WEBVTT - The Taxing Problem of Global Tech Giants 0:00:00.080 --> 0:00:02.720 Wrong, wrong thing to do. They should not have done it. 0:00:02.840 --> 0:00:04.640 I told him, I said, don't do it, because if 0:00:04.640 --> 0:00:15.520 you do what, I'm going to tax your wine. Hello 0:00:15.560 --> 0:00:18.520 and welcome to Stephanomics, the podcast that brings the global 0:00:18.520 --> 0:00:22.000 economy to you. In his four years as president, I've 0:00:22.000 --> 0:00:25.200 found I haven't agreed with Donald Trump on everything, but 0:00:25.280 --> 0:00:27.760 when he laid into the French tax on the revenues 0:00:27.800 --> 0:00:30.640 of digital companies a while back, he had a point. 0:00:31.320 --> 0:00:34.440 The international tax system wasn't built for a world of 0:00:34.440 --> 0:00:38.720 online shopping and complex global supply chains. But one country 0:00:38.720 --> 0:00:42.320 acting alone isn't going to fix it. Everyone, including the French, 0:00:42.760 --> 0:00:46.040 agrees we really need a global solution. But for that, 0:00:46.120 --> 0:00:48.000 you need the US and the rest of the world 0:00:48.000 --> 0:00:50.559 to agree on the best way to divide up the 0:00:50.640 --> 0:00:54.400 profits of those big tech giants, and that is proving 0:00:54.520 --> 0:00:58.040 very difficult. Indeed, in a minute, I'll be talking to 0:00:58.080 --> 0:01:00.760 the frenchman stuck in the middle of this, the official 0:01:00.840 --> 0:01:03.800 who has to find a way through or risk another 0:01:03.920 --> 0:01:07.880 round of nasty US europe trade wars. Will also be 0:01:07.920 --> 0:01:11.520 going to Abidjan in the Ivory Coast to hear about 0:01:11.560 --> 0:01:14.559 the global chocolate war what it means for the price 0:01:14.560 --> 0:01:18.959 of Hershey's kisses this Christmas. But first, a short introduction 0:01:19.440 --> 0:01:22.399 to the battle over the future of tax from our 0:01:22.440 --> 0:01:39.680 French economy reporter William Horrobin Mercy m. It's one a 0:01:39.880 --> 0:01:45.240 M in the French Senate on Tuesday May two, in 0:01:45.280 --> 0:01:49.480 the nine century Chamber, the President of the Session, Tanni Mohammed, 0:01:50.760 --> 0:01:53.640 is submitting to a vote the world's first tax and 0:01:53.680 --> 0:01:59.680 the digital revenues of multinational tech giants. Something to do 0:02:00.000 --> 0:02:08.600 on some detexts, continue doing some delgation depends Senator. The 0:02:08.680 --> 0:02:11.480 calm passing of the bill with only four votes against, 0:02:11.760 --> 0:02:16.160 reflected an unquestioning support in France making tech giants pay 0:02:16.280 --> 0:02:22.000 more tax. Then this happened. France put on a U 0:02:23.160 --> 0:02:29.840 attacks on our companies, you know that, and wrong, wrong 0:02:29.880 --> 0:02:31.880 thing to do. They should not have done it. They 0:02:31.880 --> 0:02:35.880 didn't do the right thing when they start taxing our companies. 0:02:36.080 --> 0:02:39.240 We tax our companies. They don't tax our companies. So 0:02:39.320 --> 0:02:41.480 France did that. I told him, I said, don't do it, 0:02:41.480 --> 0:02:43.400 because if you do it, I'm going to tax your wine. 0:02:43.400 --> 0:02:47.839 Weing tariff or tax or whatever you want. So yeah, 0:02:47.840 --> 0:02:51.840 we're working on that right now. Transcend anti clash is 0:02:51.840 --> 0:02:55.600 in fact just the tip of an iceberg. Both surface, 0:02:56.160 --> 0:02:59.960 there is a far broader battle over the future of taxation, trade, 0:03:00.400 --> 0:03:04.320 and the authority of nations. As the global economy turns digital, 0:03:07.360 --> 0:03:10.640 governments see sovereignty slipping away as they struggled to tax 0:03:10.639 --> 0:03:14.160 globe trotting firms with market capitalizations that dwarf the GDP 0:03:14.280 --> 0:03:18.800 of most nations. Traditional firms that face the costs and 0:03:18.880 --> 0:03:21.880 tax bills of having a physical presence are crying foul 0:03:21.919 --> 0:03:26.360 as their custom goes elsewhere, and even the global tech 0:03:26.400 --> 0:03:29.760 giants are voicing concern about navigating a growing thicket of 0:03:29.880 --> 0:03:34.440 