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Building on the 2023 G7 Hiroshima Summit's Economic Performance

John Kirton, Director, G7 Research Group
October 31, 2023

Prepared for "Overcoming Challenges to a Peaceful and Prosperous International Order: A Proactive Role for the G7,"
Campbell Conference Facility, 1 Devonshire Place, University of Toronto, November 2, 2023

Introduction

The greatest challenge today to the global economy is climate change and its intensified extreme weather events. They reduce and threaten strong, sustainable, non-inflationary growth, financial stability, international trade and investment through resilient, diversified supply changes and infrastructure, development, debt relief, energy and food security, and much else. The G7's Hiroshima Summit on May 19–21, 2023, produced many commitments on several of these subjects. But given their limited implementation and impact, and the prospective performance of the next G20 and G7 summits, much more is needed now. So Prime Minister Fumio Kishida, who wisely called a special G7 summit on artificial intelligence before Japan's G7 presidency ends at the end of the year, should add more ambitious climate action and spur subsequent G20 and G7 summits to act.

Hiroshima's Economic Commitments

G7 leaders at Hiroshima produced a strong performance on most of the critical issues they addressed, and across most key dimensions of governance that such summits perform.

On the key dimension of making precise, future-oriented, politically binding decisions, they produced 653 commitments. These were led by the economic ones of energy with 83 and food and agriculture with 80, followed by climate change with 55, trade 51, the environment 45 and digitalization 37 (see Appendix A).

Far fewer commitments came on the traditional economic subjects of development with 29, labour and employment with 15, macroeconomic policy with 12, financial regulation with 5 and international taxation with 3.

Hiroshima's newest and central economic priority appeared in "The G7 Leaders' Statement on Economic Resilience and Economic Security." Here leaders committed to implement the Partnership for Global Infrastructure and Investment (PGII) on critical minerals, semiconductors and batteries and to protect their critical digital infrastructure. They also launched the Coordination Platform on Economic Coercion, to increase their collective assessment, preparedness, deterrence and response, and reaffirmed their collaboration through the Framework for G7 Collaboration on Digital Technical Standards.

Implementation

But on the other key dimension – members' compliance with these commitments – Hiroshima's performance is lower.

Historic Compliance

If the past is prologue, members' compliance will be incomplete and mixed. Since the G7 summits' start in 1975, its members have complied before the next summit with their 696 priority commitments on all subjects at an overall average of 77% (see Appendix B).

Above this average came the commitments on digitalization and on labour and employment, both with 85% compliance. Energy and macroeconomic policy ones had 84%.

Below the average were development with 75%, climate change with 74%, and trade and investment with only 69%.

Predicted Full Compliance for Hiroshima's Four Key Economic Commitments

At Hiroshima, the G7 made four key commitments on economic resilience and security (see Appendix C). Full compliance with the Hiroshima commitments within a year can be estimated, using the compliance predictor developed by Jessica Rapson (2023) for the G7 Research Group.

For the four key commitments on economic resilience and economic security, predicted full compliance will average 73%.

The commitment on the PGII will average 69%; the one on resilient supply for critical minerals, semiconductors and batteries 68%, and the one on the Coordination Platform on Economic Coercion 68%.

Only the commitment on continued collaboration through the Framework for G7 Collaboration on Digital Technical Standards has a much higher predicted compliance of 86%.

Once again, trade is low and digitalization high.

Predicted Full Compliance for Hiroshima's 12 Priority Economic Commitments

On Hiroshima's 12 priority economic commitments, as identified by the G7 Research Group for compliance assessment, G7 members predicted full compliance is 76% (see Appendix D).

At the top, the commitments on energy have 86%, on digitalization 87% and on the environment 78%. In the middle, climate change, food/agriculture, labour/employment and macroeconomics each have 74%. At the bottom, development has 69% and trade 68%.

Once again, trade and investment is low, while digitalization and energy are high.

Japan's Compliance with Past and Hiroshima's Economic Commitments

For the subjects of the 12 priority economic commitments at Hiroshima, the G7's historic compliance has averaged 81% (see Appendix E). This includes the scores for partial compliance at a 50% weight, as well as the full compliance that the predicted compliance score exclusively employs.

