The G7 summit, held June 26-28, concluded with several decisions that could have a lasting impact on the global economy. Prior to the summit, U.S. Chamber President and CEO Suzanne Clark discussed main business recommendations directly with the German Chancellor and other senior officials at the B7 summit in Berlin. Many of these important messages were echoed in the G7 Communiqué.
What is the G7 in today’s world?
The Group of Seven (Canada, France, Germany, Italy, Japan, United Kingdom and United States) is first and foremost a strategic security forum. The G7 is also the de facto governing body of all the multilateral institutions that form the scaffolding of the rules-based global system. For this G7 summit, Germany has invited India as a semi-permanent guest and the presidents of Argentina, Indonesia, Senegal and South Africa have been included in sessions parallels.
G7 Achievements for Business
Despite the war eclipsing Ukraine, G7 leaders have put sustainability front and center, a reassuring signal for those who doubt the return on a sustainable investment. A positive sign for the business community, the G7:
Highlighted the role of liquefied natural gas and the need to invest in this sector.
Adopted 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 consistency of policies to promote sustainable supply chains, including directing ministers to remove bottlenecks in the supply of critical minerals.
Macroeconomic policy and trade
On major economic policy issues, the G7 has dropped any hint of a non-growth agenda. Instead, leaders specifically said they would seek a “stability-and-growth oriented macroeconomic policy mix” that preserves the resilience of the financial sector.
Leaders pledged to work against restrictive trade measures, including agricultural export restrictions, and to support meaningful plurilateral initiatives. The leaders applauded the outcome 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 tariffs on electronic transmissions.
The G7 underlined its commitment to mobilize $600 billion in public and private investment over the next five years to close the infrastructure gap in developing countries – an initiative that the US Chamber hailed as potential way to spur economic growth.
G7 leaders continue to take a more consistent and assertive stance on China’s state-centric economic model and its global effects. “We will build a common understanding of China’s non-transparent and market-distorting interventions and other forms of economic and industrial guidance,” 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, foster diversification and resilience to economic coercion, and reduce strategic dependencies.”
Although the G7 did not delve into digital issues, the official communiqué resembles the recommendations of the B20. He supports the action plan for promoting the free movement of dates with confidence and other forums which should facilitate greater coordination between the G7 in dealing with digital markets. Digitization stands out as a subject on which the G7 does not ask or expect much cooperation from actors other than the G7, the US-EU Trade and Technology Council and the Quad ( United States, Australia, India and Japan).
The G7 began defining resources for Ukraine’s economic reconstruction after the war. This year, Ukraine received $29.5 billion in budget support. Ukraine must now draw up its own reconstruction plan. Germany and Ukraine will convene an international conference to hammer out a comprehensive package, with the World Bank and the European Bank for Reconstruction and Development likely to lead implementation.
Concerns for G7 companies
While the G7 Summit brought many positive outcomes for the business community, we are also tracking some areas of concern:
G7 officials continue to merge climate change, biodiversity loss and pollution policies into a single driver for regulatory action. This shifts compliance milestones and could create further trade disruptions. The G7 also expressed support for mandatory climate-related financial disclosure, which would be very difficult to standardize. The group also expressed support for new UN-inspired legally binding instruments on plastics, ocean pollution, biodiversity, hazardous waste and the chemicals movement that the United States has not ratified.
The G7 expressed its 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 in practice. For example, the United States is implementing its new Uighur Forced Labor Prevention Law, but such strong measures (effectively banning imports from Xinjiang) seem a long way off in Europe.
Looking at lessons from the pandemic, the G7 has embraced the notion of “health sovereignty” through the expansion of sustainable local and regional manufacturing capacity in developing countries. It is important that companies remain involved in how this objective will be implemented.
The G7 aims to make healthcare systems climate neutral and environmentally sustainable. This is a long overdue change in the regulatory agenda that is potentially counterproductive.
A bigger goal
Just before the G7 summit, China chaired the 14th BRICS summit (Brazil, Russia, India, China, South Africa). The public statement from this summit includes pro-trade and pro-globalization rhetoric that sounds similar to what came out of the G7.
India and South Africa, which participated in the non-executive invited session of the G7, are full members of the BRICS group. Despite the similarities in reporting, there is no reliable bridge between the two groups of countries. We are, in fact, observing the drift of these groups and the growing challenges to the rules-based world 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 series of global business coalitions and related business summits focused on sustainable economic policies.