June 29, 2005

G8 to voice fears over oil, economy risks -official

PARIS (Reuters) - Group of Eight leaders will renew supportfor trade liberalisation negotiations and voice concern oversoaring oil prices and other "imbalances" threatening theglobal economy when they meet next week, a G8 official said.

Germany, one of the G8 group of leading industrial nations,is particularly concerned about oil prices, which hit a record$60.95 this week, and wants a G8 summit in Scotland to addressissues of economic concern, the official said.

Climate change and aid for Africa are the two big issues onwhich British Prime Minister Tony Blair wants deals at ameeting he chairs on July 6-8, where he will be joined byleaders of the United States, Canada, Japan, Germany, France,Italy and Russia.

The official, speaking to Reuters on condition ofanonymity, said the summit would issue a statement thataddresses the main economic concerns of the G8 group, namelyoil and "imbalances," jargon for problems such as record U.S.deficits.

G8 leaders are also set to reiterate the stand rich nationsvoiced on currencies more than a year ago in Florida, when theycalled for flexible exchange rate regimes in an implicit appealto China to ease state control of the yuan, the official said.

Chinese President Hu Jintao, whose country's breakneckspeed of economic and foreign export growth has the G8economies torn between fear and admiration, is due to attendthe G8 summit.

But Beijing repeatedly says it will only adjust itscurrency system when the economy is ready, not in response topressure from abroad, where many say China's peg to the dollaris making its currency and its exports unfairly cheap.

G8 leaders will also give another signal on theircommitment to the so-called Doha round of free trade talksahead of a what have been billed as crunch talks on that matterlater this year in Hong Kong.

"There will be a political push to support Doha," said theofficial. Britain is pushing for some kind of pledge by richnations to end export subsidies for farm produce, arguing thatthere is little point in offering Africa debt relief and aid ifwealthy countries are distorting competition in world trade atthe expense of Africa and other developing countries.

It was not yet clear whether there would be any pledge ofthat kind in the declarations issued at the summit, however,the official said.

The European Union argues that farm export aid can only goif the United States does likewise and as part of a wider dealin trade in industrial goods and services.