unilateral measures and punitive levees. The US has started investigations 0:03:34.440 --> 0:03:37.840 into taxes like frances in at least ten other countries, 0:03:38.120 --> 0:03:42.160 from the UK to Italy, India and Indonesia. The COVID 0:03:42.200 --> 0:03:46.680 crisis has done nothing to unwind the tension. On the contrary, 0:03:47.480 --> 0:03:50.400 locked down in their homes, consumers have moved online like 0:03:50.480 --> 0:03:54.920 never before to work, shop, eat and entertain themselves. Meanwhile, 0:03:55.120 --> 0:03:57.760 governments are clocking up vast debts as they bail out 0:03:57.760 --> 0:04:01.200 bricks and mortar firms on the verge of collap Any 0:04:01.240 --> 0:04:03.960 hope for a solution to taxation in the digital age 0:04:04.520 --> 0:04:07.080 rides on negotiations at the o e c D, the 0:04:07.240 --> 0:04:13.560 Organization for Economic Cooperation and Development. But there's a problem. 0:04:13.600 --> 0:04:15.760 The talks on the rules of tax involved nearly one 0:04:15.840 --> 0:04:19.000 hundred and forty countries and have been tracking on for years. 0:04:19.880 --> 0:04:22.839 Among the many issues still to resolve, the most divisive 0:04:22.960 --> 0:04:26.120 is the scope of new tax rules, with the Europeans 0:04:26.120 --> 0:04:29.440 wanting to single out digital companies and the US demanding 0:04:29.480 --> 0:04:32.000 no such ring fencing of firms that are in the 0:04:32.040 --> 0:04:35.880 most part American. With no swift deal in sight, a 0:04:35.920 --> 0:04:38.760 truce in the battle between France and the Trump administration 0:04:38.880 --> 0:04:43.039 is about to break. The French government is resuming the 0:04:43.080 --> 0:04:46.080 collection of its tax on digital revenues this month, and 0:04:46.120 --> 0:04:48.680 the US is set to retaliate in early January with 0:04:48.760 --> 0:04:52.320 taxes on one point three billion dollars of emblematic French goods, 0:04:52.400 --> 0:04:56.880 including handbags and cosmetics. If that happens, France says the 0:04:56.920 --> 0:05:01.279 EU must immediately retaliate all. Let's put digital tax at 0:05:01.320 --> 0:05:03.719 the top of Joe Biden's list of problems when he 0:05:03.760 --> 0:05:07.000 takes office to solve it and lead the bridge a 0:05:07.040 --> 0:05:13.200 Transatlantic divide. Here's the French finance minister Bruno Lamaire, the UK, Spain, 0:05:13.560 --> 0:05:18.680 Italy Austria have accepted to launch their own digital taxation 0:05:18.720 --> 0:05:21.119 because we are all aware that this is a question 0:05:21.120 --> 0:05:25.800 of fairness. You cannot have the digital giants being less 0:05:26.200 --> 0:05:31.520 taxes than SAMESE and than the smallest private companies euro 0:05:32.120 --> 0:05:36.640 I really hope that this new Biden's administration will mean 0:05:37.040 --> 0:05:41.880 a new start in the relationship between job and the 0:05:42.000 --> 0:05:50.159 United States. Well, if we're going to get nearly a 0:05:50.200 --> 0:05:53.120 hundred and forty countries to agree something in the next 0:05:53.120 --> 0:05:56.320 twelve months, it's only going to be after herculean efforts 0:05:56.360 --> 0:05:59.200 by the individual we're going to talk to now. Pascal 0:05:59.279 --> 0:06:01.839 Saint them are, director of the Center of Attack Policy 0:06:01.960 --> 0:06:05.240 at the a e c D in Paris. Pascal, thank 0:06:05.279 --> 0:06:08.200 you so much for coming on Stephanomics. We had a 0:06:08.200 --> 0:06:11.160 little we had a little bit from William Horrobin there, 0:06:11.160 --> 0:06:13.920 But as far as your concerned, what's at stake in 0:06:13.960 --> 0:06:18.560 these negotiations, Well, what is at stake is some form 0:06:18.600 --> 0:06:22.120 of economic peace, in particular between the US and Europe. 0:06:23.240 --> 0:06:29.640 The dispute is about how countries could better share the 0:06:29.680 --> 0:06:33.760 taxation of digital companies. That's where the Europeans and not 0:06:33.800 --> 0:06:35.800 only the Europeans the rest of the world have been 0:06:35.880 --> 0:06:39.480 very frustrated for the past ten years, seeing these companies 0:06:39.520 --> 0:06:42.760 are deriving a lot of profits from our markets and 0:06:42.839 --> 0:06:45.600 we cannot tax them. And we cannot tax them because 0:06:45.600 --> 0:06:49.360 we're stuck with rules which were designed one century ago 0:06:49.800 --> 0:06:52.880 which prevent us from taxing companies because they are not 0:06:53.000 --> 0:06:56.599 physically present on our market. Therefore we cannot collect anything. 