G7 Summit in Charlevoix Sees Intense Debate on Trade, Climate Action

14 June 2018

This year’s G7 annual summit drew to a close on Saturday 9 June, capping two days of leaders’ level discussions that focused heavily on the implications that unilateral trade measures could have on the global economic recovery, while tackling a hefty agenda that also included ocean conservation and preservation as well as climate action. 

Canada, which holds the group’s rotating presidency, hosted the annual summit of advanced economies in Charlevoix, Québec. The G7 group consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The EU is also represented by the presidents of the European Council and the European Commission, along with representatives from the European Bank and Eurogroup.

As many commentators expected, trade tensions between the US and the other members took centre stage at the summit, though were far from being the only items on a packed G7 agenda. However, these trade irritants, combined with US President Donald Trump’s insistence that Russia should be readmitted to the G7, could have lasting implications for the G7 coalition as a policy steering body, according to some experts.

Joint communiqué, with some abstentions

By the end of the Charlevoix meeting, the G7 managed to produce a joint communiqué that all countries agreed to, at least initially, though the US later withdrew its endorsement. Additionally, not all parts of the communiqué were agreed by consensus, with some paragraphs approved by subsets of the G7 membership.

For example, given US President Donald Trump’s intention to withdraw from the Paris climate agreement, the US did not sign on to the communiqué’s language on climate change. The group also developed a G7 Ocean Plastics Charter to address the threat plastics pose to the marine environment, but neither the US nor Japan agreed to it.

The group did find consensus language on some other areas, however, such as future job trends and gender equality issues.

Canadian Prime Minister Justin Trudeau ultimately described the group’s efforts as positive, telling reporters after the summit that “not only did we come out with a consensus document supported by all seven G7 nations, not only did we move forward on significant commitments on a broad range of issues … but we actually delivered almost C$4 billion for women and girls in crisis and conflict-affected areas.”

Broader context for trade and multilateral systems

The opening lines of the Charlevoix communiqué note the countries’ shared commitment to a “rules-based international order.” Its fourth paragraph emphasises the importance of “free, fair, and mutually beneficial trade and investment” as essential drivers of economic growth and new jobs.

G7 members also “recommitted” to the conclusions on trade from the 2017 G20 summit in Hamburg, Germany, specifically the “crucial role of a rules-based international trading system” and the need to “continue to fight protectionism.” (See Bridges Weekly, 13 July 2017

Additionally, the leaders pledged to “modernise the WTO” and to “strive to reduce tariff barriers, non-tariff barriers and subsidies.” Among the notable inclusions in this communiqué was specific language calling for kicking off formal talks aimed at creating “stronger international rules on market-distorting industrial subsidies and trade-distorting actions by state-owned enterprises.” 

Similar calls were issued earlier this month by the US, EU, and Japan, following a trilateral meeting in Brussels that focused heavily on industrial overcapacity and forced technology transfers. (See Bridges Weekly, 7 June 2018

US withdraws endorsement amid metal tariffs spat

Industrial overcapacity, including on steel and aluminium, received repeated mentions in this year’s G7 communiqué. While those issues have been high-profile concerns in recent years, they have taken on a new dimension in 2018 in light of the Trump administration’s steel and aluminium tariffs. (See Bridges Weekly, 7 June 2018)

The tariffs, which the US has justified on national security grounds, have drawn hefty criticism from a host of trading partners. Canada and the EU among the various countries or country groups promising responsive measures over the coming weeks. The EU is also one of several WTO members that have initiated a dispute against the US tariffs at the global trade club, with Norway being the most recent member to launch a case.

In response to questions from the press at the end of the summit, Trudeau briefly addressed the US steel and aluminium tariffs on Canada and others. The Canadian prime minister said that he told Trump, “it would be with regret, but it would be with absolute certainty and firmness that we move forward with retaliatory measures on 1 July, applying equivalent tariffs to the ones that the Americans have unjustly applied to us.”

