2021 and the New Challenges for the G7

Following the meeting in Biarritz, France in 2019, the leaders of the Group of Seven (G7) are scheduled to convene for a three-day summit in Cornwall, United Kingdom, on June 11th, 2021. The group's previous meeting focused primarily on global inequalities and environmental concerns; however, given Covid-19's long-term impact on the global economy and health infrastructures, the group would now focus on developing mitigation strategies that address global vaccination accessibility, economic recovery, and establishing minimum global corporate tax. Furthermore, the attendance of President Joe Biden, a proponent of multilateralism unlike his predecessor, might help the group in maintaining a united front in the battle against the pandemic and in preparation for future threats.

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Relevance of G7

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The group is a congregation or an informal bloc of so-called ‘advance’ or ‘west’ economies including France, Germany, Canada, Italy, Japan, the UK, and US. Although there are no prerequisites for membership into the bloc, these countries have similar high-market economies, close military ties and strong democratic (liberal) institutions that grant them a distinct identity and elevate their executive position in geopolitics. NATO and G20 also play a similar and significant role in exerting power and influence in international politics; however, the G7 have, in contrast, maintained a consistent homogeneous and collective decision-making capacity. Nevertheless, the group is often criticised for this homogeneity and lack of engagement with other emerging economies such as China, despite it being the second-largest economy. Furthermore, former President Donald Trump’s range of actions, from promotion of the inward-looking “America First” agenda to accusations towards fellow G7 nations of too much reliance on the US have also created roadblocks within the group. The distance maintained by other members with the US during the Trump presidency was evidential and its repercussions posed a new challenge to the bloc's standing as a fundamental pillar of western influence.

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Although the group's strong alliance in terms of economy, military, and polity have allowed collective action, the countries do have distinctions, particularly in terms of geography, defense, and cultural interests and burdens, which has threatened Western unity over time. With developing Asian countries such as India, Vietnam, Taiwan, and South Korea, as well as China, impacting geopolitics, the strategic focus is increasingly shifting away from the west and toward the Indo-Pacific. However, establishing an alternative bloc or objective is not the ideal solution to overcome these challenges faced by the bloc. External dynamics and internal divisions have and will continue to shake the group’s influence and efficacy. On the other hand, while the G20 could serve as a replacement for the G7 because it includes emerging economies, like India, South Africa, Brazil, and Mexico, which together account for 80 percent of global GDP, its core heterogeneity is the most significant impediment to collective action. As a result, conflicts among countries owing to ideological, economic, and political differences may preclude collective action.

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Importance of Collective Action

The pandemic has disrupted the world economy and existing health infrastructures; while the world grapples on the path of recovery, countries are consistently facing several hurdles. Every country faces a unique set of circumstances, context, priorities, and emergency responses. Their prompt actions of using conventional securitisation interventions such as enforcing lockdowns and closing borders transform health security into a national issue. Responses in line with national priorities help protect the population from external threats, however, they also affect global solidarity towards unified response to the threat of human and health security. Therefore, international cooperation could help facilitate an ‘entry point’ for coordination for an effective response. Unlike the G20, the G7, with its executive status, can help ensure a fair worldwide vaccination distribution system. As 75 percent of the vaccines are distributed in only 10 countries, several nations are facing severe shortages in providing vaccines to their populations. As a result, the primary focus of the current meeting will be on the desired road of recovery for the group and the world, along with preparations for combatting any future pandemic threats. Furthermore, as a long-term solution for future pandemics, the meeting could potentially focus on investments in vaccine research and development, as well as building a universal vaccine supply plan in collaboration with global pharmaceutical corporations. These unified actions will help deliver effectiveness through coordinated programmes to address ‘vaccine nationalism’ and at the same time, portray the west’s collective resolve for today’s global emergencies.

The focus of discussion could potentially shift to the spillovers of health insecurity into global economic stability. To address the present problem of income inequalities, the finance ministers of the G7 countries have signed a ‘landmark’ agreement that imposes a minimum global corporate tax of 15 percent on multinational companies and online technology companies. According to the agreement, countries, where these companies generate revenue, will also be taxed. While the deal is seen as a first step toward addressing tax evasion by huge firms and the tax havens they create, the tax rate is far lower than the planned 21 percent. While some countries are skeptical of the minimum rate's effectiveness, the fundamental message of this agreement is to present a united Western front in an effort to reclaim control of the global agenda and possibly challenge China's dominance in the global political economy. Nevertheless, the UK and several EU nations have also introduced a digital tax on these companies until a unilateral resolution is passed and comes into effect in the G7 and G20 blocs. Therefore, while the agreement is transformational, it depends on the effectiveness of negotiation during the summit that affects the implementation of the tax rate.

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The importance of the G7 and everything it stands for has increased as a result of the pandemic's urgency and global impact. Inviting representatives from South Korea, India, and Australia to the forthcoming summit could also be advantageous by focusing on the current Indo-Pacific's strategic priority. However, if the talks progress to the formation of the G10 (which would include these countries in the G7 bloc), the G7's objective and purpose could be jeopardised. The key difference lies in the relative economic weight, specifically in terms of wealth possession per person in these countries. In addition, India’s membership could further challenge the bloc’s cohesiveness given its divided relations with the US, and close ties with Russia. As a result, as the G7's challenges get more complex, it also presents a critical opportunity to reignite and reaffirm western unity in international affairs.

References:

• Affairs, International. ‘The G7 and COVID-19: What to Expect’. Medium, 7 June 2021. https://medium.com/international-affairs-blog/the-g7-and-covid-19-what-to-expect-cc01483dc700.

• Davies, Sara E, and Clare Wenham. ‘Why the COVID-19 Response Needs International Relations’. International Affairs 96, no. 5 (1 September 2020): 1227–51. https://doi.org/10.1093/ia/iiaa135.

• The Guardian. ‘G7 Tax Reform: What Has Been Agreed and Which Companies Will It Affect?’, 7 June 2021. http://www.theguardian.com/world/2021/jun/07/g7-tax-reform-what-has-been-agreed-and-which-companies-will-it-affect.

• RUSI. ‘Getting the Band Back Together: The UK and the 2021 G7 Summit’, 3 February 2021. https://rusi.org/commentary/getting-band-back-together-uk-and-2021-g7-summit.

• Giles, Chris, and Delphine Strauss. ‘G7 Tax Deal Is “Starting Point” on Road to Global Reform’. Financial Times, 6 June 2021. https://www.ft.com/content/95dd0c00-7081-4890-bcef-b9642312db4d.

• Council on Foreign Relations. ‘Where Is the G7 Headed?’ Accessed 10 June 2021. https://www.cfr.org/backgrounder/where-g7-headed.