Proceedings of the first day of the two-day G7 summit have commenced. The agenda for the two-day summit range from inclusive economic growth and the future of work and to international security, energy, climate change, and oceans. The G7 is a group of 7 nations – UK, US, France, Canada, Japan, Germany, and Italy with the EU as a non-enumerated member. The discussions that happen among this group, set the agenda not just for these nations, but for the world. They used to be a group of ‘like-minded’ countries. But it looks like they have perhaps temporarily drifted.
The backdrop against which this meeting is taking place is interesting. There have been some really interesting and controversial developments on international trade and diplomacy. The US has withdrawn from the Iran nuclear deal, The Trump-Kim (US and North Korea) meeting is back on track, not to forget the brewing trade war between the US and countries such as Canada, Mexico and EU. The US government didn’t extend the steel and aluminium tariff waivers for the EU, Canada, and Mexico.
Renegotiations for NAFTA are also happening and these tariffs seem to indicate that the negotiations aren’t going well.
Tariffs will perhaps be the biggest issue. The tariff wars are one of the first of their kind in the 21st century. Not since the cold war have we experienced such hostility among the transatlantic community.
From trying to create a world with free trade and globalized value chains, we are moving towards an increasingly protectionist world. This has wider implications for all countries given how integrated the global economy has become in the past few decades. The American agenda of free trade has now become a subjective view ‘fair trade’ where the fairness seem to be decided arbitrarily and by imperceptible forces. There is tangible anger among allies with strong statements being issued by heads of state. The expectation from the G7 is that there won’t be any big announcements with regard to trade as the Trump administration continues to push their agenda and other states get angered. It remains to be seen if a compromise will be reached.
Given that this G7 meeting is happening in Canada, many commentators also believe the outcome of this summit will be crucial for Prime Minister Trudeau as there will be domestic political pressures. The Prime Minister has been subject to criticism from his political opponents recently for a variety of issues ranging from oil pipelines to trade.
One of the biggest concerns for Japan is their voice being ignored during the Trump-Kim meeting. Japan is also an important stakeholder in the region and has an interest in ensuring there is peace in the region. Prime Minister Abe will be visiting Washington shortly after the summit. Chancelor Merkel and President Trump don’t share the best of relationships. Chancellor Merkel has made statements in the past about “the era in which we could fully rely on others is over to some extent…… We Europeans truly have to take our fate into our own hands….”. US-UK relations aren’t at their best either. With Brexit under way, trade negotiations between the US and UK are an important issue for the two countries.
Energy is one of the most important topics for the collective. Their interests are in alignment to a large extent.
Fluctuations in oil prices is an important topic. However, with other pressures taking up time, this may be an issue that receives little attention. Further, the protection of the environment and oceans are an important issue. The European Commission has proposed to ban single-use plastic while Canada has been engaging in various efforts to protect its oceans from plastic and other waste. Apart from this, China is also a major issue. Fixing trade with China is a priority for all these nations. The previous efforts have been in the direction of having a united front/policy approach. With trade tensions among the G7, this agenda may also take a back seat. It is ironic that a platform created to improve and encourage free trade has members engaging in tariff wars.
Trade will continue to be a major agenda during the summit. The joint communique that will be issued at the end will be indicative of where the world is headed in the near future.
Picture Credits: Thewedge.com