With a Push by the EU, the G7 Adapts to a Disorderly Global Economy
Vice President; Director, Geoeconomics Program
Peter S. Rashish, who counts over 25 years of experience counseling corporations, think tanks, foundations, and international organizations on transatlantic trade and economic strategy, is Vice President and Director of the Geoeconomics Program at AICGS. He also writes The Wider Atlantic blog.
Mr. Rashish has served as Vice President for Europe and Eurasia at the U.S. Chamber of Commerce, where he spearheaded the Chamber’s advocacy ahead of the launch of the Transatlantic Trade and Investment Partnership. Previously, Mr. Rashish was a Senior Advisor for Europe at McLarty Associates, and has held positions as Executive Vice President of the European Institute, on the Paris-based staff of the International Energy Agency, and as a consultant to the World Bank, the German Marshall Fund of the United States, the Atlantic Council, the Bertelsmann Foundation, and the United Nations Conference on Trade and Development.
Mr. Rashish has testified on the euro zone and U.S.-European economic relations before the House Financial Services Subcommittee on International Monetary Policy and Trade and the House Foreign Affairs Subcommittee on Europe and Eurasia and has advised three U.S. presidential campaigns. He is a member of the Board of Directors of the Jean Monnet Institute in Paris and a Senior Advisor to the European Policy Centre in Brussels. His commentaries have been published in The New York Times, the Financial Times, The Wall Street Journal, Foreign Policy, and The National Interest, and he has appeared on PBS, CNBC, CNN, and NPR.
He earned a BA from Harvard College and an M.Phil. in international relations from Oxford University. He speaks French, German, Italian, and Spanish.
When European Commission President Ursula von der Leyen came into office in the fall of 2019, she proclaimed the advent of a new “geopolitical Commission” where internal and external actions would be better aligned to give the European Union a stronger role on the world stage. The ambition for more political sovereignty was understandable in a world where tensions were rising not only between the United States and China but also across the Atlantic during the Trump administration.
But after last weekend’s G7 summit in Hiroshima, it seems clear that the EU is scoring its biggest successes not in traditional foreign policy but rather in helping to navigate a more multi-polar international economic system. One where established, universal rules and institutions will need to be complemented by new, more pragmatic efforts that will help create the global economic order of the future.
Its statecraft on two key issues—anti-coercion and de-risking— is playing an essential role in forging a wider coalition of like-minded countries on shaping policies for this new geoeconomic era.
As early as December 2021, the European Commission proposed an “anti-coercion instrument” that would help its member states deter and if needed respond to acts of economic aggression that could be detrimental to its prosperity and global interests. The EU’s member states provisionally adopted this instrument in March. One recent example of the kind of adverse behavior the anti-coercion instrument was created to deal with was China’s decision to boycott goods from Lithuania after that EU member state upgraded Taiwan’s diplomatic presence in the country, which disrupted the functioning of the EU’s barrier-free internal market.
The EU’s statecraft on two key issues—anti-coercion and de-risking— is playing an essential role in forging a wider coalition of like-minded countries on shaping policies for a new geoeconomic era.
In a first sign of success at socializing this concept, the December meeting of the U.S.-EU Trade and Technology Council adopted a common approach to anti-coercion, stating, “we resolve to identify and address economic coercion and explore potential coordinated or joint efforts, bilaterally and with other likeminded partners, to improve our assessment, preparedness, resilience, deterrence, and responses to economic coercion.”
Now, this development has expanded to the G7, which over the weekend produced a stand-alone statement on economic resilience and economic security that includes a commitment to “enhance collaboration by launching the Coordination Platform on Economic Coercion to increase our collective assessment, preparedness, deterrence, and response to economic coercion” that will also aim to “promote cooperation with partners beyond the G7.”
A similar dynamic has been at work on the concept of “de-risking” (rather than cutting off) trade and supply chain relationships with China, Russia, and other countries where one-sided dependencies could arise.
At the World Economic Forum in January, von der Leyen said with regard to China that “we need to refocus our approach on de-risking, rather than decoupling.” And then in a speech at the end of March, she elaborated on this position, saying, “the second strand of our future China strategy must be economic de-risking…That means recognizing how China’s economic and security ambitions have shifted. But it also means taking a critical look at our own resilience and dependencies, in particular within our industrial and defense base.”
In Hiroshima, the G7 leaders’ statement made this idea their number three priority after support for Ukraine and the pursuit of disarmament with a joint commitment to “coordinate our approach to economic resilience and economic security that is based on diversifying and deepening partnerships and de-risking, not de-coupling.”
The G7’s convergence on anti-coercion and de-risking as policy responses to a more disorderly global economy appears alongside a commitment to “promote international rules and norms in order to facilitate trade and promote economic resilience, based on the rules-based multilateral trading system with the World Trade Organization (WTO) at its core.” The G7’s assumption seems to be that a two-track approach—reviving established organizations while trying out new, ad hoc measures and coalitions—can be complementary rather than competitive.
That may turn out to be the case. But extra amounts of forbearance will be needed in both Washington and Brussels, since it is inevitable that during this time of policy creativity there will be moments when one or the other partner won’t get the balance right between institutionalism and experimentation.