WEBVTT - OECD Secretary General Mathias Cormann Talks Global Economy Uncertainty

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>I'm outside of Durban and South Africa for the convening

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<v Speaker 2>of the Finance Ministers of the G twenty and the

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<v Speaker 2>Central Bank Governor. Is really sort of overshadowed in large

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<v Speaker 2>part with a lot of the macro developments in the world,

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<v Speaker 2>namely Trump's trade war, but also these questions about FED

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<v Speaker 2>independence and the potential shockwaves that could send across the

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<v Speaker 2>planet in terms of global financial stability, and of course

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<v Speaker 2>this question of multilateralism and its future in the absence

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<v Speaker 2>seemingly of the United States. And we're very pleased to

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<v Speaker 2>be joined now by Mattias Korman, who is the Secretary

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<v Speaker 2>General of the OECD and who's got a pretty unique

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<v Speaker 2>view in terms of the picture for sort of the

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<v Speaker 2>global growth at the moment and all of the risks

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<v Speaker 2>that are sort of posing that are being posed to

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<v Speaker 2>it at this stage. What are the different sort of models,

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<v Speaker 2>the different outcomes that you're seeing for global growth, just

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<v Speaker 2>given the different possible outcomes we can get from this

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<v Speaker 2>trade war with the United States.

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<v Speaker 3>Well, we have recently released our economic outlook for the

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<v Speaker 3>global economy and compared to what we forecast back in.

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<v Speaker 1>December or even earlier this year, we have further.

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<v Speaker 3>Downgraded our outlook for growth and indeed expecting inflation to

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<v Speaker 3>remain higher for longer and to come down more slowly.

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<v Speaker 3>I mean, it is clear that there is a high

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<v Speaker 3>level of uncertainty in the global economy, high level of

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<v Speaker 3>policy uncertainty, increasing cride restrictions, tightening financial conditions. All of

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<v Speaker 3>that is vying on a consumer and business confidence and

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<v Speaker 3>hence having a negative impact on the investment and growth outlook.

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<v Speaker 2>And also think about the sort of political dimension of

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<v Speaker 2>this and the sort of moving away from the United

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<v Speaker 2>States from the multilateral order. Is there a risk associated

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<v Speaker 2>do you think with basically this breaking out into kind

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<v Speaker 2>of a g sex world versus a kind of bricks world,

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<v Speaker 2>and then there's this sort of G twenty that sits

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<v Speaker 2>in the middle trying to bring these things together.

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<v Speaker 1>What's the risk of that sort of world?

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<v Speaker 3>Well, I mean, I've just gone out of a G

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<v Speaker 3>seven Finance minister's meeting, and I think the G seven

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<v Speaker 3>is working very constructively and very cooperatively.

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<v Speaker 1>I certainly don't see that risk. And next year the

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<v Speaker 1>United States will be sharing the.

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<v Speaker 3>G twenty, So I mean, I think the US will

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<v Speaker 3>continue to be a very important contributor to global conversations

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<v Speaker 3>on key policy issues. Now, I mean, right now, there's

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<v Speaker 3>clearly an area where there is a level of disagreement.

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<v Speaker 3>There's some issues to be resolved, and it comes to

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<v Speaker 3>global tride arrangements. I mean, there's no question that open

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<v Speaker 3>markets and rules by stride have been a key driver

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<v Speaker 3>of increased incomes and living standards around the world. But

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<v Speaker 3>it's also true that there are some issues to be

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<v Speaker 3>resolved when it comes to the rules by striding system.

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<v Speaker 3>I guess what we're saying from an OCD point of

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<v Speaker 3>view too countries around the world is work those issues

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<v Speaker 3>through on the basis of dialogue and corporation. Work those

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<v Speaker 3>issues through and find vise to make global triding arrangers

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<v Speaker 3>international trading around now it's fairer and work better in

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<v Speaker 3>the way that preserves the economic benefits of open markets

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<v Speaker 3>and rules by stride.

