Friday, March 16, 2018

Reuters News - U.S. hints at shift on Russia with sanctions and condemnation

WASHINGTON (Reuters) - By imposing new sanctions on Russia and condemning a suspected Russian chemical attack in Britain, Washington has hinted at a tougher stance toward Moscow despite President Donald Trump’s stated desire for better ties.
The U.S. Treasury slapped sanctions on 19 Russian citizens and five entities for election meddling and cyber attacks in the most significant steps the United States has taken against Russia since Trump took office amid U.S. intelligence agency allegations that Moscow tried to help him win the 2016 election.
While the Treasury put off targeting oligarchs and officials close to Russian President Vladimir Putin, it said further sanctions were coming and for the first time blamed Moscow for cyber attacks stretching back at least two years that targeted the U.S. power grid, including nuclear facilities.
After initially equivocating about a chemical attack on a former Russian double agent in Salisbury, England, the White House joined a statement by the leaders of Britain, France and Germany in which they said they “abhor the attack” and blamed it on Moscow.
Moscow has denied any involvement in the poisoning.
Thursday’s actions have caused some Russia analysts to ask whether the administration is taking a more confrontational stance despite Trump’s repeated statements in the election campaign that he wanted a better relationship with Moscow, his praise for Putin and apparent reluctance to criticize the Russian leader.
“I think we have hit an inflection point in the current administration’s approach towards Russia,” said a diplomat who spoke on condition of anonymity. “There has been a shift in balance.”
The diplomat attributed the evolution partly to a clash between U.S.-backed and Russian-backed forces in the Syrian city of Deir al-Zor in February; Russia pounding Syria’s eastern Ghouta enclave of anti-government rebels with air strikes during the past month; and Putin showing a video on March 1 of a weapon appearing to hover over what looked like a map of Florida, home to Trump’s Mar-a-Lago resort.
“Those three things, taken together, have caused a shift in analysis in parts ... of the administration,” said the diplomat.


While there was a sense at the White House that there has been a hardening of Trump’s view toward Russia, at least for now, it was unclear whether this represented a long-term shift.
A senior administration official said there was some feeling that the goodwill that Trump extended toward Russia when he took over has not been reciprocated and that the Russians do not want to have good relations with the United States.
This has exasperated Trump, who instructed his team to make sure the United States appeared to be in solidarity with Britain over the nerve agent attack.
Eugene Rumer, a former U.S. national intelligence officer for Russia, suggested Trump’s approach may ultimately be guided by Special Counsel Robert Mueller’s investigation into whether Russia meddled in the election campaign.
The Kremlin denies interfering. Mueller is also investigating any potential collusion between the Trump campaign and Moscow officials, something Trump denies.
“My hypothesis is ... the White House stance on Russia is going to be determined to a large extent by how much they think the investigation threatens their political position,” Rumer said.
Officials from multiple U.S. agencies discussed next steps at a meeting on Thursday, with one aim being to avoid personally attacking Putin and taking in-your-face steps that could prompt retaliation.
In announcing Thursday’s sanctions, U.S. officials made clear more would follow.
“This is just one of a series of ongoing actions that we’re taking to counter Russian aggression,” one U.S. official told reporters. “There will be more to come, and we’re going to continue to employ our resources to combat malicious Russian activity and respond to nefarious attacks.”
Sergei Skripal, 66, and his daughter Yulia, 33, were found unconscious on a bench outside a shopping center on March 4 after being exposed to what the British authorities have identified as a military-grade, Soviet-era Novichok nerve agent.
Another U.S. official attributed the sharper edge to U.S. policy to increasingly brazen behavior by Russia in cyberspace and on the ground, culminating in the Salisbury attack.
This U.S. official, who spoke on condition of anonymity, also pointed to Russia’s refusal to restrain Syrian President Bashar al-Assad and the role of Russian “mercenaries” in Syria, now entering its eighth year of civil war.
The official said it was unclear if Trump himself saw Russia as an adversary but suggested Putin may have “overplayed his hand” by leaving Russian fingerprints on the hacking, the chemical attack, the deployment of ground-launched cruise missiles which the U.S. says violate an arms control treaty, and a March 1 speech on “invincible” Russian weaponry.
“If the president felt like Putin was one-upping him, not to mention stealing the limelight, then it wouldn’t be surprising that he would react,” the official said.
While more sanctions are expected, it was not clear if the Trump policy toward Russia was changing, especially given Trump’s unpredictability, said a third official, who is involved in talks on next steps.
“Tomorrow is another day,” the official said.
Additional reporting by Steve Holland and Warren Strobel; Writing by Arshad Mohammed; Editing by Grant McCool and Paul Tait

