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Global governance and the gap of 7

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Hello from Brussels. The eyes of the global governance world are on Cornwall over the next couple of days, and it’s not often you can say that. The picturesque craggy-coasted south-west England holiday destination, “Britain’s Maine” as an American publication has no doubt already put it, hosts the Group of Seven (G7) summit. The usual inmates — the UK, France, Germany, Italy, Japan, Canada and the US — are joined on this occasion by Australia, South Korea, India and South Africa, allowing it to retain its billing as a grouping of democracies, albeit of varying quality. Today’s main piece asks sceptically whether the G7 can seize its chance to get back in the global governance game.

In other overhyped-process news, a meeting of World Trade Organization ambassadors yesterday discussed the patent waiver issue that the US made such a big deal of backing. Supporting our growing belief that Washington is doing this all for show, a Geneva trade official said the US noted in the meeting that the initial negotiating text, submitted by India and South Africa, was too broad to achieve consensus (we’ll say), and again asked for other members to produce proposals. It said nothing about submitting its own. This is going to get monotonous quite quickly.

Charted waters looks at delays at a major Chinese port, emerging as a result of the country’s Covid-19 outbreak.

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A cat’s cradle of interests on data, China and 5G

The G7 has the somewhat tatty air of a piece of the global governance stage set being dragged out somewhere near the spotlight after a decade gathering dust in the props chest. The G7/G8 (Russia was unwisely invited to join in 1998 in a fit of Clinton-Yeltsin era optimism) was comprehensively eclipsed by the Group of Twenty (G20) during the global financial crisis on the reasonable grounds that you needed the emerging market heavyweights in the room.

Since 2008, the G7’s purview has shrunk dramatically. It has talked mainly about rich-world concerns such as, ironically, development aid, and rather embarrassingly had to expel Russia to restore its democratic credentials. (Other attempts to create such associations, such as the League of Democracies idea taken up by the late John McCain, have gone nowhere.)

The one success already bagged at this year’s G7, the agreement on a global minimum corporate tax, reflected the fact that rich countries are home to most of the world’s privately owned multinationals. Most issues in finance and trade aren’t dominated by G7 economies in the same way.

There’s nothing like a common threat to induce solidarity, though, and here comes China creating broad-spectrum concern with regional military aggression, trade-distorting state capitalism, aggressive technology transfer and determined attempts to dominate global tech standards and systems. Time for a reboot?

The problem is that a Venn diagram of the G7+4, showing sets of countries prepared to take action on various issues, would exclude leading players each time — and leave some nations outside the universal set altogether.

On 5G, for example, the US, UK and Australia are aggressive towards China, banning Huawei involvement in their systems. But Huawei is welcome in South Africa, while Canada, India, Japan and France are less categorically opposed to its involvement in 5G networks, and Germany has in effect punted the decision into the future. On data regulation, the US, Japan and the UK have liberal views on encouraging the free cross-border flow of personal information: the EU wants stricter controls.

On trade, South Africa and India have formed an awkward squad in the WTO at odds with most rich countries most of the time. The EU collectively and Germany in particular have made it clear they won’t join an aggressive US-led anti-China trade alliance. And although France, Germany and Italy are powerful players in the trade debate in Europe, even if they agree among themselves they cannot definitively deliver the entire EU.

There’s a similar NFI issue in using the G7 as a forum to discuss the intersection of trade, investment and security. There have been various suggestions in the past about converting the Five Eyes intelligence-sharing network (the US, UK, Canada, Australia and New Zealand) plus reliable allies into a coalition to resist Chinese pressure, including one plan by the UK to create a “D10” grouping on the 5G issue. But the fifth Eye, New Zealand, will not be present in Cornwall, and Jacinda Ardern’s government has resisted turning the grouping into a wider geostrategic formation against China.

It would take a very skilled and credible summit host to be able to weave together stable and broad coalitions out of this cat’s cradle of different levels of legitimacy, representation and policy orientation. Unfortunately, the meeting will be chaired by Boris Johnson. 

The UK’s trustworthiness is low on some central issues, such as climate change. Johnson recently called for a “Marshall Plan”, a creaking old metaphor traditionally wheeled out by the UK (especially former prime minister Gordon Brown) once every few years and particularly when it chairs a summit. This time round, the UK’s Marshall Plan is about decarbonising economies. Problem: Johnson has announced ever-more-ambitious target dates for the UK to reduce carbon emissions but done very little to reach them. Mindful of the risk of a British gilets jaunes insurgency, he has frozen fuel duty again: it’s now 11 years since the last increase.

In other hypocrisy news, the UK’s failure to uphold the Northern Ireland post-Brexit protocol has undermined its claim to support a rules-based international order and irritated the three EU G7 members and the US, who will be bringing it up on the margins of the summit.

The most likely deliverable for Johnson is a bilateral UK-Australia trade deal which may be agreed in principle next week. This will involve reneging on promises to British farmers to protect them from fierce overseas competition, and will add almost nothing to UK gross domestic product. Johnson’s famous Winston Churchill tribute act isn’t quite measuring up to the original, despite his shameless appropriation of the term “Atlantic Charter” for the bilateral US relationship: this small-bore global governance stuff isn’t exactly equivalent to appearing at the Yalta conference in 1945 alongside Roosevelt and Stalin.

The more you kick the tyres of this grand-confederation-of-democracies idea, the softer they seem. It’s more practical for democratic and rich-world governments to put together smaller ad hoc alliances on particular subjects than try to construct a common front across global issues. There’s no doubt that this year’s G7 will be one of the most meaningful in a decade. But that’s a very low bar to clear indeed.

Charted waters

The Financial Times reported yesterday that the Covid outbreak in China that began in late May is heaping more problems on the beleaguered global shipping industry. The industry — already hit by a lack of capacity, high demand for consumer durables, and a clearing of the backlog associated with the Suez blockage — is now facing big delays at ports on China’s east coast.

Project44, a platform for shippers and logistics providers, has the data on exactly how long those dwell times are in Shenzhen. Pretty staggering. Claire Jones

Line chart of dwell times at the port of Yantian, Shenzhen, showing that China’s Covid outbreak is causing serious delays at key ports

Trade links

Joe Biden wants to use the G7 summit to encourage allies to join the US in taking a tougher stance on Beijing. (For reasons listed above, we’re sceptical the US administration will make much progress on this.) The FT’s George Parker, who has connections to the neighbouring county of Devon, reports on the inequality behind the idyllic Cornwall venue for the summit. 

More on the Northern Ireland protocol. Biden will push the UK to end the bitter post-Brexit stand-off with the EU over Northern Ireland. 

Australia calls for reform of the WTO to counter China.

Dan Drezner, perennial optimist for global governance, argues the positive case for the G7. (Washington Post, $) 

The entry of China’s Great Wall Motors and Taiwan’s Foxconn into Thailand for electric vehicle production will intensify competition in the Thai auto market, posing a big challenge to Japanese automakers which have dominated the local market for decades. (Nikkei, $) Alan Beattie and Claire Jones

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