CNBC Transcript: IMF Managing Director Christine Lagarde Speaks with CNBC's Sara Eisen Today

Following is the unofficial transcript of a FIRST ON CNBC interview with IMF Managing Director Christine Lagarde and CNBC's Sara Eisen on CNBC's "Squawk on the Street" (9AM - 11AM) today, Thursday, April 19th. Watch video of the full interview on CNBC.com here!

CARL QUINTANILLA: WE'LL HAVE TIME FOR THAT. THE IMF AND THE WORLD BANK ARE HOLDING THEIR SPRING MEETING IN D.C. SARA EISEN IS THERE WITH THE MANAGING DIRECTOR OF THE IMF, CHRISTINE LAGARDE. HI, SARA.

SARA EISEN: HEY CARL, JIM AND DAVID. GOOD MORNING. AND MADAM LAGARDE, ALWAYS NICE TO BE HERE.

CHRISTINE LAGARDE: LOVELY TO HAVE YOU. GOOD MORNING.

EISEN: GOOD MORNING. SO, YOU PUT OUT A PRETTY ROSY PICTURE THIS WEEK OF THE GLOBAL ECONOMY. ONE QUESTION EVERYBODY IS WONDERING, THOUGH, IS THIS THE PEAK? IS THAT HOW YOU'RE THINKING ABOUT IT?

LAGARDE: WE'RE THINKING ABOUT AN UPSWING. AND THE UPSWING BECAUSE WE SEE GOOD GROWTH, SOLID 3.9% THIS YEAR, AND 3.9% FORECAST NEXT YEAR. AND WHAT IS INTERESTING IS THAT WE'RE SEEING BEING FUELED BY MORE ENGINES THAN WE HAD BEFORE. SO WE'RE SEEING INVESTMENT UP IN MANY CORNERS OF THE WORLD AND WE'VE SEEN TRADE PICKING UP EVEN MORE SO THAN THE 3.9%. SO UPSWING, WHICH NEEDS TO BE SUSTAINED, BECAUSE WE DON'T WANT TO GO BACK TO THIS MEDIOCRE RATES THAT WE HAD A COUPLE OF YEARS AGO. AND TO DO THAT, CLEARLY GOVERNMENTS, POLICY MAKERS HAVE TO IMPLEMENT REFORMS.

EISEN: YEAH, THAT'S BEEN YOUR KEY MESSAGE.

LAGARDE: YEP. MY KEY MESSAGE HAS BEEN SUN IS SHINING, WE HAVE GROWTH, FIX THE ROOF. DO THE -

EISEN: DON'T WASTE THE RECOVERY, YES, IN TERMS OF REFORMS. ON THE MARKETS, WE HAVE SEEN GLOBAL STOCKS MUCH HIGHER ON THIS COORDINATED GROWTH THEME, BUT LATELY A LITTLE MORE VOLATILITY. HOW DO YOU READ THAT?

LAGARDE: WELL, IF I TRANSLATE THAT INTO OUR OWN ANALYSIS, WE'RE SEEING LOOMING CLOUDS ON THE HORIZON AND PROBABLY MORE SO THAN WE DID SIX MONTHS AGO AND THAT HAS TO DO WITH FIRST OF ALL, THE FACT THAT SOME GOVERNMENTS HAVE BEEN LAGGING BEHIND, NOT DOING THE REFORMS THEY SHOULD DO NOW. WE'RE SEEING A BIG MOUNTAIN OF DEBT. YOU KNOW, 164 TRILLION DEBT. 225% OF GDP IS A BIG NUMBER. TWO-THIRDS OF THAT IS IN THE PRIVATE SECTOR. WE SEE HIGH LEVERAGE IN MANY CORNERS OF THE WORLD. ADVANCED ECONOMIES, PUBLIC DEBT IS AT ITS HIGHEST SINCE THE SECOND WORLD WAR. AND WHAT IS WORRYING ALSO, ALTHOUGH IT'S NOT A BIG NUMBER, BUT IN TERMS OF DEBT SERVICE, IT IS BIG, WE'RE SEEING LOW-INCOME COUNTRIES THAT ARE OVERBURDENED WITH DEBT. AND THAT'S -- THAT'S A BIG CLOUD. NOW, ONE OF THE CLOUDS THAT'S BEEN MUCH TALKED ABOUT HAS BEEN ALSO THE LACK OF INTERNATIONAL COOPERATION TO ADDRESS THE TRADE ISSUES, THE TRADE CONCERNS THAT GOVERNMENTS HAVE INCLUDING IN THIS COUNTRY, BUT ALSO IN OTHER PLACES AROUND THE WORLD.

