It's a Five Eyes world competing with China

EU attempts to tone down US action against China at the G7 Summit means the “Five Eyes” grouping of Australia, New Zealand, Canada, the UK are emerging as the principal supporters of the US.

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The G7 issued a long communique, reaffirming much of the financial and banking agreements of the Finance Ministers’ meeting. US President Joe Biden used the summit to get across his message that “America is back”, a phrase to woo his allies and to promote the view that his diplomacy will be subtler and more influential than his predecessor’s.

Three big themes dominated the conclusions. The Summit stated that: “The unprecedented and interdependent crises of climate change and biodiversity loss pose an existential threat to people, prosperity security and nature.” It spent time discussing how the world can be freed of the pandemic and improve its resilience against future health emergencies. It stressed the need to “build back better”, extending the policies and offers to the emerging world as part of a battle for influence against China’s Belt and Road.

The President of the EU Council, Charles Michel, and the President of the EU Commission, Ursula von der Leyen, joined the German Chancellor, Angela Merkel, French President Emmanuel Macron and the Italian Prime Minister Mario Draghi in the discussions.

Europe resistant to US China stance

According to journalists present at the event, the European Union pushed hard to water down the American proposals to stand up to China over human rights, and succeeded in mainly turning the specifics against China into general exhortations not to use forced labour in supply chains in the trade section of the text. In contrast, the UK and Canada supported the US position. The “Five Eyes” grouping of Australia, New Zealand, Canada, the UK and the US collaborate closely on security and intelligence and are emerging as the principal supporters of the US more generally.

The leaders agreed to strengthen their offers of reduced emissions of CO2 in time for The United Nations COP26 climate change conference in November, whilst signing up to a general collective target of halving them by 2030 compared to 2010 levels. They accepted this will mean the need to go faster in removing new diesel and petrol cars from sale. They promised not to invest in new coal generation after the end of this year and to make the elimination of coal a priority. They made a general promise to “decarbonise iron and steel, cement, chemicals and petrochemicals” and to double the efficiency of lighting, heating and cooling systems by 2030. They are seeking to mobilise massive sums in public and private investment to pay for a faster green transition.

The leaders reminded the world of the $12 trillion of pandemic economic support they calculated had been allocated so far – and said they would build on it without committing to new sums. Language was included to add levelling up to the Build Back Better slogan, with a pledge that “no place or person…is left behind”.

Considerable emphasis was laid on promoting more education and employment opportunity for women and girls. They offered to ensure a billion extra doses of vaccine find their way to the rest of the world over the next year, to add to the billion so far achieved. This will leave the world well short of vaccinating all adults in the way the advanced countries are doing. The idea of suspending patents to allow other companies to make the vaccines developed by leading US and European companies was not adopted. Instead they said they would offer help by “increasing and co-ordinating our global manufacturing capacity on all continents”

They wish to update the World Trade Organisation’s rules to reflect their new enthusiasm for sustainable supply chains that assist national resilience and underpin good labour standards. The carbon border tax idea survived in their wish to avoid carbon leakage.

This was the first in-person meeting of the leaders for many months and the first trip of Joe Biden as President to meet his allies face to face. The shape of the world is a bit different under this president, who wishes to work more closely with allies – but who expects them to follow his lead. So far, he is making more progress with Five Eyes members than with the wider group. The summit revealed an EU preference to find more ways of working with China, and a US-led view that the democracies have to stand up to China more.

Belt and Road rival

The big US idea adopted by all is a western alternative to China’s Belt and Road, as the West plays catch up by trying to finance, assist and subsidise more investment in the emerging world. Underneath is more concentrated work on shortening supply chains, getting more control over crucial technologies and raw materials, increasing national resilience and onshoring more jobs.

The investment takeaway is more of the same, with plans for a huge investment in green transition and in digital advances around the two competing systems from China and the US. The foreign policy section was a reminder of several flare points and problems with both Russia and China around the world from Ukraine to the South China Sea.

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It's a Five Eyes world competing with China

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