0:06:56.880 --> 0:07:00.159 These companies are making billions, and these billions were untacked 0:07:00.520 --> 0:07:03.720 until recently. Now they may be taxed in the US, 0:07:03.760 --> 0:07:06.920 but we want our fair share and the US in 0:07:07.000 --> 0:07:09.560 response to that set but this profit belongs to me. 0:07:09.680 --> 0:07:13.080 It's it's profit by American companies, and there is no 0:07:13.120 --> 0:07:15.240 reason for me to let you tax them. And by 0:07:15.280 --> 0:07:18.480 the way, if we find a solution, it shouldn't be 0:07:18.800 --> 0:07:22.320 ring fans to digital companies because the problem we're facing 0:07:22.440 --> 0:07:25.800 is a global problem for all companies. So we've been 0:07:25.840 --> 0:07:28.040 struggling with that for the past three years. And we 0:07:28.080 --> 0:07:32.480 have an extension, unfortunately not until the end of twenty one, 0:07:32.800 --> 0:07:35.480 but the end of the first semester of twenty one. 0:07:35.520 --> 0:07:37.680 So the challenge is even bigger because we need to 0:07:37.720 --> 0:07:41.680 find consensus in the next six months basically, it just 0:07:41.720 --> 0:07:45.280 seems like it's gonna be really difficult. Um. I mean, 0:07:45.400 --> 0:07:47.480 I guess one question is we we've we've started to 0:07:47.560 --> 0:07:51.760 think that tech giants, these enormous companies are sort of 0:07:51.800 --> 0:07:55.160 bigger than any one government. I mean, can governments actually 0:07:55.240 --> 0:07:59.440 prevail against these companies. Well, that's a good question, and 0:07:59.520 --> 0:08:03.600 indeed there is a challenge that. Maybe The first thing 0:08:03.640 --> 0:08:06.640 to say is that until we did a big G 0:08:06.840 --> 0:08:11.360 twenty O city initiative known under the Depth acronym. That 0:08:11.520 --> 0:08:14.040 was a big effort by the G twenty to try 0:08:14.120 --> 0:08:17.720 to bring some form of tax regulation to globalization and 0:08:17.760 --> 0:08:21.640 say multinational companies can locate their profits serious link tax 0:08:21.640 --> 0:08:25.360 s events in a complete legal manner. And we did 0:08:25.760 --> 0:08:28.480 change that in two thousand and fifteen. We came up 0:08:28.520 --> 0:08:30.960 with the new set of rules, and these rules have 0:08:31.080 --> 0:08:34.240 translated in the US tax reform and due to thousands 0:08:34.760 --> 0:08:39.160 sixteen seventeen, the tech companies, among others it's not omitted 0:08:39.240 --> 0:08:43.000 to tech could have an effective tax rate on their 0:08:43.000 --> 0:08:46.880 foreign source income plus to zero. Now they are taxed 0:08:47.160 --> 0:08:49.640 in the US at least at ten percent. So you 0:08:49.679 --> 0:08:52.640 can see that governments can act when they want to act. 0:08:53.040 --> 0:08:55.800 But the question which is left is how do you 0:08:55.920 --> 0:08:59.000 share these profits? Is it taxable only in the US 0:08:59.360 --> 0:09:03.480 or elsewhere? How you share profits of multinational companies depend 0:09:03.559 --> 0:09:07.640 on what we call tax treaties, which are international tax instruments. 0:09:07.880 --> 0:09:11.760 There are three thousand, five hundred instruments, and today these 0:09:11.800 --> 0:09:14.960 instruments provide for a country to tax the foreign company 0:09:14.960 --> 0:09:18.320 when this foreign company has a physical presence in the country. 0:09:18.520 --> 0:09:23.240 This dates back to ninety eight brick and mortar economy. 