EISEN: YEAH. I MEAN, CLEARLY, THIS IS WORRISOME FOR THE IMF WHICH STANDS FOR FREE TRADE AND OPEN TRADE AND COORDINATION.

LAGARDE: YES. YES.

EISEN: SO BASED ON WHAT YOU'RE HEARING FROM THE ADMINISTRATION AND CHINA AND IN THE NEWS, ARE YOU DISTURBED ABOUT WHAT YOU HEAR AND SEE?

LAGARDE: WHAT I WOULD CERTAINLY PREFER IS A VERY DETERMINED ATTEMPT TO ADDRESS THE ISSUES THAT ARE THERE. AND THERE ARE ISSUES. WE HAVE SEEN PROTECTIONIST MEASURES ON THE RISE FOR THE LAST THREE YEARS. THERE ARE ISSUES ABOUT INTELLECTUAL PROPERTY. THERE ARE ISSUES ABOUT SUBSIDIES TO STATE-OWNED ENTERPRISES, AND THOSE HAVE TO BE DEBATED. THEY HAVE TO BE DISCUSSED SO THAT THERE IS FREE TRADE. SO THAT, YOU KNOW, FREE MARKET ECONOMIES, AS WELL AS OTHERS, CAN OPERATE ACCORDING TO THE SAME RULES. WHAT I AM CONCERNED ABOUT IS THAT THIS BE DEBATED IN A MULTILATERAL SETTING WITH EVERYBODY INVOLVED BECAUSE AT THE END OF THE DAY, YOU KNOW, ENTERPRISES, COMPANIES, CORPORATES, THEY OPERATE ON A CROSS-BORDER BASIS. THEY KNOW NO BOUNDARIES. THEY ORGANIZE THEIR SUPPLY CHAIN ON A COMPLETELY MULTILATERAL BASIS. AND SO ALL COUNTRIES HAVE TO BE AT THE TABLE TO ADDRESS THOSE ISSUES. WE KNOW FROM HISTORY THAT UNILATERAL BARRIERS, MEASURES, TARIFFS DECIDED UNILATERALLY ARE NOT PARTICULARLY EFFECTIVE.

EISEN: SO DOES THAT MEAN, PRIME MINISTER ABE THIS MORNING, THE NEWS IS THAT THEY'LL WORK THROUGH A BILATERAL TRADE DEAL WHICH IS WHAT PRESIDENT TRUMP PREFERS VERSUS TPP WHICH IT SEEMS LIKE HE WAS RECONSIDERING, BUT NOT SO MUCH ANYMORE. IS THAT A MISTAKE?

LAGARDE: YOU KNOW, WHAT PROMOTES FREE TRADE, FAIR TRADE, TWO-WAY STREET TRADE IS ALWAYS GOOD. BUT WE KNOW THAT THE BEST WAY TO OPTIMIZE IT IN THE INTEREST OF ALL, NOT IN THE INTEREST OF ONE, IS TO ACTUALLY TO HAVE A MULTILATERAL SETTING. AND THAT WAS THE BEAUTY OF THE POST-WORLD WAR INSTITUTIONS AND FRAMEWORK WITHIN WHICH SO MANY COUNTRIES DEVELOPED AROUND THE WORLD. SO MANY POOR PEOPLE WE'RE TAKEN OUT OF POVERTY. SO MANY OF US BENEFITED FROM CONSUMER GOODS AT ROCK BOTTOM PRICES.

EISEN: BUT THE ADMINISTRATION WOULD SAY THE WTO IT NOT WORKING FOR US. CHINA HAS HAD THESE BARRIERS. PREVIOUS ADMINISTRATIONS HAVE TRIED AND NOTHING HAS GOTTEN DONE. SO, DO YOU BELIEVE HIS TACTICS CAN WORK, THESE THREATS OF LARGE TARIFFS ON CHINESE GOODS?

