G7 summit: what for?

2015 G7 summit at Schloss Elmau, Germany. (Source: EC - Audiovisual Service, Pierre Teyssot © European Union 2015)

Next Thursday and Friday the leaders of the G7 (US, UK, France, Japan, Germany, Canada and Italy) will meet in Ise-Shima, Japan. But will this summit actually matter or is it just another archaic piece of an international system that is so often put in question these days? I will review both the official agenda and the underlying issues to try to make sense of the summit and its larger repercussions.

The G7 (previously G8 until Russia was suspended after the annexation of Crimea) is an informal forum created in 1975 to coordinate macroeconomic policies among the most industrialized countries of the time. It is considered as one of the oldest examples of minilateralism, that is, the establishment of small forums of the most concerned countries in order to deal more efficiently with specific issues than in big multilateral fora with often more than a hundred members.

The G7 leaders normally meet once a year in a relaxed setting (often in some kind of resort) in the country which holds the rotatory presidency for the year. Nevertheless, throughout the year there are several thematic meetings at ministerial level, from energy to education to finance, in a more traditional working setting.

So, starting with the agenda, it must be said that despite the fact that the state of the economy remains a fixed item in each year's agenda, the major coordination work of the world economy has been largely delegated to the more inclusive G20. So, G7 leaders will reinforce their commitment for further economic stimulus if needed (and if Germany allows it). Another hot issue will be tax heavens, in the light of the Panama Papers and David Cameron's implication in them.

A more important issue will be trade, as will be a perfect opportunity to discuss the future of both TTIP (EU-US free trade agreement) and CETA (EU-Canada free trade agreement). On TTIP, the good vibes between Obama and Merkel, plus Junker and Tusk will try to give a new impulse to the negotiations, meanwhile Hollande has already stated its opposition to the agreement in its current form (it can be understood as a gesture towards his left-wing electorate with presidential elections one year away). What role will Cameron play remains a mystery. On CETA, the agreement was already finished but it has been recently modified to include the same dispute-settlement mechanism recently devised for TTIP, and now needs to be ratified. Therefore, leaders may need to set future steps to start implementing the agreement. Another issue they may discuss is whether the EU should grant China Economy Market Status by the end of the year given Chinese dumping in sectors such as steel (Market Economy Status it's a term within the World Trade Organization which would lower the tariffs for Chinese imports).

The third big topic of the summit will be foreign policy. On the one hand leaders will speak about migration and adopt an Action Plan on Countering Terrorism and Violent Extremism. However, given the Asian setting, most of the discussion will be focused on the region, largely about how to respond to nuclear proliferation in North Korea (additional sanctions were recently imposed by the UN Security Council) and territorial disputes with China in the South China Sea. Moreover, during some of the sessions on Asia, they will be joined by Laos as the chair of ASEAN plus other countries from the region.

Also, leaders will try to accelerate the implementation of the Paris Agreement on Climate Change and the 2030 Agenda for Sustainable Development.

However, there are many issues outside the agenda which will also be very present at the summit. For one, it will be one of the last occasions in which the main European leaders will meet before the June 23 referendum on Brexit. David Cameron may try to use the opportunity to launch another message about the UK having a stronger voice in fora like the G7 by remaining inside the European Union.

The US presidential elections will also be very much present in the summit, given the profound difference in worldview between President Obama and the likely Republican candidate Donald Trump. Obama may try to highlight (as he has been doing for months now) the importance of Climate Change, free trade or US global leadership, in opposition to Trump's proposals in the campaign trail. Furthermore, Obama will indeed continue in "legacy mode" by being the first sitting US President to visit the Hiroshima memorial remembering the victims of the nuclear bomb launched over the city by the US in 1945 (critics will hammer that this is another stop in his "apology tour"). There, he won't actually apologize for using the bomb, but will rather take advantage to reinforce his vision about global nuclear disarmament (even as the US military modernizes its own nuclear arsenal) and also to criticize Trump's call for Japan and South Korea to develop nuclear weapons of their own. Also, he will visit Vietnam just before the summit in order to to try to seal some kind of partnership with the still communist country to counter China's assertiveness in the South China Sea, right before Vietnamese coasts. The agreement might involve the presence of US navy ships in Vietnamese ports.

But what can the summit actually deliver? Clearly this may be a summit of messages more than one of deals. Leaders are likely to appeal to Britons to remain in the European Union, to remind Americans that US leadership in the world is indispensable, and to warn Chinese leaders that International Law is for everyone to respect; as a case between China and the Philippines before the International Court of Justice is about to be decided (even if the US hasn't ratified the landmark UN Convention on the Law of the Sea). Nevertheless, agreements may be reached to advance TTIP and for basing US warships in Vietnam.

So, it may be said that the G7 is archaic in the sense that its members no longer represent the most developed economies. Moreover, its foundational purpose, macroeconomic coordination is now performed by the G20. Nevertheless, at least this year there seems to be a lot of important issues on the leaders' plate, and therefore it will be an important summit to follow.