The summit of the group of seven, which consists of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, will run for three days. The official theme of this year’s meeting, chaired by French President Emmanuel Macron, is the fight against inequality and the advancement of universal access to social welfare.
Trade Ties with China, Iran to Take Centre Stage
Bringing together four major European countries and the United States, the summit will be a natural opportunity to address burning issues for both sides — the US spiralling trade war with China and relations with Iran, which Europe has been trying to salvage since Washington pulled out of the 2015 nuclear deal.
"The most important, and most anticipated, talks will be on trade negotiations, on the conflicts between the United States and Iran and the United States and China. We will also talk about the willingness of some of the G7 countries, France and the United Kingdom, in particular, to tax big corporations in the digital economy. This is a point of conflict elsewhere with the United States," Jacques Sapir, French economist, director of The School for Advanced Studies in the Social Sciences and of the CEMI centre, said.
Relations between the United States and China have been strained since last year after Washington imposed tariffs on imports from Beijing. China criticized the US move and came up with a set of retaliatory steps that have since escalated into a tit-for-tat trade war.
"This G7 meeting will certainly be an opportunity to spread some differences. We can think of Iran, a subject on which France, Germany, but also Japan disagree with the United States, but also the question of trade negotiations. The United States has clearly expressed dissatisfaction with multilateral negotiations. The countries of the European Union are, rightly or wrongly, more attached to it," Sapir said.
On the other hand, tensions between the United States and Iran have been soaring since the United States withdrew from the Joint Comprehensive Plan of Action last year and reimposed sanctions against Tehran. The European Union, one of the seven parties to the deal alongside China, France, Russia, the United Kingdom, the United States and Germany, has remained committed to honouring their commitments, even setting up the Instrument in Support of Trade Exchanges to facilitate continued trade with Iran.
"On trade the EU and the current US administration are far apart, with the EU in favour of a multilateral, rule (WTO)-based approach, the US fostering a bilateral, power-based approach. … I do not see room for progress on Iran or China, provided they are on the agenda altogether," Carlo Altomonte, professor of Economics of European Integration at Bocconi University and director of the Globalization and Industry Dynamics unit within the Baffi Carefin research centre, said.
Another unavoidably heated debate in Biarritz will redoubtably be about the future of the WTO.
At his first G7 summit in Sicily in 2017, Trump claimed he would leave the Paris climate agreement and later followed through on that promise. On August 13, Trump threatened to leave the WTO over the alleged mistreatment of the United States within the organization.
"The question of the United States' presence in the WTO is indeed a central issue. Donald Trump has made it clear that he does not see multilateral organizations as effective, at least from the perspective of the United States. This question will be a natural part of the G7 discussions, and therefore of a possible reform of the WTO. But the ability of this institution to be heard by the WTO is much smaller now than it was ten or fifteen years ago," Sapir said.
On July 26, Trump directed US Trade Representative Robert Lighthizer to secure changes at the WTO that would prevent developing countries from taking advantage of regulatory loopholes. A White House memorandum issued that same day pointed out that seven of the 10 wealthiest economies in the world currently claim themselves as developing countries: Brunei, Hong Kong, Kuwait, Macao, Qatar, Singapore and the United Arab Emirates. China, the world's second-largest economy, has been identified by the United States as the biggest abuser of WTO rules that insists it is a developing country, according to the memorandum.
"I think the G7 will discuss the state of affairs of international trade, and the EU will try to pursue conclusions that go in the direction of steps forward in the reform of the WTO. I do not believe the current US administration is ready to go in that direction, although at the same time it is not in their interest to pull out of the WTO. The US announcement looks as the typical Trump-style opening salvo in the negotiations. Which implies, and that is a good news, that negotiations have started," Altomonte said.
Discussions about reforming the WTO have been going on for years, and the organization's 164 member states are yet to reach a consensus on the matter. They are divided in two camps, with one group advocating for the organization's continued development and another calling for a new format.
"All international organizations need to reform in order to take all perspectives into account. This is the precondition to solving global challenges and it will prove one thing in the end: Nationalism and multilateralism are not contradictions – nations will benefit from an effective multilateral system," Markus Engels, Secretary-General of the Global Solutions Initiative, said.
Other issues that are likely to be addressed by the G7 leaders are the climate crisis in light of the devastating wildfires in the Amazon rainforest, and the crisis in democracy, which can be seen in Hong Kong.