0:09:23.440 --> 0:09:26.360 That's what we need to change. But again, if we 0:09:26.480 --> 0:09:30.680 change it, it shouldn't be only on tech companies. But 0:09:30.800 --> 0:09:34.240 you may raise the same question for uton the French, 0:09:34.360 --> 0:09:38.240 you know, luxury company, the manufacture bag, the design, the 0:09:38.320 --> 0:09:41.679 good French taste, right, so French good taste, So they 0:09:41.720 --> 0:09:44.559 say it belongs to us. But the Chinese who buy 0:09:44.640 --> 0:09:47.560 the bags may say, well, sorry, part of the value 0:09:47.600 --> 0:09:50.760 creation belongs to us. So the question of how you 0:09:50.880 --> 0:09:55.360 share the profit is not omitted to tech companies and governments. 0:09:55.440 --> 0:09:59.320 I think if they act together, can change the rules. 0:09:59.640 --> 0:10:03.080 So companies are not in a position to block but 0:10:03.600 --> 0:10:06.640 it's more for governments to make the effort to try 0:10:06.679 --> 0:10:10.000 to reach consensus, and that's not easy, especially as you 0:10:10.080 --> 0:10:12.440 said it. We have one hundred and forty countries around 0:10:12.480 --> 0:10:15.959 the table. If we don't get these countries agreeing on something, 0:10:16.640 --> 0:10:21.800 the risk we face is trade tensions, trade wars, and 0:10:21.800 --> 0:10:23.920 then you know, the French are trying to move on 0:10:24.000 --> 0:10:27.199 their own and the US is retaliating, and Europe may 0:10:27.280 --> 0:10:30.719 retaliate to the retaliation, and that's where you end up 0:10:30.720 --> 0:10:34.480 with the trade war, which would harm growth further. And 0:10:34.520 --> 0:10:37.720 after COVID, we we don't need any other hurdle on 0:10:37.720 --> 0:10:41.840 on growth. So you know, the counter factual is the 0:10:41.920 --> 0:10:44.600 best reason to try to find an agreement. We've been 0:10:44.600 --> 0:10:47.200 talking on this podcast about the new players and the 0:10:47.240 --> 0:10:50.439 Biden administration. How do you think the Biden administration can 0:10:50.559 --> 0:10:54.240 change this or even break the log jam. It's a 0:10:54.360 --> 0:10:57.240 very good question, and like very good questions, there is 0:10:57.280 --> 0:11:01.760 no answer yet. We do not know. What has happened is, however, 0:11:01.960 --> 0:11:06.240 quite interesting and much more complex than people think. First, 0:11:06.760 --> 0:11:10.320 when we did the Best Project back in two thousand, thirteen, 0:11:10.440 --> 0:11:14.240 fourteen and fifteen, the Obama administration at that time said 0:11:14.280 --> 0:11:17.120 there is no problem with digital, let's not talk about that. 0:11:17.200 --> 0:11:21.360 We revisit that in twenty after all these measures are implemented, 0:11:21.440 --> 0:11:26.240 So the US was very negative Obama administration. Very Paradoxically, 0:11:26.600 --> 0:11:30.760 the Trump administration, which was not known for being multilateralists, 0:11:30.880 --> 0:11:35.200 right said well, let's have a conversation. The US changed 0:11:35.280 --> 0:11:38.440 its approach and kind of told the French, you want 0:11:38.480 --> 0:11:41.720 to tax Google. You're right, you're the market, but we 0:11:41.800 --> 0:11:44.840 want to tax your companies because we are their market. 0:11:45.160 --> 0:11:49.280 And that's where the conversation started in two thousand and seventeen. Paradoxically, 0:11:49.520 --> 0:11:52.760 the door being opened by the Trump administration. Now it 0:11:52.960 --> 0:11:57.560 is true that in two thousand twenty this year, the 0:11:57.600 --> 0:12:02.480 Trump administration has got cold feeds because the election was approaching, 0:12:02.600 --> 0:12:06.160 because companies were not sure whether they wanted to change 0:12:06.360 --> 0:12:08.599 or not. And at the end of the day, I 0:12:08.679 --> 0:12:12.400 mean progress like behind and and we didn't deliver the 0:12:12.440 --> 0:12:15.280 solution by here and as planned. So what will the 0:12:15.320 --> 0:12:20.440 Biden administration do. We hope that they will continue the negotiation, 0:12:20.920 --> 0:12:23.600 that they will say we want a solution, and that 0:12:23.720 --> 0:12:27.720 they will take some leadership to indicate what is the 0:12:27.760 --> 0:12:30.199 solution they want. I think all the other countries are 0:12:30.280 --> 0:12:32.920 ready to take what the US would tell them if 0:12:32.960 --> 0:12:36.600 it's fair enough, and that's will But that's what we 0:12:36.679 --> 0:12:40.280 will see. We shall see I hope soon, and we 0:12:40.360 --> 0:12:44.000 must see it soon because we have only six months, 0:12:44.120 --> 0:12:47.600 and after six months, countries will move unilaterally. Because it's 0:12:47.600 --> 0:12:51.360 been yes, they've been waiting, So the Biden administration will 0:12:51.400 --> 0:12:54.960 probably have to disclose quite soon what their position is. 0:13:03.080 --> 0:13:05.760 This negotiation has actually got bigger and bigger, in part 0:13:05.800 --> 0:13:11.120 because of the Trump administration's approach. Um, is it the 0:13:11.120 --> 0:13:14.239 case that you have to agree this whole new system 0:13:14.280 --> 0:13:18.080 for taxing companies globally in order to resolve the digital question? 0:13:18.320 --> 0:13:21.439 Or are you hopeful that maybe there's a halfway house. 0:13:22.720 --> 0:13:26.360 There is a menu of options. One option would be 0:13:26.559 --> 0:13:29.840 to say, what is the dispute. The dispute is on 0:13:29.960 --> 0:13:35.040 a few highly digitalized companies, and one could say, let's 0:13:35.080 --> 0:13:39.000 sort this out first and then take more time to 0:13:39.040 --> 0:13:43.280 sort out the more fundamental problems of the international tax framework. 0:13:43.960 --> 0:13:47.040 But these crosses the red line fixed by the US 0:13:47.120 --> 0:13:50.240 so far in a bipartisan manner, which is not ring fencing. 0:13:51.000 --> 0:13:54.120 So you have here a contradition. You could do an 0:13:54.120 --> 0:13:58.320 easy fix, a quick fix, but these crosses redline, because 0:13:58.360 --> 0:14:00.320 that would be just too much one way try effect 0:14:00.320 --> 0:14:03.040 for the US. It's a one way traffic. The US 0:14:03.080 --> 0:14:05.120 pays a check to the rest of the world. Right, 0:14:05.320 --> 0:14:07.360 I mean you you have a free lunch on American 0:14:07.440 --> 0:14:10.079 companies and we give a tax credit, which means that 0:14:10.200 --> 0:14:13.280 we transfer taxing rights to you. So you can understand 0:14:13.320 --> 0:14:15.920 why they would say that. Well, absolutely, and the US 0:14:15.960 --> 0:14:18.679 as a fair point to say, one, why would we 0:14:18.800 --> 0:14:20.720 be interested in paying the check to the rest of 0:14:20.760 --> 0:14:24.880 the world when they unfairly attacked American business Because that's 0:14:24.920 --> 0:14:28.360 the US perception. And too, we cannot really bring fens 0:14:28.880 --> 0:14:31.440 so that's a way to do a quick fix. May 0:14:31.640 --> 0:14:35.080 not work. Then what we could do and it wouldn't 0:14:35.080 --> 0:14:38.200 take years, is to have a broader scope. But that's 0:14:38.240 --> 0:14:40.920 for the US to say what they want in that scope. 0:14:41.280 --> 0:14:45.920 Digital companies, consumer facing businesses, which was the latest position 0:14:46.000 --> 0:14:49.400 of the US administration, whether it's the sustained engagement of 0:14:49.440 --> 0:14:53.440 a company with the customers, with the consumers, the final 0:14:53.560 --> 0:14:56.840 consumers on the market. That that that that would be 0:14:56.920 --> 0:14:59.160 the area where you would you would create the new 0:14:59.240 --> 0:15:02.040 taxing right where you would gives to the markets a 0:15:02.120 --> 0:15:04.480 new taxing right. And that we can do, and that 0:15:04.640 --> 0:15:08.120 we can do in the next six months because we're ready. Technically, 0:15:08.200 --> 0:15:12.600 we're ready almost we are very well advanced and just 0:15:12.840 --> 0:15:15.880 waiting for political equipment to press the button and get 0:15:15.960 --> 0:15:20.200 it at and ready. We should probably we should pause 0:15:20.240 --> 0:15:22.160 for a second to paint the scene a little bit 0:15:22.240 --> 0:15:24.600 because people listeners who are not so familiar with the 0:15:24.760 --> 0:15:26.880 with the O E c D. When you talk about 0:15:26.920 --> 0:15:29.360 technical work, that is what the O E c D 0:15:29.520 --> 0:15:32.280 is famous for. And you sit in the wonderful office. 