Transcripts For CSPAN2 Free Trade 20180209

Another one, give the people and another one or two minutes to sort of come in before we start the next panel, but our intent is to start with the next 90 seconds. So i am one of the conference chairs for the 2018 policy conference. I would like to start off by thanking those who have just arrived and thinking those also who have been with us from this morning or just arrived from the eu investors panel, i think this next panel really is in some respect at the heart of the trade subject. Financial services is integral to our everyday lives and to the modern economy. Every modern economy lies on Financial Services. Its also, in many respects a good kind of like the deduction that we dont often think about how crosses borders. We just assume that when we go to atms will take money out of the bank and we assume that we will have the same service only go on vacation to other countries as well so theres an infrastructure in place that supports a very complicated global web of services but its not one that we engage with in everyday discussions but its a very important one for the Financial Services is incredibly important and thats not only because of the size of goods and services that cross are natural borders. Its also one that in recent years has become much more important to the global, how do you regulate this industry whats the best way to do so, how do we make sure the gains are shared by everyone and that it contributes positive lead towards economies in which it resides. I think we have a next line panel to sort of tackle these discussions and also just the larger discussion and fills philosophical sense. Moderating the panel will be necklace he cofounded the think tank in brussels in 2002 and he joined the Pearson Institute in 2009. He is currently a senior fellow. His research is primarily the Financial Systems and Financial Services policies and he frequently briefs senior policy officials in europe, the United States and asia and has had elementary hearings in member states. Has been a financial policy expert in the court of auditors and parliament, International Monetary fund and the world bank. A lot of organizations trust his judgment. Next, we have robert will start off by saying you cannot trust my judgment because hes also my current professor. Bob is a highly respected lawyer with regards. [inaudible] he had previously served in senior positions in white house and congress and he is skilled in international and substantial economy of the Global Economy. He brings 15 years of private sector experience to solve difficult problems in his widely seen as one of the most savvy and effective attorneys helping people in washington. Prior to joining in 2001 he served in the Clinton White house, first as a special assistant to the president with the National Security council and National Economic council and then as a project where he oversaw u. S. 300 billion budge budget. Since then he focused his time on special focus in international divisions. Next we have frank who advises clients on International Trade law, trade policy, trade legislation and negotiations. He is chair of the India Practice Group and the Latin American Task force. He handles matters frequently before the u. S. Trade representative, other executive trade agencies, u. S. InterNational Trade commission , custom services, foreign sovereigns and nationals. So again, someone who really does know the needs of both governments and corporations in respect to the Global Economy and trade. Next we have douglas who works in the Financial Division within structured finance department where he underwrites loans for project financial deals. Prior to joining this, he spent time working as a policy Division Structures and finance departments. He previously worked at Morgan Stanley in new york as a fellow member of the nextgeneration counsel sr 21, Nonprofit Research group and has hold a masters in arts in International Relations at johns hopkins. Finally, he was a senior legal counsel, a Belgian National who holds degrees in both laws and business ministration. Prior to working he worked for the European Central bank and now he works on financial policy. With that i will leave it to the people with much more impressive resume for me we can start conversation. Take it so much. It was indeed an impressive setting of the scene for this panel. We are going to talk about trade and investment and financial relation that is the distinctive attribute of this panel going on beyond the. Trade and extending good. Theres a lot of jargon in this area, there are lots of acronyms and specialized knowledge. I encourage her panelists to go into the weeds to a certain extent, but to explain for the audience if you use an acronym, explain it in this kind of thing but i dont think we should shy away from going into some of the technical technical stuff. Without further knowledge for me, lets go first or panelists and ill ask each of them to make brief introductory statements and ill take it from there. Thank you necklace. I wanted to begin by asking one very important questions. Where is the Global Economy heading . What path are we on . Are we on the path where there will be greater nationalistic trade policies, a decline in embrace of international institutions, a path that is more characterized by the policies of president tromp and brexit or are we in a path where for several years here we may be through that. But we will then return to the postworld war ii path that evidenced greater globalism, gradual embrace of international institutions, which of those paths are we on . Thats what id like to begin to talk about today. Before i do that, let me first of all thank georgetown for putting this together. Michael has done a great job, he has helped and a special shout out to leslie efforts of georgetown who has been my guiding shepherd as ive done my teaching there. I really appreciate that. Its go back to this question, which path are we on . All of us like to think we live in a bit of a special era and that