The 12 priority Hiroshima commitments have predicted full compliance averaging 75%. By member, Japan is slightly below the G7 average, with 79% historic and 72% predicted compliance.

By subject, Hiroshima's predicted compliance is above the G7's historic compliance for digitalization (87% predicted, 85% historic) and energy (86% predicted, 84% historic). But on all other subjects it is lower, led by infrastructure, followed in turn by labour and employment, macroeconomics, development, food and agriculture, and environment. It is equal on climate change (at 74%) and trade (at 69%).

For Japan, the story is very similar, but often more extreme.

Impact

In the five months since the Hiroshima Summit, the impact of these commitments as compliance proceeds has been increasingly insufficient, as the global need for better G7 performance has grown.

Impact by Subject

Trade and investment have stagnated; critical supply chains still depend on an authoritarian, expansionist China; and protectionist moves by the United States and China in high tech sectors have increased. On October 29 G7 trade ministers opened their statement by noting that "the challenges we addressed in April continue, including Russia's war of aggression against Ukraine, prolonged non-market policies and practices, and longer-term structural shifts." They added their concern with "the recent export control measures on critical minerals, and "coercive economic measures and threats thereof, which interfere with the legitimate sovereign choices of another government, and … the growing recurrence of such measures. They ended by noting … "the newly introduced import restrictions on Japanese food products."

Development setbacks have deepened. Almost all the United Nations Sustainable Development Goals (SDGs) remain off track to be met by their due date in 2030 and many countries are now in debt distress.

Economic growth has slowed within the G7 and globally, as the International Monetary Fund's autumn World Economic Outlook reported, even if third quarter growth in the United States was a strong annualized 4.9%. Fiscal deficits, debts and interest payments have soared in the United States and Japan, and in the G7 and G20.

Labour and employment are strong in most G7 members. But Japan and others face labour shortages and Italy and several other EU members have high youth unemployment.

Food and agriculture security has declined. G7 trade ministers on October 29 acknowledged that "with an estimated 345 million people experiencing acute food security, the world is also facing the largest food and nutrition crisis in modern history."

Climate change and environmental destruction have reached unprecedented heights. The five months since Hiroshima have seen the highest global warming and temperatures in recorded history, in the air, land, sea, ice and permafrost, in all G7 members and most global regions. The costs of the resulting intensified extreme weather events have soared.

Digitalization has intensified, driven by the proliferation of artificial intelligence. But its dynamics and impacts remain poorly understood and there are almost no international regimes to govern its path. G7 trade ministers on October 29 noted "the number of countries adopting data localization measures is on the rise worldwide." However, the next day the G7 leaders issued a statement on the Hiroshima AI process along with guiding principles and a code of conduct, building on the work of their digital and tech ministers, and tasked them with accelerating the development of the Hiroshima AI Process Comprehensive Policy Framework, in cooperation with the Global Partnership for Artificial Intelligence and the Organisation for Economic Co-operation and Development.

Energy security has improved, as the international price for oil and gas has dropped. But it remains threatened by Russia's aggression against Ukraine, drought, and now attacks on Baltic Sea pipelines and the Hamas attack on Israel.

G7 Ministerial Meetings Response

The G7 response to this growing gap has been poor. Since the Hiroshima Summit in May, by October 30, other than G7 foreign ministers who met in person, virtually or by telephone four times, ministers from eight different portfolios had met eight times (see Appendix F). Only three meetings were on economic subjects – on digital and tech on September 7, finance on October 12, and trade on October 28–29. Two more ministerial meetings were planned before the end of Japan's 2023 presidency: another meeting of foreign ministers on November 7–8 and the interior and security ministers on December 8–10.

The G7 Hiroshima AI Process: G7 Digital & Tech Ministers' Statement, issued on September 7, made 12 commitments. Of these seven were highly ambitious and binding. By subject, climate change had one commitment, the SDGs one, democracy one and human rights one.

The finance ministers and central bank governors on October 12 made 31 commitments. Only six were ambitious, highly binding. By subject, 17 of the 31 commitments were on Ukraine and 7 were on development or debt relief. But climate change and energy had only five. There were none on fiscal or monetary policy or trade (beyond Ukraine).

