Transcript

Bloomberg Interview with Christine Lagarde

December 2, 2016

I N T E R V I E W

MR. MICKLETHWAIT: Let's begin with the theme of this event, which is women in power, and there are kind of two meanings of that. One is women in power like yourself or Hillary Clinton or Angela Merkel -- or Hillary Clinton almost -- and the second is women in power all the way across the world. And you know the statistics better than I do. You have the McKinsey Report saying that you could increase global GDP by $28 trillion -- maybe by $12 trillion if you may alter a bit for regions. There's a huge gain to be had there. You've talked about it being the great economic no-brainer. So why hasn't it happened?

MS. LAGARDE: That's the trillion dollar question actually because when we look at what is needed for everyone we tend to say that we want more growth, we tend to say that we want more diversification of the economies, so that they don't rely on one single source of resources. We tend to say that we want less inequality because we are now really demonstrating that excessive inequality are a source of instability and are not conducive to sustainability of growth.

So if you park just those three buckets, more growth, less inequality, more diversification, including women in the economy addresses those three issues. It increases growth significantly, and you know the numbers, you have them as well, and many in the room have them. You can increase U.S. GDP by five percent, but you can increase Indian GDP by twenty seven percent. If you look at diversification, we have now documented evidence of the fact that when women participate in the economy and in the labor market as much as men do, you have a more diversified economy. And by bringing women to the labor market, giving them access to finance, you reduce the inequality. And we've really now documented extensively at the IMF that you can actually reduce the Gini coefficients by 10 points if you have women participation in the labor market at the same level as men.

And we can talk about the corporate world later on, but it's just completely obvious, which is why I've said that it's an economic no-brainer, yet it is happening very, very gradually. And it's only happening a little bit faster when there are quotas, incentives, in order to push women into both the labor market, access to finance, circles of decision makers, parliaments. When you look at the number of parliaments around the world it's about 20 percent and it should happen. So we have to ask why is it not happening, as you just did. What is preventing women from achieving what they can achieve?

MR. MICKLETHWAIT: Do you think it's something to do with the leaders? I mean, just to give you an example, you've got President Abe, he's been -- in Japan he's been trying to do stuff, not much has happened. Or even Mr. Barack Obama. Some people in this room might feel that he did do something by pushing money toward low-income workers and things like that, but in terms of diversity of his cabinet, in terms of doing things specifically to help women, it would be hard to claim he did a lot.

MS. LAGARDE: You know, I think that there is somehow -- I'm a very optimistic person by nature, but I think that I see -- and I hope this will last some momentum in that field -- when I was at the last UN General Assembly a few blocks from here the UN Secretary General said, I am a feminist. Justin Trudeau said, I am a feminist. The Prime Minister of Jamaica, who is heading that group, says, I am a feminist. Great. Now I think it is up to us women and men who have vested joint interest in this turning to their men, saying you are the leaders in your respective countries, you form the leadership of the world, show us how you're going to be feminists. Who you're going to hire, who you're going to promote, what policy measures you will have in place, whether your infrastructure programs are going to focus on what is actually helpful for women in order to limit and eradicate hopefully violence against women, how you're going to put in place inclusive finance, so that women are not the victims of the middle man, the violence that is -- you know, eventually in developing countries gets into the way of them being economic actors, how are the 90 percent of the countries going to demonstrate that they eliminate the legal discriminations that are embedded in their constitution or in their legal system. You know, it came to me as a huge surprise, 90 percent. Can you believe 90 percent of the countries of the world have in their legal system a provision or an article in the constitution that is actually a discrimination against women? So there is plenty to be done for those in leadership who can demonstrate that they are feminists. Okay, that's great.

MR. MICKLETHWAIT: Just to use Barack Obama as an example, I'm sure he would have also said he was a feminist. We had eight years of --

MS. LAGARDE: He did, he actually did.

MR. MICKLETHWAIT: You had eight years of him and yes you've had more pay for low-income workers and you've had some degree of equality stuff in terms pay within companies, but it will be hard to claim that he has pushed the cause of women forward, wouldn't it?