were at a big Inflection Point. Let me begin by giving the contrary view and the position that maybe this isnt particular Inflection Point. They have done studies of what is the political aftermath in countries after you have a financial crisis. They went back and looked, going back to the 1800s and looked at 60 developed countries and examples of what happened politically in those countries after you had a financial crisis. They found a very clear pattern. Four things happen. It takes about eight years for country to get out of the economic effects of the financial crisis. Those are the eight years weve just been through with the election of president tromp. Two, son increase in most countries of far right politics. Think populism as well. Three, you saw a distinct challenging of the distinct political parties. Varney sanders challenging the Democratic Party and donald trump challenging the republican party. Four, you son increase in confrontational politics. Weve seen that as well. Now, after that eight years is over, gradually those effects dissipate and things go back to a little bit more the way they were before. So, if you believe that pattern, then this is a speedbump, we change things but we eventually return to that. Thats one point of view. The second way to look at it is that this isnt just speedbump but it is more of an Inflection Point and there are unresolved tensions in the Global Economy that we need to think about. What do we do about middle american, middle income workers in developed countries and their capacity to compete and have good livings, given low wage workers in emerging markets and the rise of automation . Thats an unresolved issue. That will not resolve itself within the eight year time period. What about immigration and the pressures that causes . Good and bad, but they are absorbing greater immigrant populations. Not likely to be true resolved in eight years. I would also throw global architecture. We are changing into a world in which the Power Centers tend to be the United States and china, yet we have a g20 that is still built a little bit where you get a sense that the derivative of the g7 and a world war ii structure and we have other structures that probably need to be realigned to the kind of world that is shaping up. History has a tendency to work out those unresolved problems and cause Inflection Points and cause difference of approaches and so which one of those are we in . Im not sure we know the exact answer, but it has enormous implications for the Financial Services area. Financial services, traditionally has not been something that is most affected by trade negotiations, and in fact thats been handled by the Treasury Department, its a bureaucratic thing, but more importantly, probably what made the greater difference in investment which is what ill focus on is more what i would call competitive reform, that emerging markets needed to reform and liberalize investment in order to get Foreign Investments and create jobs for the people. Thats a much greater impact of the last decade than trade negotiation. If this construct of globalization opens and changes, what does it mean for that dynamic. Thats a big deal in this area. The second thing i would point out is just what happens to the question of using an intersection between National Security and Foreign Investment. In this country we have a committee on Foreign Investment in the United States. Its a process that our government uses to review Foreign Investment into the country that could affect National Security negatively and block investments that need to be done and all for them and so forth. Many of you are probably familiar with it. The trumpet ministration has been very difficult in terms of approving investments by Chinese Companies that might touch in these areas and that would likely continue for some time. Other countries are beginning to use this mechanism, not only to block Foreign Investment, but maybe as a trade tool to block investments in other countries from gaining power. To what extent do those mechanisms start to become a tool of trade and investment policy and not as much National Security or do the to get blurred. Thats an issue that needs to be addressed. With that, maybe we can talk about that a little bit more in questionandanswer but i wanted to throw out those large ideas to kick this off. Thank you. Thank you for having me here. Ive really piqued my curiosity about the history of trade negotiations. Im reading an interesting book called classical commerce which is the First Comprehensive history of u. S. Trade policy going back to the founding of the country. It strikes a couple themes that bob touched on, but the notion that trade policy and Monetary Policy are related is reflected on what has happened historically when the u. S. Economy has been threatened by International Developments that really have more to do with Exchange Rate fluctuation that have to do with monetary and fiscal policy, the reaction many times by congress and then by the president of the administration is straight legislation which really doesnt fix the underlying problem. That sets the stage for where we are now in addressing bobs question is the sum multilateral world or unilateral world. I think we all share some concerns about where the u. S. Is heading on trade policy. You may not know that every president is required to file basically an annual report on trade. Its a National Trade agenda, the latest one is due in less than three weeks on march 1, but president tromp filed his report last year, he talked about a couple things that probably shouldnt surprise you, but what struck me most was a discussion where he talked about National Sovereignty always takes precedence over trade policy. To me that means that this is an administration that is going to look to implement policies on a unilateral basis and not on a multilateral basis. If you look at what happened last year, its very clear that the president likes to sign executive orders. Theres lots of opportunit Photo Opportunities of him signing