Trade ministers on October 28–29 made 61 commitments. But only 13 were ambitious, highly binding ones. By subject these commitments were led by those in the section on reforming the World Trade Organization with 12, followed in turn by climate and the environment with 8, and development with 6. Then came the sections on "Ensuring a Level Playing Field" and on supply chain resilience both with five and on economic coercion with four. Digital trade also had four (but none on artificial intelligence), and business and human rights had four. Although there were some synergies, especially with climate and the environment, only one of these eight commitments was an ambitious, highly binding one.

During the five months since the Hiroshima Summit, G7 leaders never met on any economic subject. But they  found the time to address security ones at the NATO Summit in July and agreed on the statement on the Hiroshima AI Process in October.

G20 Summit Assistance

Little help has come from the bigger, broader, more diverse G20 summit, hosted most recently by India in New Delhi on September 9–10. That summit produced only 244 commitments, led by those on development, health and gender equality. G20 members' compliance with their summit commitments from 2008 to 2021 averaged only 71%, well below the G7's overall average of 77%.

Indian prime minister Narendra Modi has called a second G20 summit, to be held virtually on November 22, at the end of his hosting year. Although he originally announced that summit would again be on development, rather than the other key economic subjects at centre stage, more recent media reports suggest it will focus on implementation.

Conclusion: Recommendations for G7 Action

So once again it is left to the G7 to provide the global economic governance the world increasingly badly needs.

But he should broaden its agenda, to add the critical need for action on climate change, clean energy, and trade and investment to start before the presidency shifts to Italy for 2024.

This is even more urgent, as Italian prime minister Giorgia Meloni, who takes over on January 1, 2024, has already said her top priority for her summit in June is controlling migration and refugees, rather than any economic subject old or new.

To be sure, Brazil's President Luiz Inácio Lula da Silva has said his top priority for the G20 summit he will host in Rio de Janeiro next November is climate change. But a full year from now is too long to wait. And progress at Rio is still subject to the de facto veto that an authoritarian, fossil fuel–fired Russia, China and Saudi Arabia wield in the G20.

References

Rapson, Jessica (2023). "Predicting G7 performance on compliance," in John Kirton and Madeline Koch, eds., G7 Japan: The 2023 Hiroshima Summit (GT Media: London), pp. 104–05. https://bit.ly/g7hiroshima.

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Appendix A: 2023 G7 Hiroshima Summit Commitments

Subject

Total

Communiqué

Clean energy

Ukraine

Nuclear

Economic resilience

Food security

Energy

83

28

47

8

 

 

 

Food and agriculture

80

12

 

5

 

 

63

Regional security

67

24

 

43

 

 

 

Climate change

55

40

14

1

 

 

 

Trade

51

34

 

2

 

15

 

Environment

45

44

 

1

 

 

 

ICT/Digitalization

37

20

 

 

 

17

 

Health

34

34

 

 

 

 

 

Development

29

28

 

 

 

1

 

Gender

26

26

 

 

 

 

 

Non-proliferation

21

8

 

 

13

 

 

Human rights

19

16

3

Macroeconomy

12

9

 

 

 

3

 

Crime and corruption

18

18

Labour and employment

15

15

 

 

 

 

 

Migration and refugees

9

9

 

 

 

 

 

Infrastructure

9

6

 

1

 

2

 

Education

8

8

Democracy

6

6

Science and research

6

6

Financial regulation

5

5

 

 

 

 

 

Terrorism

4

4

Accountability

4

3

 

1

 

 

 

Peace and security

3

3

 

 

 

 

 

Taxation

3

3

 

 

 

 

 

International cooperation

2

2

 

 

 

 

 

Nuclear safety

2

 

 

2

 

 

 

Total

653

411

61

67

13

38

63

Note: ICT = information and communications technology.

