Global summit yields broad agreement

World leaders at a historic global economic summit in Washington Saturday agreed on a statement of mostly broad principles aimed at halting the current downturn and improving investment and banking oversight, and agreed to meet again by the end of next April.

But the worst fears of some in the U.S. that the summit would produce draconian regulations or a shift in global governance went unrealized, as the leader’s statement was peppered with commitments to free markets and trade liberalization.

The general list of commitments included a call for coordinated stimulus spending within each country, better regulation of banks and complex investment products that avoids “over regulation,” more inclusion of emerging economies in global governance, and a need to avoid protectionism.

The summit agreement, however, did not address differences between the U.S. and Europe over what form future regulation should take, leaving each country to make those decisions for themselves while encouraging better communication between regulators.

Click here to see the ‘Declaration Summit on Financial Markets and the World Economy’

President Bush spoke for 10 minutes at the conclusion of the two-day summit while many of the 19 other foreign leaders left the National Building Museum bound for various parts of the city to hold their own press conferences or speeches.

“I don’t think we could have predicted how productive this meeting was going to be,” he said.

Mr. Bush on Friday evening had challenged his fellow leaders not to abandon free-market principles at a White House dinner to kick off the two days of meetings, saying they should “reject calls for protectionism, collectivism and defeatism in the face of our current challenge.”

The joint communique said that countries should “avoid over-regulation.”

“These reforms will only be successful if grounded in a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems. These principles are essential to economic growth and prosperity and have lifted millions out of poverty, and have significantly raised the global standard of living.”

Click here to read text of President Bush’s remarks

Mr. Bush pointed to his administration’s support for better oversight of complex derivative products such as credit default swaps – which have played a major role in the market instability.

The White House on Friday announced support for selling and buying these derivatives through a clearinghouse that will enable institutions to better track their level of risk.

“That’s a significant reform,” Mr. Bush said.

The agreement to meet again by the end of April means that the next global economic summit will take place after President-elect Barack Obama is in office.

The global economic crisis is now largely Mr. Obama‘s problem.