The G7 Summit, held on June 26-28, concluded with several decisions that could have a lasting impact on the global economy. In the lead-up to the Summit, U.S. Chamber President and CEO Suzanne Clark discussed key business recommendations directly with the German Chancellor and other senior officials at the B7 summit in Berlin. Several of these important messages were picked up in the G7 communique.
What is G7 in today’s world?
The Group of Seven (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) is primarily a strategic security forum. The G7 is also the de facto governing board of all the multilateral institutions that make up the scaffolding of the global rules-based system. For this G7 Summit, Germany invited India as a semi-permanent guest and the presidents of Argentina, Indonesia, Senegal and South Africa were included in side sessions.
G7’S ACCOMPLISHMENTS FOR BUSINESS
Despite the overshadowing war in Ukraine, G7 leaders put sustainability first—a reassuring signal to those doubting returns on sustainable investment. In a positive sign for the business community, the G7:
- Stressed the role of liquefied natural gas and the need for investment in this sector.
- Embraced the role of nuclear energy and its potential to provide affordable low-carbon energy and contribute to the security of energy supply.
- Committed to improving the quality and coherence of policies to promote sustainable supply chains—including tasking ministers to clear critical minerals’ supply bottle necks.
Macroeconomic Policy and Trade
On broad economic policy matters, the G7 abandoned any hints at a no-growth agenda. Instead, leaders specifically stated they will seek a “stability- and growth-oriented macroeconomic policy mix” that preserves the resilience of the financial sector.
Leaders promised to work against trade-restrictive measures, including export restrictions on agricultural products, and to support meaningful plurilateral initiatives. Leaders applauded the outcomes of the 12th WTO Ministerial Conference but noted that there is still work to be done, including making permanent the two-decade old moratorium on customs duties on electronic transmissions.
G7 outlined its commitment to mobilizing $600 billion in public and private investment over the next five years to close the infrastructure gap in developing countries—an initiative that the U.S. Chamber welcomed as a potential way to spur economic growth.
G7 leaders continue to inch toward a more coherent and assertive stance toward China’s state-centric economic model and its global effects. “We will build a shared understanding of China’s non-transparent and market-distorting interventions and other forms of economic and industrial directives,” the leaders said in their joint statement. “We will then work together to develop coordinated action to ensure a level playing field for our businesses and workers, to foster diversification and resilience to economic coercion, and to reduce strategic dependencies.”
While G7 did not delve into digital issues, the official Communique resembles B20 recommendations. It supports the Action Plan for Promoting Date Free Flow with Trust and other forums that should facilitate greater coordination among G7 in dealing with digital marketplaces. Digitalization stands out as a topic where G7 is not asking or expecting much cooperation from others beyond G7, the US-EU Trade and Technology Council, and the Quad (United States, Australia, India, and Japan).
G7 began outlining resources for the economic reconstruction of Ukraine after the war. This year, Ukraine has been provided $29.5 billion in budget support. Now Ukraine needs to develop its own reconstruction plan. Germany and Ukraine will convene an international conference to develop a comprehensive package, with The World Bank and the European Bank for Reconstruction and Development likely leading the implementation.
CONCERNS FOR BUSINESS FROM G7
While the G7 Summit spurred quite a few positive outcomes for the business community, we are also tracking some areas of concern:
- G7 officials continue to meld together climate change, biodiversity loss, and pollution policies into one driver of regulatory action. This moves the goalposts of compliance and could create further disruptions to trade. G7 also has expressed support for mandatory climate-related financial disclosure, that would be very hard to standardize. The group also expressed support for new, UN-inspired legally binding instruments on plastics, ocean pollution, biodiversity, hazardous waste, and movement of chemicals that the U.S. has not ratified.
- G7 expressed commitment to an “international consensus on business and human rights to strengthen compliance with international standards, including through mandatory measures.” But, it is unclear how these statements will translate into practice. For example, the U.S. is implementing its new Uyghur Forced Labor Prevention Act, but such forceful measures (effectively banning imports from Xinjiang) seem remote in Europe.
- In reviewing the lessons from the pandemic, G7 adopted the notion of “health sovereignty” through the expansion of sustainable local and regional manufacturing capacity in developing countries. It is important for business to stay involved in how this goal will be implemented.
- G7 intends to make health systems climate-neutral and environmentally sustainable. This is a long-anticipated shift in the regulatory agenda that is potentially unproductive.
A WIDER LENS
Immediately prior to the G7 Summit, China presided over the 14th Summit of BRICS (Brazil, Russia, India, China, South Africa). The public statement from that summit includes pro-trade and pro-globalization rhetoric that is appears similar to what came out of the G7.
India and South Africa—which took part in the guest, non-executive session of G7—are full members of the BRICS group. Despite the similarities in statements, there is no reliable bridge between the two groups of countries. We are in fact observing the drifting apart of these groups and mounting challenges for the global rules-based order.
About the authors
Senior Vice President, Global Initiatives, U.S. Chamber of Commerce
Gary Litman, senior vice president of Global Initiatives at the U.S. Chamber of Commerce, is responsible for the Chamber’s policy advocacy for the economic reform agenda of the G20, G7, and international institutions. He leads the Chamber’s participation in a range of global business coalitions and related business summits focused on sustainable economic policies.