The isolationist policy of former US President Donald Trump during his term under the slogan “America First”; it was about to cause a rupture in the group. The current US president, Joe Biden, is once again betting on the multilateral cooperation and the good relations with friendly countries. German Chancellor Angela Merkel spoke of a successful reboot of the G7: Although the world no longer has problems, Merkel said “we can work on solving these problems with renewed vigor.”
A key decision of the summit was a commitment to provide more aid in the form of vaccines to the poorest countries in the fight against the Corona pandemic. According to the final statement, 870 million doses of vaccines have been promised, half of which will be delivered to countries that need them by the end of the year. Some organizations criticized the promises as insufficient. The World Health Organization (WHO) estimates that poor countries need 11 billion doses.
The G7 aims to achieve climate neutrality by 2050
The climate policy of industrialized countries was another key issue. Under Donald Trump, the United States had temporarily withdrawn from the Paris Agreement. Since then, Biden has reversed this withdrawal, thus enabling joint action. Specifically, the G7 agreed at its summit to cut carbon dioxide emissions by about half by 2030 compared to 2010. The full climate neutrality it must be reached no later than 2050. This means that by then no carbon dioxide will be emitted or CO2 emissions will be fully offset.
In addition, a comprehensive aid program should support developing countries to invest in the fight against climate change. According to the G7, the initiative called “Build Back Better World” (“B3W”) should provide several hundred billion dollars in infrastructure investments for low-income countries. Only Germany wants to increase its annual contribution in aid to infrastructure from € 4 billion to € 6 billion by 2025.
Minimum tax rate for fair competition
An identical minimum tax rate for companies in all countries was also discussed, in order to close tax loopholes in the future. The G7 agreed to a minimum tax rate of 15%, and this proposal will now be presented to the broader round of G20 countries in July. While the G7 includes the US, Great Britain, Germany, France, Italy, Japan and Canada, the G20 also includes other leading economies such as China, South Korea, Argentina, Australia, Brazil, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa and Turkey.
The cooperation will level the playing field, generate more tax revenue and tackle tax evasion, according to the G7 statement. The economic stimulus packages in the fight against the crisis they have put considerable pressure on the national budgets of some countries, probably fueling the desire for a fair distribution of tax revenues.
G7 reacts to China’s rapid rise in power
Finally, one of the main themes of the summit was the creation of a common front against China. It is not just Joe Biden’s turnaround, but also China’s growing prominence, that is probably bringing the G7 closer today. On the one hand, the G7 wants to counter China’s “new silk road” and the country’s growing influence in the world with its own infrastructure initiative. Previously, the US Senate had already approved $ 250 billion worth of technology investments to counter China’s global influence.
The offensive of G7 investment in poor countries, suggested by Joe Biden, should also be considered in this context. Western industrialized countries no longer want to sit idly by as China gains influence.
In its statement, the G7 also demanded that China respect human rights and freedoms. In particular, however, the G7 countries were divided in their policy towards China. While the United States calls for the strongest possible toughness, German Chancellor Merkel wants to avoid confrontation as much as possible. China is a very important sales market for many German companies, for example in the automotive and mechanical engineering sectors.
NATO also honed its tone toward China at its latest summit. China’s goals and its semblance of self-confidence pose “systemic challenges” to the rules-based international order and areas relevant to the Alliance’s security, according to NATO’s final statement.