From international trade to the fight against climate change, there will be many contentious topics of discussion between the 20 largest economies of the planet, whose leaders will be meeting in Hamburg on Friday 7 and Saturday 8 July.
The summit’s host, German Chancellor Angela Merkel, wants to make this summit a personal success with less than three months to go until the German general elections, despite the uncertainties surrounding the positions of major powers such as the United States. However, she is not prepared to sell out the interests of the Europeans, who are calling against all the odds for multilateralism to tackle global challenges of the moment. Pledging to make its voice heard in Hamburg, civil society is out in force to remind the world’s leaders of their responsibilities.
Trade. On trade matters, the Hamburg summit is expected to see some heated discussions, with observers anticipating a clash between the American President, Donald Trump, whose administration is refusing to live up to the commitments of previous American administrations in favour of free trade and against protectionism, and the host of the meeting, Chancellor Merkel, as well as the other leaders of the principal global economies (see EUROPE 11819).
Tension is mounting between the EU and the US, over and above Washington’s lethargy overtaking position on the shelved TTIP talks, and the approach favoured by Washington to remedy the American trade deficit against European countries (see EUROPE 11786): the Europeans fear that the American administration will decide to hit European steel exports with anti-dumping taxes, following a special investigation into American imports of steel commissioned by Trump of his Trade Department.
Trump has invoked a trade law clause dating back to 1962, entitled ‘section 232’, which gives the American administration full powers over Congress and authorises it to restrict imports that may jeopardise the security of the country. The results were due out in June.
However, on 26 June, Trade Commissioner Cecilia Malmström issued a warning that the EU would not rule out retaliatory trade measures against the US should Washington decide to slap anti-dumping duty on European steel exports (see EUROPE 11816). “We are well-prepared”, a European source stressed on Monday 3 July. “We do not want to create tension, but if measures are adopted, we will react and we are getting ready to do so” a source close to French President Emmanuel Macron also said.
The question of steel overcapacity will be on the agenda of the Hamburg summit. At their previous meeting in Hangzhou (China), in early September 2016, the G20 countries decided to set up a global forum on global overcapacity in the steel sector, to be steered by the OECD, with a progress report expected this year (see EUROPE 11616).
From a global point of view, although Merkel said on Monday that she did not expect the positions of the American government to change much in Hamburg and that she anticipates differences of opinion on trade, the EU and its member states with a seat at the G20 will reaffirm their commitment to free trade. “On the final declaration, the EU will stick to the fundamental principles that trade must be free and fair”, our European source told us, but stressed that the Europeans are keen to exercise caution over any language that would “ask for some reform of the WTO”.
However, whilst reiterating their commitment to fight protectionism, the Europeans will also stand firm over on fair trade. On 26 June, when presenting the Commission’s report highlighting a 10% increase in barriers to trade encountered by European exporters in 2016 – mostly in G20 countries, principally Russia, China and India – Malmström warned that at the G20 summit, the EU would call for protectionism to be resisted. She added that Europe would not stand by and do nothing, but would not hesitate to use all the tools at its disposal when countries do not follow the rules.
Climate. The G20 leaders are expected to adopt an action plan for climate and energy at the service of growth. “The aim is to show that the G20 and Trump are on the same wavelength; it is not about putting pressure on anyone in particular”, a senior European official said on Monday.
However, following the announcement that the Trump administration was to withdraw from the Paris Climate Agreement, this universal agreement will be one of the sticking points between 19 members of the G20 and the US, particularly as Trump confirmed on Thursday 29 June that he was “very proud” of turning his back on it.
The EU, which is more determined than ever to take a leading role to implement the Agreement, is nonetheless confident in the engagement of the 'G19'. “We have not yet reached breaking point. Quite the reverse, a very strong commitment has been made. Everybody understands that climate is a global issue. In America, they understand and share this concern. However, they are talking about negotiating the ways and means. We need to find a way to move forward”, the same senior European official summed up, reiterating that as far as the EU is concerned, the Paris Agreement is not up for renegotiation (see EUROPE 11819).
In the Hamburg declaration, it is possible that the problem will be resolved with two-level wording, similar to what happened at the G7 of Taormina (see EUROPE 11797). A general paragraph will recognise the commitment of all to fight climate change and a second referring specifically to the Paris Climate Agreement could possibly include a footnote explaining the specific position of the US, the same source said.
Taxation. The G20, which takes the pulse of the global economy and means needed to support economic recovery every year, will also look at tax questions.
In Hamburg, the OECD will present the results of the work of the global forum on tax havens. Following the Panama Papers scandal, the leaders of the 20 largest economies of the world called in Hangzhou for an international blacklist of tax havens to be drawn up by July 2017 (see EUROPE 11616). The examinations of the global forum show that ultimately, only Trinidad-and-Tobago would be on it, as it has been unable to demonstrate sufficient progress. The Marshall Islands are only partially meeting their obligations.
In Europe, it is felt that the international blacklist is inadequate. The EU is working on its own list of tax havens with criteria going slightly beyond those used by the OECD (see EUROPE 11730). To date, the EU has contacted 92 jurisdictions it intends to assess. According to our information, some of them have yet to respond. The member states hope to sign off the final list together with a raft of sanctions by the end of the year.
Finalisation of Basel III. The Summit will take stock of the work to tighten up the international rules setting bank capital requirements (Basel III). At the June meeting of the Basel Committee (see EUROPE 11810), no consensus was reached on the revision of the minimum capital requirements (‘output floor’).
Africa. The G20 is to launch a new partnership with Africa aiming to stimulate investment, jobs and sustainable development – an initiative that is particularly important to the German Presidency of the G20 and which has been welcomed by the EU.
The EU will attempt to create synergies with its own initiatives ahead of the EU/Africa summit to be held in Abidjan (see EUROPE 11812), in particular its external investment plan or European Fund for Sustainable Development (EFSD). The official creation of this instrument is imminent, to allow the fund to be able to raise €44 billion of investments in the private sector across the African continent and neighbouring countries, with an initial budget of €3.35 billion (see EUROPE 11818). “In the EU, we are moving forward with our external investment plan. We want to capitalise on what Germany is trying to achieve. We want the G20 to recognise that the EU is doing its bit to its external investment plan”, said our European source.
Migration. In reference to the work carried out in Antalya in 2015 (see EUROPE 11431), the global leaders will go on to discuss migration, which brings with it opportunities in terms of economic dynamism, as well as the challenges of integrating migrants in the host countries.
Finally, the G20 is also to adopt a declaration on the fight against terrorism, a subject close to the heart of Germany, which has been struck by the phenomenon on its own soil. As for regional crises such as the war in Syria, these will be discussed at a dinner of the foreign ministers of the G20 countries on Friday. (Original version in French by Emmanuel Hagry, Aminata Niang, Elodie Lamer, Marion Fontana and Mathieu Bion)