"The democratic crisis and the temptation of authoritarian regimes will be a theme. Macron will also try to push the environmental agenda, but it may be that others will prefer to wait to discuss that at the UN," Paul Smith, Associate Professor of French and Francophone Studies at the University of Nottingham, said.
Altomonte, meanwhile, agreed that climate could be addressed at the annual gathering, given Macron's focus on the matter.
The choice of the official summit topic was most likely dictated by France's domestic agenda, Smith believed since Macron sees inequality as the major cause of the crisis in Western democracy, which vividly played out in France through the yellow vest movement.
"The French G7 Presidency’s focus on inequality and on fighting the many manifestations of inequality is a welcome topic for the Biarritz Summit. The so-called decoupling of economic and technological progress from social progress is a major obstacle in our attempts to find global solutions. Think back to 2018: President Macron paid a high price when he attempted to encourage France’s transition to clean energy by implementing a tax on fuel. The result was social unrest in the form of the Yellow Vest protests," Engels said.
The G7 should take concrete steps to address the disparities in and among societies starting by merging economic and social progress, he continued.
Guest Countries Invited to Make Up for Waning Influence
This year, Macron, as chairperson of the summit, decided to expand the list of participants, so apart from usual seven nations he invited Australia, Chile, India, as well as several African states.
"It is obvious that Emmanuel Macron's proposal to invite other countries, with the exception of China and Russia, aims to mask the loss of influence and prestige of the G7 over the G20. Moreover, if we calculate in PPP [purchasing-power parity], the share of the G7 in the world GDP is today lower than that of the BRICS. It is a proposal of pure form, which has no other goal than to try to break the front of the emerging countries," Sapir said.
Altomonte also noted that at current growth rates, with the exception of the United States and possibly Japan, none of the G7 members will be in the top seven world economies 10 years from now.
"Macron is very keen to extend French soft power beyond Europe and the French-speaking world. Hence also the presence of Australia and South Africa," Smith said.
"If there is a state with which France feels an affinity it is Chile, not Brazil — and there are obvious reasons why Brazil would not be invited, despite its economic strength in South America. So, the reasons are geopolitical, but also economic. France, for example, might have much to discuss with Australia over managing the Asian superpower, China," he continued.
Unlike the G7, the G20 format includes Russia, China, Brazil and other major economic and political powers.
"One reason for the G20’s openness in this respect might be the fact that the group represents all continents with representatives joining from African, Asian and South American countries. In this regard, it does make sense for the G7 to invite other countries to the table – doing so negates the idea that this is a club of wealthy nations, which address global challenges from an elevated perspective," Engels said.
The Russia Issue
The issue of Russia possible return to and revival of G8 became increasingly popular after Russian President Vladimir Putin and Macron held a bilateral meeting in southern France last week.
On August 20, Trump told reporters that he would support Russia's possible return to the format, adding that he had agreed to Macron's proposal to invite Russia to the G7 summit next year.
At the same time, a high-ranking source in EU institutions stated to reporters that the European Union was against resuming the G8 format until Russia addressed the issues that led to its suspension back in 2014.
"The United States has understood that they want to invite Russia again to participate in the G7. But it is unlikely that Russia will accept. She knows very well that the G7 is an institution at the end of life," Sapir said.
Kremlin spokesman Dmitry Peskov said on Thursday that coming back to the G8 was not a Russian objective and that Moscow believed the G20 format to be more efficient for solving global problems.
"Russia has been for many years an invited member of the G7 thanks to the initiative of the Italian Government (under Mr. [Silvio] Berlusconi). I think this is a sensible idea, and I believe it is in the best interest of the US (and the EU) to pursue a multilateral dialogue with Russia on the various political fronts that are open (Ukraine, the Middle East, energy, etc.)," Altomonte said.
According to Smith, the timing of inviting Russia this year was inappropriate since it was still too early. Had Macron invited Russia to Biarritz, he "would not be understood." Trump, however, might well invite the Russian leader next year.
G7 summits usually result in joint declarations, though last year in Canada Trump refused to sign the communique.
The summit is expected to be accompanied by widespread anti-globalist protests. The "Alternative summit" camp will be located in the Basque village of Urrugne, 15 miles south of Biarritz.