those and initiating studies, bringing complaints, bringing trade complaints that dont require an adjudicative determination by an independent body like the International Trade commission, but can be done by the president. These are 232 investigations. To me it sets a troubling president because i worry that if the u. S. Were to lose, and they happen they will, i could see this administration saying we werent elected by International Bureaucrats in geneva, we were elected by people of the United States and protecting their jobs so if you say we violated the wcl, do whatever you want, im not change anything. That can be the beginning of a very dangerous process and trade policy. So, let me briefly go over, in the short term i have, some of the developments on trade negotiations. Bob talked about nafta and some of the other agreements. First of all the regulation from dodd frank from 2010 set the framework and they talked about the need for some sort of regulatory harmonization. Bob is right, the Financial Services and Financial Regulations really arent the primary topic of trade negotiations. Whether its a nafta or tpp. They are done separately through treasury and other agencies, but, i will point out something spread nafta, where you know we are renegotiating, u. S. Has a big competitive advantage in Financial Services print 4. 3 billion surplus in Financial Services with canada, 1. 1 surplus with mexico. With respect to the tpp that youve heard about, we now have the tpp 11, president tromp withdrew from that Transpacific Partnership agreement. When he withdrew there were a number of reservations taken off the table because they were in the insistence of the United States, very quickly on Financial Services, they are about to sign this agreement very soon, but there are commitments with respect to Financial Services regarding relating Financial Institutions and investor and investment crossborder trade in services will also be addressed in the tpp. Finally, there is something called the t tip which i think is still alive. The u. S. European trade agreement, im sure he address that very quickly, one of the big issues, and it may come back was regulatory course coherence, why dont we make standards and regulations the same between countries, in this case between the eu and the United States. The big banks and wall street put together a big pool of money to launch a campaign that said this is a great idea, we are all in favor of regulatory coherence on Financial Services and what they really meant was, here is our opportunity to water down dodd frank. We are going to add regulatory coherence with the europeans and therefore all of these restrictions that we hated, we have an international basis for getting rid of. The democrats responded and said there is no way you are going to dilute dodd frank because t tip is in limbo, we will wait to see how that develops but i think its an important process to examine as you look at the trade and Financial Services. Today is my five minutes . Okay. Very quickly on brexit, i know you talked about it before there are some interesting Financial Services issued in the only thing i would mention very quickly is that just today the commission we least, and i havent seen these notices, but notices to the Financial Services stakeholders, highlighting the implications of brexit in the following areas, financial instruments, banking and payment services, post rate Financial Services, asset management, pet and rating agencies, insurance, reinsurance and statutory audits. All of that available beginning today at the European Commission which will allow stakeholders to comment on the effects of brexit. I think those are five creative agreements in five minutes. With that i turned it over. Ive learned a lot. Thank you for having me as well. Aside from being the least accomplished person appear on the panel easily, i also have very little, if anything to do with trade so ive already learned a lot. My background, i have been focused more on the investment side and look forward to speaking to that a little bit. I will also note, in terms of my introduction, one point was left out that im probably the most proud of is that im also a georgetown alarm. I got my bachelors degree at georgetown, studied the year in beijing at beijing university and so my background at georgetown, my time spent in east asia, i will definitely pull from those expenses to speak to todays topics. I also need to point out that coming from the u. S. Government agency, a lot of views that im able to share today are my own and not of the agencies, but i thought it would be worthwhile to at least speak a little bit about the organization. We are a small agency, about 250 people and we have roughly a 29 billiondollar cap in terms of capital available for us to invest in developing countries we are about 22 billion in terms of existing assets. We are open in about 160 countries, all developing. We support investment into the private sector into these respective countries but we have to partner with privatesector investors and our projects cannot be government or publicly owned. Very much our investment is going into the private sector in helping local economic growth. The products we have available to do so is our Financial Products so longterm debt, we also have Political Risk insurance to actually help incentivize Equity Investments into countries that would do so if not for various reasons, largely related to Financial Regulation. Lastly we have a product that supports private equity funds and basically implementing a debt like structure into a gpl structure for private investments. One thing i would say my experience, both in terms of my time at georgetown as well as since then, and now i opec is a requires us to go to the countries where we are investing. You do walk away with an interesting perspective, again, all the countries we operate our developing and requires us, through do do Due Diligence to understand whats happening and what we need to advise in order to support the investment. What are the