MS. LAGARDE: Maybe there are a few things that he would have liked to do and has not been able to do for some reason. But, you know, I wish, particularly in this country, there was a serious parental leave. I mean it's one of the few countries in the world where it doesn't exist (laughter) except in great companies like I'm sure Bloomberg. (Laughter)

MR. MICKLETHWAIT: We can come back to the issue of Donald Trump and parental leave because I think that's very interesting, but it strikes me in the moment there are two sort of arguments for how to change the role of women in the economy. One is that we need more diversity programs and those sort of things. On the other hand, the main effect in terms of pushing women forward is just simply enabling and enriching low-income workers, which include a disproportionate number of women. Do you think in the end the bigger gain is going to come from general economic policies or for things particularly aimed at women?

MS. LAGARDE: Both, both, absolutely both. You know, minimum salaries, yes, absolutely. Earned income tax credit, yes, absolutely. But this is not going to be sufficiently focused on women. So I think that the combination of a serious and well funded parental leave combined with, you know, money. At the end of the day you need money. And you get your return on assets -- or return on investment rather, but if you have sufficient budget to cut childcare costs or childcare centers, or whatever system people resort to, reduced by half, you automatically encourage women to join the job market. So I think it's a combination of measures intended for low-income earners, but it's also specific measures that for cultural or historical reasons are targeted for women.

MR. MICKLETHWAIT: Just focus on that parental leave question, which you raised. I think only 12 percent of women across America get it at the moment.

MS. LAGARDE: Yes.

MR. MICKLETHWAIT: If Donald Trump was to do that, and you have his daughter, a particular supporter of that, would that be a revolutionary step in terms of what involves women?

MS. LAGARDE: I think many women would actually welcome a parental leave that would be financed properly and that would be legally prescribed. So that would certainly be a big plus.

MR. MICKLETHWAIT: Do you have any explanation why America is a long way behind Europe in that regard?

MS. LAGARDE: I think the whole --

MR. MICKLETHWAIT: No? (Laughter)

MS. LAGARDE: No, I mean that's a really broad, broad question. You know, if I look back at my own country, for instance, in France, a lot of those measures and policies and programs who are put in place in 1936, at a time when then socialists came into power, changed the course of things. If you look at American history, the major shift that occurred was FDR. And that was a bit later on with no clear focus on welfare benefits and social security and this, to the same extent that it had been in many European countries. But, hopefully, you know, people will get there and health and security in that domain can become part of people's entitlement and rights.

MR. MICKLETHWAIT: Can I ask you a bit about corporate boards and the question of quotas?

MS. LAGARDE: Yes.

MR. MICKLETHWAIT: Do you think that is the one area where quotas are justified?

MS. LAGARDE: Yes, I do think that quotas are justified in many, many areas, but I think on boards as much as elsewhere quotas are needed and are helpful. I mean if you look at a country like Norway, for instance, there has been a jump in women's participation on board as of the time when quotas were put in place. In Europe now thanks to the European directive it is also now getting close to or sometimes above the 20 percent threshold, and that threshold will go up to 30 percent. So there is clearly attention paid by existing board members and my shareholders to the fact that it is better, it is more -- I mean there is now plenty of documented evidence about the fact that there is a better return on assets in those companies that have one or more than one woman on the board. And it's even more true in those companies that are based on knowledge. And I think it's really important when you see how the service industry is clearly expanding in the field of knowledge use. Women are clearly contributing even more so in those sectors than in these sort of standard manufacturing sectors.

MR. MICKLETHWAIT: But you also publicly said that quotas is one of those words which sort of terrified people to some extent. Is there a case at all for having quotas that last for a sort of limited amount of time?

