The G7 summit in Cornwall this weekend has now wrapped up, giving a moment to take stock of what was billed as a world-changing intergovernmental event.
The agreement on corporate tax was the headline outcome of the summit, and with good reason. The first of its kind, the proposed agreement on an international minimum corporate income tax is not only ambitious but, a rare achievement in international law, eminently enforceable.
World leaders have also been praised for their agreement to donate one billion vaccine doses to countries unable to afford the jabs, a welcome move after months of inaction.
In other respects, however, the inadequacy of the G7 to solve today’s issues was startlingly evident.
On vaccines, the amount pledged was flagrantly insufficient to meet global demand. The World Bank estimates that 11 billion doses are needed to end the Covid-19 crisis around the world – 11 times the number pledged.
UN secretary general Antonio Gueterres criticised the plan, saying that G7 leaders had not grasped the extent of intervention necessary to end the pandemic and prevent the emergence of new and dangerous variants. Former UK Prime Minister Gordon Brown described the proposal as akin to “passing around the begging bowl”.
On the issue of corporate tax, the reduction in the minimum rate from the 21% proposed by US President Joe Biden to just 15%, slightly higher than tax haven Ireland’s current rate of 12.5%, as well as the inclusion of loopholes for low-margin corporations, demonstrated a lack of seriousness among at least some member states.
The failure of the G7 to provide serious leadership on these two core issues, despite giving them top priority, bodes ill for their third priority: countering the rising geopolitical clout of China.
The G7 has not included all seven of the world’s largest economies since 1994, and since the early 2000s the majority of the world’s economy has been outside the bloc. The rise of China has been the key event upending the relevance of the G7, but so too has the rise of the other so-called BRICS: Brazil, Russia, India and South Africa.
Those in the good books of the G7 powers have been allowed to attend as guests. South Africa’s Cyril Ramaphosa, South Korea’s Moon Jae-in and Australia’s Scott Morrison were all present, while India’s Narendra Modi attended via Zoom due to his country’s ongoing Covid-19 outbreak.
The continued exclusion of the world’s largest economy, and piecemeal inclusion of rising powers, undermines the relevance of the G7 as a genuine forum for international cooperation.
Join Our Newsletter
Want more FDI insights?
Sign up to Investment Monitor's weekly newsletter, Eye on FDI, to receive a round-up of the most important stories.