Finance ministers from the world’s rich economies could propose a new partnership on supply chains that would be open to other nations, and would require countries to have minimum standards on human rights and environmental policies to join.
Officials are well advanced in drafting a statement for the G7 meeting, with the additional details on diversifying supply chains to be included, people familiar with the matter said.
The planned partnership would start by the end of this year, they said, declining to be named as the drafting is not public.
Photo: REUTERS
Efforts to diversify the supply chain of renewable energy resources is also likely, one person said. China has a dominant position in the supply of some rare earths, and policymakers from around the world have spoken about the need to diversify sources.
Finance ministers and central bank chiefs from the G7 yesterday began a second day of talks in Niigata, Japan, with three hours of closed-door morning talks on global financial stability.
Shoring up supply chains is among the top concerns at the G7 gathering, alongside concerns over the financial sector, the war in Ukraine and debt restructuring.
The G7 finance officers would be looking to show more progress on these issues than is possible in the more disparate G20, which includes China and Russia.
The strengthening of supply chains inevitably has a geopolitical element, given China’s importance in supplying and manufacturing for the global economy. While the US is pushing to reduce reliance on China, some European countries are showing some reluctance.
Speaking in Niigata, European Commissioner for Economy Paolo Gentiloni said that a decoupling from China presents a risk for global commerce.
“What we are talking about is not closing our trade with China, but making our supply chains more secure in some strategic sectors like rare minerals,” Gentiloni said in an interview on the sidelines of the summit. “I think you have to build your own capacity in some of these sectors. This is absolutely needed.”
Yesterday’s talks were to continue through the afternoon, and were to be followed by a dinner. Meetings would resume this morning, with a concluding statement and news conference scheduled for about 12:30pm.
Japan, as this year’s G7 host, invited officials from emerging economies including Brazil and Indonesia to the gathering.
That is a departure from protocol, with the aim to counter China’s growing influence in the so-called Global South.
With recent G20 meetings marred by discord over Russia’s invasion of Ukraine, the G7 has allowed the US and allies to push priorities such as tightening sanctions on Russia and diversifying supply chains from China.
US Secretary of the Treasury Janet Yellen on Thursday said that Washington intends to crack down on Russia’s ability to skirt sanctions imposed by the US and allies after its invasion of Ukraine.
She said she hopes to discuss with her G7 counterparts a set of possible restrictions on outbound investments to China that US President Joe Biden’s administration has been mulling for some time, but has not yet finalized.
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