WINNIPEG, Manitoba/WASHINGTON (Reuters) - Prime Minister Stephen Harper will advocate strong national oversight of markets and international consultation in talks with world leaders this weekend, but will argue against global regulation as a way to solve the economic crisis.
Harper said on Friday that measures aimed at stopping the meltdown must not infringe on national sovereignty or impede free trade. He made the remarks to reporters before traveling to Washington for a meeting of leaders from developed and emerging countries that make up the Group of 20.
“I don’t think the major economies will ... consent to have external controls over their regulatory systems,” the Conservative leader said. “Compulsory global governance ... is unrealistic, will never be accepted.”
Harper has frequently pointed out that the Canadian financial system has escaped relatively unscathed from the crisis and said its resilience showed the need for some sort of regulation -- but only at a national level.
“Unregulated financial markets do not work. Canada has known that for a long time,” he said at his Conservative Party’s convention in Winnipeg. “I thought, frankly, we all knew that from events of many decades ago, but obviously the United States went on a different path.”
Canadian officials in Washington for the summit said Ottawa was pushing for a mandatory and public international review of the financial systems in individual countries.
Twice Canada has voluntarily undergone such a review under the auspices of the International Monetary Fund’s Financial Sector Assessment Program. Still, Harper says, it is up to the country involved to change its ways -- influenced by international moral suasion.
“It’s incumbent on the United States and others that if they make regulatory reforms, that we allow peer-review mechanisms ... to give us evaluations and suggestions,” he said. “Not to impose solutions -- we want to respect national sovereignty.”
While critical of past U.S. regulatory failures, Harper’s tone was much closer to that of President George W. Bush than to that of some European leaders. Both Bush and Harper have spoken of the need not to crush free markets, which they say have delivered wealth and innovation.
Canada, like the United States, is showing markedly less interest than European and emerging economies in spending time this weekend on international financial architecture.
Harper said he expected the final communique of the G20 leaders to focus on policies for stimulating economic growth to soften the global recession. Finance ministers and central bankers, who gathered in Brazil last weekend, urged governments to boost spending and cut taxes where possible to foster growth.
U.S. President-elect Barack Obama favors a second round of stimulus measures in the United States, and China has approved nearly $600 billion in new government spending through 2010.
Canada did not appear to have any fiscal measures of its own to announce at the summit, though a senior Canadian official briefing reporters in Washington pointed to a program to buy C$75 billion ($61 billion) in mortgages from banks to boost liquidity, on top of tax cuts introduced last autumn.
The official also said Canada expects the summit to directly address the exchange rate of China’s currency in its discussions on measures for restoring global economic growth.
“We expect there’ll be frank discussion around that,” the official said. “Having the market dictate the value of currencies would be a positive step and one of the ways to address the imbalances that we’re seeing.”
Additional reporting by Louise Egan in Ottawa; Editing by Peter Galloway