LAGARDE: I BELIEVE THAT THERE IS AN ISSUE OF TRUST THAT NEEDS TO BE PRESERVED. AND WHEN OPERATORS AND INVESTORS AND COMPANIES ARE UNCERTAIN ABOUT TERMS AND CONDITIONS UNDER WHICH TO ORGANIZE THEIR SUPPLY AND CHAIN, TERMS AND CONDITION UNDER WHICH THEY'RE GOING TO TRADE, TYPES OF TARIFFS THAT THEYRE GOING HAVE TO PAY, THEY STEP BACK AND THEY DON'T INVEST. THEY DELAY. THEY WAIT. SO TO, YOU KNOW, BRUTALLY CHANGE THE COURSE OF THINGS, WITHOUT HAVING TRIED VEHEMENTLY, DIRECTLY, FORCEFULLY WITHIN THE MULTILATERAL SETTING TO IMPROVE THE POSITION, I THINK, IS NOT THE MOST CONDUCIVE AND EFFECTIVE PRODUCE FOR TRUST PURPOSES.

EISEN: SO, SHOULD TIM COOK AT APPLE OR MARK PARKER OF NIKE BE WORRIED ABOUT A BOYCOTT OF AMERICAN GOODS IN CHINA?

LAGARDE: I AM NOT SURE THAT THIS IS HIGH ON THEIR MIND. WHAT IS PROBABLY HIGH ON THEIR MIND IS "HOW DO WE ORGANIZE OUR SUPPLY CHAIN? WHERE DO OUR PARTS COME FROM? WHERE DO WE SET UP THE ASSEMBLY LINE? WHERE DO WE ORGANIZE THE INTELLECTUAL PROPERTY?" THOSE ARE THE QUESTIONS THAT THEY HAVE IN MIND.

EISEN: SO DO YOU EXPECT THE U.S. AND CHINA TO WORK THIS OUT INTO SOME SORT OF DEAL? YOU WERE IN CHINA WHEN THIS WAS ALL GOING ON. HOW DO YOU PERCEIVE THEIR RESPONSE AND THEIR WILLINGNESS GET TO THE TABLE AND HAMMER OUT A DEAL WITH TRUMP?

LAGARDE: ON BOTH SIDES, ANY NEGOTIATIONS, WHETHER IT'S BETWEEN TWO PARTIES OR WITH MULTILATERAL OPERATORS, EVERYBODY OPERATES IN THEIR OWN INTEREST, AND THEY WILL TRY TO OPTIMIZE THEIR POSITION, BUT THEY HAVE TO TAKE INTO ACCOUNT THE CURRENT SITUATION OF THE WORLD, THE SUPPLY CHAINS THAT EXIST, THE BENEFITS FOR CONSUMER AND THEY HAVE TO TAKE INTO ACCOUNT TIME, AS WELL. WHAT MIGHT SEEM LIKE A SHORT-TERM GAIN MIGHT TURN OUT TO BE A MEDIUM-TERM LOSS.

EISEN: YOU HAVE BEEN SUPPORTIVE OF THE CORPORATE TAX CUTS, WHICH WE DID SEE PASS. BUT YOU WARNED, I REMEMBER IN BOSTON A FEW MONTHS AGO, YOU WANT TO SEE TAX REFORM THAT IS NOT GOING TO BLOW A HOLE IN THE DEFICIT AND WHAT WE'VE GOT IS WE'RE GOING TO RETURN TO TRILLION DOLLAR DEFICITS AS A RESULT OF THIS TAX CUT.

LAGARDE: YOU KNOW, WE HAVE SUPPORTED, ENCOURAGED AND ARE STRONGLY IN SUPPORT OF THE CORPORATE TAX REFORM THAT HAS TAKEN PLACE. IT'S A MAJOR IMPROVEMENT AND IT'S GOOD. AT THE SAME TIME, WE ARE CONCERNED ABOUT THE DEFICIT. WE ARE CONCERNED ABOUT THE DEBT OF THE UNITED STATES. AND WE KNOW THAT BECAUSE OF AGING, BECAUSE OF ENTITLEMENT, THESE WILL COME TO HAUNT THE AMERICAN ECONOMY AND THE AMERICAN PEOPLE. SO WE'RE SAYING THERE IS AN UPSWING NOW. GROWTH IS UP. TAKE THE RIGHT GROWTH-FRIENDLY, FISCAL MEASURE, MEASURES THAT WILL HELP CONSOLIDATE AND LEAVE OUR RATE.

