G7 Leaders Call for "Free, Fair" Trade at Taormina Summit

1 June 2017

Leaders from the G7 nations met in the Sicilian town of Taormina from 26-27 May, with hot-button issues such as trade, inequality, the global economy, and climate change featuring on their agenda.

This year’s G7 summit was held under the Italian presidency, whose theme was “Building the Foundations of Renewed Trust.”

This mission, according to this year’s hosts, developed as a result of increasing public concern and scepticism over “their governments’ ability to deliver on issues that affect their daily lives” – requiring that these governments look to revamp their approach to policy in order to better serve their constituents.

This dynamic has played out in various contexts, most publicly in the elections seen in the US and some EU member states over the past year, along with the Brexit referendum from June 2016. This year’s G7 summit was therefore built around three pillars – citizen safety, sustainability and tackling inequalities, and innovation and labour – with various associated target areas.

The two-day summit came during US President Donald Trump’s first major trip overseas since taking office in January. Other leaders who were attending the summit for the first time included French President Emmanuel Macron, elected last month; Italian Prime Minister Paolo Gentiloni; and UK Prime Minister Theresa May.

The members of the G7 include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The European Union is also involved in this process as a “non-enumerated” member.

Trade, labour, innovation

Heading into the Taormina meeting, speculation was rife over how leaders might address their views on trade and protectionism, given the debates seen at earlier G7 ministerial-level meetings over how to approach the issue.

Just weeks ago, G7 finance ministers had avoided including language on protectionism in their communiqué, and instead referred to their work “to strengthen the contribution of trade to our economies.” (See Bridges Weekly, 18 May 2017)

The language ultimately agreed on at the Taormina meeting this weekend did include pledges to tackle protectionism, while also noting the group’s broader approach to trade, jobs, and growth.

“We acknowledge that free, fair, and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation. Therefore, we reiterate our commitment to keep our markets open and to fight protectionism, while standing firm against all unfair trade practices,” said leaders in their final communiqué.

Leaders also called for tackling “all trade-distorting practices,” including within this definition “dumping, discriminatory non-tariff barriers, forced technology transfers, subsidies, and other support by governments and related institutions that distort markets.”

Regarding the WTO, leaders also referred to the value of the “rules-based international trading system,” and lent their backing to the global trade body, including trade rule enforcement. They also pledged to work together to support the organisation’s next ministerial conference in Buenos Aires, Argentina, this December.

WTO members are negotiating in a series of areas, such as fisheries subsidies and domestic agricultural support, in a bid to reach outcomes in time for the Buenos Aires meet later this year. (See Bridges Weekly, 24 May 2017)

G7 leaders also discussed the broader state of the global economy, noting some positive signs for economic growth, while also cautioning that risk remains and that more must be done to increase growth levels.
“Our top priority is to raise global growth to deliver higher living standards and quality jobs. To this end, we reaffirm our commitment to use all policy tools – monetary, fiscal and structural – individually and collectively to achieve strong, sustainable, balanced and inclusive growth,” they said.

Leaders also endorsed the “Bari Policy Agenda” adopted by finance ministers a few weeks ago, which outlined various approaches that could be used to address different forms of inequality both within their countries and at the international level.

Aside from the communiqué, G7 leaders in Taormina also adopted other documents built around the meeting’s themes, including a “people-centred action plan on innovation, skills, and labour” as well as a “roadmap for a gender-responsive economic environment,” among others.

The above-mentioned action plan outlines a series of areas where leaders have directed their ministries to pursue continued work. For example, they call for finding ways to make it easier for small and medium-sized enterprises (SMEs) to participate in the “innovation-driven economy,” along with referring more broadly to the need for greater connectivity.

The action plan also discusses the “future of work,” such as supporting “inclusive and sustainable innovation-driven growth,” along with the need to boost research capacity for addressing major shifts in production that result from today’s shifting technological landscape.

The latter roadmap features recommendations for supporting an increased role for women not just in economic terms, such as by creating a more supportive system for female entrepreneurs and facilitating the participation of women in the workforce, but also by backing more female participation in political settings, including the G7 process itself.

The roadmap also calls for acknowledging the economic contributions made by women working in the “unpaid care economy” and in domestic work, as well as backing “social infrastructure” efforts that would make such care work less burdensome and facilitate greater female participation in the paid workforce.

The eight-page document also discusses the need to account better for gender when studying and addressing poverty, and backs policy efforts towards ensuring equal pay for women, among other issues.

Climate stance

Coming forward with a unified stance on tackling climate change – including through the UN’s Paris Agreement – was also expected to be one of the summit’s key challenges.

Under the heading of “climate and energy,” leaders in Taormina ultimately endorsed shared language in their communiqué on “collective energy security” as well as “open, transparent, liquid, and secure global markets for energy resources and technology.” The document further refers to the value of clean technology in supporting jobs and growth.

Regarding the Paris Agreement, however, leaders openly acknowledged in their communiqué that they would be unable to take a unified position at this time, given the current lack of clarity on the US’ next steps under the new administration.

“The United States of America is in the process of reviewing its policies on climate change and on the Paris Agreement and thus is not in a position to join the consensus on these topics,” they said. (For more on the US and the Paris Agreement, see related story, this edition)

The other leaders involved all gave their “strong commitment to swiftly implement the Paris Agreement,” in line with earlier pledges on the subject.

ICTSD reporting; “Japan needs ‘bargaining leverage’ as U.S. likely to push for bilateral trade deal,” JAPAN TIMES, 29 May 2017; “Trump Advisers Wage Tug of War Before Decision on Climate Deal,” THE NEW YORK TIMES, 30 May 2017; “Scoop: Trump is pulling U.S. out of Paris climate deal,” AXIOS, 31 May 2017.

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