MS. LAGARDE: Sure, sure. Look, when I joined Baker McKenzie I thought that because I was such a brilliant lawyer (laughter) I would make partnership and I didn't need anything. But then I looked around. Well, first of all I realized that I was not just such a bright person, but I looked around and there were so few women that if you calculate over the course of time and based on historical data, it would have taken more than 120 years before there would have been even close to parity between male and female partners. So yes, quotas are a needed step in order to reach an objective. Once the objective has been reached, then you need to reset the parameters of what you want to do, because then you want to keep people because any consulting firms, any -- I think the work has been particularly done in professional firms. You lose talented women at a particular point in time in their life because their career development and their biological cycle coincides at pretty much the time when you need to be super performing and when you're going to be super creative. (Laughter)

MR. MICKLETHWAIT: I remember reading one -- I hope so -- I remember reading something about your very first job interview where I think you were told that you would get paid less because you were a women or something along those lines.

MS. LAGARDE: No, it was worse than that because, you know, you were paid less, okay, maybe you don't have as many diplomas, maybe you're not as -- but it was worse than that because what I was told was, you know, please join. You have all the credentials, all the good background, everything works fine, and we'll give you some interesting work, but don't ever expect to make partnership. And when I said why is that, they said because you're a woman.

MR. MICKLETHWAIT: But do you --

MS. LAGARDE: Now maybe things have improved a bit. (Laughter)

MR. MICKLETHWAIT: But over that time -- exactly. No, but what do you think has been the big gain that has happened since then and what do you think has been the big thing that you expected to happen that hasn't?

MS. LAGARDE: First of all, particularly in my position as head of the International Monetary Fund, I'm always a bit cautious about passing general judgments about women and what is needed, what would help, what has failed, because it is so different, whether you look at Peru or you look at Namibia, or you look at the United States, or you look at Sweden.

MR. MICKLETHWAIT: Just look at the west maybe, because that would be the --

MS. LAGARDE: Advanced economies. I think in most of these advanced economies, including Japan -- and we can come back to Japan if you want -- there is a clear, general consensus that certain things have to be done, certain things have to not be done, certain things have to be said, certain things have not to be said. And I hope that stays that way. So there is a momentum and there is a political force about women sharing that objective, sharing those views, and being prepared to close ranks and claim their place in the economy, their place in finance, their place in the world. So that's the positive. I think enough sort of self-awareness and probably a bit more solidarity among women, which was not a given in the mid and late '70s.

What has not improved is very often the perception of others and that goes to the cultural elements. You talked about Japan, in Japan I think many women have -- including his wife actually -- have convinced Prime Minister Abe that it was critically important to improve the position of Japanese women, to welcome them to the workforce, to make it equal for them, to facilitate the guardianship, the caring of their children while they were at work. Yet it is not changing massively yet. So the perception, the cultural environment, the misrepresentation, the apprehension, which is often the result of how other people perceive women, not so much how women perceive themselves, that has not changed.

But speaking of how women perceive themselves, there's a lovely book by Katty Kay and her friend about the confidence factor, which I think is still true today. And I wondered why I came into this room with my notes. It's a factor of my insecurity and my lack of confidence.

MR. MICKLETHWAIT: I have notes too. (Laughter)

MS. LAGARDE: But then I saw that John had his.

MR. MICKLETHWAIT: On that subject you talk about women closing ranks. At the moment in America there is a very obvious (inaudible) for example. You had a woman running for president who was extremely well qualified, you had a man running against her who had -- let's put it this way, less qualifications on the face of it, and on top of it had been --

MS. LAGARDE: He wasn't a woman, that's for --

MR. MICKLETHWAIT: Exactly, but on top of that he'd also been caught I think saying things which most people would interpret as misogynist, and yet most white women voted for Donald Trump. What does that tell you about that sort of idea of women in power?

MS. LAGARDE: Well, I would hope that irrespective of what happened in the past that respect, dignity, elegance in dealing with people, not in the way people are wearing clothes, would prevail over low instinct and disparaging comments.

MR. MICKLETHWAIT: But all the same, it does seem to -- to put it this way, maybe misogyny doesn't matter as much as some people say.

MS. LAGARDE: I hope not.

