Biden’s G-7 tax offer to gain crucial political points in Europe

U.S. President Joe Biden speaks at a press conference with Virginia Governor Ralph Northam as they meet to discuss the state’s progress against the coronavirus disease (COVID-19) pandemic in Sportrock Climbing Centers in Alexandria, Virginia on May 28, 2021.

Evelyne Hockstein | Reuters

LONDON – With G-7 officials likely to back a US proposal for a minimum corporate tax rate this weekend, analysts have pointed out how this could help form alliances on geopolitical issues in the years to come. come.

Many European officials have long called for a common approach to taxation, even in countries like Ireland, where some of America’s big tech giants are headquartered. Essentially, the argument has been that in order to correct the internal differences between the 27 countries of the EU, the best result would be to find a common method of taxation on an international framework.

President Joe Biden has now given hope to such a policy, supporting a minimum overall corporate tax rate of 15%. The question at this point is not so much whether there will be an agreement in this regard, but when it will be confirmed. The rules should not only impact taxation, but other fronts as well, including how the United States deals with China.

“Take any issue that is problematic from Washington’s point of view regarding China: currency, intellectual property, the origins of the pandemic, behavior in the South China Sea, Xinjiang … All of those things. are important in varying degrees to Washington. And they are also important for Europeans, ”Jeremy Ghez, affiliate professor at HEC Business School in Paris, told CNBC on Thursday.

“Where Biden and (former President Donald) Trump may differ is on the question of alliances. Trump felt that (the Europeans) were of little help and that Europe was as bad as China when it comes to trade… Biden thinks that with a broad coalition, you might be able to push China on a more constructive path. International pressure, that is, pressure that is not just coming from Washington, could prove useful on any of these topics, ”said Ghez.

In the latest escalation to China, Biden signed an executive order banning U.S. entities from investing in 59 Chinese companies allegedly linked to the military.

Speaking to CNBC on Friday, European Economic Affairs Commissioner Paolo Gentiloni said relations with China “will be a very important issue” when G-7 heads of state meet next week.

“We need to cooperate in certain sectors, in particular on climate change and climate transition, but at the same time, we need to have a strong global agreement between us to ensure (a) a level playing field on (the) economy, which is not at all granted by China and to meet the challenge of the relationship with China in the future, “he said, adding that the G-7″ will work together to find the right balance ” .

EU relations with China have been chaotic in recent months. EU-China relations ended 2020 on a positive note, with the signing of an investment agreement that would make it easier for European companies to invest and work in China, where they face competition. state-funded enterprises.

However, the ratification of this agreement was put on hold by Europe after a diplomatic row with Beijing in March. At the time, the EU decided to impose sanctions against China for its treatment of the Uyghur ethnic minority, and Beijing retaliated by announcing counter-sanctions against members of the European Parliament.

Ethnic Uyghurs, who live primarily in western China, have been identified by the United Nations, the United States, the United Kingdom and others as a suppressed group. China’s foreign ministry in March called such claims “malicious lies” designed to “smear China” and “frustrate China’s development.”

Leslie Vinjamuri, director of the United States and the Americas program at Chatham House, told CNBC earlier this week that the ratification hiatus was a “game changer” because it “allows for greater cooperation” between the EU and United States

Discussions on China are expected to continue between US and EU officials after the G-7 leaders’ meeting next week, when Biden flies to Brussels for an EU-US summit on June 15.

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