Trump, who had left the summit early, missing meetings on climate change, responded to Trudeau’s comments via social media site Twitter, issuing a series of posts criticising the Canadian leader and retracting US support for the joint communiqué.

Trump and his aides called Trudeau’s comments a change of position, with the US president calling Trudeau “very dishonest and weak.” However, Trudeau’s statements did not reflect new developments, but were rather an affirmation of an announcement weeks ago that Ottawa plans to impose countermeasures in response to the US tariffs.

“G6” statement on climate

Besides the underlying trade tensions, another high-profile topic this weekend was climate change and the environment.

At last year’s G7 summit in Taormina, Italy, the final statement acknowledged that the US was reviewing its climate change policies and Paris Agreement commitments and was thus “not in a position to join the consensus on these topics.” The remaining leaders went on to “reaffirm their strong commitment to swiftly implement the Paris Agreement.” (See Bridges Weekly, 1 June 2017)

In Charlevoix, similar divisions between the US and the other G7 members were apparent on climate. In two paragraphs that the US did not join, the remaining nations voiced their support for climate action. They expressed a desire to adopt a common set of guidelines at the UN Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP) 24, in Poland in December. These guidelines would involve the so-called Paris rulebook, which would assist in implementing the landmark climate accord.

In addition to their reaffirmation of their support to the Paris Agreement, leaders stressed the importance of a “just transition,” including financing adaptive capacity, enhancing resilience, and reducing vulnerability.

The communiqué also emphasised the importance of carbon pricing, with G7 members minus the US reaffirming their commitments “to reach a global carbon-neutral economy over the course of the second half of the century.”

Absent from the communiqué was any mention of phasing out “inefficient fossil fuel subsidies,” which the parties had endorsed frequently in recent years. That language was also absent last year. The coalition had set out a 2025 deadline in 2016 for eliminating these subsidies. (See Bridges Weekly, 7 June 2018)

The communiqué included a separate paragraph describing the US position. While it acknowledged the importance of reducing air and water pollution, it did not mention climate change specifically, though it did refer to the importance of using renewable energy sources. Furthermore, that section focused on the affordability, reliability, resiliency, and security of energy systems.

“The United States will endeavour to work closely with other countries to help them access and use fossil fuels more cleanly and efficiently,” that paragraph added.

Oceans and coastal communities

In addition to climate and energy issues, the summit also addressed healthy oceans and issues affecting coastal communities, with parties endorsing the Charlevoix Blueprint for Healthy Oceans, Seas and Resilient Coastal Communities.

The Blueprint seeks to address illegal, unreported, and unregulated (IUU) fishing; marine pollution and plastic litter; and climate change effects such as ocean warming and acidification, sea level rise, and extreme weather events. It also stressed the importance working with local, indigenous, and remote coastal and small island communities to address these issues.

The US did not join the Blueprint’s language on climate change, nor did the US and Japan endorse the Annex to the Blueprint, namely the G7 Ocean Plastics Charter.

The nations agreeing to the Plastics Charter committed to moving towards a “resource-efficient lifecycle management approach to plastics,” with a number of specific targets set for 2030 and 2040. This commitment is in step with recent European Commission proposed rules on plastics to reduce marine litter, as well as UN Environment’s initiative to beat plastics pollution.

As part of the focus on oceans, Trudeau hosted a roundtable discussion with leaders of Small Island Developing States (SIDS), as well as bilateral meetings with a number of other coastal nations, including Argentina, which will host the G20 summit from 30 November-1 December.

ICTSD reporting; “After a year of nice, Trump brings Trudeau to brink of trade war,” REUTERS, 10 June 2018; “Trump administration moves to keep failing coal and nuclear plants open, citing national security,” CNBC, 4 June 2018; “EU initiates WTO case against U.S. steel, aluminum tariffs: WTO official,” REUTERS, 1 June 2018; “EU presses ahead with retaliation to US steel tariffs,” FINANCIAL TIMES, 6 June 2018; “Trump again calls for readmitting Russia to G7, blames Obama for Crimea's annexation,” CNN, 10 June 2018.

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