The Group of Eight Summit: One Pillar of Today’s “G-x World”

It has become conventional to assert, following Eurasia Group President Ian Bremmer, that we live in a “G-Zero World.” The international system lacks global leadership. Rather than concerting efforts in common endeavors, we are told, every nation is out for itself. In fact, the “G-Zero” label is misleading—a barren caricature of the rich landscape of international cooperation that actually does exist. What is distinctive about our era is not the absence of multilateralism, but its astonishing diversity and flexibility. When it comes to collective action, states are no longer focusing solely or even primarily on universal, treaty-based institutions like the United Nations—or even on a single apex forum like the Group of Twenty (G20). Instead, governments have adopted an ad hoc approach, coalescing in a bewildering array of issue-specific and sometimes transient bodies depending on their situational interests, shared values, and relevant capabilities. Welcome to the “G-x” world.

An important pillar of this G-x world is the venerable Group of Eight (G8), composed of the United States, Japan, Germany, the United Kingdom, France, Italy, Canada, and Russia (plus the European Union). The G8’s resilience is something of a surprise. Ever since President George W. Bush elevated the G20 to the leaders’ level in November 2008, pundits have predicted the G8’s demise. Such obituaries remain premature. The G8 retains unique advantages as a minilateral forum for political and macroeconomic coordination among advanced market democracies—notwithstanding Russia’s sometimes fractious relations with its liberal partners. These strengths will be in evidence next week, when the body meets for its annual summit in Lough Erne, Northern Ireland.

One of the G8’s obvious advantages over the G20 is its modest size, which enables the unscripted, candid dialogue that world leaders crave. The first summit of this kind, a G-5 meeting in the Chateau de Rambouillet in 1975, remains the model for this sort of interaction. After intimate discussions over the world economy, the leaders produced a concise declaration of only fifteen paragraphs. David Cameron, this year’s host, is anxious “to go back to those first principles. There will be no lengthy communique. No armies of officials telling each other what each of their leaders think.” As at last year’s Camp David summit, leaders will roll up their sleeves, outside the prying eyes of cameras and reporters, and get down to business.

That business, mercifully, will focus on a limited agenda. Under the theme of supporting “open economies, open governments and open societies,” Downing Street has chosen three topics for discussion: advancing global trade, ensuring tax compliance, and promoting greater transparency. These are all worthy goals and ones where the G8—which represents half of global GDP and the lion’s share of official development assistance—has a natural role to play in mobilizing international action.

• Advancing trade liberalization: Given the abandonment (for all intents and purposes) of the WTO’s Doha Round, trade liberalization efforts are increasingly focusing on the negotiation of bilateral, regional and “plurilateral” agreements. At Lough Erne, the Cameron government will seek to build momentum for the proposed Transatlantic Trade and Investment Partnership (TTIP), as well as the EU’s ongoing bilateral negotiations with Canada and Japan. An eventual EU-US trade deal could add many tens of billions of dollars to the U.S. and EU economies, but it will necessitate extraordinarily detailed and painstaking negotiations, scheduled to begin shortly. The most difficult talks are likely to pertain to reductions not of tariffs (which are only 3 percent, on average), but of non-tariff barriers. Expect tough negotiations over the liberalization of public procurement rules, the reduction in agricultural subsidies, the harmonization of regulatory standards from automobiles to pharmaceuticals, and France’s insistence on a “cultural exception” to free trade movies as well as digital products.
• Cracking down on tax evasion and avoidance: As a conservative, Cameron favors lower taxes. But that result is impossible, he says, if individuals and corporations illegally evade the taxes that they owe, or if governments make it too easy to legally avoid taxation altogether. To avoid regulatory arbitrage and protectionist competition, the world’s major economies need to adopt common multilateral standards. This includes a commitment by national authorities to crack down on tax cheats, make tax avoidance difficult, and tackle tax havens. Supporting improved tax collection is particularly important within the developing world. Too often, foreign aid from OECD countries “crowds out”—rather than “crowds in”—domestic efforts to generate government revenue for essential welfare goals. The G8 can offer technical assistance to help developing countries bolster their performance.
• Enhancing transparency in development aid and extractive industries: Donor countries have long demanded greater transparency and accountability from developing countries in return for foreign aid. More recently, NGO activists have turned the tables, insisting on greater donor accountability in delivering on generous pledges made at G8 and other summits, as well as in policing the conduct of multinational firms doing business in the developing world. At Lough Erne, Cameron will make transparency in foreign aid a priority, as well as push for major new commitments to the G8’s food security initiative. Having met its target to spend 0.7 percent of its gross national income on development aid, the UK is in a strong position to press other governments to augment their efforts. The UK government will also push its G8 partners to demand greater transparency from international companies exploiting mineral wealth in developing countries, building on the work of the Extractive Industries Transparency Initiative and, in the United States, Section 1502 of the Dodd-Frank Act (which seeks to reduce trade in conflict minerals from Eastern Congo and the Great Lakes region of Africa).

This being a meeting of world leaders, the conversation in Northern Ireland will doubtless stray from this focused agenda to high-profile political topics—from the latest developments in Syria to the Iranian and North Korean nuclear programs. If so, one can hope that the intimate setting will offer opportunities to forge common ground—or, at least a common understanding of the stakes involved. In a G-x world, global problem-solving will increasingly occur through concerted action within informal clubs of states.