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<v Speaker 2>And if you just got off that car with the

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<v Speaker 2>G seventies, so presumably also with Scott Bessen on that car,

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<v Speaker 2>what was the message. What kind of insight can you

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<v Speaker 2>give into the Americans like inside is.

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<v Speaker 3>That G seven countries continue to think very carefully about

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<v Speaker 3>the challenges and opportunities in the global economy and work

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<v Speaker 3>together in a very cooperative and constructive way and trying to.

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<v Speaker 1>Deal with some of those issues like.

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<v Speaker 3>Supplies, shine, resilience related to challenges, economic security related challenges,

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<v Speaker 3>issues around unfair tried practices and how based to tackle them.

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<v Speaker 3>But I guess the key focus here is I mean,

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<v Speaker 3>it is important for the global economy and to boost

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<v Speaker 3>the global economic outlook to as quickly as possible, to

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<v Speaker 3>restore policy certainty, as well as dealing with some of

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<v Speaker 3>the structural challenges.

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<v Speaker 1>In front of us.

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<v Speaker 2>And you're not just an observer of the global economy,

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<v Speaker 2>you're also a participant in some of the initiatives, namely

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<v Speaker 2>the global minimum tax initiative that has been sort of

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<v Speaker 2>launched a few years ago, had a lot of momentum

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<v Speaker 2>under Biden, had lost some of that momentum under Trump,

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<v Speaker 2>with some carveouts for the United States. I'd like to

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<v Speaker 2>get an update from you on where we stand with

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<v Speaker 2>that today.

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<v Speaker 1>Well, I mean that's not quite right. Do why you

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<v Speaker 1>find that?

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<v Speaker 3>I mean, the United States aide of global tax implies

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<v Speaker 3>for some time. It was introduced under the first Trump

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<v Speaker 3>administration and the OICD Global room Tax, which is now

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<v Speaker 3>being legislated or is in the process of being legislated

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<v Speaker 3>by sixty seven countries around the world and more countries

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<v Speaker 3>coming on.

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<v Speaker 1>Board, is also a reality.

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<v Speaker 3>So what's been happening is that at the G seven again,

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<v Speaker 3>I mean, there have been a lot of conversations about

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<v Speaker 3>how to manage in the most appropriate way side by

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<v Speaker 3>side arrangement between the US version of the Global minimum

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<v Speaker 3>Tax and the global attax which was negotiated through the

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<v Speaker 3>ODG twenty Inclusive framework, and I when the United States

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<v Speaker 3>continues to be a subject to key aspects of the

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<v Speaker 3>OSDG twenty version of the Global Minroom Tax, but there

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<v Speaker 3>are also some pragmatic approaches to ensure that there is

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<v Speaker 3>not an unnecessary level of double up when it comes

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<v Speaker 3>to the imposition of global rom attax arranging.

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<v Speaker 2>So I guess there was a concern after this G

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<v Speaker 2>seven meeting, and there was a bit of a car

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<v Speaker 2>out that there was a two tiered system where the

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<v Speaker 2>UNI it says we'll play by slightly different rules. So

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<v Speaker 2>are you saying that has basically not altered in any

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<v Speaker 2>way the participation of other countries. We heard from Frederick

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<v Speaker 2>Mounts yesterday saying that the system was no longer appropriate,

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<v Speaker 2>that they had.

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<v Speaker 1>To be revisited.

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<v Speaker 2>We had that walk back a bit by the Finance

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<v Speaker 2>Minister no As fa As And again I mean.

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<v Speaker 3>I've come out of a G seven meeting now, and

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<v Speaker 3>I mean Germany is a strong supporter of the global

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<v Speaker 3>women tax arrangements as they've been negotiated through the always

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<v Speaker 3>ce G twenty inclusive framework, and of course European countries

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<v Speaker 3>who were among the first to implement the Global women tax,

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<v Speaker 3>oridents who were through a relevant EU level directive, and

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<v Speaker 3>I'm very confident that Germany and other countries across Europe

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<v Speaker 3>that will continue to attack this very important reform forward.