relative entities involved . I do a lot of into structure and power related projects so whether its administering a power or finance where usually meeting with those individuals as well. I think, just in light of todays discussion and as bob accurately pointed out, there is this interest in terms of the shift in mindset, a resurrection of more nationalists perspectives and being a country that has seen a political shift to a certain extent, how is that being perceived abroad . I would say theres kind of two answers to that and i think it also speaks to how spheres of influence may be carved up with more traditional allies were similar mindsets as far as that goes. The philippines is a good example because you have to heads of states that are more aligned than others. There are other countries that would fit the same mold. Have also spent a lot of time in japan through my job at opec and ill be enough it certainly isnt a developing country but the rationale is really a similar strategic objective and its a very impressive rise of china and so far mixed results but overall a Successful Development model in terms of how china is investing abroad and how is the u. S. And japanese can Work Together to provide an alternative mechanism framework in developing countries. Also, what has been the reaction of pulling out of the tpp. Very much, countries that have been involved all along are still Going Forward and negotiating the tpp called tpp 11 and there is still this mindset, i guess recent news aside, in the Trump Administration, perhaps showing some interest in reentering those discussions, we will see what that ultimately comes to. Tpp 11, the mindset in the countries in which ive interacted still have this kind of mindset of just waited out. This is only four years in the u. S. Will likely come back and we will figure this all out and become this entity that was originally envisioned. So, those are my perspectives in terms of how the past year has gone in terms of the investment world. Ill have you dive into some of the other detail. Thank you, good afternoon. As youve heard my work for the International Monetary fund. Obviously all my opinions are my own and i do not represent formally the fund. In my five minutes i want to focus on the two objectives in the name of my employer so to try to give a little bit of International View and to focus on the monetary issues and grow the Financial Stability issues of trade and Financial Services. The fund, as an International Organization is certainly, and it means very much supported with openness and Financial Services and you may have seen that the managing director is quite vocal in advocating open trade in Financial Services however the fund is not dogmatic about trade. One must recognize that trade openness causes negative side effects. A colleague mentioned in the midwest, and he talks about nafta. I would invite each one of you to contemplate what nafta has done for farming in mexico where the salary of a day labor today is 40 cents. Day. So, policymakers must consider the negative side effects of trade and goes beyond the midwest. When it comes to Financial Services, the biggest problem is that unbalanced opening of trade to Financial Services may create financial instability. I dont have time to go into the details, but believe me, it can. Now, what is very important to understand, however, is that trade openness and Financial Stability are not mutually exclusive. They are not a zerosum game. Its perfectly possible to design regulatory, supervisory , legal and institutional frameworks that contribution at the same time to more open trade and more Financial Stability. The problem in the world is that most countries do not have that kind of framework. They really suffer from a double problem. The first problem is over prudence. What do i mean . Questions have looked at what happened at the north atlantic in the past ten years and theyve seen the ballooning Financial Sector and what it can do and what kind of prices it can cause, they are terrified by this. They really believe that by having very rigid Financial Regulation they would avoid the kind of trouble that weve had the north atlantic over the past ten years. Now, they may find ten, 20, 30 free trade agreements and nothing changes them. Ill give you a very practical example. One way Financial Services are treated across borders is through branches of banks, a bank of country acts opens a branching countrywide to start providing Banking Services to the people over there. You look at the western hemisphere of this continent, mexico has entered into nafta with the United States but Branch Banking is not allowed in mexico. In brazil, the second largest economy of the american continent, he can only open up branch by direct authorization of the head of state. In colombia, following the trade agreements, they said you can open a branch in columbia but we will regulate your branch in exactly the same way of the colombian bank. These are all examples of over prudence. At the same time it exists on this continent as well. They just open up trade and say come in but they do not have Regulatory Framework that helps them dealing with Financial Services. For those of you like technical aspects, the regulatory tool that you use maintenance requirements, basically if you open the bank and other country they will require you to hold. [inaudible] they would be amazed the number of countries in the world that have maintenance role, you can count them on two hands. Also the question is how do we approve that. More widespread use of Financial Services chapters in free trade agreements could help. I would really like to confirm the point of the first speaker. Actually, the impact of free trade agreements on trade and Financial Services is relatively minimal. It becomes useful and thats really the point. If you combine entering into freetrade agreements to a more profound and comprehensive and revelatory reform of the Financial Sector in your country and opening up is just a part of the picture but the bottom line