Thursday, March 15, 2018

BBC News - Tax rises of £40bn 'needed by mid-2020s' to cut deficit

HMRC document
Annual tax rises of £40bn will be needed if the government wants to keep spending constant and balance its books by 2025, a think tank has warned.
The Institute for Fiscal Studies added that dismal productivity, earnings and GDP growth had become the "new normal".
Its forecast comes after the chancellor unveiled upgraded growth and borrowing forecasts in the Spring Statement on Tuesday.
Philip Hammond said the UK economy had reached a turning point.
Paul Johnson, director of the Institute for Fiscal Studies (IFS), said that "nothing much" had changed in the Spring Statement.
He said the UK was still suffering the hangover of the 2008 financial crisis and its growth outlook was "the worst in the G20".
He said the big problem facing the chancellor was how to balance growing demands for spending increases with his promise to eliminate the deficit by the mid-2020s.

Tax challenge

On the one hand, public services such as prisons and the NHS were struggling "in a way that they were not two or three years ago", Mr Johnson said.
On the other, the government is struggling to collect as much tax as it used to, after taking large numbers of people out of paying income tax.
"The chancellor has been unable to tackle the problems posed by the increasing numbers of self-employed and company owner managers, who pay less tax than similarly remunerated employees," Mr Johnson added.
"If high-paid jobs - and EU citizens, who are well represented among high earners in the UK - relocate elsewhere, the consequences for the Exchequer will be severe," he added.
Given the outlook, the IFS said tax rises of £30bn would be needed each year to retain public spending and balance the budget by the middle of the next decade - a Conservative Party pledge.
An extra £11bn would be required to cover social care, health and pension costs for the ageing population, the IFS said.

Higher growth?

In the Spring Statement, Mr Hammond said growth was now forecast to be 1.5% in 2018, up from 1.4% forecast by the Office for Budget Responsibility in November.
He also said debt was expected to fall as a share of GDP from 2018-19, the first drop in 17 years, and that inflation would return to 2% by the end of the year.
Net UK GDP growth bar chart
Image captionGrowth is now forecast to be 1.5% in 2018, up from 1.4% forecast by the Office for Budget Responsibility in November
However, Mr Johnson said the good news on borrowing would "largely wash out" over the next few years, while the structural deficit in 2019-20 would be almost unchanged.
He added that the UK economy was now 14% smaller than would have been expected, based on pre-crisis trends, while median earnings remained below their 2008 level.
"The reality of the economic and fiscal challenges facing us ought to be at the very top of the news agenda," Mr Johnson said.
"And I mean the reality, not the spin and bluster of politicians on all sides pretending there are easy solutions."
Commenting on the IFS's analysis, John McDonnell MP, Labour's shadow chancellor, said: "Despite the chancellor's spin yesterday, the IFS has revealed that there may be £30bn of new tax rises and spending cuts to come.
"Under the Tories, it won't be the richest who are hit by these tax rises and austerity cuts, but the poorest - largely families and children - who will bear the brunt of their heartless economic plans."
A Treasury spokesperson said: "Our balanced approach has reduced the deficit while also cutting taxes for over 30 million people and investing in our vital public services."