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Appendix B: G7 Compliance Assessments, Summary, 1975–2022

Subject

Number of assessments

Dates

Average

Average %

Climate change

99

1985–2021

+0.47

74%

Health

94

1983–2022

+0.56

78%

Development

61

1996–2022

+0.49

75%

Crime and corruption

47

1996–2022

+0.47

74%

Non-proliferation

37

1996–2022

+0.37

69%

Trade and investment

53

1975–2022

+0.37

69%

Regional security

47

1984–2022

+0.60

80%

Terrorism

37

1978–2022

+0.56

78%

Information and communications technology/Digitalization

17

1996–2022

+0.70

85%

Energy

28

2001–2022

+0.67

84%

Food and agriculture

15

2000–2022

+0.57

78%

Democracy

12

2002–2022

+0.54

77%

Environment

27

1996–2022

+0.62

81%

Macroeconomy

25

1996–2022

+0.68

84%

Education

13

1997–2019

+0.38

69%

Conflict prevention

8

1996–2009

+0.51

76%

Social policy

5

1998–2000

+0.71

86%

Financial regulation

10

1991–2015

+0.57

79%

United Nations reform

4

1996–1996

+0.19

60%

Labour and employment

8

1996–2022

+0.70

85%

Migration and refugees

5

2015–2017

+0.73

87%

Gender equality

24

2014–2022

+0.38

69%

International cooperation

4

2020–2021

+0.78

89%

Compiled by John Kirton, October 6, 2023.

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Appendix C: Predicted Compliance with Four Key Commitments on Economic Resilience and Security from the 2023 G7 Hiroshima Summit

2023-500: We reaffirm our strong will to support the wider international community, particularly developing countries, in building their resilience, including through implementing the Partnership for Global Infrastructure and Investment.
Catalysts tested: issue, host
Predicted compliance: 69%

2023-501: We will enhance resilient supply chains through partnerships around the world, especially for critical goods such as critical minerals, semiconductors and batteries.
Catalysts tested: issue, host, ministers
Predicted compliance: 68%

2023-515: Recognizing the importance of existing joint efforts including at the WTO, we will enhance collaboration by launching the Coordination Platform on Economic Coercion to increase our collective assessment, preparedness, deterrence and response to economic coercion, and further promote cooperation with partners beyond the G7.
Catalysts tested: issue, host, ministers
Predicted compliance: 68%

2023-523: To this end, we reaffirm our continued collaboration including through the Framework for G7 Collaboration on Digital Technical Standards.
Catalysts tested: issue, host, ministers
Predicted compliance: 86%

Source: "The G7 Leaders' Statement on Economic Resilience and Economic Security." Identified, coded and analyzed by Brittaney Warren, October 23, 2023.

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Appendix D: Predicted Compliance with 12 Priority Economic Commitments from the 2023 G7 Hiroshima Summit

Economic subject

Predicted number of commitments

Predicted full compliance

Climate change

2

74%

Energy

2

86%

Environment

1

79%

Food and agriculture

2

74%

Labour and employment

1

74%

Digitalization

1

87%

Macroeconomics

1

74%

Development

1

69%

Trade

1

68%

Average by subject

9

76%

Average by commitment

12

77%

Compiled by Brittaney Warren, October 23, 2023.

2023-91 (#4) Climate Change: Domestic Mitigation Measures
"We reiterate our commitment made in Elmau last year to rapidly implement domestic mitigation measures aimed at achieving our Nationally Determined Contribution (NDC) targets."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 74%

2023-104 (#5) Climate Change: Emission Reduction Policies
"We support appropriate policy mixes including carbon pricing, non-pricing mechanisms, and incentives that effectively reduce emissions, and note that these could vary reflecting country- specific circumstances."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 74%

2023-550 (#6) Energy: Clean Energy Technologies
"We will work to ensure that our regulations and investments will make clean energy technologies more affordable for all nations and help drive a global, just energy transition for workers and communities that will leave no one behind."
Catalysts tested: issue area, summit host, ministers, human rights
Predicted compliance: 90%

2023-172 (#7) Energy: Low Carbon and Renewable Hydrogen Markets
"We will enhance our efforts to develop the rule-based, transparent global market and supply chains for low carbon and renewable hydrogen based on reliable international standards and certification schemes adhering to environmental and social standards."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 81%

2023-154 (#8) Environment: Conservation Measures
"We stress our commitment to achieving the target of effectively conserving and managing at least 30 per cent of terrestrial and inland water areas,… nationally and globally, according to national circumstances and approaches through promoting the designation and management of protected areas and other effective area-based conservation measures (OECMs)."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 79%

2023-618 (#9) Food and Agriculture: Healthy and Safe Diets
[We commit to improving access to affordable healthy diets and safe and nutritious foods through] … increasing the availability, affordability and quality of malnutrition treatment and prevention products and services.
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 74%

