The next finance G7 will take place on February 12, the G20 will follow on February 26 but already, during the preparatory meetings last week, the tone has changed, the atmosphere too! The French present during its meetings noted “a change of state of mind, in particular because of the expression of the representatives of the United States”, one rejoices in Bercy. Bruno Le Maire was able to discuss by phone with his counterpart, Janet Yellen, Thursday afternoon, who confirmed the best dispositions of the Americans on the backlogs.
In fact, the American representative who acted as interim during meetings at the level of “substitutes” (director of the treasury …) was already there under Trump, but the instructions have changed. Witnesses relate a funny anecdote: the American delegate began by reading a paper resuming Trump’s positions, then he realized that he had made the wrong document and resumed reading the correct document …
Several subjects hitherto blocked by Donald Trump are now considered “with a spirit of openness”, we note among the French who, of course, expect concrete actions at the summits to come. First good surprise, the representatives of the Biden administration agree to resume work on global taxation with a precise timetable: it is a question of agreeing on the “principles of a taxation of digital giants” and “a minimum corporate tax rate ”(to stem tax optimization) by the summer.
Biden opens digital tax case
For France, the Gafa tax was a subject of great tension with Donald Trump. The French tax had provoked commercial clashes. Joe Biden agrees to open the subject “with a real desire to engage”, notes Bercy. The technical work was carried out by the OECD. If the political will is there, the G20 could end in an enlarged format at the end of the first half of 2021. It would only be a question of reaching an “agreement in principle”, the implementation, it would still take. time.
France is very involved in this file within the European Union. It is strongly supported by Italy, Austria, Poland, Germany, United Kingdom. In the absence of “cooperative” digital taxation, the risk would be great of a fragmentation of international taxation with a flowering of national digital taxes …
Africa at the heart of the IMF’s concerns
Second opening subject for the Biden representatives: the coordination of economic policies which will be on the G20 menu on February 26. The European Union is moving slowly in the completion of its recovery plan, NGUE (Next generation EU). For his part, Joe Biden announced a stimulus package of 1.9 trillion dollars corresponding to about 9% of US GDP. Here again, the Americans are showing an appetite for better coordination of budget support measures, particularly in the more general context of climate issues. The return of the United States to the Paris Agreement puts oil in the wheels between the two shores of the Atlantic.
Finally, one last subject was blocked by Donald Trump: aid to poor countries, especially African countries, through the increase in the IMF’s special drawing rights (SDRs). This is a French proposal carried by Emmanuel Macron and Bruno Le Maire. Africa is impacted by the pandemic due to the slowdown in world trade and the fall in the prices of raw materials in extremely dependent countries. From mid-April, Bruno Le Maire had pushed for an increase in SDRs to 500 billion dollars. The Americans, under Trump, did not see this step necessary. Both the Chinese and the Germans are in support of this French proposal which, according to Bercy, would give a “breath of fresh air” and increase the reserves of all countries in the world, of which $ 16 billion would benefit the poorest countries. In 2008, during the financial crisis, Washington agreed to increase the IMF’s SDRs by $ 250 billion. Donald Trump left, the lock is lifted and Washington agrees to examine the proposal “with an open mind,” said Bercy. We will see what will really be during the G7 finances (under British presidency) and G20 finances (under Italian presidency) on February 12 and 16, which will take place by videoconference.
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