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— This is the script of CNBC's news report for China's CCTV on June 10, 2019, Monday.
As you just heard, the communique of the G20 finance ministers and central bank governors' meeting pointed out that the trade disputes have intensified. However, there was also disappointment that the meeting did not offer a solution to the trade conflict. "Recognizing the urgent need to address trade tensions" in the previous draft was deleted at the insistence of the United States, sources familiar with the matter told Reuters.
Analysts see it as a U.S. concern about burdening future trade talks, and this is a further sign that the G20 talks are still at odds. There was also no specific language on how much damage trade conflicts would do to the global economy. Recently, however, weak global manufacturing and other data are showing the impact on the global economy and America's bond markets are warning that the economy may be weakening.
But, Steven Mnuchin, United States Secretary of the Treasury, said in an interview with CNBC that the U.S. remains a economy with strong growth and reemphasized its current priority of balancing trade.
United States Secretary of the Treasury
We are in an environment where global interest rates are very low around the world. So i think that's what you're seeing in the US bond markets. But we see no signs of a recession. We see another strong quarter in the United States. And the message that I've been delivering here at the g 20 is we want free and fair reciprocal trade， but it's got to work in both directions.
In the communique, there's another area that gets a lot of attention that is a possible global digital tax on tech giants. At the meeting, finance ministers agreed to set common rules to close tax loopholes used by global tech giants like Facebook and Google to lower corporate taxes.
At present, the first place for digital taxes is in Europe. In recent years, tech giants have come under fire for locating their headquarters in low-tax areas where they can make more money but serve people who are in hard-to-define areas. Such tax avoidance is seen by many as a violation of the fairness principle. But how to tax the tech giants is fraught with disagreement.
We know that in March last year, the European Union announced its "digital tax" plan, which plans to levy taxes on large Internet enterprises with annual revenues of more than 750 million euros, but it sparked controversy, with France and Britain firmly on the EU's side, however, low-tax areas such as Denmark, Sweden and Ireland are opposed, they argue that the introduction of digital taxes will reduce their competitiveness. Such disagreements led the European Union to announce the suspension of the EU-wide digital tax in March. And that led to France going it alone. France passed legislation in May that a 3 per cent digital tax will be imposed on companies with global digital revenues of at least €750m and those with revenues of more than €25m in France. But digital taxes are controversial, and not just in the EU, and this may make the confrontation between the United States and the European Union continue.
The European Union estimates that between 120 and 150 Internet giants would be affected by a digital tax, and half of those affected are American. As a result, the US is concerned that US Internet companies will be unfairly targeted on global corporate tax problems. So it may be some time before a global digital tax actually works, because of the support from the US and the division in the EU.
United States Secretary of the Treasury
I have made it very clear in this meeting that we do not support the proposed UK and France's tax positions that we think they are discriminatory against our companies, having said that i am sympathetic to the issue as you have changing business models, you have to look at the tax impact, so we are looking at the tax issue more broadly and looking for a broad solution that would be supported by the OECD.
But what's clear is that as this issue gets agreed across the G20, it's likely to get harder for the tech giants. We will keep an eye on this issue.