MR. MICKLETHWAIT: Maybe it just -- but on Donald Trump, to revitalize the reputation.

MS. LAGARDE: I hope not and I think that it is each and every one of our responsibilities to make sure that it's not. And it's more of a human dignity issue than a female issue. (Applause)

MR. MICKLETHWAIT: Just staying on Donald Trump for just a second, you know, we've said these bad things about him.

MS. LAGARDE: My comments were not addressed to him, my comments are general. Because there are many corners of the world where women are suffering an attitude which puts them in a lower position or in a subordinated situation or in a state of dependency and humiliation, which is unacceptable.

MR. MICKLETHWAIT: Yes. On the issue of Trump again, we talked a bit about parental leave and what he could do there. There are other things where despite some of the things he has said in the past, where he could sort of I suppose reverse that reputation.

MS. LAGARDE: Well, you know, when I hear the words inclusive I listen very carefully because inclusive means inclusive growth, it means inclusive finance, it means opening up to all, making sure that there are opportunities for all. And if that is the intention then I think that is important for women and for those who are and have been excluded. So that is -- you know, parental leave is one. As I said, the earned income tax credit at the lower end of the income range. I think inclusive finance is a critically important thing. There are 60 million American people today who are either under banked or not banked at all because they have no access to finance. So those are really good propositions if they can be delivered upon. That certainly would make a difference, including for women.

MR. MICKLETHWAIT: Let's stretch the thing slightly broader on the issue of the economy.

MS. LAGARDE: But your parental leave idea is a very important --

MR. MICKLETHWAIT: That would be a big thing. Would that conceivably make Trump a better president for women than Obama was?

MS. LAGARDE: Oh, we’re not in that sort of --

MR. MICKLETHWAIT: It’s always worth trying. There’s only a small group of people here. (Laughter) Stretch it more broadly on Trump and the economy. You -- many of us -- have sat there saying, look, the world has got to change from relying on central banks, governments have got to start doing things. Look at what Donald Trump is talking about. He’s talking about spending money on infrastructure, he’s talking about pumping money into the economy. Is it possible that that’s another area where he could surprise on the upside? Are you optimistic about what you see he’s doing so far?

MS. LAGARDE: Well, I would preface any comment with, you know, we’re a bit lost in conjecture for the moment because there are certain things that are coming back, whether it’s the spending on infrastructure, whether it’s the tax reform, there are things that we hear that are hinted more than affirmed, such as the trade policies. So, it’s very premature to sort of draw conclusions at the moment.

But we have consistently said that the tax system in this country needs to be reformed, needs to be simplified, that corporate tax needs to be lowered and tax loop holes eliminated. At the lower end of the income range, less taxation would be extremely beneficial for growth. So, on the tax front, if what we hear is heading in that direction, this is beneficial on two fronts. One on growth, because it could certainly boost growth. And it’s also beneficial on the risk of a very divided society with the elite of the half and the others, they have not. But it’s a question of how that tax reform is designed, and how many jobs are created as a result.

The second area is -- the beginning of proposals are also welcome -- is in the area of infrastructure. Infrastructure is badly needed in this country, whether it’s port, roads, railroads, airports, there has been reduced public spending on even the maintenance of what exists. So, this is needed. How it will be financed, whether it will be public funding, whether it will be incentives through the private sector, is also going to matter in terms of output.

So, in the short-term, if you only take those two blocks of proposals, it’s rather positive for the United States. But it needs to be factored into a longer-term proposition. And clearly with entitlements kicking in in 2021 or so, with baby boomers retiring, with interest rates likely to rise, and certainly interest repayment rising at around the same time, the decisions that are made today to the extent that they possibly increase inflation, that they make financing more expensive, that they strengthen the dollar. All of that is also going to have an effect in the medium-term.

MR. MICKLETHWAIT: You see how strong the dollar is just a given over the next few years.

MS. LAGARDE: It’s very likely. If those policies are implemented it’s very likely. And it will have both good -- well, it will have downsides and upsides, consequences.