Wednesday, March 14, 2018

Reuters News - Wall Street slips as industrials lag

(Reuters) - Wall Street’s main indexes gave up opening gains on Wednesday as industrial companies continued to suffer from concerns over the impact of new tariffs on trade.

Boeing (BA.N) fell nearly 2 percent, turning the Dow Jones Industrial Average negative, with traders citing continuing fallout from reports on Tuesday that U.S. President Donald Trump is seeking to impose tariffs on up to $60 billion of Chinese imports.
“The market is still trying to weigh concerns about tariffs on one hand and understanding how the President acts and how he speaks openly and comes up with a different policy in the end,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.
Major U.S. manufacturers have been the heaviest hit since Trump trailered and then announced tariffs on steel and aluminum imports earlier this month.
The issue overshadowed China’s report that its factory output grew much faster than expected at the start of the year, suggesting the world’s second largest economy may be picking up speed.
The third straight monthly fall in retail sales did not speak well of U.S. growth but it cooled any nerves that the Federal Reserve could raise interest rates more than the three times in 2018.
At 9:59 a.m. ET, the Dow Jones Industrial Average .DJI was up 0.08 percent at 25,027.92. The S&P 500 .SPX gained 0.1 percent to 2,768.29 and the Nasdaq Composite .IXIC rose 0.02 percent to 7,512.85.
Shares in Qualcomm fell about 3 percent and those in rival Broadcom declined 1.7 percent after the Singapore-based chipmaker formally withdrew its bid for Qualcomm Inc (QCOM.O) but said it would pursue other targets.
Ford shares (F.N) were up 4.3 percent after Morgan Stanley double-upgraded the stock to “overweight” and raised its earnings forecast for the first time in two years.
Signet Jewelers (SIG.N) fell about 14 percent after the company reported lower same-store sales in the fourth quarter.
Advancing issues outnumbered decliners on the NYSE by 1,744 to 796. On the Nasdaq, 1,320 issues rose and 1,004 fell.
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur

Tuesday, March 13, 2018

BBC News - UK exports to a group of emerging nations could be $10bn more

by Simon Jack
Yangshan Deep Water Port, ShanghaiImage copyrightREUTERS
Image captionChina is Germany's number one export destination
The UK is missing out on £10bn worth of exports a year to a group of emerging economies, according to a study by Standard Chartered bank.
Annual exports to what Standard calls the Emerging 7 (China, India, Pakistan, Nigeria, Bangladesh, Vietnam and Indonesia) are currently worth £24bn.
But the bank, which specialises in financing international trade, calculates it should be £34bn a year.
Of all the G7 countries, the UK could be a big beneficiary of closer trade.
Standard Chartered urges the UK to orientate its Emerging 7 (E7) trade policy accordingly.
Michael Vrontamitis, the bank's head of trade for Europe and Americas, said: "With the UK settling into a slower pace of growth and Brexit on the horizon, UK businesses need to look more widely for growth.
"It is clear that the E7 countries represent multi-billion-dollar trading opportunities for the UK and British businesses searching for export diversification and growth.


The study was immediately welcomed by the International Trade Secretary, Liam Fox, who has repeatedly stressed the opportunities that Brexit presents to refocus trade policy on faster growing economies.
He said: "As an international economic department, we are supporting businesses meet this demand, target overseas markets and succeed on the global stage, so we create more jobs and prosperity in every part of the country."
However, the study does not examine the potential loss of exports to our biggest and closest market - the EU - as a result of Brexit. Many people have questioned whether increased trade with the E7 can offset those losses.
One of the most sceptical voices was former civil servant Sir Martin Donnelly, who until last year ran the very same Department for International Trade of which Liam Fox is secretary.