0:15:32.480 --> 0:15:34.840 Wonderful office is in a in a very nice part 0:15:34.880 --> 0:15:38.000 of Paris, UH, and have tended to be very good 0:15:38.040 --> 0:15:40.720 at technical work, not always so good at reaching fast 0:15:40.760 --> 0:15:48.400 agreements UH and having dynamic progress on. I think you 0:15:48.600 --> 0:15:51.480 keep the recent years it was twenty years ago. I 0:15:51.960 --> 0:15:55.920 hope we get the the expertise and the technical point 0:15:56.000 --> 0:15:57.840 and you've kept the nice buildings that should be said 0:15:57.880 --> 0:16:01.080 and we get the nice building as well. Your point all, yeah, 0:16:01.280 --> 0:16:05.760 that's so good at providing political breakthrough, it's no longer true. 0:16:06.760 --> 0:16:09.560 Let me give you two examples. Two thousand eight, Global 0:16:09.600 --> 0:16:13.080 French Ship Crisis two thousand eight. For the first time 0:16:13.240 --> 0:16:16.280 the G twenty meets at the leaders level when they 0:16:16.360 --> 0:16:18.760 say we need to put an end to bank secrecy. 0:16:19.080 --> 0:16:23.000 The obesity delivered the end of bank secrecy in two 0:16:23.080 --> 0:16:27.360 years time. We listed countries, we provided a standard, we 0:16:27.480 --> 0:16:32.160 provided a multilateral convention to implement that standard. Ten years later, 0:16:32.320 --> 0:16:35.080 where we are not a single country in the world 0:16:35.200 --> 0:16:39.920 has bank secrecy left. Last September, eighty four million bank 0:16:39.960 --> 0:16:45.000 accounts were exchanged Switzerland, I mean the temple of bank 0:16:45.080 --> 0:16:48.920 secrecy exchanged more than three million bank accounts with the 0:16:49.080 --> 0:16:53.520 countries where the people live having bank accounts in Switzerland 0:16:53.840 --> 0:16:59.280 for a total value of ten trillion US dollars ten trillion. 0:16:59.800 --> 0:17:03.600 That a concrete example. Second one and due to thousand twelve, 0:17:04.080 --> 0:17:10.040 multinational companies could locate their profits wherever they wanted tax avoidance. 0:17:10.160 --> 0:17:12.879 It was an easy game to play. We came up 0:17:12.920 --> 0:17:15.080 with an action plan and we told the g twenty 0:17:15.400 --> 0:17:18.560 we're going to change international tax woos. It's used to 0:17:18.640 --> 0:17:21.840 take twenty years to change COMMA and DOT in ob 0:17:22.000 --> 0:17:26.800 City guidelines. We did all these changes fifteen changes in 0:17:27.200 --> 0:17:30.800 two years time. And as a result, you have hundreds 0:17:30.880 --> 0:17:34.680 of billions of taxes which are being collected on multinational 0:17:34.800 --> 0:17:37.880 companies which were not in the past. It is true 0:17:37.920 --> 0:17:41.080 that on the digital project it takes more time because 0:17:41.160 --> 0:17:45.440 it's more complex because big countries are modivided, but we're there. 0:17:45.800 --> 0:17:49.679 We have all these people coming together, exchanging information, sharing 0:17:49.760 --> 0:17:52.720 the same goal, which is to strengthen the attacks sovereignty 0:17:53.119 --> 0:17:56.480 by corporation. But we'll also have I think a high 0:17:56.560 --> 0:17:59.080 level of gorenment. The question is more of the timing. 0:17:59.200 --> 0:18:03.600 So I think we've we've been more than just happy 0:18:03.720 --> 0:18:07.800 technocrats in Paris. So there you have it. For for years, 0:18:07.840 --> 0:18:09.639 I think people some people would have said, what's the 0:18:09.680 --> 0:18:12.280 O E c D for? But but quite seriously, it 0:18:12.359 --> 0:18:14.320 turns out this is what it can be for trying 0:18:14.359 --> 0:18:17.040 to fix these really incredibly difficult problems that we face 0:18:17.520 --> 0:18:21.959 with a move to a to a digital economy. So Pascal, 0:18:22.680 --> 0:18:25.119 where does this go from here? You've talked about the 0:18:25.160 --> 0:18:30.200 Biden administration, You've talked about the timing. I can't help 0:18:30.320 --> 0:18:33.560 noticing that there's been some talk about the middle of 0:18:33.680 --> 0:18:37.919 next year and then maybe the end of next year. Realistically, 0:18:38.320 --> 0:18:40.760 how likely is it that this is going to get 0:18:40.800 --> 0:18:45.440 resolved in the next six or twelve months. I don't know. 0:18:46.400 --> 0:18:48.640 There is a real level of unset and you which 0:18:48.720 --> 0:18:52.080 makes it exciting right for observers, a bit stressing when 0:18:52.119 --> 0:18:56.879 you're an insider. Um we we need to wait for 0:18:57.760 --> 0:19:01.119 Biden administration to give indications, and I think they are 0:19:01.160 --> 0:19:03.560 reflecting on that they need to make up their minds 0:19:03.800 --> 0:19:05.920 and send a message to the rest of the world. 