MR. MICKLETHWAIT: What about the obvious -- if that is the obvious good thing about Trump from your perspective, presumably the worry is trade and especially the idea of maybe a trade wall with China or any of those particular -- recently there have been somewhat more clement noises about that. Do you think that’s a fair reason?

MS. LAGARDE: Well, the more moderate approach to trade is probably predicated on the fact that trade has been beneficial, and has been beneficial not just for the 100 millions of people who have been taken out of poverty around the world, particularly in Asia, but around the world, but has also been beneficial in terms of improved competition, better allocation of the factors of production including capital, certainly lower prices for consumers in the advanced economies, which have generally benefitted in particular people at the low-income level.

So, when you realize all that, you sort of consider whether trade is not actually a reasonably good thing, but -- and that’s where I would be very interested also to hear what his “but” will be -- it needs to be associated with clear measures that will benefit people who have been left out. Because if you combine international trade and the massive increase that we’ve had in the last 30 years, the technology improvements -- and it’s very difficult to dissociate the effects of one versus the others, but they are combined. And they have created pockets of unemployment, people completely left out of their jobs, factories that have closed, and regions that have been devastated. That needs to be addressed. It cannot just be about trade is great, cheaper products, more consumption, better allocation of the factors of production. It needs to be trade that benefits all. And for the moment, that second part, which is addressing the issues of dislocation of supply chains, people displaced, people out of their jobs and out of any training, that is critically important.

MR. MICKLETHWAIT: Surely, the problem there is that trade doesn’t benefit all. It benefits different people in different ways. It benefits, as you pointed out, lots of poor consumers in America, but there will also be people who are obviously hit by it and are frightened about it, and they are the people who voted for Donald Trump, for Brexit, and --

MS. LAGARDE: Yes, and there are generally those people who have either lost their job or whose job is not paying them so much anymore, whose children are not going to get a job in the same vicinity as where their parents have been because of change in the supply and the manufacturing supply chain because of the fact that it’s a lot cheaper to produce elsewhere than in such or such state in the United States. And that’s where a particular effort needs to be put in place. A social safety net by way of minimum salary, by way of, as I’ve said, earned income tax credit. And a focus on, okay, you’ve lost your job, but there are other jobs that are coming up. The U.S. economy is constantly creating lots of jobs. The question is, how can they be held towards these jobs in a more efficient way than has been tried so far.

MR. MICKLETHWAIT: In particular the thing with China is there is always this issue about whether the renminbi has been held down, and I think the IMF generally has tended to say that China is not a currency manipulator. Are you still in that position?

MS. LAGARDE: You know, we evaluate the status of the currency relative to its economy on an annual basis, every year. With most economies of the World, we determine whether it is under-appreciated, over-appreciated, or generally, we say, broadly in line with fundamentals. On China, the latest was in Article IV back in June or July, and at that time the renminbi was broadly in line with fundamentals after having been probably hailed up for a period of time more than was required by the economy.

Clearly, in the last few weeks, the renminbi has depreciated because the Chinese authorities and the banking authorities in particular are not aligning the determination of their currency relative to a basket of currencies. And when the dollar appreciates, which is one of the components in the basket, clearly other currencies around the world including the renminbi are declined because it’s a zero-sum game. One goes up and others go down.

MR. MICKLETHWAIT: Should we return to the continent from which we both came? The joys of the Italian Referendum. How frightened are you by that? Is that -- you have lived through several versions of the euro crisis. If Renzi were to lose, particularly to lose badly, would that spark off another round of it?

MS. LAGARDE: You know, we tend to look at the Italian economy irrespective of what the outcome of the Referendum is. I mean, so far, we’ve really experienced polls, forecasts, absolutely determined view as to what the outcome will be and we’ve seen how wrong we were. So, we look at the Italian economy independently and irrespective of the outcome of the Referendum. Matteo Renzi’s decision to stay as president of the council or not.

