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Editorials/Opinions Analyses for UPSC – 12 June 2021


  1. Group of 7 (G7) and the recent developments

Group of 7 (G7) and the recent developments


Advanced economies making up the G7 grouping have reached a “historic” deal on taxing multinational companies. Finance ministers meeting in London agreed to counter tax avoidance through measures to make companies pay in the countries where they do business.


GS-II: International Relations (Important International Institutions, Foreign Policies and Developments affecting India’s Interests)

Dimensions of the Article:

  1. What is the G7?
  2. History of the G7
  3. G7 Summit Participation
  4. Agenda of the G7 Summit
  5. Key developments in G7 Summits
  6. India and the G7

What is the G7?

  • The Group of 7 (G7) is an informal group of seven countries — the United States, Canada, France, Germany, Italy, Japan and the United Kingdom, the heads of which hold an annual summit with European Union and other invitees.
  • Together the member countries represent 40% of global GDP and 10% of the world’s population.
  • Unlike other bodies such as NATO, the G7 has no legal existence, permanent secretariat or official members.
  • It also has no binding impact on policy and all decisions and commitments made at G7 meetings need to be ratified independently by governing bodies of member states.
  • The major purpose of the G-7 is to discuss and deliberate on international economic issues.
  • G7 is capable of setting the global agenda because decisions taken by these major economic powers have a real impact. Thus, decisions taken at the G7 are not legally binding, but exert strong political influence.
  • It sometimes acts in concert to help resolve other global problems, with a special focus on economic issues.

History of the G7

  • A meeting between the current G7 members, excluding Canada, in 1975 laid the basis for the formation G7. At the time, the global economy was in a state of recession due to the OPEC oil embargo.
  • As the energy crisis was escalating, the then US Treasury Secretary decided that it would be beneficial for the large players on the world stage to coordinate with each other on macroeconomic initiatives.
  • After this first summit, the countries agreed to meet annually and a year later, Canada was invited into the group which marked the official formation of the G7 as we know it.
  • The President of the European Commission was asked to join the meetings in 1977 and following the collapse of the Soviet Union in 1991 and a subsequent thaw in relations between the East and West, Russia was also invited to join the group in 1998. Thereafter the group was named the G8 until 2014, when Russia was expelled for its annexation of Crimea from Ukraine.
  • The presidency of G7 meetings is held by each of the seven countries in turn, each year. The country holding the presidency is responsible for organising and hosting the meeting.

G7 Summit Participation

  • Summits are held annually and hosted on a rotation basis by the group’s members.
  • The leaders of important international organizations like the European Union, IMF, World Bank and the United Nations are also invited.
  • The groundwork for the summit, including matters to be discussed and follow-up meetings, is done by the “sherpas”, who are generally personal representatives or members of diplomatic staff such as ambassadors.

Agenda of the G7 Summit

  • The G7 summit provides a forum for member countries to discuss shared values and concerns.
  • While it initially focused on international economic policy, in the 1980s, the G7 extended its mandate to include issues related to foreign policy and security as well.
  • In recent years, G7 leaders have met to formulate common responses to challenges encompassing counterterrorism, development, education, health, human rights and climate change.

Key developments in G7 Summits

  • In 1997, the G7 countries agreed to provide $300 million to the effort to contain the effects of the reactor meltdown in Chernobyl.
  • Then, at the 2002 summit, members decided to launch a coordinated response to fight the threat of AIDS, Tuberculosis and Malaria.
  • Their efforts led to the formation of the Global Fund, an innovative financing mechanism that has disbursed more than $45 billion in aid and, according to its website, has saved the lives of over 38 million people.
  • Global Apollo Program was launched out of the 2015 G7 summit meeting designed to tackle climate change through clean energy research and development. The programme calls for developed nations to commit to spending 0.02% of their GDP on tackling climate change from 2015 to 2025; an amount that would total USD 150 billion over a 10-year period.
  • The election of Donald Trump in 2016 also caused some friction between the G7 member nations. Ahead of the G7 summit in Sicily in 2017, Trump refused to recommit the US to the 2015 Paris Climate Agreement and criticised Germany for its trade surplus, threatening to block the US import of German cars.
  • In 2020, the G7 summit was cancelled for the first time as a result of the Covid-19 pandemic.

India and the G7

  • The G7 has been criticised for being outdated and ineffective in recent decades due to its exclusion of two of the world’s largest economies in India and China.
  • Several think tanks have called for India’s inclusion into the group; however, some argue against it, pointing to India’s much lower GDP per capita relative to other states.
  • While not being an official member of the group, India has been invited to the 2021 G7 summit as a special guest, making this year the second time that Prime Minister Modi has been asked to participate in discussions.
  • India will be particularly interested in the talks related to global vaccine delivery as both a major manufacturer and consumer of vaccines.

-Source: Indian Express

July 2024