0:19:06.359 --> 0:19:10.080 And it will largely depend on on their message whether 0:19:10.560 --> 0:19:14.720 they want to play ball or not what they will 0:19:14.800 --> 0:19:18.840 do on the on the trade front. Given that before leaving, 0:19:18.880 --> 0:19:23.639 the Trump administration will inflict sanctions on the French. Because 0:19:23.720 --> 0:19:27.600 the French are moving unilaterally with their digital service tax um, 0:19:28.400 --> 0:19:31.000 we we we have a fair chance of reaching an agreement. 0:19:31.080 --> 0:19:33.639 And at the leaders level there is the sense that 0:19:34.200 --> 0:19:37.080 not only it is possible, but it is wishable that 0:19:37.200 --> 0:19:40.280 we reach an agreement. And against that background we can 0:19:40.359 --> 0:19:44.280 be optimistic that that something positive will happen, even though 0:19:44.560 --> 0:19:46.560 we don't know yet. And and it's up for the 0:19:46.640 --> 0:19:50.480 Biden administration to decide which direction they will they will 0:19:50.560 --> 0:19:55.920 want to go. Countries would rather avoid the trade attensions, 0:19:56.119 --> 0:19:58.680 especially in the post COVID environment. I mean this is 0:20:00.000 --> 0:20:02.320 if you take some distance, this is a tiny issue 0:20:02.640 --> 0:20:05.480 in the grand schemes of things, so we should not 0:20:05.720 --> 0:20:10.480 have we should not harm growth for these and the 0:20:10.600 --> 0:20:16.199 tax technicalities can be fixed, even though it's politically sensitive, 0:20:16.520 --> 0:20:19.320 they must be fixed. So we are confident that we'll 0:20:19.359 --> 0:20:23.240 move ahead and that will will have a path towards 0:20:23.520 --> 0:20:28.440 further corporation, some form of tax regulation of globalization, which 0:20:28.720 --> 0:20:33.200 I think is what we need. Meanwhile, it could be 0:20:33.560 --> 0:20:35.720 handbags at dawn. I mean, we are literally having a 0:20:35.800 --> 0:20:39.280 bare neck or fight between the US and France on 0:20:39.440 --> 0:20:43.480 this with with the US imposing the tariffs on on handbags. 0:20:43.480 --> 0:20:47.320 So we come we come full circle from the heights 0:20:47.400 --> 0:20:50.399 of the digital economy to sort of basic taxes on 0:20:50.600 --> 0:20:55.680 key products like handbags and lipsticks cosmetics, which is the 0:20:55.880 --> 0:21:00.400 US vision of the French right bags and dipsticks. Past 0:21:00.480 --> 0:21:03.320 canaandam Or, director of the Center for Text Policy at 0:21:03.320 --> 0:21:13.240 oc D, thank you very much. Thank you. In a 0:21:13.320 --> 0:21:17.840 global chocolate war, it's Hers against West Africa. That was 0:21:17.920 --> 0:21:19.800 a headline on bloom Bog but jumped out at me 0:21:19.960 --> 0:21:22.800 this week. We can't have a global chocolate war two 0:21:22.880 --> 0:21:26.359 weeks before Christmas. Then I read the story and found 0:21:26.400 --> 0:21:28.719 out there was a lot more resting on this than 0:21:28.800 --> 0:21:32.159 your holiday bowl of hers. She's kisses or chocolate orange. 0:21:32.840 --> 0:21:36.360 Leander Basson Pierre is our Ivory Coast reporter and she's 0:21:36.400 --> 0:21:38.919 been covering this story and she's joining me now from 0:21:39.000 --> 0:21:43.399 Abidjan in the Ivory Coast leanne It is quite complicated 0:21:43.480 --> 0:21:46.760 this story. We should just start with the basics. Where 0:21:46.840 --> 0:21:50.280 you're sitting. Ivory Coast in West Africa is where a 0:21:50.359 --> 0:21:54.120 lot of the world's coco is produced and the gharner 0:21:54.320 --> 0:21:57.760 produces most of the rest. Tell me first how these 0:21:57.800 --> 0:22:00.440 two countries have tried to use the