The U.S. gave into pressure from Europeans over environmental concerns, allowing the word “climate” into a joint communique at a conference overshadowed by a viral outbreak that’s shaken the global economy.
Delegates at the G-20 meeting in Riyadh, Saudi Arabia, spent much of their time talking about a global slowdown exacerbated by the coronavirus outbreak, but struggled to come up with a united response, according to people familiar with the deliberations. Countries such as Japan, and institutions including the Organization for Cooperation and Economic Development, have been pushing for those with surpluses to spend more.
One of the main addressees of the calls for more spending is Germany. So far, the export-driven country has showed little interest in significantly boosting expenditures, arguing fiscal stimulus can’t bolster foreign demand.
On climate change, differences of opinion on display in the Saudi capital were more stark. The U.S., represented by Treasury Secretary Steven Mnuchin, objected to including a reference to the subject, according to four people familiar with the communique-drafting process. The Saudi delegation, which is hosting the event, didn’t show much enthusiasm for it either, according to two of them.
After several days of heated debate, including France finance chief Bruno Le Maire cornering Mnuchin late Saturday in Riyadh as the G-20 economic leaders dined, the U.S. reluctantly agreed to a mention of climate change, according to two people familiar with the matter.
A Treasury spokeswoman didn’t reply to a request for comment.
Tax Debate
As of Sunday morning in Riyadh, it was also looking unlikely that representatives would leave Saudi Arabia with any breakthroughs on a global taxation system that would apply to multi-national companies including tech giants like Alphabet Inc.’s Google andFacebook Inc., according to the people.
Europeans have balked at a U.S. proposal that new global rules should be a “safe harbor” regime. Mnuchin sought to reassure his counterpart by insisting such a system would not mean the rules would be optional, but Europeans said they still needed to fully assess the proposal.
If there’s no agreement, several European nations will go ahead with taxes on revenues of multinational digital firms. That could spark a transatlantic trade war as the U.S. says such measures are discriminatory and has already threatened France with tariffs.
In introducing a so-called global minimum tax — a measure intended to prevent large companies from shifting profits to low-tax locales to avoid paying them at home — the two sides are closer to compromise as there’s little difference among current corporate tax rates among major economies, and little concern that the minimum tax would be too low, one person said.
— With assistance by Saleha Mohsin
Source: Read Full Article