Rev. ed. Toronto: University of Toronto Press, 1989. One of the best resources available on Canadian history after World War II.
  • citation-type="booksimple"

    xlink:type="simple">Cohn, Theodore H. Governing Global Trade: International Institutions in Conflict and Convergence. London: Ashgate, 2002. Surveys the post-World War II trade scene, in which the summits played an important part. Contains a complete listing of the summits, by date and by location.
  • citation-type="booksimple"

    xlink:type="simple">Daniels, Joseph P. The Meaning and Reliability of Economic Summit Undertakings, 1975-1989. New York: Garland, 1993. Examines the importance of the various economic summits and argues that some have not played a large role in world affairs.
  • citation-type="booksimple"

    xlink:type="simple">Dobson, Wendy. Economic Policy Coordination: Requiem or Prologue? Washington, D.C.: Institute for International Economics, 1991. Work by a Canadian expresses doubts about the usefulness of economic summits.
  • citation-type="booksimple"

    xlink:type="simple">Putnam, Robert, and Nicholas Baynes. Hanging Together: Cooperation and Conflict in the Seven-Power Summits. 2d ed. Cambridge, Mass.: Harvard University Press, 1987. Argues for the importance of economic summits and international collaboration. Offers a contrasting view to those expressed in the Daniels and Dobson works cited above.

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