This year’s G7 may mark a new milestone on the declining path of multilateralism. Despite all efforts by Mr. Trudeau, a strong supporter of multilateralism, the Canadian G7 Summit will likely achieve a very mild and short-sighted Final Declaration, if any. Just a few days before the Summit, President Trump announced his decision to let tariff exemptions expire, de facto imposing tariffs on all the other six G7 members. This speaks volumes about the Summit’s loss of relevance and, even worse, about the accelerating decline of multilateralism. Last year in Taormina, Trump made it clear that the US Administration was serious about its “America First” policies and expressed his criticism regarding the Paris Agreement on climate change. Yet, he did not announce any specific trade measure before the Summit, nor did he formalise his exit from the Paris Agreement. Simply put, Trump showed some respect for the G7 and left some room for manoeuvre in the Taormina Summit in the (failed) attempt to narrow the gap between the US and the other members.
In just one year the situation has definitely changed for the worse. It is no coincidence that the word ‘trade’ does not appear among the five main themes chosen by the Canadian Presidency of the G7, notwithstanding its relevance to at least two topics: “Investing in growth that works for everyone” and “Preparing for jobs of the future”.
Furthermore, whilst climate change is indeed mentioned – “Working together on climate change, oceans and clean energy“ – no direct reference is made to the Paris Agreement. Arguably, it looks like a second best choice for the Canadian Presidency to at least make some progress on the environment, but with a narrower scope than the Paris Agreement.
The leaders of four EU member states (Germany, France, Italy plus the UK) will attend the Summit together with Jean-Claude Juncker and Donald Tusk representing the EU as a whole.
In a time when Trump considers his traditional allies as threats to the US national security, as justification for the new trade tariffs, many pundits place the spotlight on the potential positive impact on the EU, as this should push towards further unity among European states.
Yet, when having a closer look, the existing cracks, divisions and views of the apparently united EU countries inevitably emerge. There is no doubt that Trump is well aware of this and is a quick learner when it comes to taking advantage of others’ weaknesses.
To be sure, so far the united and firm EU condemnation of American tariffs is a good sign. The EU as a whole considers them wrong and illegal and is getting ready to put forward its own countermeasures.
However, European states have different interests, preferences and approaches on trade, despite their apparent unity and common trade policy. Most of them are simply turning a blind eye to Germany’s significant – and potentially unsustainable – current account surplus (8% of its GDP), which is in breach of the EU’s very own rules (the maximum threshold in the EU Macroeconomic Imbalance Procedure is 6%). Furthermore, Germany’s 70 billion USD trade surplus vis-à-vis the US accounts for about 65% of the entire Eurozone trade surplus.
Simply put, Germany’s exception is a dividing issue in Europe and provides new impetus to Trump’s rhetoric on trade. All in all, Trump might have excluded Europe from tariffs if the EU trade surplus against the US had been more moderate, as is the case of key EU members (other than Germany): France (4 billion USD), the UK (6 billion USD), and even Italy (24 billion USD). To make things worse, due to Brexit, today the EU is about to lose one of its key members. Despite the UK’s recent decision to join its European allies in condemning US tariffs, Trump is confident that he can easily water down Ms. May’s resolve by promising different and more favourable trade tariffs, if any, to London after its exit from the EU.
This also holds true when it comes to EU relations with China. Again, EU member states attempt to prove their unity and patch up trade relations with the US by joining Washington on the basis of common interests for both sides of the Atlantic such as the screening of Chinese investments in strategic sectors, the respect of intellectual property rights, and reciprocity and fair market access to the Chinese market. Still, European states do not miss the opportunity to move in their own directions and strengthen bilateral relations with Beijing in search of new business opportunities, with Berlin, London and Paris particularly active in these initiatives. Let alone 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 - also if detrimental to other EU partners - and their race to join the Asia Infrastructure Investment Bank (AIIB), despite the strong opposition of the former US Administration which lamented (in vain) its potential overlap with a truly multilateral investment bank, the 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/or anti-elite governments across Europe, from Hungary to Austria, from Poland to Italy. The bottom line is that behind the façade of unity, European states are hiding deep divisions and, in the international context of old and new great powers, are acting as “defensive positionalists”.
Multilateralism has not been abandoned by Europe but is realistically side-lined, overlapped or plainly replaced by bilateralism/ plurilateralism when deemed necessary. No wonder in Trump’s eyes – and not only in his – Europe does not appear as a truly and fully credible defender of multilateralism.