January 22, 2022

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Clear Variations Stay Between France and U.S., French Minister Says

Clear Differences Remain Between France and U.S., French Minister Says

PARIS — As international finance leaders collect this week in Washington for the annual conferences of the Worldwide Financial Fund, Bruno Le Maire, the finance minister of France, made clear that efficient French-American cooperation on an overhaul of the international tax system couldn’t masks stark variations on China and different points.

“America needs to confront China. The European Union needs to interact China,” Mr. Le Maire, an in depth ally of President Emmanuel Macron of France, mentioned in a wide-ranging interview forward of the conferences. This was pure, he added, as a result of america is the world’s main energy and doesn’t “need China to change into in just a few years or in just a few many years the primary superpower on this planet.”

Europe’s strategic precedence, against this, is independence, “which implies to have the ability to construct extra capacities on protection, to defend its personal view on the battle towards local weather change, to defend its personal financial curiosity, to have entry to key applied sciences and never be too depending on American applied sciences,” he mentioned.

His remarks mirrored unresolved tensions that got here to the floor final month in a furious disagreement between France and america over President Biden’s resolution to supply nuclear-powered submarines to Australia. The deal changed an earlier French contract to promote Australia standard submarines. Mr. Macron was not knowledgeable of Australia’s plans until the last minute.

“Clearly there was not less than an necessary misunderstanding between France and america, and there has additionally been, I’d say, misbehavior from the U.S. administration,” Mr. Le Maire mentioned.

The important thing query now for the European Union, he mentioned, is to change into “impartial from america, capable of defend its personal pursuits, whether or not financial or strategic pursuits.” Nonetheless, he added, america stays “our closest companion” when it comes to values, financial mannequin, respect for the rule of legislation, and embrace of freedom.

However with China, he mentioned, “we don’t share the identical values or financial mannequin.”

France and america are striving to repair the damage from the submarine deal, and the French ambassador, who was recalled to Paris in protest, has returned to Washington. Mr. Macron, who will meet Mr. Biden this month, needs to see a better American dedication to impartial European protection ambitions that he says could be complementary to NATO, in addition to proof of American respect for European strategic ambitions within the Indo-Pacific area.

Requested if variations over China meant inevitable divergence between america and Europe, Mr. Le Maire mentioned, “It may very well be if we’re not cautious.” However each effort ought to be made to keep away from this, which implies “recognizing Europe as one of many three superpowers on this planet for the twenty first century,” alongside america and China.

An space the place Europe and america have been working in lock step is on monetary reform. Efforts to press probably the most sweeping overhaul of the worldwide tax system in a century are nearing a breakthrough.

Finance ministers of the Group of 20 largest economies are anticipated to again an accord on the I.M.F. conferences as early as Wednesday, following a landmark deal final week by almost 140 nations to create a 15 % international minimal company tax and new guidelines that will pressure company and know-how giants like Amazon and Fb to pay an applicable share of tax wherever they function.

The pact, supposed to crack down on tax havens which have drained nations of much-needed income, follows months of negotiations which have included intense behind-the-scenes lobbying by Mr. Le Maire and the U.S. Treasury secretary, Janet Yellen.

Mr. Le Maire mentioned that he had labored “very effectively with Janet Yellen on many key points,” and was decided to enhance the connection between the 2 nations. “However it is usually as much as america to take some selections in the correct path to revive confidence between the 2 continents and between the 2 nations.”

One of many greatest lingering factors of rivalry is over steel tariffs that former President Donald J. Trump imposed globally in 2018. Officers face difficult negotiations in coming weeks. Europeans plan to impose retaliatory tariffs on a spread of U.S. merchandise as of Dec. 1, except Mr. Biden pulls again a 25 % responsibility on European metal and a ten % tax on aluminum.

“If we wish to enhance the bilateral financial relationship between the continents, step one have to be for america to raise the sanctions within the metal and aluminum case,” Mr. Le Maire mentioned. “We’re fed up with the commerce wars,” he added. “It’s clearly not within the curiosity of america and never within the curiosity of the E.U.”

Enhancing financial stability within the wake of the pandemic is essential. Mr. Le Maire has overseen an enormous help program to steer France out of a historic recession that included beneficiant state funding to stop mass layoffs by subsidizing wages and reduction for companies struggling to pay their payments.

The help is now being wound down because the financial system stabilizes amid widespread vaccinations. The financial system is predicted to develop 6.25 % this yr, whereas unemployment, a political lightning rod six months from a presidential election, is projected to fall to 7.6 % by year-end, the bottom in over a decade.

The rebound is essential as France gears up for its election in April. Mr. Le Maire mentioned he’s beginning a political motion to again the re-election of President Macron.

The far proper is presenting a robust problem as Éric Zemmour, a author and TV movie star recognized for his anti-immigrant nationalism, positive aspects floor in political polls by tapping into insecurity over immigration and fears of rising financial inequality from globalization.

“You’ve extremist events rising all over the place in Europe and all over the place within the Western nations as a result of many individuals are afraid of what’s occurring resulting from local weather change, because of the technological revolution, because of the necessary strikes of migration,” Mr. Le Maire mentioned. “The easiest way to battle towards extremist events is to get outcomes,” he mentioned.

However within the nation the place the anti-elite Yellow Vest protest motion raged for a lot of months, beginning in 2018, Mr. Le Maire acknowledged that the frustrations that fueled the mass protests may flare once more in France and unfold to different European nations if inequality worsens as governments attempt to sort out local weather change by shifting away from low-cost gas to renewable power sources.

With the worth of power wanted to bridge that transition hitting document highs, “local weather transition stays a danger for all of us, for all democracies, as a result of it will likely be very expensive — much more expensive than anticipated,” Mr. Le Maire mentioned.

“I actually suppose {that a} new Yellow Vest motion stays doable all over the place inside Europe,” he added. Securing a worldwide tax deal can be essential to assist keep away from that by bringing governments an important supply of recent income to cut back inequality divides, he mentioned.

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