When Jamaica pulled out of the nascent West Indies Federation in 1961, Trinidad and Tobago’s then prime minister, Dr Eric Williams, famously said ‘One from ten leaves nought’. In the run up to the US elections on 5 November, the US’s longstanding allies need to ask themselves if the same logic must apply to the G7.
A Donald Trump victory will result in stark differences between the US and its closest partners on key global economic issues. US allies would no doubt try and persuade the new president to moderate his position, but experience suggests that this will have little, if any, effect.
They may then want to work around the US, or on a parallel track. But doing so will be very hard unless they have a framework for discussing and developing ideas collectively. Could some form of ‘G6 plus’ forum help?
The role of the G7 today
The G7 no longer acts as a steering group for the global economy. However, it remains a critical forum for the US and its allies to coordinate their efforts to help solve global problems, to defend common Western interests, to resolve internal disputes and to underpin information exchange.
In the past two years, the G7 has come to be seen by the US and other members as one of the most effective international mechanisms. It has played a critical role coordinating Western efforts to recover from the last pandemic and prepare for future ones.
It has been pivotal in weakening Russia’s economy following the attack on Ukraine and has acted to strengthen Western economic security and resilience more broadly.
The G7 has also responded to ‘Global South’ calls for help in dealing with the pandemic aftermath and the Ukraine war.
Trump’s approach to the G7
The problem is that the G7’s effectiveness depends critically on full US engagement, sometimes as a leader of initiatives (such as the decision to impose an ‘oil price cap’ on Russia in autumn 2022) or as an essential partner.
If elected, former President Trump is likely to abandon the G7 as an instrument of international economic policy. This is effectively what happened during his first presidency and there are reasons to expect this to be repeated.
Many of Trump’s international economic policies are highly controversial with US allies, including his apparent determination to withdraw from the Paris Agreement, impose across the board 10-20 per cent tariffs and even punish countries for not using the dollar. His domestic policies, including mass deportation of undocumented immigrants and aggressive deregulation and fiscal easing could lead to further sharp disagreements.
Furthermore, Trump demonstrates general antipathy towards multilateralism. Under his presidency, US representatives in the G7 and G20 sought to weaken core values and policies that have underpinned international economic cooperation for decades – including the importance of a rules based international system, the IMF’s global safety net role, and the responsibility of the advanced world to assist the poorest countries financially.
Other G7 and G20 countries tried to preserve as much as possible of the previous consensus. But in the case of climate change, the only solution was to have a separate text for the US. Critically, such efforts diverted time and attention from the enormous challenges facing the world at the time.
Trump went through four different G7/G20 Sherpas during his presidency and disowned the final declaration of the 2018 Canadian G7 summit after hundreds of hours of negotiation, and despite previously signing off on the text. The US failed to host a final leaders’ summit, even virtually, during his administration’s G7 presidency.
Of course, how far Trump carries through his most radical policies will depend, among other things, on the outcome of the Congressional elections and the stance taken by US courts.
He may also have second thoughts if elected. His first administration sometimes supported significant multilateral economic initiatives, notably the G20’s Debt Service Suspension Initiative and ‘Common Framework’ for debt rescheduling.
But, in the event of a second Trump administration, the most likely scenario for the G7 is a repeat of the paralysis of 2017-20, which would be even more costly today.
Should Vice President Kamala Harris win on 5 November, the situation should in theory be very different. She will likely continue with President Joe Biden’s collaborative approach to the G7.
Nonetheless, major issues may still arise where America’s allies want to take a fundamentally different approach and need a mechanism to do so. These could include policy on the WTO, de-risking the economic relationship with China, restricting carbon leakage, and regulating US-dominated big tech.
How should US allies respond?
No US ally will want to be seen to be leading development of a new ‘G6’ that excludes the US. The top priority will be securing the best possible relationship with the incoming president. Political weakness and/or new governments in France, Germany, the UK and Japan will add to this hesitancy.
Any new forum will therefore need to be as low profile as possible. The concept should initially be discussed in private by sherpas from each participating country. Once established, officials should as far as possible meet online. Leaders should only meet online, at least initially.
Participants should be fully transparent about the forum’s existence and avoid any grand ‘framing’ along the lines of the EU’s ‘strategic autonomy’. Instead, it should be described as a practical, largely technocratic forum intended to coordinate activity among Western economic powers in those areas where the US chooses not to engage. A suitably innocuous name – such as the ‘the sustainable growth club’ could help.
Topics should be limited to those requiring urgent collective global action, such as climate, health, tech governance, development finance and trade – and where the US federal government is not an ‘essential’ partner. Such a forum should not therefore address defence.
It should be made clear that the new forum is not intended as an alternative for the G20. It should also be clear that the G7 will continue – and should the US wish to engage (constructively) on any of the issues under discussion, participants will switch the topic back to the G7.
It is hard to predict how a future President Trump would respond. He could simply dismiss the forum, saying he has no problem with other countries discussing issues that are not important to the US. But he may also attack it, threatening retaliation if any decisions harm US interests as he sees them. Staying the course in these circumstances will be critical. Once the new forum is up and running, US concerns could dissipate.
The forum should also evolve, as the relationship between the G7 and G20 has done. This may include expanding discussion on some topics to a ‘G6 plus’ format including other like-minded countries such as South Korea, Australia, Singapore or Switzerland – and IFI representatives.
There are clearly risks in establishing an alternative forum to the G7, but allowing paralysis of Western policy thinking is also a major risk, and one that non-US G7 members should not be prepared to take.
Creon Butler, Director, Global Economy and Finance Programme.