EISEN: NOBODY'S TALKING ABOUT CONSERVATISM THOUGH. I MEAN, THAT IS NOT EN VOGUE WITH REPUBLICANS ANYMORE, THESE DAYS.

LAGARDE: WELL, I THINK IT'S SOMETHING THAT IS IS WORTHY OF CONSIDERATION BECAUSE WE'RE NOT JUST SHORT TERM. WE HAVE CHILDREN - GROWN CHILDREN. DO WE WANT TO SHIFT THE BURDEN ON THEM AND A HIGHER BURDEN THAN BEFORE? I DON'T THINK - CERTAINLY THAT'S NOT GOOD ECONOMIC PROPOSALS.

EISEN: ALL RIGHT. YOU'VE CERTAINLY BEEN WARNING ABOUT THAT. I KNOW YOU LOOK AT BANK REGULATIONS. WHAT ABOUT TECHNOLOGY REGULATIONS? DO YOU THINK WE'RE ABOUT TO SEE A WAVE OF INCREASED SCRUTINY- OBVIOUSLY WE'VE SEEN SCRUTINY, BUT REVELATIONS WHEN IT COMES TO TECH GLOBALLY AND REVELATIONS INTO THEIR COMPETITIVENESS, AND COMPANIES LIKE FACEBOOK, GOOGLE AND AMAZON.

LAGARDE: WELL, AS YOU SAID IN THE IMF, WE SUPPORT FREE MARKET. WE SUPPORT COMPETITION. WE SUPPORT IMPROVED PRODUCTIVITY. WE SUPPORT INNOVATION. AND WE KNOW FOR A FACT THAT WHEN THERE IS TOO MUCH MARKET CONCENTRATION IN THE HANDS OF TOO FEW, WE'RE NOT SEEING COMPETITION, WE'RE NOT SEEING INNOVATION. AND OVER TIME WE ARE SEEING, YOU KNOW, GRADUAL --

EISEN: IS THAT WHEN FACEBOOK IS?

LAGARDE: IT DEPENDS HOW YOU DEFINE THE MARKET. IT DEPENDS WHO SUBSTITUTES. I MEAN, IT'S A VERY COMPLICATED DEBATE.

EISEN: YOU'RE NOT GOING TO CALL ANYONE OUT.

LAGARDE: BUT WE SHOULD ACTUALLY DETERMINE WHETHER OR NOT THERE IS THAT LEVEL OF ACCESS TO MARKET, AND WHETHER OR NOT THE ACCUMULATION OF THAT DATA IN THE HANDS OF A FEW IS NOT GOING TO BE SUCH A BARRIER THAT OTHER ENTREPRENEURS SIMPLY CANNOT ACCESS. SO THE SITUATION IS VERY DIFFERENT FROM WHAT IT WAS IN THE TELECOM AGE OR IN THE GILDED AGE. WE NEED TO REALLY RE-THINK THE WAY IN WHICH THAT SITUATION IS ADDRESSED. COMPETITION IS ENCOURAGED AND IF THAT REQUIRES A NEW SET OF RULES TAKING INTO ACCOUNT THE INTANGIBLITY OF THOSE ASSETS, IT NEEDS TO BE DONE. LOOK AT TAX, FOR INSTANCE. IT'S ONE IN WHICH ALL POLICYMAKERS AROUND THE WORLD NEED TO ACTUALLY LOOK AT: WHERE IS VALUE LOCATED? WHERE IS VALUE GENERATED? HOW SHOULD IT BE TAXED AND WHAT REVENUE SHOULD BE CONTRIBUTED BY THOSE PLAYERS?

EISEN: ALRIGHT, WELL, I KNOW THAT IS ONE OF THE BIG THEMES OF DISCUSSION HERE AT THE IMF WORLD BANK MEETINGS. THANK YOU FOR SITTING DOWN WITH US AND A FIRST WITH CNBC. CHRISTINE LAGARDE, DIRECTOR OF THE IMF. I LEFT IT THERE, GUYS, BECAUSE I KNOW YOU'RE TALKING ABOUT THESE KIND OF ISSUES WITH AMAZON SURPASSING 100 MILLION CONSUMERS AND ALL SORTS OF OTHER TECH

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