At this week's G7 summit in Cornwall: 5 global trade talking points on the agenda

Mon 7 Jun 2021
Posted by: Noelle McElhatton
Trade News

This week’s G7 summit in Cornwall – ‘the West’s last chance to lead… a rare such event that actually matters’, according to the FT – is the first time the leading nations’ group has convened since the start of the pandemic in February 2020.

Global trade will be high on the agenda and here are five issues that will be talking points among the world’s most powerful economies:

1. Global corporation tax

A statement on Saturday 5 June declared that G7 members the US, Japan, Germany, France, UK, Italy and Canada have agreed to stop large companies shifting profits to low tax jurisdictions and ensure the largest multinationals pay more tax, the FT reported.

Reuters described it as a “landmark deal”.

Janet Yellen, US treasury secretary, said the agreement was a “significant, unprecedented commitment” to a global minimum corporate tax of at least 15%.

The US had demanded that digital taxes, which affect US tech giants such as Google, Facebook and Amazon, are dropped immediately by France, the UK and Italy, in return for gaining taxing rights in this deal.

European countries insisted they would abolish these taxes once any global agreement had been sealed and ratified.

2. Biden warns UK over NI Protocol

Joe Biden will use a bilateral meeting with Boris Johnson to warn the PM not to renege on the Northern Ireland Protocol that was part of the UK’s withdrawal from the EU, the Times reports.

He will also warn that the prospects of the US trade deal with the UK will be damaged if the situation remains unresolved.

The two leaders will meet on Thursday 10 June, a day before the G7 summit begins. According to the Telegraph, they are expected to discuss trade deals, challenges from China and Russia, and Covid travel restrictions.

Major airlines in America and Britain have called on the pair to reopen transatlantic travel for this summer.

3. EU pressures UK on NI Protocol

France, Germany and the rest of the EU will “corner Boris Johnson during this week’s G7 summit and hand him an ultimatum over the Northern Ireland Protocol”, according to the Daily Express.

The Times reports that the EU is drawing up plans to impose trade sanctions on Britain, accusing Boris Johnson of “taking them for fools” over the Protocol.

Senior EU diplomats have claimed that Lord Frost, the Brexit minister, has “completely failed to engage” with the commission on implementing the agreement.

Under the terms of the Brexit agreement either side can impose retaliatory tariffs on the other’s exports for breaching the agreement.

The EU is frustrated at the slow pace of building the infrastructure for physical checks on goods entering Northern Ireland, as well as a lack of EU access to UK customs data.

4. China, WTO and multilateral trade

The G7 trade ministers met ahead of this week’s summit to announce their commitment to ‘free and fair trade as foundational principles and objectives of the rules-based multilateral trading system’.

According to the FT, Joe Biden will use the conference to encourage the other G7 nations to work with the US to restrain China from anti-democratic crackdowns in Hong Kong, repression of the Uyghurs, aggressive stances in the South and East China Seas, and economic retaliation against critics.

The UK is keen to see a reformed WTO play a bigger role in ensuring fair play in global trade, with trade minister Liz Truss recently announcing it was “now or never” to reform and strengthen its rulebook.

Truss, who chaired the G7 trade ministers meeting, has said the UK and its allies have been “too soft” on China and that the WTO needs to get tough, City AM reported.

5. Vaccines and climate change

Boris Johnson will warn G7 leaders that a climate change deal will only be possible this year if the West provides money to help developing countries to tackle Covid, the Times reports.

The UK is expected to contribute more than 100 million vaccine doses worth £2 billion via Covax, the UN-backed vaccination scheme for poorer countries.

Johnson will say that Covid has severely hit the finances of poorer countries and until the virus is defeated there will not be investment in clean technologies.

A group of 100 former presidents, prime ministers and foreign ministers have also urged G7 nations to pay for global coronavirus vaccinations, reports CNN. The bill for vaccinating the world’s population would be $30 billion for the next two years, but would be “in every country’s strategic interest”, the letter said.