From inaction to action – that is the message that the 2021 G7 summit seems to be more than willing to get across. And, indeed, things appear to be moving fast: from bolder commitments on climate change to the recent announcement of a global corporate tax, from redoubled promises to help vaccinating the world to foreign policy coordination.
As far as commitments go, the newfound activism of G7 countries should be taken as a welcome sign for multilateralism. Or, at least, for its smaller (and often criticised) version: a “minilateralism” between big, market-based economies that also happen to be democracies. It is certainly interesting to note that, even as Biden frequently called for a “Summit of Democracy” and openly mulled on how to go about with that project, the upcoming G7 summit will closely resemble something along those very lines. Not just because Russia has been expelled – that has been a feature of the summit since 2014. But especially because the UK government has extended an invitation to participate to Australia, India, and South Korea, which brings the total number of participating democracies to 10: an endorsement of the idea of a “D10” that has been circulating at least since 2014, and has garnered an explicit backing from the UK government years before Biden became President.
This development is welcome not just because it brings more democracies to the table, but also because all three invited democracies are also members of the G20. Coupled with the US’ newfound commitment to show that America is still willing to lead in the international stage, it sets a remarkable about-turn compared with the G7’s dismal state during Trump’s tenure, and opens up an unprecedented opportunity for the Summit to show that it can act as an effective “clearing house” for negotiations and coordination among a restricted set of like-minded countries, which may then bring their consensus position to be discussed by the remaining 50% of G20 members.
The most recent example of the newfound activism of the G7 was this weekend’s communiqué by Foreign Ministers and Central Bank Governors on an agreement in principle for a global minimum corporate tax of at least 15 per cent. The deal shows three things. First of all, it shows that – after almost a decade of staunch opposition towards the proposal – the US is willing to compromise, especially when such a compromise may serve a domestic purpose: to avoid that the Biden administration’s proposal to raise its own corporate tax rate persuades big multinational companies to relocate elsewhere in the world. Second, the deal shows that the G7 can effectively work as a forum where a compromise can be struck between like-minded countries before opening up the consensus position to discussion at the G20 level. Third, events following the deal are evidence that once the G7 settles on a common position, the topic can be rapidly bumped up on the G20 agenda. Indeed, the G20 is set to discuss the proposal already next month, at the upcoming Venice meeting of Finance Ministers and Central Bank Governors.
Sure, the deal is still tentative and preliminary. G20 countries could still derail it, or at least delay it significantly. Once passed, it would take years to enact at the national level in a coordinated manner, and squabbles would probably move to the fine print, as countries attempt to come up with gimmicks in order to keep companies on their soil. EU countries are still somewhat sceptical, so much so that they refused to ditch their own “digital taxes” until a deal has been finalised and implemented. But the road is marked, and the path is clear.
Differently from global fiscal coordination, climate change is an example of others “leading the way” without the US, with the G7 playing a small but not insignificant role. Indeed, by early 2021 all G7 members have declared their commitments to “net-zero” climate targets. The UK was first of the pack in late 2019, soon followed by the European Commission in March 2020. Then, in the second half of the year, Japan and Canada announced their own plans, with the US coming last in early 2021 as the Biden administration settled in. At the G20 level these commitments have only been echoed by China (committing to becoming carbon neutral by 2060), South Korea and South Africa, showing that much remains to be done. One way the G7 could spur other countries into action would be to show that it puts its money where its mouth is. In particular, it should explore ways to honour its commitment to mobilise at least 100 billion dollars annually by 2020 through 2025, to help low-income countries finance their own transitions and cope with the economic consequences. As of today, the promise remains unmet, with recent analyses putting 2020 support in the order of 70-80 billion. Redoubling financial commitments could also serve to convince the almost 100 low-and-middle-income countries that still need to do so, to declare bolder policy targets for 2030 by the start of the COP26 in Glasgow this fall.
A similar argument holds true for the role of the G7 in the global race to vaccinate the world. Biden has waited until 50% of Americans had received at least one dose of an anti-Covid vaccine before announcing that the country would donate 80 million doses to third countries. Despite the US’s late arrivals, the donations are a welcome development: together, the EU, China and Russia have donated less than 20 million doses combined. However, if we also count exported doses (at market prices), Washington is (very) late to the party, as China and the EU combined have already exported almost 600 million vaccine doses to the rest of the world, while the US still remains at close to zero. Whether international commitments involve sales or donations, the world is in urgent need of vaccines. Just a few days ago, the WHO Director General called for the G7 to donate at least 100 million more vaccine doses by July, and 250 million by September. Here, then, the G7 countries have another opportunity to show that the club’s newfound relevance is here to stay.
After years of leaving the car engine idle, the G7 is striving to reclaim its place as a crucial piece in today’s global governance jigsaw. And, at least so far, it shows that even as the world changes, and the economic and political power of new, non-Western and non-democratic countries rises, the Summit can still serve a bigger purpose than just being a lofty club for the rich, democratic few. Whether it delivers on its promises after this fresh new start, and G7 governments can continue to set apart their differences to work on what unites them, will be another matter still.
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