is what we do believe that works and thats why i was so happy of the title of this profession is that a way to open up trade and Financial Services is indeed by harmonization of rails rate frameworks we have really understood that the framework is a most a precondition for opening up and moving your buyers into Financial Sectors and Financial Services. If you look at whats happening globally. You have bodies where the Central Banks come together and they set standards for banking supervision and has a stability board including cross border but the problem with those standards is there really 10000 miles high. Tell about help overcome the over prudence at 70 companies have in their not granular enough to have what other countries have. What you need . We believe today with the fund, the solution is really harmonization of supervisory roles, but at a regional level. We dont think something major will happen at the global level, but as the regional level where you have countries with similar supervisory countries and language and traditions, thats really where they can come together and start opening up. I encourage you to make answers so we have as much time as possible for interaction with the rest of the participants. Starting with you. You mentioned the committee on Foreign Investment in the United States and you mentioned the risk that theres some blurring of the lines between National Security which is the raison dctre and broader concerns, nationalism, industrial qualities, protection of locals and the like. This has been actually the very point of the creation which if my memory is right, in the 1980sit was going to wave investment from japan. And certainly there has been a lot of Foreign Investment in the us, countries which are or currently live in which we have a complicated foreign relationship with china or other words. So this tension between National Security and the kind of nationalism is inherent so my question to you is to going a word, is the communication unprecedented here . Is there something really new and whats happening now or do we just have a rerun of things we had when dubai ports world for example was investing in us ports or Us Technology the last 15years or more . Is the administration any different . Thats a very good question and i think the short answer is it remains to be seen. It has been hard to sift through this process to get investments by Chinese Companies approved. Probably more than in past administrations. As you know, and youre right, this debate about National Security versus using it for other purposes is a longstanding debate. The city is committee is headed by the Treasury Department and that was probably done quite consciously bypassed Treasury Departments because they wanted to be sure that we had an open investment regime, generally tempered by the need to deal with National Security problems rather than something for inward Foreign Investment which jumped off entirely. It remains to be seen how the iterations of politics of that is going to play out in this administration. You also have members of congress, notably senator cornyn that introduced a bill that would lower the threshold for interactions but also try to deal with joint ventures and sharing of information with other countries as a joint venture. That is sort of an unprecedented approach using cfius, not good or bad but it is unprecedented, its fair to say and the question was will Congress Push it in that direction as well . I think we are still administrating on that. Frank, you mentioned an interesting interaction between wall street firms and teach it and you gave this stylized view that it was actually pushing for globalist regulatory coherence, views because it serves theirinterest. Thats about to be dismantled , some of the regulations. Now steve bannon is no longer in the white house. There have been many indications that the Trump Administration was not exactly antiwall street nor is congress at this point so would you extrapolate that insight . Is the direction of travel for the Trump Administration despite the America First agenda is one of Global Financial regulatory homogenization because thats what wall street wants . Thank you, its a very interesting question. Before i answer that, may i have 10 questions on your question . This bill of senator cornyn is extremely important. Its an effort by congress, the Trump Administration to broaden congress powers. And i dont think there is any real opposition to that bill. Its difficult for a member of congress to oppose legislation thats going to make it tougher for Foreign Companies to acquire the us and transmogrify that statement to say the chinese are going to take over all of our cuttingedge technology. What if it destroys jobs . Well, i think the point of the legislation is to say we need to protect National Security more than we have and mister trump on this one will review. Its hard to vote against it. But to your issue, you raise this fundamental debate which weve all been reading about about thetension within the white house on trade policy. There are those who we would call extremists , America First who tend to look at a very unilateral approach, protect jobs, go back on the campaign. There are those who you might call realists or whatever it is, led by the National Economic council who take a more measured approach to say we need to live up to our commitments on a multilateral basis and we cant really go wild on some of these trade actions. If t tip which is resurrected which is by no means a certainty, i heard the prior ambassador about this a few months ago and he said if i can quote him because hes not here, he said were still open to talk about t where we are happy to discuss it with the Trump Administration. We havent been approached on that donald trump withdrew from ttip within days of being president. Hes not done anything with respect to dismantling so its in a state of suspension. If it comes back which it may and if this issue is raised, this will be a litmus to which school is going to prevail in the white