PARIS – As world finance leaders gather this week in Washington for the annual meetings of the International Monetary Fund, Bruno Le Maire, French Minister of Finance, made it clear that effective Franco-American cooperation on an overhaul of the system international tax could not hide marked differences on China and other issues.
“The United States wants to face China. The European Union wants to engage China, ”said Mr. Le Maire, a close ally of French President Emmanuel Macron, in a broad interview before the meetings. It was natural, he added, because the United States is the first world power and does not “want China to become in a few years or in a few decades the first superpower in the world”.
Europe’s strategic priority, on the other hand, is independence, “that is to say to be able to acquire more defense capabilities, to defend its own vision of the fight against climate change, to defend its own interests. economic, have access to key technologies and not be too dependent on American technologies, ”he said.
His remarks reflected unresolved tensions that emerged last month in a furious disagreement between France and the United States over President Biden’s decision to supply nuclear submarines to Australia. The agreement replaced a previous French contract for the sale of conventional Australian submarines. Mr Macron was only made aware of Australia’s plans at the last minute.
“There has clearly been at least one major misunderstanding between France and the United States, and there has also been, I would say, misconduct on the part of the US administration,” Le Maire said.
The key issue now for the European Union, he said, is to become “independent from the United States, capable of defending its own interests, whether economic or strategic”. Yet, he added, the United States remains “our closest partner” in terms of values, business model, respect for the rule of law and embrace of freedom.
But with China, he said, “we don’t share the same values or the same economic model.”
France and the United States are working to repair the damage caused by the submarine agreement, and the French ambassador, recalled to Paris in protest, is back in Washington. Mr Macron, who will meet with Mr Biden this month, wants to see a greater American commitment to independent European defense ambitions that he says would be complementary to NATO, as well as a demonstration of American respect for them. European strategic ambitions in the Indo-Pacific. Region.
When asked if the differences over China meant an inevitable divergence between the United States and Europe, Le Maire said: “It could be if we are not careful.” But everything must be done to avoid this, which means “recognizing Europe as one of the three superpowers of the world for the 21st century”, alongside the United States and China.
One area in which Europe and the United States have worked together is that of financial reform. The efforts to undertake the most radical overhaul of the international tax system in a century are about to be successful.
Finance ministers from the Group of 20 largest economies are expected to back a deal at IMF meetings as early as Wednesday, following a landmark agreement reached last week by nearly 140 countries to create a global minimum corporate tax of 15% and new rules that would force corporations and tech giants like Amazon and Facebook to pay an appropriate share of tax wherever they operate.
The pact, intended to crack down on tax havens that have robbed countries of much-needed revenue, follows months of negotiations that have included intense behind-the-scenes lobbying by Mr. Le Maire and the US Treasury Secretary. , Janet Yellen.
Mr Le Maire said he had “worked very well with Janet Yellen on many key issues” and was determined to improve relations between the two countries. “But it is also up to the United States to take decisions in the right direction to restore confidence between the two continents and between the two countries.”
One of the main lingering points of contention concerns the metals tariffs that former President Donald J. Trump imposed globally in 2018. Officials will face difficult negotiations in the weeks to come. Europeans plan to impose retaliatory tariffs on a range of American products from December 1, unless Mr Biden withdraws a 25% duty on European steel and a 10% tax on aluminum .
“If we want to improve bilateral economic relations between the continents, the first step must be for the United States to lift the sanctions in the steel and aluminum case,” said Le Maire. “We are fed up with trade wars,” he added. “This is clearly not in the interest of the United States and not in the interest of the EU”
Improving economic stability in the aftermath of the pandemic is crucial. Mr Le Maire oversaw a massive aid package to pull France out of a historic recession that included generous public funding to prevent mass layoffs by subsidizing wages and aid to companies struggling to pay their bills.
Support is now wiping out as the economy stabilizes amid widespread immunizations. The economy is expected to grow 6.25% this year, while unemployment, a political lightning rod six months from a presidential election, is expected to fall to 7.6% by year-end, the lowest for over a decade.
The rebound is crucial as France prepares for its elections in April. Mr Le Maire said he was starting a political movement to support President Macron’s re-election.
The far right presents a tall order as Eric Zemmour, a writer and television celebrity known for his anti-immigrant nationalism, gains traction in political polls by exploiting immigration insecurity and fears growing economic inequalities due to globalization.
“You have extremist parties rising up all over Europe and all over Western countries because a lot of people are afraid of what is happening because of climate change, because of the technological revolution, because of the large migratory movements” , said Mr. Le Maire. “The best way to fight extremist parties is to get results,” he said.
But in the country where the anti-elite yellow vests protest movement raged for many months, starting in 2018, Le Maire acknowledged that the frustrations that fueled the mass protests could erupt again in France. and spread to other European countries if inequalities worsened as governments attempt to tackle climate change by shifting from cheap fuels to renewable energy sources.
As the price of the energy needed to bridge this transition is reaching record highs, “the climate transition remains a risk for all of us, for all democracies, because it will be very expensive – much more expensive than expected,” said Mr. . The mayor.
“I really think that a new movement of yellow vests remains possible everywhere in Europe,” he added. Reaching a global tax deal will be crucial to help prevent this by providing governments with a vital source of new revenue to reduce inequality, he said.