CONNELL: CAN YOU TRADE ECONOMIC
GROWTH AND THE OUTLOOK FOR THE
UNITED STATES.
EARLIER TODAY HERE IN WASHINGTON
I ASKED CHRISTINE LAGARDE OF THE
INTERNATIONAL MONETARY FUND
ABOUT THE IMPACT OF
PROTECTIONIST TRADE POLICIES ON
GLOBAL GROWTH.
HOW MUCH DO PROTECTIONIST TRADE
POLICIES PLAY INTO YOUR GROWTH
FORECAST?
IN OTHER WORDS, IF YOU LOOK AT
GROWTH IN THE MID 3% RANGE, AND
IF YOU WERE TO TAKE
PROTECTIONISM OFF THE TABLE AS A
GLOBAL POLICY, WHERE WOULD THAT
GROWTH NUMBER BE?
>> WE WOULD BE CERTAINLY HIGHER
THAN 3.3%.
CONNELL: HOW MUCH?
>> I CAN'T TELL YOU BY EXACTLY
HOW MUCH.
TRADE NUMBERS ARE QUITE FUNNY.
IF YOU LOOK AT THE IMPACT OF
TRADE RESTRICTIONS OR TRADE
TENSIONS, IT'S NOT MONUMENTAL
BUT IF YOU ADD TO THAT MARKET
IMPACT AND MORE IMPORTANTLY, THE
CONFIDENCE IMPACT, THEN IT
STARTS HURTING, BECAUSE PEOPLE
HAVE BEEN USED TO TRADE FOR
MANY, MANY YEARS NOW AND THEY
HAVE ORGANIZED THEMSELVES.
COMPANIES HAVE ORGANIZED THEIR
SUPPLY CHAINS IN SUCH A WAY THAT
THEY CAN TAKE ADVANTAGE OF THE
BEST LABOR FORCES, CAPITAL
TAXATION REGIMES AND ALL THE
REST OF IT.
SO TRADE ACTUALLY MATTERS BOTH
IN TERMS OF ACCESS TO MARKETS
BUT ALSO IN TERMS OF FRAMEWORK
WITHIN WHICH COMPANIES ORGANIZE
THEMSELVES.
CONNELL: IF WE HAD LESS
PROTECTIONISM, IS IT AN
EXAGGERATION TO SAY WE COULD
HAVE 4% GLOBAL GROWTH?
>> I DON'T KNOW BECAUSE WE HAVE
NOT ACTUALLY FACTORED IN
REVOCATION OF WHOLE TARIFF AS
BANNIERS.
FOR INSTANCE, LET ME TELL YOU
ONE THING.
WHEN WE CAN PROBABLY FORECAST
THAT IN TERMS OF PRODUCTS, IN
TERMS OF SERVICES, WE STILL HAVE
WAY TOO MUCH TARIFFS AND WAY TOO
MUCH NON-TARIFF BARRIERS.
CONNELL: WE HAVE CERTAINLY THE
ONGOING DISPUTE BETWEEN THE U.S.
AND CHINA WHICH EVERYBODY SEEMS
TO BE FOCUSING ON BUT EUROPE IS
IMPORTANT AS WELL.
PRESIDENT TRUMP HAD A TWEET LAST
NIGHT SAYING TOO BAD THE EU IS
BEING SO TOUGH ON THE UK AND
BREXIT SO THE EUROPEAN UNION IS
LIKEWISE A BRUTAL TRADING
PARTNER WITH THE U.S. WHICH WILL
CHANGE, HE SAYS SOMETIMES IN
LIFE YOU HAVE TO LET PEOPLE
BREATHE BEFORE IT ALL COMES BACK
TO BITE YOU.
WHAT DO YOU THINK THAT MEANS?
ALL COMES BACK TO BITE YOU?
>> I HAVE NO IDEA.
BUT WHAT I VERY MUCH HOPE IS
THAT THE TRADE RELATIONSHIP
BETWEEN THE U.S. AND THE EU IS
SOLID, IS CONSOLIDATED AND IS
FAIR AND PROVIDES RECIPROCATING
BENEFITS BECAUSE THOSE ARE TWO
NATURAL ECONOMIC REGIONS THAT
SHOULD BE ALLIED TOGETHER.
CONNELL: WE AT THE SAME TIME
HAVE THE DISPUTES THAT CONTINUE
OVER MOST RECENTLY SUBSIDIES TO
AIRBUS WHICH THE PRESIDENT --
>> THAT HAS BEEN A FOREVER
STORY.
CONNELL: IT HAS.
IS HE RIGHT ABOUT THAT?
>> THAT SUBSIDIES --
CONNELL: ON THE MERITS.
>> I'M A LIBERAL PERSONALLY AND
I CAN TELL YOU THAT SUBSIDIES ON
BOTH SIDES SHOULD JUST NOT EXIST
AND THEY HAVE BEEN AT EACH
OTHER'S THROAT USING, YOU KNOW,
COMPETITION RULES AND
ANTI-SUBSIDIES PRINCIPLE AGAINST
EACH OTHER.
CONNELL: DOES HE GET IT RIGHT ON
SOME OF THOSE ISSUES, IN YOUR
VIEW?
>> OF COURSE HE DOES.
CONNELL: SO DO YOU HAVE MORE OF
AN ISSUE WITH THE HOW THAN THE
WHAT?
>> NO, I TELL YOU WHAT I'M
CONCERNED ABOUT.
I'M CONCERNED ABOUT THE POSSIBLY
LASTING IMPACT OF THE THREAT OF
TRADE WAR CAN HAVE ON ECONOMIES.
BECAUSE I HAVE BEEN IN THE
PRIVATE SECTOR FOR 20 YEARS OF
MY LIFE.
YOU LISTEN TO POLICY MAKERS AND
YOU TAKE YOUR DECISIONS, YOU
DECIDE TO OPEN AN OFFICE, YOU
DECIDE TO SET UP A SUBSIDIARY,
YOU DECIDE TO HIRE PEOPLE ON THE
BASIS OF WHAT YOU ANTICIPATE.
SO WHEN THREATS ARE ON THE
HORIZON, YOU JUST WATCH, YOU
WAIT.
CONNELL: YOU'RE NOT SURE.
YOU'RE UNCERTAIN.
>> YOU'RE NOT SURE WHERE IT'S
HEADING SO YOU DON'T DO MUCH OF
ANYTHING.
THE U.S. ECONOMY IS DOING
ABSOLUTELY FINE.
CONNELL: IT IS.
>> RIGHT?
AT THE MOMENT?
CONNELL: THAT'S WHAT THE NUMBERS
SHOW.
>> UNEMPLOYMENT IS DOWN, GROWTH
IS REASONABLY HIGH.
CONNELL: WHY DID YOU GUYS
DOWNGRADE YOUR FORECAST EVEN FOR
THE U.S. IN YOUR GLOBAL GROWTH
OUTLOOK?
>> BECAUSE REMEMBER LAST YEAR,
WE HAD THE JOB AND TAX ACT WHICH
CLEARLY HAS OPERATED AS A BIG
STIMULUS ON THE ECONOMY, SO THAT
FISCAL STIMULUS HAS HAD A BIG
IMPACT LAST YEAR.
WE THINK THAT THE U.S. ECONOMY
IS STILL DOING MORE THAN