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G7 and trade policy: What leaders did not say

The heads of state of the G7 met three days in Cornwall over the week-end to discuss an array of issues and agree on a coordinated general direction of travel for the their respective policies.

The main focus was tackling the COVID-19 pandemic, reviving economic growth and investment, and making foreign policy fit their values, which involves, they say, promoting multilateralism and human rights.

But a long 25-page communiqué released at the end of the meeting is also interesting for what it does not say.

After many years of crisis-ridden meetings in this forum during the Trump administration, this week-end’s G7 gathering, marked by positive body language, was genuinely productive. We were, after all, served a 25-page to-do-list at the end.

G7 communiqués are political, non binding documents, but they do set the tone for broader policies among its members. In the area of trade policy the communiqué contains both quite a lot on volume and fairly little on substance.

Northern Ireland

The roll-out of the Northern Ireland Protocol was a key conversation item during the meeting. But little came out of it. It all ended with the host Boris Johnson threatening once again to suspend the protocol’s application – triggering its Article 16 – and thereby risking the introduction of border checks on the island of Ireland. No entreaties by US president Joe Biden ahead of the summit appear to have changed Johnson’s mind – at least in the short term.

The final communiqué does not mention Northern Ireland.

COVID-19, vaccines, trade and intellectual property

The G7 statement sticks out by its absence of mention of the proposal under negotiation at the World Trade Organization on a waiver on intellectual property protections for medical goods to help boost production and thus fight the pandemic. One wonders where the initial United States support for the idea has gone?

Instead, we read the usual language on donating vaccine doses – the G7 pledged 1 billion more doses – investing in production capacity and accelerating voluntary IP licensing deals. “We will engage constructively with discussions at the WTO on the role of intellectual property, including by working consistently within the TRIPS agreement and the 2001 Doha Declaration on the TRIPS agreement and Public Health,” the G7 governments say.

The G7 further: “We commit to an end-to-end approach to boost supply of COVID-19 tools, including vaccines, raw materials, tests, therapeutics, and personal protective equipment (PPE), through more production in more places to sustain a global supply network for this pandemic and the next. This will be based on the principles of open trade and transparency, including through terminating unnecessary trade restrictive measures and supporting open, diversified, secure and resilient supply chains.”

It is interesting that the United States signed off on the language related to “the principles of open trade and transparency”.

World Trade Organization

The United States – and Japan – did not however concede much on the issue of restoring the Appellate Body at the WTO, which the Trump administration choked off by refusing to allow the nomination process of new members to proceed. Restoring the Appellate Body is however a priority for the EU and for many other WTO members.

The WTO gets a good half page in the communiqué.

“Looking ahead to the 12th WTO Ministerial Conference (MC12) in November, we will work with other WTO members to make progress on immediate issues, including reaching a meaningful conclusion to the multilateral negotiation on fisheries subsidies and advancing negotiations on e-commerce,” we read.  “We also welcome the work undertaken towards the conclusion of the negotiations under the Joint Statement Initiative on Services Domestic Regulation by its participants.”

The G7 members also talk about boosting women’s economic empowerment issues at the WTO.

The other sections dedicated to the WTO focus genuinely on US priorities – which are also European, Japanese priorities of course. This is about the usual litany about overhauling the WTO rule-book to tackle so-called “unfair practices” such as forced technology transfers, distortive industrial subsidies, non-compliance with commitments, developing country status graduation, and the like.

On dispute settlement, the G7 want: “proper functioning of the WTO’s negotiating function and dispute settlement system, requiring addressing long-standing issues”.

Forced labour in supply chains

The issue of forced labour in global supply chains is a political priority for Washington in particular: the White House issued a specific press release on this matter after the event.

“We commit to continue to work together including through our own available domestic means and multilateral institutions to protect individuals from forced labour and to ensure that global supply chains are free from the use of forced labour,” says the communiqué. “We therefore task G7 Trade Ministers to identify areas for strengthened cooperation and collective efforts towards eradicating the use of all forms of forced labour in global supply chains.” 

Climate and carbon border adjustment

The G7 commit to “promoting the transition to sustainable supply chains, and acknowledge the risk of carbon leakage, and will work collaboratively (sic) to address this risk and to align our trading practices with our commitments under the Paris agreement”.

That’s about it on climate. No cooperation on carbon border adjustment. No vision statement on a ‘carbon club’.

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