The G7 Tests



Matthew P. Goodman | Center for Strategic and International Studies

The Group of Seven (G7) has had a bad couple of decades. Riven by internal differences and lack of common purpose, replaced by the G20 as the effective steering group for the global economy, and belittled by Donald Trump, the forum bringing together the world’s seven largest advanced market democracies—the United States, Japan, Germany, the United Kingdom, France, Italy, and Canada—plus the European Union, has far to go to restore its credibility. But in 2021, under the United Kingdom’s presidency, the G7 will be a useful testing ground for three propositions about global governance.

The first is whether UK prime minister Boris Johnson’s notion of “Global Britain” has substance. The G7 summit scheduled for June 11-13 in Cornwall will be one of two major international gatherings hosted by the United Kingdom in its first full year of independence from the European Union. (The other is the United Nations Climate Change Conference, COP26, in November.) Johnson has wisely ditched his earlier idea of formally supplanting the G7 with a “D10” of leading democracies, opting instead to invite four other countries—Australia, India, South Korea, and South Africa—as guests at this year’s G7 meetings.

Optics—from the smoothness of the summit logistics to Johnson’s own performance as chair—will play a role in whether Britain can restore some of its luster as a global leader, but ultimately the success of the Cornwall summit will be judged by its substantive outcomes. London has laid out an ambitious agenda for its host year under the familiar banner, “Build Back Better.” It promises collective action in four areas: pandemic recovery and resilience, climate change, free and fair trade, and shared values (more on the last of these below). Pre-summit meetings of ministers on these topics have produced encouraging roadmaps for G7 cooperation; the question is whether Johnson can engender a sense of unity of purpose among leaders and collective determination to deliver tangible action in these areas. (If recent reports of a possible G7 agreement on a global minimum corporate tax hold up, this will certainly count as a big win for Johnson.)

G7 solidarity will largely hinge on a second test: whether the United States and European Union can patch up their differences and agree to work together on global challenges. Given the G7’s disproportionately transatlantic membership, harmony between Washington and Brussels is a precondition for broader G7 effectiveness. The two sides have sparred for years over trade, regulation, privacy, and taxation, and four years of haranguing and imposition of tariffs by former president Donald Trump have kindled European yearnings for “strategic autonomy.” Hopes of a reset after the November 2020 U.S. elections were set back by the European Commission’s conclusion of a Comprehensive Agreement on Investment (CAI) with China at the end of the year, despite clear signals of concern from the Biden transition team. Moreover, the fact that, four months into its term, the Biden administration has still not removed Trump’s 2018 steel and aluminum tariffs remains a thorn in Brussels’ side. (It also highlights an awkward tension in Biden’s international economic policy, namely between the administration’s impulse to work with allies and its equally strong determination to protect American workers.)

Yet there have also been promising signs of rapprochement between Washington and Brussels. Less than one month after the U.S. elections last fall, the European Commission laid out “a new, forward-looking transatlantic agenda for global cooperation.” President Biden signaled a clear recommitment to the transatlantic alliance in February, calling out the need for continued U.S.-EU cooperation in response to shared challenges, including Covid-19, climate change, and strategic competition with China. The two sides have agreed to put on hold their long-standing battle over subsidies to Boeing and Airbus and the more recent spat over steel tariffs. The new transatlantic goodwill—assuming it continues—improves the prospects for meaningful outcomes at the G7 summit and beyond.

Driving the United States and European Union together is their growing concern about the behavior of large authoritarian powers, notably Russia and China. President Vladimir Putin’s Russia is seen as menace on both sides of the Atlantic, invading and pressuring neighboring countries, assassinating political rivals, and launching cyberattacks on Western assets. G7 foreign ministers spoke out forcefully against Russia’s coercive behavior earlier this month, though no new action was announced. European concerns about China, meanwhile, have lagged behind those in the United States, but the gap is closing as a result of Beijing’s inroads into Eastern and Southern Europe, its repression in Xinjiang and Hong Kong, and its sanctioning of European politicians and civil society organizations. At least three of the G7’s invited guests—Australia, India, and South Korea—have been subject to various forms of coercion by Beijing and will also welcome a group stand against this behavior.

All of this points to the G7’s third test: can this group of advanced market democracies step up to the challenge of defending the international rules and norms that it has long championed but that are increasingly under strain? Despite its early mistakes, China has managed the disruptions of Covid-19 better than most advanced countries, creating a perception in some quarters (not only in Beijing) that authoritarian state capitalism may be a more effective form of governance than market democracy. Biden has made clear that he sees the competition between democracy and authoritarianism as a generational challenge; as he said in his first press conference in March, “This is a battle between the utility of democracies in the twenty-first century and autocracies. We’ve got to prove democracy works.”

Johnson apparently shares this sentiment and wants to use the G7 as a platform for defending democratic values. As mentioned earlier, London has put forward “championing our shared values” as one of the four themes of its G7 host year. It has identified global development, including girls’ education, food security, health, and sustainable development financing, as the centerpiece of the group’s policy work on shared values. In addition to these critical topics, it will be important to watch what the G7 says and does about another high-stakes policy issue for market democracies: data governance. As we have written, this is the missing “fifth pillar” of the global economic order, and the G7 has an opportunity to begin building a favorable system of international rules, standards, and norms for data flows and related issues.

Expectations for substantial policy progress at any given summit meeting should be suitably low. The question is whether G7 leaders in Cornwall can present a compelling vision for cooperation among like-minded market democracies, describing the “city on the hill” to which the group is headed, and then lay down a few tangible “bricks in the road” toward that destination, before passing the trowel to next year’s G7 host, Germany.

Matthew P. Goodman is senior vice president for economics and holds the Simon Chair in Political Economy at CSIS. The CSIS Economics Program, which he directs, focuses on international economic policy and global economic governance. Before joining CSIS in 2012, Goodman served as director for international economics on the National Security Council staff, helping the president prepare for global and regional summits, including the G20, Asia-Pacific Economic Cooperation (APEC), and East Asia Summit.

To read the full commentary from the Center for Strategic and International Studies, please click here.

Image from Reuters