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<v Speaker 2>So at this point, no other country is seeking a

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<v Speaker 2>similar situation to what the UNITS has negotiated.

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<v Speaker 3>The US was the first country in the world to

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<v Speaker 3>essentially impose a global women at tax on its internationally

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<v Speaker 3>operating businesses US headquartered international pride businesses, and so what

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<v Speaker 3>is yet to be finalized. I mean what the G

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<v Speaker 3>seven has assessed and reflected in a statement, which is

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<v Speaker 3>an important statement, is the opportunity for side by side

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<v Speaker 3>arrangement with a clear focus on making sure that this

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<v Speaker 3>doesn't create new risks of bias, eerosion, profit shifting that

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<v Speaker 3>it does reserve a level applying field, and the US

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<v Speaker 3>continues to be engaged through the OCD processes, but to

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<v Speaker 3>come up with a pragmatic side by side arrangement that

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<v Speaker 3>helps to preserve the policy objectives, which is to make

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<v Speaker 3>the international tax arrangements fair and work better, to preserve

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<v Speaker 3>the tax basis for governments, but to also provide certainty

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<v Speaker 3>for business in terms of the international tax arrangements operate.

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<v Speaker 3>So we're preserving the policy objectives, would be coming up

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<v Speaker 3>with a pragmatic way, and that is the discussion now

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<v Speaker 3>that will happen in the broader inclusive rymework on how

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<v Speaker 3>the US system and the OCD G twenty system can

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<v Speaker 3>operate in a complementary why the most appropriate white possible.

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<v Speaker 2>And the OECD itself is also one of the great

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<v Speaker 2>pillars of these multilateral organizations trying to bring tries together

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<v Speaker 2>to cooperate economically. Of course, the United States is also

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<v Speaker 2>one of the the largest funder of that, and there's

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<v Speaker 2>been some doubt about the US's commitment to these sort

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<v Speaker 2>of initiatives, but you can't think the United States will

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<v Speaker 2>remain a support of the OECD and that funding work

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<v Speaker 2>keep flowing.

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<v Speaker 3>Look, I mean, I can't speak for the United States,

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<v Speaker 3>but you're right. I mean, the United States is an

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<v Speaker 3>incredibly important founding member of the OCD. In fact, you know,

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<v Speaker 3>we started our life as the Marshall Plan Secretary, that's

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<v Speaker 3>the Organization for European Economy Cooperation. The OCD is very

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<v Speaker 3>much a US diplomatic foreign policy success story, and all

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<v Speaker 3>of my interactions with the US government, with US business,

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<v Speaker 3>and with stakeholders in the United States is that there

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<v Speaker 3>is very strong support for the work we do.

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<v Speaker 1>Are bringing together like minded market place.

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<v Speaker 3>Democracies from around the world, focusing on your policy based

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<v Speaker 3>practice and the development of the best practice standards. But

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<v Speaker 3>you know, in the end of it, of course, coman

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<v Speaker 3>days are matters for the United States to consider through

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<v Speaker 3>its internal processes as APPROBA.

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<v Speaker 2>Let's see Escorman, thank you so much for your time

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<v Speaker 2>here on the sidelines of the Jeekes twenty meeting.

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<v Speaker 1>Outside of Durban.

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<v Speaker 2>South Africa. There sort of a sort of continued support

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<v Speaker 2>for that INITIAT for the Global Minimum Tax that came

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<v Speaker 2>into a little bit of doubt after the United States

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<v Speaker 2>wanted some amendments to its seemingly moving forward with the

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<v Speaker 2>support seemingly also of the Germans, where there was a

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<v Speaker 2>little bit of doubt as well