2023-646 (#10) Food and Agriculture: Food Safety and Sustainable Production
"[We commit to] supporting adoption of the One Health approach to address food safety [and] sustainable food production."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 74%

2023-269 (#15) Labour and Employment: Job Creation
"We also work towards quality job creation."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 74%

2023-303 (#16) Digital Economy: Digital Ecosystem with Trust
"We seek to increase trust across our digital ecosystem and to counter the influence of authoritarian approaches."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 87%

2023-49 (#17) Macroeconomics: Fiscal Sustainability and Price Stability
"In striving for strong, sustainable, balanced and inclusive growth, we are committed to a stability- and growth-oriented macroeconomic policy mix that supports medium-term fiscal sustainability and price stability."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 74%

2023-70 (#19) Development: Official Development Assistance
"We underscore the need for continued efforts to scale up official development assistance (ODA) and expand its catalytic use including through innovative financing mechanisms, recognizing the importance of respective commitments, such as the 0.7% ODA/GNI target that some countries adopted."
Catalysts tested: issue area, summit host
Predicted compliance: 69%

2023-501 (#20) Trade: Resilient Supply Chains
"We will enhance resilient supply chains through partnerships around the world, especially for critical goods such as critical minerals, semiconductors and batteries."
Catalysts tested: issue area, summit host, ministers
Predicted compliance: 68%

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Appendix E: Historic and Predicted Compliance with 12 Priority Economic Commitments from the 2023 G7 Hiroshima Summit, by Member and Subject

Issue area

Average

Canada

France

Germany

Italy

Japan

United Kingdom

United States

European Union

Predicted

Historic

Predicted

Historic

Predicted

Historic

Predicted

Historic

Predicted

Historic

Predicted

Historic

Predicted

Historic

Predicted

Historic

Predicted

Historic

Infrastructure

69%

97%

72%

100%

64%

100%

72%

100%

47%

75%

64%

100%

78%

100%

72%

100%

79%

100%

Trade

69%

69%

72%

80%

64%

53%

72%

75%

47%

59%

64%

75%

78%

76%

72%

64%

79%

87%

Digitalization

87%

85%

89%

91%

85%

88%

89%

86%

73%

75%

84%

83%

92%

94%

89%

86%

92%

93%

Climate change

74%

74%

77%

77%

70%

72%

77%

82%

54%

55%

70%

71%

82%

84%

77%

71%

83%

92%

Energy

86%

84%

88%

86%

84%

82%

88%

88%

72%

68%

83%

79%

91%

91%

88%

93%

91%

95%

Environment

79%

81%

82%

91%

76%

84%

82%

84%

61%

62%

76%

79%

86%

91%

82%

66%

87%

93%

Food and agriculture

74%

79%

77%

84%

70%

77%

77%

87%

54%

57%

70%

87%

82%

87%

77%

87%

83%

89%

Labour and employment

74%

85%

77%

100%

70%

88%

77%

88%

54%

92%

70%

69%

82%

100%

77%

69%

83%

92%

Macroeconomics

74%

84%

77%

88%

70%

88%

77%

84%

54%

72%

70%

80%

82%

84%

77%

88%

83%

86%

Development

69%

75%

72%

76%

64%

76%

72%

80%

47%

62%

64%

72%

78%

87%

72%

77%

79%

79%

All subject average

75%

81%

78%

87%

72%

81%

78%

85%

56%

68%

72%

79%

83%

90%

78%

80%

84%

90%

Compiled by Brittaney Warren, October 30, 2023.

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Appendix F: Post–Hiroshima Summit G7 Meetings

June 16–18

Transport

June 21

Foreign ministers (at the Ukraine Recovery Conference, London)

June 24

Foreign ministers (telephone regarding Russia)

June 25

Gender equality

July 7

Justice

July 7–9

Urban development

July 12

Leaders, at NATO Summit, Vilnius

July 13

Foreign ministers (statement on North Korea missile launch)

September 7

Digital and tech (virtual)

September 18

Foreign ministers

October 12

Finance ministers and central bank governors (31 commitments)

October 28–29

Trade (60 commitments)

October 30

Leaders' statement on the Hiroshima AI process

November 7–8

Foreign ministers

December 8–10

Interior and security ministers

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