speri.comment: the political economy blog

Cameron’s three Ts agenda and the G8

The summit was also noticeable for what it did not prioritise

Professor Tony Payne, Professorial Fellow, SPERI

Tony Payne

In the end, the G8 summit at Lough Erne in Northern Ireland was dominated by Syria, and that’s fair enough.  The plight of that country is truly appalling and deserving of the highest and most urgent political attention.

But, as always, there was plenty of political economy in the communiqué and it’s worth making an early assessment of what the leaders of the world’s oldest industrialised countries came up with on this front.  There is also an additional British dimension, because it was very much David Cameron’s summit.

Cameron’s agenda was set out in a letter he sent to his fellow G8 leaders in January.  At its heart, he said, were three issues – ‘advancing trade, ensuring tax compliance and promoting greater transparency’.  It isn’t known how these came to the fore within the pre-summit planning process, but one can be sure that the marketing appeal of a nicely alliterative ‘3 Ts’ sound bite was attractive to the UK prime minister and his staff.

At any rate, Cameron stuck firmly to this script in the run-up to the summit and reiterated it again during his final press conference on the shores of Lough Erne on Tuesday afternoon when he claimed that ‘real progress’ had been made by the G8 on these issues.

How does that claim stand up?  Well, on the first issue of trade, Cameron can fairly point to the G8’s confirmation that the US and the EU would launch negotiations for an ambitious new transatlantic trade deal.  His aides briefed that he hoped to see this concluded by the end of 2014, although this seems unlikely given the complexity of regulatory regimes that will need to be reconciled.   It’s also the case that this announcement, which is entirely consistent with recent trends in the global political economy, was going to be made anyway and didn’t need the paraphernalia of a G8 meeting to get lift-off declared.

On the third issue of transparency, which is code for the familiar ‘good governance’ agenda of liberalising, anti-corruption measures beloved of late by the international financial institutions, the communiqué did not have much to say.  The leaders agreed an Open Data Charter to make government information public in more easily accessible ways and also promised to make extractive industry payments more transparent.  But that was really it.

The second T, tax, is actually the interesting bit of Cameron’s agenda, especially when viewed politically.  It is more of a puzzle to see what is going on here, for Cameron is an unlikely figure to lead a major tightening of the currently loose – arguably broken – international tax regime.  After all, he leads a party that is dependent structurally on financial support from the City of London and other business interests and, as a consequence, is committed ideologically to low tax.

Various arguments can be considered.  It could be that Cameron has been stung by the campaigning activities of groups like UK Uncut and alarmed by the impact on public opinion in Britain of the revelations about how little tax has been paid lately by major corporate giants like Google, Starbucks and Amazon.  In this context it might indeed make political sense to position himself as the man to tackle tax evasion, especially when responsible domestic companies express anger that international companies use tax havens to avoid reporting for tax profits made within the UK.

It could also be, and it would be encouraging to think this, that Cameron and his advisers have come to realise in a more deep-seated way that all states are ultimately ‘tax states’. They need resources to sustain the public expenditure demanded of them by their electorates, especially in periods when great efforts are being made to reduce spending without putting taxes up.

In the event, Cameron could not get G8 leaders to make hard commitments to tax reform.  More than with most issues, the devil lies in the detail with tax policy and a lively debate has already opened up on the significance of what was agreed on the automatic exchange of tax information, the registration of beneficial ownership of companies and the like.  The consensus, for the moment, seems to be that an awful lot remains to be done.

Nevertheless, whether or not Cameron has embarked on something that he is capable politically of following through, the fact is that an agenda has been launched and a door to global tax reform thus opened. A Lough Erne Declaration listed 10 moves that ‘should’ be made by G8 governments and the communiqué itself called upon the OECD to develop a template for the ‘country-by-country’ reporting to tax authorities by major corporations that was once anathema and is the key to radical change on this front.

Amidst all these specific issues, we shouldn’t also fail to see a big problem with the format of the G8 revealed by the domination of this week’s summit by Cameron’s agenda.  He chose the issues on which the leaders focused and they turned up to discuss them.  This is no way to run a major forum of global governance.

For one thing, there is no continuity from one summit to another.  For another, there exist a range of important issues consequently not prioritised, just because they don’t suit the host leader. Where, at Lough Erne, was there intensive discussion on financial imbalances and competitive currency relationships between countries, or the need to re-engineer another global financial stimulus, or – heaven forbid – the huge, long-term problem of reconciling economic growth with climate change?  Cameron didn’t want time devoted to these types of questions – and it wasn’t.

A partial defence could be that, in a world that now has the G20 as its apex economic forum, the G8 can afford to focus on niche issues where it can make a difference because of the particular character of its membership.  But, if so, these issues of debate just move on to the next G20 meeting scheduled for early September in St Petersburg.  President Putin will then be in the chair.  We shall see.

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