hour they have 0:22:00.560 --> 0:22:04.200 in this particular crucial bit of the global economy. And 0:22:04.280 --> 0:22:08.040 while we've ended up talking about war, well, they've tried 0:22:08.640 --> 0:22:13.359 many times before to try to keep the price in 0:22:13.440 --> 0:22:17.760 their favor, but it hasn't really worked until last year 0:22:17.960 --> 0:22:21.720 when they decided to add a four hundred dollar premium 0:22:22.280 --> 0:22:24.840 on top of the price of the on on top 0:22:24.880 --> 0:22:27.640 of the futures price, that is, and that came into 0:22:27.760 --> 0:22:30.960 effect from the first of October, which was the start 0:22:31.119 --> 0:22:34.240 of the main crop harvest in both these two countries. 0:22:34.560 --> 0:22:38.320 And as you rightly said, these two countries supply nearly 0:22:38.560 --> 0:22:42.520 seventy percent of the world's cocoast. So they saying, while 0:22:42.600 --> 0:22:46.720 all these multinationals are benefiting from this one hundred billion 0:22:46.960 --> 0:22:51.040 dollar industry, poor farmers in Ivory Coast and Ghana are 0:22:51.480 --> 0:22:55.159 barely seeing or barely able to make ends meet, and 0:22:55.520 --> 0:22:58.480 they're not seeing the fruits of their labor. They don't 0:22:58.520 --> 0:23:02.080 even know what the in product actually tastes like. I 0:23:02.160 --> 0:23:04.320 guess it's it's fair to say that the Hersheys and 0:23:04.359 --> 0:23:07.680 all these big chocolate producers didn't didn't like this very much. 0:23:07.720 --> 0:23:09.760 But what's actually happened, Why is it why are we 0:23:09.800 --> 0:23:13.520 now talking about war? Well, what happened was that when 0:23:13.560 --> 0:23:16.200 they initially announced this, which was in the middle of 0:23:16.480 --> 0:23:21.440 the last year UM, there was obviously some some discussions 0:23:21.480 --> 0:23:24.880 that took place with chocolate companies, with big exporters as well. 0:23:25.480 --> 0:23:28.479 All of them actually came and board saying yes they 0:23:28.560 --> 0:23:31.639 World by Coco at that price when it comes in 0:23:32.119 --> 0:23:35.320 from the first of October to Everyone was on board. 0:23:35.640 --> 0:23:37.440 They were on board with the fact that that needs 0:23:37.480 --> 0:23:40.920 to happen. But nobody really thought that COVID nineteen was 0:23:41.000 --> 0:23:44.440 going to happen and that they would be people where 0:23:44.480 --> 0:23:48.760 people would be eating less chocolates and sales would would slump, 0:23:48.840 --> 0:23:52.080 and so nobody really took that into the equation. And 0:23:52.160 --> 0:23:54.640 then what happened was that they needed to I guess, 0:23:54.760 --> 0:23:59.400 try to find a way to UM to basically keep 0:23:59.480 --> 0:24:02.040 their price is in check. Given that they had lost 0:24:02.400 --> 0:24:06.119 quite a lot in sales, and that happened. And so 0:24:06.280 --> 0:24:10.000 what happened is that they revisited this premium that they 0:24:10.080 --> 0:24:13.320 had promised to pay from the start of the season, 0:24:13.400 --> 0:24:15.560 which was on the first of October, and tried to 0:24:15.680 --> 0:24:19.920 inverge his case. They went and actually brought some some 0:24:20.119 --> 0:24:24.840 beings directly from the exchange in New York and not 0:24:25.600 --> 0:24:29.119 in the physical market. And many companies were surprised by 0:24:29.240 --> 0:24:33.200 this move. The governments of Ivory Coast and Gharner, they said, 0:24:33.240 --> 0:24:36.240 you know, what they did means that they against the 0:24:36.359 --> 0:24:39.480 four hundred dollar premium, which is called the Living Income 0:24:39.720 --> 0:24:42.840 differential or l I d UM. They said it was 0:24:42.920 --> 0:24:45.199 a sign in the in the wrong direction that they 0:24:45.280 --> 0:24:48.679 had agreed to it, that they had spoken about it significantly. 0:24:49.080 --> 0:24:53.160 So Ivory Coast and Ghana have suspended the sustainability programs, 0:24:54.000 --> 0:24:56.639 which obviously is going to hurt the farmers that are 0:24:56.720 --> 0:24:59.200 involved in those and the workers who are involved in 0:24:59.280 --> 0:25:01.960