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CNBC Transcript: Michael Froman, Vice Chairman and President, Strategic Growth, Mastercard   


Below is the transcript of a CNBC interview with Michael Froman, Vice Chairman and President, Strategic Growth, Mastercard. The interview was first broadcast on CNBC's Squawk Box Asia on 17 September 2018.

All references must be sourced to a "CNBC Interview'.

Interviewed by CNBC's Amanda Drury

Amanda Drury (Mandy): When you got an emerging market as big as China, and obviously going backward and forward over trade with the US, you got issues still with NAFTA, the US also threatening to pull out of the WTO, do you feel that all the balls are in President Trump's court?

Michael Froman (Michael): The president, well he certainly has a very distinct approach to trade. It's something that he's had a longstanding view on long before he ran for president. I think the rest of the world is paying attention to that. I think the president and the administration is figuring out how they want to proceed with this renegotiation of NAFTA. Whether it's engaging with the Europeans or whether it's engaging with China and other trading partners to try and resolve in some cases longstanding trade issues different administrations have different approaches. I was part of another administration that had a somewhat different approach but certainly some of the underlying concerns about subsidies about IP theft about forced technology transfer. Those are longstanding issues that a number of administrations have been concerned.

Mandy: Putting on your trade cap again, what advice would you give to President Trump today?

Michael: We are most influential vis-a-vis China when we're part of a broad based coalition of other developed and developing countries and I think the administration has started to reach out and work with the EU and Japan, visibly China and I think broadening that out to include other major emerging economies could be helpful as well. I think that's having a carrot and stick approach we use the WTO quite aggressively. We brought 26 cases before the WTO, six of which are against China. We won every case that went to conclusion and then it made engaging in some meaningful dialogue about the kinds of changes you want to see in Chinese policy in order to have a more stable and enduring economic relationship but we have to have a clear idea about what it is we want China to do and make sure that we can put it forward in a way that the Chinese will see that it's in their interests as well.

Mandy: Do you think the WTO has been treating the US unfairly as President Trump claims?

Michael: I think as a general matter, the WTO is something the United States was very much involved in the formulation of it, the rules underlying it, the processes underlying it. We're an active user of its dispute settlement procedures and we tend to do very well in those procedures. Having said that, it's not a perfect organization. There is need to update and reform it. And I think one of the fundamental questions that the WTO faces is how do we accommodate it, bring into the global trading system a party like China which has a very different approach through state capitalism into a system that's based on an open rules based dynamic. It's been a challenge since they joined the WTO and it will continue to be a challenge as we think about reforming it.

Mandy: So when you say about reforms, it's almost like we need to rip up the old playbook and completely rewrite it, as the world realigns itself with the greater power of China and the East?

Michael: I think there are specific reforms that could be pursued without completely ripping up the playbook as you say but certainly in the areas of the dispute settlement body, they could be quicker in coming to a conclusion. It needs more resources in order to do that. But I think there are things that could be done to address it. But we recognize the WTO is an organization. 164 countries and decisions are made by consensus. Any single country whether it's as large as China or as small as some of the other countries can obstruct that consensus. And that's why we pursued agreements like TPP, the Trans-Pacific Partnership as a way of raising standards above the level of the WTO. So as a way of creating some positive dynamic in the global trading system

Mandy: Mike, you worked on TPP. Do you feel that President Trump might come back to it under different terms?

Michael: I don't know. I think it's good that there are 11 countries continue to pursue TPP that there are other countries that want to join it. And I think a number of the issues that the administration has been engaging with Mexico and Canada on and the renegotiating of NAFTA are also issues that we dealt with in TPP. So whether or not they ever come back to TPP itself, I think a lot of the rules that we pursued there that we negotiated there will find their way into the global trading system in one form or another.


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