On July 16th and 17th, the G7 Trade Ministers’ Summit took place in Italy, discussing a range of issues. The summit emphasized a multilateral trading system that is free, fair, rules-based, and market-oriented. Ministers stated their intent to use “trade tools” as needed to combat market distortions, with a stronger stance compared to previous summit declarations.
On Tuesday and Wednesday, the G7 trade ministers met in Villa San Giovanni, Italy, to discuss reforming and strengthening the multilateral trading system centered around the World Trade Organization (WTO) and enhancing cooperation on common challenges.
The summit released a 6-page communique on Wednesday, outlining the G7’s commitment to establishing a multilateral trading system based on the WTO, rule-based, market-oriented, free, fair, open, equal, sustainable, inclusive, and transparent. It aims to ensure a fair competitive environment, promote international trade, encourage sustainable trade environments, enhance economic resilience, and economic security.
“We will intensify our commitment to maintaining economic openness and competitiveness, promoting free and fair trade and investment, and collaborating with global partners including the Indo-Pacific, Latin America, Africa, and other regions,” the statement said.
In terms of ensuring a fair competitive environment, the communique mentioned continued efforts to promote transparency in international trade to foster a more equitable global competitive environment, respecting WTO rules within their respective policies. It also highlighted the need to address non-market policies and practices that lead to overcapacity and market distortions.
“We are committed to effectively using our trade tools and developing new tools as needed to identify, address, and combat these practices, promoting stronger international rules and norms in collaboration with partners,” the communique stated.
In matters of industrial subsidies, the G7 trade minister’s communique expressed a collective effort to address prevalent, opaque, harmful industrial subsidies and state-owned enterprises distorting markets.
“We emphasize that all WTO members need to ensure transparency within the WTO, notably through subsidy notifications and public disclosure of subsidy programs domestically,” the communique stated.
The European Union recently began imposing high tariffs on electric cars imported from China to protect the EU automotive industry from the impact of cheap Chinese electric vehicles, highlighting China’s significant subsidies in the sector.
A study by the Kiel Institute for the World Economy in Germany released in April showed that Beijing heavily subsidizes domestic industries, particularly in green technologies such as electric vehicles or wind power, with estimates indicating that China’s subsidies are three to nine times greater than countries like the US or Germany who are members of the OECD.
A new study by the Center for Strategic and International Studies released in June revealed that the Chinese government has provided at least $230 billion in government support to electric car manufacturers like BYD over the past decade, with subsidies accounting for approximately 18.8% of sales revenue.
The communique also expressed concerns about forced technology transfer and unreasonable data localization measures, stressing worries about any forms of forced technology transfer, especially when used to dominate markets in specific industries.
G7 trade ministers believe that unreasonable data localization measures pose negative impacts on cross-border data flows, affirming their dedication to combatting unreasonable, opaque, and arbitrarily enforced data localization measures.
Regarding encouraging sustainable trade environments and social sustainability, the communique reiterated concerns about the use of all forms of forced labor and child labor in global supply chains.
“We unanimously recognize the importance of upholding human rights and international labor standards in global supply chains,” the communique said.
G7 trade ministers once again pledged to take actions to eliminate all forms of forced labor and child labor in global supply chains, including promoting due diligence by businesses and further enhancing predictability and certainty for companies.
Furthermore, they urged all countries not to use economic coercion and condemned any attempts to weaponize economic dependence.
“We are working jointly with partners to ensure such attempts or related threats do not succeed and stand ready to take action against economic coercion when necessary, including through the G7 Economic Coercion Coordination Platform, and cooperating with partners beyond the G7,” the communique stated.
While not explicitly naming China, the communique highlighted concerns about Beijing frequently utilizing economic coercion against other countries. The US ambassador to Japan, Rahm Emanuel, stated on April 8th that China continuously employs economic coercion against various countries, including Japan and the Philippines, viewing it as China’s “most enduring and harmful tool”.
Countries from South Korea, Japan to Australia and Lithuania have experienced economic coercion from China. After successfully assisting Lithuania in countering Chinese economic coercion, the US State Department established an eight-person team dedicated to helping allies combat Chinese economic bullying.