On June 8 and 9, the leaders of the G7 countries have met in Canada for their 44th annual summit. For decades, the summit has offered an opportunity for representatives of democratic, economically-advanced countries to reaffirm their commitment to a free and liberal world. This time seems different, with US President Trump imposing new tariff restrictions on the other G7 countries just a few days before the start of the Summit, last year's US withdrawal from the Paris Agreement, not to mention Trump's decision to leave the Summit earlier on Saturday, to reach Singapore ahead of his meeting with North Korea's Kim Jong-un. At the same time, the rise of nationalist and anti-elite governments is testing Europe’s credibility as a true defender of multilateralism. What are the topics ranking high in the G7 agenda? What does a final agreement without US mean? What other tensions are simmering in the background? What is in it for the newly-appointed Italian government?
The G7 agenda: What is in, what is out… and why?
As has been customary for the last two decades, the G7 summit agenda has consistently expanded to comprise a vast number of topics, which each rotating annual presidency collects in different ways. This time around, the Canadian presidency has announced that leaders will discuss topics under five thematic areas: (1) Investing in growth that works for everyone; (2) Preparing for jobs of the future; (3) Advancing gender equality and women’s empowerment; (4) Working together on climate change, oceans and clean energy; and (5) Building a more peaceful and secure world.
As John Kirton (Founder and Director of the G7 Research Group) and Aaron Shull (Managing Director, CIGI) write, “this agenda would be ambitious under normal circumstances, but normalcy is not the context in which the Charlevoix Summit will take place”. The Trump administration’s confrontational stance with longstanding allies, coupled with rifts between European countries, has effectively shrunk the possible outcomes of the meeting. According to the G20 Information Centre, US compliance with its self-imposed commitments at the G7 has dropped significantly over the last 12 months (see graph). In fact, there is a concrete risk that, for the first time in the history of G7, the leaders will not even be able to issue a joint final communiqué.
Recognizing this, the Canadian President Justin Trudeau declared yesterday that “gender equality will be top priority at the Summit”. Already last year, the G7 leaders adopted the “Roadmap for a Gender-Responsive Economic Environment”. While a crucial addition to the leaders’ agenda, it remains to be seen whether placing gender equality as the top priority of the summit expresses a real commitment to the issue, or is just an attempt to mask the existing disputes between G7 countries on many other relevant topics.
Trump and trade: G7 or G6+1?
On June 1st, the Trump administration decided to let tariffs exemptions expire, de facto imposing a 25% tariff on steel and a 10% tariff on aluminium of its Western allies. This confirms a remarkable turnaround from recent “ordinary” times, when the United States was the staunchest defender of free trade. Even after the Great Recession in 2009, as risks of a global trade war loomed, G7 leaders united under then-US President Barack Obama to institutionalize the G20 format, bringing emerging countries to the table and avoiding protectionist measures, especially in the form of new tariffs. On the contrary, today the Trump Administration blames competitors and allies alike for their trade surpluses vis-a-vis its country, with Germany and Japan being the most-often cited culprits among G7 countries (they both share a trade surplus of around 70 billion dollars with the US). As Erik Jones (SAIS, Johns Hopkins University) puts it in his commentary, "the Trump Administration seems more interested in courting China, Russia, and North Korea than its traditional allies. Hence the question is not just what the Trump Administration hopes to achieve but also why it is bothering to attend at all”. The answer, the author points out, is that "The Trump Administration plans to attend the G7 because these big global summits are a good place both to do business and to be seen to do business. [...] This vision of the G7 is entirely consistent with the transactionalist approach that the Trump Administration has adopted since the beginning. It is also consistent with the Trump Administration’s determination to act unilaterally when necessary to achieve its policy goals".
Also thanks to Trump’s threats to carry on alone, last year’s Leaders’ declaration acknowledged that “trade has not always worked to the benefit of everyone”. But while the leaders pledged to work “for the removal of all trade-distorting practices (...) so as to foster a truly level playing field”, it was still clear that the message was mainly aimed at non-G7 countries such as China and India - a situation far removed from a world in which the US imposes tariffs on its own allies.
The 2017 communiqué continued to recognize “the importance of the rules-based international trading system”, and leaders committed “to improve the functioning of the WTO”. Today, instead, the US administration is blocking the appointment of new judges to the WTO appellate body that renders judgment on trade disputes among member countries, and did not wait for a formal complaint to go through the WTO process before imposing tariffs, instead invoking the never-used-before “national security” clause.
Europe: ready to defend multilateralism?
The leaders of four EU member states (Germany, France, Italy and the UK) are attending the G7 Summit together with top representatives of the EU Institutions (Jean-Claude Juncker and Donald Tusk). After Trump’s decisions on the new trade tariffs, the EU did its best to show unity and jointly announced countermeasures, while stressing the necessity to defend multilateral rules on trade. But how credible is the EU as a strenuous and united defender of multilateralism? When having a closer look at Europe, a much more complex and fragmented picture emerges. European states have different interests, preferences and approaches on trade. As Antonio Villafranca (ISPI) puts it, “most EU countries are simply turning a blind eye to Germany’s significant current account surplus (8% of GDP)”, which is breaching the EU’s very own rules (that set the upper limit to 6%). After all, Trump might have excluded Europe from tariffs if the overall EU surplus against the US had been more moderate. The apparent EU unity in defending free trade and multilateralism cracks also when considering sanctions against Russia and the response to the US secondary sanctions on Iran, also due to their asymmetric effects on EU countries. Not to mention relations with Beijing, with European states offering plenty of examples of bilateral - or at most plurilateral - relations with China, mostly in search of their own economic advantages: the 16+1 Initiative between China and Eastern European countries; the struggle of EU Member States to get the spotlight in the Belt & Road initiative; and their race to join the Asia Infrastructure Investment Bank (AIIB), despite its potential overlap with a truly multilateral investment bank (World Bank). Last but not least, the EU’s credibility as a united defender of multilateralism is further weakened by the rise of nationalist and anti-elite governments across Europe, from Hungary to Austria, from Poland to Italy.
