Hamburg G20 was the EU’s first test in a new world order

The Hamburg G20 summit showed that the EU will need to step forward to fill the gap left by the US on free trade and climate change.

The G20 had its start on the heels of the financial crisis, almost 10 years ago, as a promising example of global governance, expanding the top decision-making sphere to include emerging economies and countries not in the UN Security Council. The latest summit in Hamburg has proved to be one of the most challenging by far. It concluded with two days of protests and vandalism on the streets, amid tensions between different approaches to governance. Trump, Erdogan and Putin proved to be a triple threat to host Angela Merkel and the European Union.

A pessimistic note

This is one of the first times that the summit ends with such pessimism, exposing to the world the divisions among western leaders. The Anglo-American divide over cooperative trans-Atlantic and EU dealings was clearly on display, accelerating the shift to more personality-driven and protectionist approaches.

EU leaders vowed to present a united front to support democracy, international trade and development, orchestrating the timing of start of the summit with the conclusion of the Japan-EU trade agreement.

But as the G20 wrapped up, it was evident that centres of power and influence are changing, and personality and perceptions play a key role in shaping the international system.

The challenges

For the European Union, the main topics of interest at the summit were trade, climate and finance.

These key policy issues will also be the main challenges faced by EU regulators in the years to come, as they seek to push forward the liberal agenda and bridge the gap that the US is starting to leave in the international system.

The foremost sign of this development was Washington’s decision to leave the Paris Agreement in June. This disregard of the climate issues was reinforced during the summit: Trump and Putin skipped the climate policy session for a bilateral conversation.

The remaining participants reaffirmed their commitments to fight against climate change, and the US’s role as a discordant voice at the summit was duly noted in the leaders’ declaration that closed the meeting.

On trade, the EU was also working with a single voice, marked by a powerful intervention by Jean-Claude Juncker, stating that “trade agreements are not only about selling and buying”. There was talk of EU retaliation meausures should the US pursue controversial steel tariffs.

In the summit declaration a compromise was achieved, as leaders supported “reciprocal and mutually advantageous trade” even if recognizing the role of “legitimate trade defence instruments”.

The way forward

With the US potentially backing away from defending globalization, the EU stands to become the main player on trade, climate, democracy and related forward-looking issues. Taking up this mantle would be consistent with the concept of an evolving Market Power Europe, basically an EU that advances freedom and democracy through trade and regulatory standards.

Signing agreements with countries as Japan and Canada, and expanding the EU model to other regional trade blocs, will be especially important as a way to counter rising protectionism and populism.

In Hamburg, the EU emerged as a potential alternative pole of power, and a serious and committed defender of globalism. Before it can fully step into this role, it will need to address internal divisions, notably the issue of Brexit. This will be the next test of whether a united Europe can take strong leadership approach and implement market-based solutions, such as a capital markets union.

Categories: International

About Author

Daniel Bouzas

Daniel Bouzas is a specialist on EU policies and regulations and their effects in the global arena. He has worked at the European Investment Bank and at the consultancy and interest representation sectors in Brussels. He also has extensive experience on Regional Integration, Political Economy and Security. Daniel holds an MA in International Relations and Diplomacy from the College of Europe in Bruges.