Fulfilling potential

Sir Martin recently told the BBC that the UK was "giving up a three-course meal, which is the depth and intensity of our trade relationships across the European Union and partners now, for the promise of a packet of crisps in the future if we manage to do trade deals outside the European Union which aren't going to compensate for what we're giving up".
The Standard Chartered report says that of the G7 countries, only Germany is fulfilling its export potential to the E7, and only then through its reliance on its huge exports to a single country - China.
It is perhaps worth remembering that the UK exports more to the US than any other single country, while China is Germany's number one export destination. Neither of these relationships are supported by a free trade agreement.
This illustrates a point often made by former trade minister and ex-chairman of Goldman Sachs Asset Management Jim (Lord) O'Neill.
When it comes to trade, knowing which products and services foreign markets actually want - and getting them there - is more important than striking trade deals.

Monday, March 12, 2018

Bloomberg News - Investors See South Africa Dodging a Downgrade by Moody's

by Colleen Goko

Investors are betting South Africa will escape a fourth credit-rating downgrade in less than a year. The cost of insuring the country’s sovereign debt against default for five years using credit-default swaps fell to a five-year low Monday. Moody’s Investors Service is reviewing the nation’s assessment later this month after cutting the debt one level in June, following downgrades by S&P Global ratings and Fitch Ratings in April.

Friday, March 9, 2018

BBC News - Trump tariffs: US President imposes levy on steel and aluminium

President Trump has signed controversial orders imposing heavy tariffs on steel and aluminium - but some countries will be spared.
Mr Trump has said the US is suffering from "unfair trade" and that the move would boost US industry.
But countries have expressed outrage at his plans, and experts have warned of new trade wars.
The tariffs will go into effect in 15 days and include exemptions for Canada and Mexico.
Tariffs of 25% are to be placed on steel and 10% on aluminium imported into the US.
The tariffs are opposed by many in the president's own party and by the US's major trading partners.
Republican Senator Jeff Flake - a prominent critic of Mr Trump who opposes the move - said he was drafting legislation to nullify the tariffs, saying trade wars are only ever lost.
House Speaker Paul Ryan said he disagreed with the action and feared its unintended consequences.

What has the international reaction been?

  • EU Trade Commissioner Cecilia Malmstroem tweeted that, as a close ally of the US, the bloc should be excluded from the tariffs
  • French Finance Minister Bruno Le Maire said there were "only losers" in a trade war and that France regretted the US announcement
  • The British government said it would work with EU partners to consider "the scope for exemptions" while "robustly" supporting UK industries.
Steel and aluminium workers were at the signing.
Mr Trump praised them as "the backbone of America" - and alluded to their role in his election.
He said such workers had been betrayed - but that was now over and he was delivering on a campaign promise.
The president said the tariffs would defend America's national security.

What exemptions will there be from the new tariffs?

They will apply to all countries except Canada and Mexico, which will be exempt while discussions over the North America Free Trade Agreement (Nafta) take place.
There are provisions within the documents for other countries to get exemptions.
"We are going to be very fair, we're going to be very flexible," Mr Trump said earlier on Thursday.
He also praised his country's close relationship and trade surplus with Australia, saying "we'll be doing something with them".
The president linked defence spending to trade, and said the US "subsidised many countries" in the military.
He said there would be a reduction in tariffs for countries that "treat us fairly", but said "many of the countries that treat us the worst on trade and on military are our allies", singling out Germany for criticism in his earlier comments.

Why is Mr Trump doing this?

Mr Trump says he aims to protect the American worker - and he promised in his campaign that he would rebuild the steel and aluminium industries.
The two metals are "the bedrock of our defence-industrial base", the president said on Thursday.
The industry has been "ravaged" by aggressive foreign trade practices that are "an assault on our country", the president said.
He is also making a political decision, aiming to appeal to blue-collar voters in states such as Pennsylvania - voters who turned away from the Democrats to support Mr Trump in 2016.
The president says the US's trade deficit is due to "very stupid" deals and policies.

What are possible repercussions?