A lot needs to be done on the Italian economy irrespective of the Referendum. Even if there is a guest vote and the Italian Senate is sort of -- sees power reduced, a lot needs to be done on the banking sector, as we know. Recapitalization is needed, strengthening of the books by elimination and dealing with the non-performing loans that are stuck in some of these banks. A lot needs to be done on the productivity front, which has not improved by far.

So, the Italian economy needs a lot of reforms and it needs to be done.

MR. MICKLETHWAIT: There is another large country just above Italy where you might say has needed a lot of reforms. You now have the removal of Sarkozy, Hollande is now gone. There is a new generation of people coming in. Do you think that France is more likely to be reformed now?

MS. LAGARDE: Well, we at the IMF --

MR. MICKLETHWAIT: Even the French people. (Laughter)

MS. LAGARDE: We certainly view France as a country that needs to continue seriously in depth reforms of its economy. And whoever is elected, come next May, will have to tackle head on the need for structural reforms. The labor market has begun reform but it needs to be faster and deeper. Product markets have begun to reform a little bit in the boss (?) sector, okay, great. We need a bit more than that. That economy needs more than that. It has the benefit of this accommodating monetary policy by the ECB, which presumably is going to continue for a while. The price of oil is still low, even at around 50 which is where it will hang for the next few months. The euro is 1.05, 1.06 with the dollar. It’s not bad when you’re an exporting country and you buy oil at a reasonably low price per barrel.

So, the whole scenery, the whole landscape, should be really favorable to those structural reforms, and a limited use of fiscal space because, you know, fiscal space can only be used appropriately to support the structural reforms. It cannot be an invitation to just increase public spending. There is plenty of public spending in France at the moment. So, it needs to be reorganized and reshaped, which, you know, is being talked about.

MR. MICKLETHWAIT: I saw a cover of Liberte the other day which showed Francois Fillon converted into Margaret Thatcher.

MS. LAGARDE: With the wig, yeah.

MR. MICKLETHWAIT: Is he a big enough personality in your view to be the Margaret Thatcher of France?

MS. LAGARDE: What I know of him is that he is certainly a determined reformist. He’s also fiscally prudent, but he’s -- I’ve seen him, you know, and I’ve worked with him for four years, and he’s certainly very lucid in terms of the diagnosis about the French economy. He is the one who three months into the job of Prime Minister said I’m the Prime Minister of a bankrupt country, which didn’t please very much the President then.

MR. MICKLETHWAIT: He’s’ now running against the man who described France as Cuba without the sunshine. (Laughter)

MS. LAGARDE: That’s right. Well, they might -- yeah. They will have to compare holiday destinations together.

MR. MICKLETHWAIT: We’ve probably done a lot of bashing of France. There is another country even further north of that that is trying leave --

MS. LAGARDE: I know, I’m not bashing my country, no, no, no. (Laughter)

MR. MICKLETHWAIT: You have often said before that reform there is way too slow and you’re now saying that there is a chance of it changing.

MS. LAGARDE: Yes, I should think so. When I joined the government as Finance Minister with Francois Fillon as Prime Minister, our goal, our determination was to reform. And, unfortunately, the financial crisis just came to hit us six months in the job, and we had to back up and go about rescuing the financial sector and try to calm depositors and make sure that the economy would not contract too much as opposed to what we were preparing to do.

MR. MICKLETHWAIT: In the name of fairness, I was going to get up to Britain --

MS. LAGARDE: Now, that’s your country. (Laughter)

MR. MICKLETHWAIT: Here is your chance to bash Britain. But you look at Britain, is that now in your mind moving a little bit away from hard Brexit to soft Brexit? Is that something making more conciliatory noises or is it still -- can be a very short negotiation where the British walk in and say they want access to the single market and the ability to control their immigration, and the Europeans say that’s an either/or, you have to make a choice.

