Divided G-7 Leaders Headed for Clashes at Tense French Summit

par THE WALL STREET JOURNAL | le 23 August 2019

Club of rich nations is divided on how to deal with nearly every issue they are set to discuss at Biarritz gathering



Stacy Meichtry in Biarritz, France,
Josh Zumbrun and
Rebecca Ballhaus

Once a showcase for international cooperation, Group of Seven summits have turned into minefields of geopolitical discord—and this year’s gathering promises another feast of high-level squabbling.

The club of rich nations is divided on how to deal with nearly every issue they are set to discuss during the three-day summit beginning Saturday at the French sea resort of Biarritz, from tensions over Iran’s nuclear program to the U.S.’s trade war with China.

The divisions stem from disagreements over the system of global trade and multilateral cooperation that emerged in the wake of World War II.

British Prime Minister Boris Johnson, who is making his G-7 debut, is threatening to crash the U.K. out of the European Union at the end of October. President Trump, who is no fan of international institutions, has unilaterally wielded tariffs to punish both China and G-7 allies.

“We’re facing a historic challenge to the world order,” French President Emmanuel Macron, who is hosting the summit, told reporters.

The summit’s working sessions will begin on a contentious note Sunday morning with a meeting focused on the global economy, which was added at the last minute at Washington’s request, a senior administration official said in a press briefing.

Mr. Trump is expected to use that forum to tout the policies that he says have led to economic growth in the U.S.—many of which have come under fire from European allies—and “contrast this with Europe, where growth is effectively flat,” the official said.

Divisions between the G-7 members were thrown into relief Wednesday as Mr. Macron rebuffed Mr. Trump’s call to readmit Russia to the club of nations. The French president said Moscow, which was ejected in 2014 over its annexation of Crimea from Ukraine, needed to make progress in peace talks with Kiev before it is welcomed back.

“To say that without any conditions Russia can return to the table would be a sign of weakness of the G-7,” Mr. Macron said.

Mr. Trump would likely address the question of Russia rejoining the group at the summit, another senior official said, but the U.S. expects Moscow to ask for readmission before any invitation would be extended.

It was the Trump administration’s steel and aluminum tariffs on G-7 allies that derailed last year’s summit in Canada.

Finance ministers of the G-7 countries other than the U.S. issued a unified rebuke of U.S. trade policy at a gathering in advance of the heads-of-state summit.

When the leaders gathered, Mr. Trump initially agreed to a joint statement, but after departing the summit he withdrew—via a tweet sent from Air Force One—after Canada’s Prime Minister Justin Trudeau deemed the steel and aluminum tariffs “kind of insulting.”


German Chancellor Angela Merkel deliberated with President Trump on the sidelines of the G-7 summit in Quebec, Canada, in 2018


A photograph of Mr. Trump squaring off with German Chancellor Angela Merkel went viral, encapsulating the tensions.

A year later, Canada is the only G-7 country to escape the steel and aluminum tariffs. But the deal it struck, the U.S.-Mexico-Canada Agreement, has yet to make it through the U.S. Congress.

Meanwhile, the Trump administration is threatening G-7 allies with tariffs on goods, ranging from wine and cheese to aircraft and automobiles. That is a chief concern for Japan and Germany, the largest automobile importers to the U.S. outside of North America.

Mr. Trump is scheduled to hold bilateral meetings this weekend with Mr. Trudeau, Japanese Prime Minister Shinzo Abe and Ms. Merkel, among others, one of the senior administration officials said.

Japanese officials who attended the contentious 2018 summit fretted afterward that Mr. Trump might cancel the G-7 in 2020, when the U.S. is due to host. A White House official said the administration is fully committed to hosting the G-7 summit in 2020.

Japan is working on a trade agreement with the U.S., but it faces a challenge: For a deal to be completed quickly, it must be limited in scope so that it doesn’t need congressional approval.

This limitation would also apply to a U.S.-U.K. trade deal. Though Messrs. Trump and Johnson—who will meet for the first time since Mr. Johnson became prime minister—have declared their enthusiasm for a sweeping accord, Congress has threatened to block it, especially if it undermines the 1998 peace agreement that ended tensions in Northern Ireland.

The U.S. has launched a process to impose tariffs against France—potentially against all French imports to the U. S.—because of a newly-passed tax on digital services that falls heavily on U.S. tech companies. Mr. Trump is expected to raise the matter in his meeting with Mr. Macron.

On Wednesday, Mr. Macron renewed France’s call for a universal tax code on digital services. U.S. and Chinese tech giants base their operations in low-tax countries like Ireland to lower their tax bill—a situation Mr. Macron called “a kind of permanent tax-haven status.”

Another potentially contentious front for Mr. Trump is a meeting he is scheduled to have with Indian Prime Minister Narendra Modi, who is not a G-7 member but was invited by Mr. Macron to attend the summit, where Mr. Trump is expected to raise the escalating conflict in Kashmir, one of the senior administration officials said.

Summits like the G-7 stem from the 1970s when countries united to respond to oil-price shocks and the mid-1980s when the Reagan administration came around to the view that the dollar was seriously overvalued.

The U.S. coordinated an effort to bring about its depreciation with its partners in the Group of Five: Japan, Germany, France and the U.K. The outcome was the Plaza Accord of 1985, forged in the swanky New York hotel, that agreed on joint currency intervention to bring the dollar down.

This year analysts warn the sheer number of disagreements could make it impossible for the G-7 to agree on a final statement. Citing the G-7’s chaotic finish in Canada last year, Mr. Macron said leaders have ditched the longstanding practice of negotiating for months in advance over the statement’s final wording.

Matthew Goodman, a senior vice president at the Center for Strategic and International Studies, said the leaders “will not agree on trade, and maybe not even agree on a communiqué as a result.”