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G7 Trade Ministers Meetings Return with a Promising Post-Brexit Bang

John Kirton, Director, G7 Research Group
April 1, 2021

On March 31, G7 trade ministers met under the chair of the United Kingdom's trade secretary, Liz Truss. It was a welcome return to G7 trade ministers meetings after too long an absence, from the days when much value was added by the Trade Ministers Quadrilateral of the United States, European Union, Japan and Canada that began at Key Biscayne, Florida, in 1982 (Cohn 2002). The March 31 meeting can be seen as a benefit of a post-Brexit Britain, hosting the G7 this year, exercising its new freedom in the trade field to create a stronger global Britain, as protectionist pressures loom from vaccine protectionism, digital protectionism and climate protectionism (through prospective carbon border adjustment mechanisms).

The initial documentation indicates that Germany's economy minister, Peter Altmeier, and France's responsible minister, Franck Reister, participated, while Italy was represented by a senior official, Vincenzo Celeste. It thus seems that these countries have fully surrendered their sovereignty to a supranational European Union, either for the core trade issues relating to the process and reform of the World Trade Organization (WTO) or for the trade-related issues of climate change, fisheries, health, gender and digitalization that the ministers made commitments on. Moreover, if these commitments are to be complied with, the responsible ministers in all G7 members must act, rather than rely solely on action under the formal legal competence and internal political consensus of the various institutions of the EU in Brussels, Strasbourg or elsewhere.

The trade ministers issued only a chair's statement, rather than a collective communiqué. Still, this was a step toward transparency that recent meetings of other G7 portfolio ministers lacked. Allowing for the peculiar phraseology of a chair's statement, which was written in the third rather than the first person, the trade ministers, by a generous count, made 17 precise, future-oriented politically binding commitments. This is enough to make their meeting more than a talk shop generating consensus on facts, causes, and what is right and wrong. In fact, it produced 17 decisions to act, in ways that the members presumably intend to comply with, at least until the UK's year as G7 host ends and Germany, without the legendary Angela Merkel, assumes the chair in 2022.

It is, however, likely, that the trade ministers' wise decision to hold not one but two pre-summit meetings, with another promised for May, will boost compliance with the trade commitments their leaders will make at their own summit in Cornwall on June 11–13, and even the one made at the Virtual Summit on February 19. G7 members' compliance with leaders' trade commitments certainly need a boost. Since the start of G7 summitry in 1975 up to 2020, trade compliance averaged only 66%, well below the all-subject average of 75% (Marchyshyn 2020). Trade compliance has been led by the European Union at 84%, followed by Canada at 76%, the EU-constrained, pre-Brexit Britain at 74%, and Germany and Japan at 72% each. Below the 66% trade compliance average came the United States at 60%, Italy at 57% and France at 48%.

So Britain comes to the G7 trade table in 2021 with relatively clean hands, credibly convincing its partners that the trade promises they collectively make will be kept by a post-Brexit global Britain. The challenge is lifting up to the same high level a United States still significantly attached to an approach of "Buy America," made-in-America, re-shoring to America, and American-first vaccinations, even after Donald Trump has left the presidency.

The trade ministers' 17 commitments on March 31 contain six on the classic trade subjects focused on the WTO. A glaring omission is the formerly routine anti-protectionist pledge, often accompanied by a promise of "redress" for the protectionist sins members had committed in the recent past. They certainly have much to atone for after their actions over the past year or two. Another shortcoming is only one passing reference to the need for, and advantages of, plurilateral and bilateral trade agreements, such as the one the UK itself has just concluded with Canada and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership that the UK seeks to join. Such agreements beyond the WTO produce faster, fuller, real trade liberalization than the WTO does, which has not completed a single round since it began its work a quarter of a century ago. They also set higher standards to protect the inherently linked values and opportunities of the environment, labour, gender equality and digitalization, even while Indigenous Peoples and others await their turn.

The trade ministers on March 31 did take a major step in mobilizing these synergies. They made two commitments on climate change. Both were highly binding, whereas only four of the six classic trade commitments were. The two on climate focused on sustainable supply chains and fisheries subsidies. They left for later the looming issue of trade protectionism for climate protection, in the form of carbon border adjustment mechanisms and immediate full free trade among G7 members for genuinely environmental goods and services. Understandably impatient climate activists will note that the first trade commitment was merely to "deepen discussions" of the trade-climate nexus. They could also note that if the G7 does not succeed at the WTO in "reaching a meaningful conclusion" on fisheries subsidies, G7 members could agree to end their own, and protect their own stocks from subsidized predators. They have enough naval power and other relevant capabilities to make this work, as Canada proved in its "Turbot War" with Spain in 1995.

Trade ministers also admirably made two commitments on gender. They had a first-generation feminist focus on women and their economic empowerment on trade. There was one highly binding gender commitment. Both commitments were to do more study, analysis and discussions, rather than actually to empower women in the short term. Once again, they looked to the WTO to do that job. There were no references to gender elsewhere in the statement. With three female ministers at the meeting, and the first female director general of the WTO, one might have expected more. The evidence suggests that when more women are at the high-level decision-making table, better outcomes flow, for gender equality and other things. And G7 summit badly needs a boost in its gender performance (Kulik 2020). With no meeting of G7 gender ministers planned this year, it has been left to the trade and other portfolio ministers to lend a hand.

Health has only two commitments, even as COVID-19 cases surged in all G7 countries but the UK and throughout the EU. One commitment was a highly binding, as ministers "agreed to further consider the ways in which trade policy can develop to support trade in health products … as we work to build back better from Covid-19." The second, low binding one was to "encourage cooperation … to identify policies which support ramped-up production and distribution of vaccines." Some might wonder if such analysis-paralysis is necessary, as too many citizens die from the vaccine protectionism that currently prevails within the G7. The answer is obvious: for COVID-19 vaccines and their components, and anti-protectionist pledge with redress, immediate full free trade among all G7 members and free of subsidized exports to those outside whose need them most.

Digital trade is the bigger winner among the extended subjects. It has five commitments, all highly binding, including on opposition to digital protectionism. One even had a short-term deadline to accomplish something by the end of the year. While this is admirable, one might ask why connectivity has done better than climate change, COVID-19 and gender equality, all central crises of our time.

By far the best news is that G7 trade ministers will meet again in May, before their leaders assemble in Cornwall in mid-June. Trade ministers promised to advance "a shared agenda" in May. They might have added "shared action." One can hope that such action will come, along with a proper communiqué agreed to by all. But at the moment, the mere fact that the G7 trade ministers meetings are back provides hope that the G7 Cornwall Summit will be a success, on trade and on climate change, COVID-19 control, gender equality and digital governance too. And as trade ministers will meet again in October, they could well boost compliance with their leaders' Cornwall commitments, as they try to make the long overdue WTO ministerial meeting in December a success.

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References

Cohn, Ted (2002). Governing Global Trade: International Institutions in Conflict and Convergence (Aldershot UK: Ashgate).

Kulik, Julia (2020). "G7 Performance on Gender," in John Kirton and Madeline Koch, eds., G7 USA: The 2020 Virtual Year (London: GT Media), pp. 100–101. http://bit.ly/g7usa.

Marchyshyn, Maria (2020). "G7 Performance on Trade," in John Kirton and Madeline Koch, eds., G7 USA: The 2020 Virtual Year (London: GT Media), pp. 74–75. http://bit.ly/g7usa.

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