However, it would not be fair to say that Europe has abandoned multilateralism. Rather, the latter is realistically side-lined, overlapped or plainly replaced by bilateralism when deemed necessary. No wonder this takes its toll on the EU’s credibility to act as the true defender of multilateralism.
Climate change: an even more divided G7?
Since the 1990s, the G7 has included in its agenda (and in final communiqués) a commitment to slow down climate change, also by working in multilateral contexts such as the 1992 Kyoto Protocol and, more recently, the 2015 Paris Agreement. Last year, in the first G7 of the Trump era, Italy managed to delay the unavoidable (the US intention to withdraw from the Paris agreement) by inserting a paragraph in the final communiqué stating that the US were “in the process of reviewing” their own climate change policies and were thus “not in a position to join the consensus on these topics”. On the other hand, all the other leaders reaffirmed “their strong commitment to swiftly implement the Paris Agreement”.
However, just a few weeks later at the German G20 in July, world leaders were inevitably forced to “take note of the decision of the United States of America to withdraw from the Paris Agreement”, whilst the Leaders of the other G20 members stated that “the Paris Agreement is irreversible”.
On climate change, however, Trump’s decision to withdraw from the Paris agreement may be overshadowing the fact that the G7 countries are more divided than it appears at first. Canada, for instance, could benefit from the American reluctance to commit to multilateral pledges on climate change. In fact, the country is one of the biggest per capita emitters of CO2 in the world, hovering close to the US (see graph), and recent developments have made experts increasingly doubt that Canada will be able to deliver on its climate commitments. Japan, as well, is struggling to cope with its energy transition, in a post-Fukushima scenario in which nuclear plants are closing down and natural gas (a greenhouse gas producer) is being used as a replacement.
What’s at stake for the new Italian government?
This year’s G7 will be the first important international meeting for the new Italian government. The previous Gentiloni government has presided over the 2017 edition of the summit, managing to include migration as a relevant issue in the leaders’ final declaration, under the topic “Human Mobility”.
After winning the confidence vote in the Italian Parliament last Wednesday, the new Prime Minister Giuseppe Conte is just in time for joining the other G7 leaders around the table, relying on the negotiating positions adopted by the outgoing Gentiloni government during a number of preparatory meetings. On Wednesday, the Italian Prime Minister stated that he will take part in Canada’s G7 to “present the new government and ask for respect”.
Overall, Italy has a strong interest in defending multilateralism and free trade, being the second largest manufacturer in Europe and boasting a 50 billion dollars (42 billion euros) trade surplus. Here, Italy could easily align itself with the other five G7 countries that are being hit by the US steel and aluminium tariffs. On this, the EU could present its own set of retaliatory measures, the strongest allowed under WTO rules, worth about 2.8 billion euros a year.
Despite the strong legacy of the Gentiloni government, on foreign policy the incoming Italian Government will still be able to take a number of independent positions, due to the fact that foreign policy topics tend to be left to discussion for the Leaders’ summit.
For instance, Prime Minister Conte announced that his government intends to review Italy’s stance on Russian sanctions, something which may be at odds with the interests of its G7 European partners. On the issue, the Italian government has already been warned by Jens Stoltenberg, NATO Secretary General, and by the US Permanent Representative to NATO not to undermine the EU’s common position and to renew its commitment to the sanctions.
In general, the international press appears to be waiting on the sidelines to decide whether Italy will stand in defense of multilateralism, or whether it will appear to side with “disruptors”.
Towards the G20: an alternative or a complementary summit?
The G7 in Charlevoix won’t be the only summit shaping global governance this year: the Group of Twenty (G20) Summit, to be hosted by Argentinian president Mauricio Macri, will gather in Buenos Aires between November 30 and December 1 this year.
John Kirton points out that “the coordination begins with the strong overlap” between the Canadian and Argentinean Presidencies, as the two countries “face the same array of severe global challenges, including the unilateral trade protectionist moves of US President Donald Trump”, and his withdrawal from the Paris Agreement.
Despite the strong convergence between the G7 and G20 summits, the latter has proved to work more efficiently in “firefighting mode”, as was the case of the 2009 Great Recession when it effectively averted the perverse race to the bottom of a protectionist trade war. Coordinating efforts are much harder today with a global economy growing at a steady pace. Moreover, a decade ago the G20 managed to achieve common goals thanks to a strong and converging commitment to dialogue between Beijing and Washington, while nowadays the disputes between the world’s two biggest economies may transform the forum from a place of dialogue to one of direct confrontation.