Treasury Secretary Janet Yellen made a new push in Brussels to repair the United States’ relationship with the European Union, urging EU members to assist in confronting China and Russia.
During her first visit to Europe as Treasury Secretary, Yellen referred to the post-World War II partnership and “rules-based international order,” before naming three countries she believes are undermining that order.
“Together, we must confront threats to the principles of openness, fair competition, transparency, and accountability,” Yellen said in remarks to EU finance ministers on Monday. “These challenges include China’s unfair economic practices, malign behavior, and human rights violations; the Lukashenka regime’s ongoing abuses in Belarus; and Russia’s continued and growing malign behavior,” she said in some of her harshest criticisms of Moscow and Beijing to date.
The remarks highlight President Joe Biden’s intentions to repair trans-Atlantic ties that were severely strained under Donald Trump. The former president confronted China aggressively on economic issues, but he also escalated trade disputes with the EU and put little emphasis on human rights. The US is urging greater cooperation with the EU on economic, fiscal, and climate issues. Yellen arrived in Brussels on Sunday afternoon, fresh from a Group of 20 meeting of finance ministers and central bankers in Venice, where the world’s largest economies endorsed a game-changing plan to overhaul global corporate taxation rules.
China expressed “strong opposition” to the remarks, Foreign Ministry Spokesman Zhao Lijian said at a regular press briefing in Beijing on Tuesday.
“China has supported multilateralism and the multilateral trade regime with the World Trade Organization at its core, and has conducted international trade and economic cooperation based on the principles of equality and mutual benefit,” he said. “We don’t exercise bullying, sanctions or long-arm jurisdiction, nor do we suppress enterprises without any reason.”
The agreement, which nations hope to finalize at the G-20 leaders’ summit in Rome in October, aims to prevent major corporations from shifting to low-tax jurisdictions by instituting a global minimum tax, as well as to establish a fairer system for distributing multinational firms’ taxation.
Prior to her speech on Monday, Yellen scored a victory when the EU announced that it would postpone its push for a digital levy in order to focus on broader tax negotiations. The United States has stated that the planned digital tax may discriminate against US tech behemoths, thus violating the pending tax agreement.
Yellen made no mention of the dispute in her remarks, but she did address EU members who have objected to the proposed deal’s inclusion of a global minimum corporate tax. So far, Ireland, Hungary, and Estonia have refused to sign up to the minimum tax, potentially creating a roadblock due to the need for unanimity on tax issues within the EU.
“We hope that all EU member states will join the consensus and that the European Union will take action on this issue,” she said.
The Biden administration is banking on the global tax overhaul to help fund a $4 trillion economic agenda in the United States. Yellen made it clear that the US believes EU members should spend more money while the global economy is still under threat from the Covid-19 pandemic.
“It is critical that the fiscal stance remains supportive through 2022,” she said, urging EU members to “consider additional fiscal measures to ensure a robust domestic and global recovery.”
She made no mention of inflationary fears in the United States or elsewhere, and the topic drew little public discussion among G-20 officials in Venice.
Yellen emphasized the importance of the United States and the European Union assisting poorer countries in containing and recovering from the pandemic, as well as supporting their efforts to meet climate goals. “Both the United States and the European Union have the tools to help less-developed countries achieve their emissions reduction goals, and we should work together to drive emissions reductions in these markets,” she said.