Mr Trump's announcement last week about his plan to impose the hefty tariffs sparked alarm and upset markets at home and abroad.
Major trading partners have threatened retaliation and the plans are opposed by many in his own party.
  • The president's top economic adviser Gary Cohn, a supporter of free trade, resigned on Tuesday. More than 100 Republicans have signed a letter addressed to the president, expressing their "deep concern" about the tariffs
  • International Monetary Fund chief Christine Lagarde has warned "nobody wins" in a trade war, saying it would harm global economic growth
  • The EU has proposed retaliatory measures against a number of US goods including bourbon and peanut butter
  • China has threatened an "appropriate and necessary response" in any trade war with the US. Foreign Minister Wang Yi said China and the US should strive to be partners rather than rivals
Mr Trump has said that the US would "win big" in a trade war.
Other countries are likely to take the US to court, arguing that the decision violates World Trade Organization moves.
The White House says that the national security rationale for the move is "unassailable" and national security considerations are allowed under WTO rules.
The director of UK Steel said the tariffs would have a profound and detrimental impact on the UK steel sector.
"Imposing such measures on US allies in the name of national security is difficult to comprehend," Gareth Stace added.
Presentational grey line

What happens now?

Analysis by Natalie Sherman, BBC News business reporter, New York
President Trump made clear on Wednesday he will consider exemptions to the tariffs.
The move invites lobbying from other countries and could quiet critics who say his actions will lead to a trade war.
Will Mr Trump's approach, which the White House has described as "flexible", mean this proves to be another announcement stronger on rhetoric than substance?
We don't know yet. The White House has said exemptions will be granted to nations that offer other ways to resolve his concerns about national and economic security.
The strategy has raised objections from at least one Republican. But should countries want to talk, that provides Mr Trump the opportunity to revisit a host of issues near and dear to his heart, including a wall along the Mexican border, barriers to US goods in countries like Germany and South Korea - even US contributions to security organisations like Nato.
Mr Trump, who casts himself as the ultimate negotiator, is opening the door to more of the deal-making he appears to relish.
Presentational grey line
A chart shows the top steel importers to US: Canada, EU, South Korea, Mexico, Brazil, Japan, Taiwan, China, Russia, Turkey

Thursday, March 8, 2018

Reuters News - Eleven nations - but not U.S. - to sign Trans-Pacific trade deal

by Dave Sherwood
SANTIAGO (Reuters) - Eleven countries are expected to sign a landmark Asia-Pacific trade agreement in Santiago on Thursday, as an antidote to the increasingly protectionist bent of the United States, which last year pulled out of the pact.

The signing ceremony comes the day after Europe and the International Monetary Fund urged U.S. President Donald Trump to step back from the brink of a trade war sparked by plans to slap duties on steel and aluminum imports.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will reduce tariffs in countries that together amount to more than 13 percent of the global economy - a total of $10 trillion. With the United States, it would have represented 40 percent.
Even without the United States, the deal will span a market of nearly 500 million people, making it one of the globe’s three largest trade agreements, according to Chilean and Canadian trade statistics.
The original 12-member agreement, known as the Trans-Pacific Partnership (TPP), was thrown into limbo early last year when Trump withdrew from the deal just three days after his inauguration in a bid to protect U.S. jobs.
The 11 remaining nations, led by Japan and Canada, finalized a revised trade pact in January.
Trump has also threatened to dump the North American Free Trade Agreement unless the other two members of the pact, Canada and Mexico, agree to provisions that Trump says would boost U.S. manufacturing and employment. He argues that the 1994 accord has caused the migration of jobs and factories southward to lower-cost Mexico.
The revised agreement, to be signed at 3 p.m. (1800 GMT) Thursday, eliminates some requirements of the original TPP demanded by U.S. negotiators. Those include rules ramping up intellectual property protection of pharmaceuticals, which governments and activists of other member nations worried would raise the costs of medicine.
The final version of the agreement was released in New Zealand on Feb. 21.
In January, Trump told the World Economic Forum in Switzerland that it was possible Washington might return to the pact if it got a better deal. However, New Zealand’s trade minister said that was unlikely in the near term, while Japan has said altering the agreement now would be very difficult.
The 11 member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Reporting by Dave Sherwood; Editing by Caroline Stauffer and Leslie Adler