MS. LAGARDE: All the noises, all the comments, all the little posturing here and there seem to indicate that we are still looking at a hard Brexit. Our hope at the IMF is that the uncertainty is cleared because that’s the first factor that is really for the moment questioning investment decisions. I know that they are numbers that seem to indicate that there is still investment, there is still movement. But when you talk to people they really are concerned about what the outcome will be.

I think in the financial sector, a lot of clarity would help because the financial passports that banks located on the British territory and I should say -- should I say British or English? I never know.

MR. MICKLETHWAIT: British.

MS. LAGARDE: That excludes Ireland as part of the -- which it is, as an independent country. But those banks on British territory will want to know, and their shareholders will want to know whether or not there is a passport to continue to act in the rest of Europe.

MR. MICKLETHWAIT: Do you think the two-year deadline, Mrs. May goes and votes after 50 and then it takes two years, and that’s really becoming -- it’s going to take longer than two years. And the Irish Prime Minister this morning, he was saying that.

MS. LAGARDE: Yes, most people who are close to the preparation -- and on both sides they are preparing and they are trying to move along the curve -- they’re all saying that it’s going to take longer than two years. I mean, it’s going to be something like 60 different bilateral trade treaties will have to be negotiated, if only that to begin with. And then you have to disentangle the system. And I hear what is being said, which will be, okay, let’s keep it as it is and we will gradually remove what we don’t like. I don’t think it’s going to be a, you know --

MR. MICKLETHWAIT: You can’t see the British cherry-pick what they would like from Europe.

MS. LAGARDE: It’s a negotiation. You have two parties. I don’t want to appoint as to who is in the strongest position but I’m not sure --

MR. MICKLETHWAIT: Can I ask one last question. (Laughter) I think I get the message. There is one last question to do with globalization. If you think of all the things we’ve spoken about today, we’ve talked about trade with China and America, we’ve talked about Europe. At one time the whole future of trade very much tied up with what you think about towards these big global trade deals and now you see Trump try to do things on a bilateral basis. You’ve talked about Britain having to do bilateral deals. Is there an element of deglobalization beginning to happen, or do you think there is a way through with all these little deals?

MS. LAGARDE: I certainly hope that there is not a move towards deglobalization. I equally think that we have to move towards globalization that has a different face and which is not excluding people along the way as it proceeds towards increasing -- or improving the development of those developing countries of, say, Africa and some of the Asian world, and moving up for the emerging market economies. So, I hope it’s not deglobalization. I hope it’s a different globalization. From a purely institutional point of view, I would hope that the WTO continues to do the hard work that is required to have a framework within which other arrangements can be had. But it’s clearly taking a different form. The Bally Agreement has not yet been ratified, the DOHA Agreement is a bit of the story of the past now. So, a new framework has to be invented. And I hope that it can be proposed in a sufficiently attractive way that is compatible with regional or bilateral agreements as well, which is clearly the road that it’s taking.

My IMF colleagues will probably be very upset with me because I’m supposed to say that a global deal is better than a lot of bilateral deals and this baggity ball is not desirable. But I think that’s --

MR. MICKLETHWAIT: It’s not one flat pizza.

MS. LAGARDE: No, I think, you know, a bit like in Europe you have the subsidiarity principle. And I’m not suggesting that the global trade should be operated a la Brussels. But I think that having a general framework which does not necessarily go into the details, but is compatible with bilateral arrangements that can be negotiated, or regional arrangements that can be negotiated, might be a way for the future.

* * * * *

CERTIFICATE OF NOTARY PUBLIC

I, Carleton J. Anderson, III do hereby certify that the forgoing electronic file when originally transmitted was reduced to text at my direction; that said transcript is a true record of the proceedings therein referenced; that I am neither counsel for, related to, nor employed by any of the parties to the action in which these proceedings were taken; and, furthermore, that I am neither a relative or employee of any attorney or counsel employed by the parties hereto, nor financially or otherwise interested in the outcome of this action.

Carleton J. Anderson, III

)Signature and Seal on File)

Notary Public in and for the Commonwealth of Virginia

Commission No. 351998

Expires: November 30, 2016