Finance Ministers and Central Bank Governors of the G7 countries will meet on Wednesday 17 July and Thursday 18 July in Chantilly for a meeting on the theme of 'Rebuilding capitalism' which should lead to conclusions on a wide range of topics from digital taxation to virtual currencies, sustainable finance and tackling inequality.
Digital taxation. On Wednesday, ministers will hold a working session on international tax reform (see EUROPE 12272/3) to make progress towards an agreement at the OECD in 2020.
A discussion will be held against the backdrop of Franco-American tensions, following last week's announcement that the United States will launch an investigation to determine whether the French 'GAFA tax' is discriminatory and whether it hinders American trade (see EUROPE 12294/10).
“We must build a 21st century tax system for the 21st century economic model based on data valuation: that is our ambition and not to target a particular country or a particular company, as the President of the United States of America believes”, explained a senior official of the French Ministry of Finance on Friday, 12 July.
During a bilateral meeting with his American counterpart, Steven Mnuchin, the French Minister Bruno Le Maire intends to remind him that the French tax is intended to be abolished when an international agreement on the taxation of giants in the digital sector has been reached (see EUROPE 12250/13) and that it should, on the contrary, encourage the United States to make progress in the work at the OECD.
“I think we will have ambitious conclusions, particularly on tax issues, but also on digital issues”, said the same senior official, excluding, on the other hand, that agreement could be reached in the G7 on effective global minimum corporate taxation, another top priority of the French G7 Presidency.
On this subject, France and Germany are determined to achieve concrete results and are supported by the United States, he assured. Nevertheless, he said, reaching a rate definition at this meeting would be “premature”.
At least two G7 countries are politically unable to accept the definition of a rate or even a rate corridor, he explained, believing that at best ministers could agree in principle.
Virtual currencies. Facebook's Libra cryptocurrency project (see EUROPE 12277/24) will also be on the ministers' table on Wednesday. In June, France had requested the establishment of a working group on stable currencies (see EUROPE 12279/12), coordinated by Benoît Coeuré, member of the ECB's Executive Board.
At the meeting, ministers will consider the conclusions of the interim report of the working group that assesses the risks associated with these assets in terms of financial stability, monetary policy transmission, consumer protection and money laundering and terrorist financing.
Since Bercy, the project has been viewed with caution. “No digital company should acquire sovereign currency”, warned this source, believing that it is necessary to quickly define the “modalities of strict, effective and controlled regulation”.
As soon as it was announced, the project raised public outcry everywhere and even in the United States, where President Donald Trump expressed his mistrust of cryptocurrencies. Asked about the possibility that France might oppose the creation of Libra by Facebook, this senior official indicated that all options remained open.
In addition, ministers will discuss ways to enhance international cooperation on cybersecurity and take stock of the first G7-wide cross-border cyber crisis simulation exercise held in June (see EUROPE 12252/3).
Sustainable Finance. On Thursday 18 July, sustainable finance will be at the heart of the ministers' working breakfast. They will also discuss ways to increase public and private funding for the transition by mobilising G7 countries and private actors.
Fight against inequalities. “Fair capitalism” is the last theme to be addressed by ministers on Thursday. They will address in particular the issue of sustainable financing, investment in developing countries, as well as the financial inclusion of women through digital technology in Africa, on the basis of a report presented by the Bill & Melinda Gates Foundation. The discussion will also aim to promote the exchange of good practices on equal opportunities, gender equality and wage transparency.
IMF. Without being a formal item on the agenda, the ministers will also discuss the succession of Christine Lagarde, who should be appointed President of the ECB as of 1 November (see EUROPE 12287/1). The Europeans have already indicated that they will present a single candidate for this position (see EUROPE 12292/29). (Original version in French by Marion Fontana)