house . And i think in terms of. Frank regulation, regulatory coherence, in my view there doesnt seem to be a great political argument for opposing wall street on this. Because its not a job position, i think donald trump would look at doddfrank and see how many pages of regulations we have and thats part of the problem. Its not an action of regulatory coherence, thats going to say wait a minute, youre betraying the coal miners inwest virginia and the steelworkers in ohio by backing wall street. I think on this issue , they are really separate. Look, you raise my appetite by alluding to the chinese one rule project to this idea of a code that china would finance projects who have seamless infrastructure for trade and investments throughout eurasia and eastern africa. And you mentioned questions on the joint paternity approach from the us and japan if i heard you correctly that would be for the countries in southeast asia, east africa or Eastern Europe or centralasia , a kind of competitor to the chinese propositions, whatever they are. Can you tell us more about this . Yes, and i think id like to phrase my answer i guess in a way of what the strategy is as well as what i think the challenges are that remain. And you know, its also important to note that the one bell strategy is traditionally known as kind of a cross the eurasian landmass and then they basically indian ocean being, i forget what which ones the road but essentially, respect the road. I know its kind of flipped on a lot of these but no. Its important to note that leadership takes a much more cognizant approach of National Security interest in terms of how opec as utilized as a tool for foreign assessment. We are taking through not just traditionally, we basically look at and where a small agency so really this is our resources have been devoted which is in terms of us interest in investing and developing countries, how can we support that project . Its on a project by project basis and the idea now is can we tank of a bit more broadly, can we have the regional strategy of specific country strategy and you know, taking lessons from the past, is it smart to look at this as throwing in dollar for dollar or is it kind of taking a cue from i guess being a more digitally connected world, where communication is much broader and in your face, can we take a bit more of a strategic view of looking at it on a country by country basis and the saying you know, even a single pr when can actually do a lot more damage than say a dollar for dollar, meaning if theyre putting up 10 power plants, lets go up to 12. I think weve learned our lesson that thats a waste of money so they being the chinese here absolutely. By far the largest competitor i guess i would say, when youre looking at potential projects, potential us japanese or whatever projects , that not only source good, thats not what our focus is again. Its not necessarilythe procurement of equipment but the actual investment. Where traditional projects financed. So the strategy is to take a regional approach of what countries do we see as being in the Us National Interest in increasing our role in that country . And through that, basically a coastal projection of power . And how can we go about doing that . Our interaction with the japanese is not only to enhance what was already a strong alliance, but how to utilize each others strengths and quite frankly, we are still walking through those exact details. But the idea is that in a lot of countries, our Companies Already Work Together. Its just a matter of in what form of partnershipsdoes it make sense the most and we dont want to be overly restrictive. No sustainable project is ever going to come together by saying it has to be this percentage from each side and us components have to fit this mark and japanese components that area and it does need to be flexible in order to be sustainable and we already have some existing projects that weve kind of hailed as early successes. We recently closed on a solar facility in jordan in which we pick as a lender and the Japanese Bank is, well, they are providing insurance. So we have a model that we know works. Its not a matter of how can we be flexible and develop a framework that addresses not only the private sectors needs but also delivers what is actually needed in another country. Can you give us a sense of geographical priority, regions or subregions . Is there more specificity to it . Yes, and i would say it is more on the country by country basis but for instance, indonesia, vietnam , me and mark are particular countries of interest in southeast asia. In terms of south asia, india and sri lanka in particular are countries of interest. Can you and even djibouti are also, they stand out as some of those we already have a pretty sizable portfolio and others we have virtually nothing. Part of the question is why and this goes to the point earlier, framing my response in terms of what are the challenges and it goes somewhat to the top of todays presentation is a lot of the aspects just the National Aspect that make the environments ready for investment is how far are they along in terms of Financial Regulation and what are the policies that are in place that actually increase the level of comfort for investors . Fascinating. On that note, you told us that to reap the benefits of financial integration basically, you highlighted two things if i heard you well. One is it develops the domestic financial regulatory and supervisory environment, make it better and the second one is regional homogenization. So my obvious question here is what about china . Because china is so big, it has this huge domestic Financial Sectorwhich is by some measures now bigger than the us, bigger than the euro zone. It is also very close and potentially not only, if it opens up, not only would it import financial instability but it could also export financial instability potentially so how does the imf look at that . Its a good question and personally i have to be more active in other regions. I havent given it that much thought