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Can the G7 Summit Succeed?

Authors: John Kirton, G7 Research Group, and Aaron Shull, CIGI
Jun 6, 2018

African Union Expert Brief Flags are placed at the G7 summit in Taormina, Italy on May 26, 2017. Alessandro Bianchi/Reuters

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The Canadian government has set an ambitious agenda for the June 8–9 Group of Seven (G7) summit in Charlevoix, Canada. When Canada took over the G7 presidency in January, Prime Minister Justin Trudeau announced a progressive summit program that would focus on gender equality, women’s empowerment, clean energy, and what he described as “economic growth that works for everyone.”

This agenda would be ambitious even under normal conditions, and the circumstances surrounding the Charlevoix summit are far from normal. Leaders of the world’s major industrialized democracies are meeting at a time of intensifying technological change that will have profound global economic consequences. Developments in artificial intelligence, blockchain technology, and quantum computing are already affecting everyday life. At the same time, many people in the industrialized world feel left behind, watching economic opportunity pass them by and their existing jobs disappear. This has fed political instability in several regions, global tension and revanchism, the reinvigoration of old rivalries, and assaults on democracy, the core mission of the G7. Additionally, these changes are set against a backdrop of a changing climate and shifting weather patterns.

The need for a coordinated response by G7 members and the corresponding need for a successful summit could not be stronger. Whether this will happen remains doubtful, especially after the steep tariffs U.S. President Donald J. Trump imposed a week before the summit on imported steel and aluminum from Canada, Mexico, and Europe.

Investing in Growth for Everyone

The G7 leaders have recognized that excessive inequality can undermine growth, social cohesion, and confidence in domestic and international institutions. In the 2017 G7 Taormina Leaders’ Communiqué [PDF], the leaders welcomed their finance ministers’ Bari Policy Agenda on Growth and Inequalities [PDF] as a framework to foster inclusive growth. The Bari Agenda set out policy options that G7 members could pursue to make their tax systems more equitable by “broadening the tax base, curtailing inefficient tax expenditures, and reducing tax wedges on labour . . . while supporting the incomes of working families.”

To take these pledges forward, the G7 states at Charlevoix should seize on the work of the Organization for Economic Cooperation and Development’s Task Force on the Digital Economy on the implications of the rapid digitalization of the world economy. The task force report calls for a swift, coordinated policy response to address capital mobility and aggressive tax planning and counter the wide-scale subversion of taxes in the digital economy. Revenues raised through such steps should be used to limit inequality through national economic and social policy. The G7 should treat this as a priority issue and coordinate to better capture taxable revenues to fund a social policy response.

Technology: Disruption and Opportunity

Any discussion on jobs of the future would invariably be rooted in the premise that advanced robotics, artificial intelligence (AI), big data, blockchain, and 3-D printing will lead to tremendous disruption in the labor market. The policy mechanisms that leaders typically tout as a response to this looming disruption are increased support for transitioning workers, including retraining efforts, improved social safety nets, and promotion of education as a lifelong endeavor.  

In preparation for the Charlevoix summit, the G7 ministers responsible for areas such as employment and innovation convened in late March in Montreal, where advances in AI emerged as the priority issue. In response, G7 innovation ministers will convene a conference in the fall of 2018 to “bring together stakeholders including government, academics, specialists, and private sector partners to discuss future economic, legal, social, and ethical issues relating to the development and deployment of AI.”

If Prime Minister Trudeau is to make good on his promise to find concrete solutions to these challenges, the G7 will need to do much more than convene conferences. Although there is debate about the economic impact of AI and the timeline associated with its widespread commercial adoption, many believe that the economic ramifications will be significant. Right now, states are racing to develop this technology in the absence of a global regulatory framework that could ensure coordination on dealing with AI’s legal, safety, security, and ethical implications. The G7 has an opportunity to dig into these policy issues, but it is not clear if it will be able to seize it.

How to Make Trade Work for Women

Last year, the G7 leaders considered the issue of women’s economic empowerment and adopted the G7 Roadmap for a Gender-Responsive Economic Environment [PDF]. Though laudable, the document contained no specific references to women and trade.

Yet trade remains a critical, underserved aspect of women’s economic empowerment. Women and female-owned enterprises continue to face barriers to engaging in trade and accessing global markets. In December 2017, 121 member states and observers of the World Trade Organization (WTO) recognized this fact when they signed the Declaration on Trade and Women’s Economic Empowerment [PDF]. The signatories committed to share information, gather data, and develop best practices to encourage female entrepreneurship and remove barriers to trade. Bringing more women and their businesses into international trade is increasingly viewed as a way to stimulate economic growth around the globe.

The Charlevoix summit presents G7 nations with an opportunity to reinforce these international initiatives and help fulfill their existing commitments in these areas. The leaders should not let this opportunity pass them by; rather, they should vigorously promote the detailed set of policy options from the G7 Roadmap for advancing the role of women in their national economies, as well as in global trade.

Shrinking the Sea of Plastic

The political realities surrounding climate change make it exceedingly unlikely that a united G7 will have much to contribute. With the U.S. intention to withdraw from the Paris Agreement on climate and its policy reversal to support coal, the ability of the G7 to move collectively on climate change has been undermined. However, this does not mean the group cannot act effectively on the environment.

Canada has been working behind the scenes to negotiate a zero-plastic-waste charter at the summit. The content of such a charter is still murky, but early indications are that it would address potential targets for reductions in plastic waste, outline a mechanism for partnering with industry to develop less environmentally harmful products, and pledge assistance to developing states to improve waste disposal systems to keep excess plastics out of the water.

It is hard to argue against keeping plastic out of the ocean, as the mass known as the Great Pacific Garbage Patch now covers an area three times the size of France. Moreover, the United States and Canada, countries with two of the longest coastlines in the world, could act as particularly effective leaders in such an effort. In addition to a plastics charter, it could consider actions to make coastal communities more resilient in the face of increasingly powerful storms, especially along the Gulf Coast. Given the importance of all these existing political exigencies, if the G7 wants to reach consensus, it should start with plastics.

External or Internal Threats?

G7 foreign affairs and security ministers met on the theme of building a more peaceful and secure world in Toronto, Ontario, in April. In the group’s concluding document, it noted that “foreign actors seeking to undermine democratic institutions and processes through coercive, corrupt, covert, or malicious means constitute a strategic threat.” It also committed to providing advice to the G7 leaders ahead of the Charlevoix summit. The importance of this declaration cannot be overstated, as there have been widely reported cases of Russian interference in elections in the United Kingdom, France and Germany and clear evidence of interference in the 2016 U.S. presidential election.

Cold War politics had previously been part of the forum’s agenda and at the core of its raison d’être since its start in 1975. The G7 stands as a bastion for the liberal democratic values that have become the hallmarks of Western civilization. Those values are under threat from an old adversary. If these G7 leaders cannot stand in solidarity on this especially with the work already done by their foreign affairs and security ministers then it will be unclear whether they can stand together on anything.

Conclusion

With a trade war brewing between the United States and other G7 members, the summit faces steep obstacles to success. The Trump administration has been working to dismantle or undermine a number of global institutions that the United States took a lead role in creating. The U.S. withdrawal from the Trans-Pacific Partnership and the Paris Agreement and the country’s failure to name judges to the WTO’s Appellate Body provide ready examples of hostility toward multilateral institutions. This is obviously an embodiment of the America First doctrine, but in pushing to be first, America may well find itself alone.

Global Memos are briefs by the Council of Councils that gather opinions from global experts on major international developments.