but i think the very fundamental question is really how, what is the specific nature of the chinese financialsystem . And how does that fit with its regional partners . And it would be fair to say that the state and Public Policy plays or continues to play a significant role in the chinese Financial Sector. And that will not necessarily in and of itself facilitate closed border integration. I think. A state economic structure surrounded by countries that are relatively free market, they say opposites attract and that may be true that the human level but when it comes to the Financial Sector theres no reason it couldnt work in theory but in practice we may come back to that but its time to open it up to the floor and i encourage you to raise yourhand. Introduce yourself briefly, ask your question and we will take it from there. I think we have roving microphones, yes. I will take two or three questions and come back markowitz, most importantly a former law import partner of bob tiles. And ive also taught International Investment law for a long time. And International Project finance at georgetown law and id like to follow up on something bob said in the beginning and its this regularly and study of every eight years after a crisis, presumably a financial crisis , things right themselves and a lot of people now are looking back and many people say, economists say that the protection isnt created by the smoothawley tariff red to trade wars, probably the depression, maybe led to war, world war ii and so im curious as to whether that is an analog to where we are now. How dangerous is the nationalism, trade nationalism that europe perhaps through le pen, certainly the United States is getting into because im a french citizen i should inform the audience that mrs. Le pen is not the president of france but still, its a very relevant question even with that defeat. Thank you very much. My name is laura, im a former colleague of law at amf and now i work on Financial Sectors as well. In thinking about financial integration and openness of Financial Services, i think that sometimes we forget the fundamental question and its why. Why do we want to open . Financial services to trade. Because weve seen we close with our borders, we are fine. After the financial crisis, we are doing great. You mentioned well, its financial inclusion. We still have a lot to do there with our own. Though i think that a good question iswhy . I can think one answer and thats capital markets. Weve seen that sometimes being over prudent, companies limiting investments and that causes a risk to Financial Stability. So when you are in both extremes, i think Financial Stability is a risk. Just from what ive seen, especially in asia its that countries close investments and they force investors to invest in government bonds and then they underwrite the bonds. What happens . So i think both extremes are dangerous, but harmonization is at the end of the day, harmonization is the answer. So whats your question . What do you think . Any other questions . Yes, over there. And over there. You will have the floor later. My name is francis, im from china. Our speaker mentioned that structure plays an Important Role in trade development. In china we have a vivid description that if you want to be a bridge, you first have to build a road. But infrastructure is high investment industrial which means countries need a lot of money so my question is for the speakers, do you think that in developing the infrastructure, the country should deregulate Financial Regulation so that we can easily raise funds from the Foreign Investors for exemption should they deregulation of the derivatives such as the cds, i mean to risk more money for investors, thank you. We take the fourth question here and i will take more after that my name is christian conroy, i may Public Policy master student here, no connection to any of the gentlemen there this is not a policy question. I was a bit surprised to hear that optimism over cfius having a good impact because of increased scrutiny over joint ventures, but also your optimism over the incentive isms that congressional representatives have to support it. When senator cornyn proposed it, it was a hilarious situation where put out these proposals and it was shown that maybe some of these deals would not work out under the new cfius scrutiny, most specifically there was a pipeline project in alaska that people question whether that would hold up to cfius scrutiny. You have the organization for International Investment back on representatives in terms of how this will potentially hurt us Company Interest abroad and thats softening some of the blow so im curious about what incentives you think congressional representatives in light of that half both for increased cfius scrutiny and what do you see as the potential drawbacks of this direction . We have four Great Questions and even greater is that they are perfectly and ryan line with the topic which doesnt happen that often. We have smoot hawley, we have deregulation to have more Infrastructure Investment and we have the cornyn bill. I dont know that it necessarily in this country leads hauley. You look at other forms of nationalism and other ways of shutting off globalism and free markets, and the United States has benefited in terms of what other done countries have done, encouraged democracy in a number of parts the world and so forth. Think what you have to look out is whether there could be policies that would re sirs that. I dont see tariffs as rising to the point right now. We live in a much more complex world than we did then, in the sense you could have regulatoriy barriers. Others that go beyond the tradition negotiation over tariffs and i think the good news is i don see it yet. The bad news there are a lot more areas where you could have to the restrictions. I just read in the late 16th century the jesuits controlled a part. So i dont no whether youre want to go ours involved iraq. So thats a different. Were in a different world. Smoot hawley didnt raise tariffs as m