Friday, August 31, 2018

Bloomberg News - Trump Threatens to Pull U.S. Out of WTO If It Doesn’t ‘Shape Up’

President Donald Trump said he would pull out of the World Trade Organization if it doesn’t treat the U.S. better, targeting a cornerstone of the international trading system.
“If they don’t shape up, I would withdraw from the WTO,” Trump said Thursday in an Oval Office interview with Bloomberg News. Trump said the agreement establishing the body “was the single worst trade deal ever made.”
A U.S. withdrawal from the WTO potentially would be far more significant for the global economy than even Trump’s growing trade war with China, undermining the post-World War II system that the U.S. helped build.
Trump said last month that the U.S. is at a big disadvantage from being treated “very badly” by the WTO for many years and that the Geneva-based body needs to “change their ways.”
U.S. Trade Representative Robert Lighthizer has said allowing China into the WTO in 2001 was a mistake. He has long called for the U.S. to take a more aggressive approach to the WTO, arguing that it was incapable of dealing with a non-market economy such as China.
Lighthizer has accused the WTO dispute-settlement system of interfering with U.S. sovereignty, particularly on anti-dumping cases. The U.S. has been blocking the appointment of judges to the WTO’s appeals body, raising the possibility that it could cease to function in the coming years.
In the Oval Office interview, Trump said at the WTO “we rarely won a lawsuit except for last year.”
“In the last year, we’re starting to win a lot,” he added. “You know why? Because they know if we don’t, I’m out of there.”
For all of his complaints about the WTO, Trump’s administration has continued to file cases against other members. Earlier this week it launched a case against Russian duties on U.S. products that it argues are illegal.
Countries that bring complaints to the WTO tend to prevail and defendants in trade disputes lose.
But WTO data also shows that the U.S. does slightly better than the WTO average in both cases it brings and that are brought against it, said Simon Lester, a trade analyst at the Cato Institute, a Washington policy group that favors more open international trade.
Of the 54 cases brought by the U.S. over the life of the WTO, Washington won at least one finding in its favor in 49, or 91 percent, Lester said. Of the 80 cases brought against it, a WTO panel had ruled against it in at least one aspect in 69 cases, or 86 percent of the time.
The Trump administration has taken his complaints a step further by arguing that the WTO’s dispute settlement system is broken and in need of a major overhaul.
The EU has been leading an effort to propose reforms to try and defuse the conflict. Officials from the EU and Japan visited Washington last week to discuss potential changes as well as joint efforts to take on China at the WTO.
Since World War II, successive U.S. presidents have led efforts to establish and strengthen global trading rules, arguing that they would bring stability to the world economy.
The WTO was created in 1994 as part of a U.S.-led effort by major economies to create a forum for resolving trade disputes.
— With assistance by Sarah McGregor, and Shawn Donnan

Wednesday, August 29, 2018

BBC News - Food prices 'to rise 5%' because of extreme weather

Meat, vegetable and dairy prices are set to rise "at least" 5% in the coming months because of the UK's extreme weather this year, research suggests.
Consultancy CEBR said 2018's big freeze and heatwave would end up costing consumers about £7 extra per month.
It follows price warnings from farmers' representatives about peas, lettuces and potatoes.
Wholesale prices of other vegetables have already soared by up to 80% since the start of the year.
But the Centre for Economics and Business Research (CEBR) explained that these increases can take up to 18 months to fully have an effect on shoppers.
"So, while the worst of the recent heat may have passed, the cost to consumers looks set to climb," it warned.
The UK saw record temperatures in June, July and August which caused widespread drought and crop failures.
This, along with a "wet, cold and challenging" winter, particularly the cold spell caused by the Beast from the East, has put stress on farming costs and yields, CEBR said.
As a result, it said:
  • Wholesale vegetable prices had jumped between March and July, with onion prices up 41%, carrots by 80%, and wheat for bread by a fifth
  • The farm gate price of butter has climbed 24% since March, as hot weather hampered grass growth for grazing.
  • Meat prices are set to rise due to a shortage of livestock feed.
Weather extremes in winter and summerImage copyrightREUTERS/PA
Image captionThe UK's cold, wet winter was followed by the driest start to a summer on record
It said these "wholesale price shocks" were likely to push up consumer costs by about £45m per week - equivalent to £7.15 per month per household.

'Effectively bare'

Tod Bulmer from Kenyon Hall Farm near Warrington said yields from his fruit and cereal harvest had been half of what he would normally expect.
He told BBC Radio 4's Today programme that the potential price rise would compensate "a little bit but not enough".
He added that the low yields meant dairy farmers were having to pay more for their feed.
National Farmers' Union president Minette Batters said the shelves for feeding livestock were "effectively bare" and that dairy farmers were having to rely on silage meant for winter use.
"Many farmers are looking at £60,000 of added costs," she said.
She added that she was still waiting on the government to deliver on a promise to take action.
CowsImage copyrightGETTY IMAGES
Image captionDairy farmers have had to pay extra to feed their animals, pushing up costs
Following a drought summit earlier this month with the NFU, Environment Secretary Michael Gove said the government would do "whatever it takes" to maintain food supplies.
Earlier this month, the Agriculture and Horticulture Development Board warned that livestock and vegetable prices would be a "little bit higher right the way through until next spring" because of weather issues.
Shortages of vegetables also helped drive food price inflation to 1.6% in July - up from the 1.2% in May and June, according to the British Retail Consortium and Nielsen.
A spokeswoman for the Department of Environment, Food and Rural Affairs said: "Food prices are affected by a number of factors aside from the weather, such as fuel costs, international commodity markets and exchange rates."
She said steps had been taken to help those affected, including allowing farmers to take more water from reservoirs and providing flexibility on funding.
She added that the hot weather had helped boost products such as soft fruits and wine.
But the CEBR said there was bad news for wine fans too, as severe hailstorms in the French wine regions of Bordeaux, Champagne and Cognac "have eliminated millions of bottles of product".

Tuesday, August 28, 2018

BBC News - Trump announces 'incredible' trade deal with Mexico

The US and Mexico have reached common ground on key trade terms as pressure mounts to complete renegotiation of the 25-year-old North American Free Trade Agreement.
US President Donald Trump, a frequent critic of the existing deal, announced the apparent breakthrough on Monday.
The final outcome remains in doubt with Canada, the third country in the pact, due to rejoin talks on Tuesday.
Mr Trump has triggered a year of talks, after threatening to pull out of Nafta.
He demanded renegotiation of the 1994 trade agreement, which he blames for a decline in US manufacturing jobs, especially in the auto industry.
US shares rose and the Mexican peso strengthened on news of the preliminary treaty on Monday.

What has Trump said?

In a televised appearance at the White House, Mr Trump said the US and Mexico had agreed on terms that would make for an "incredible" deal that was "much more fair".
Negotiators have been rewriting the Nafta treaty over the past year, but in the last five weeks, Canada has not been part of the discussions.
"We will see whether or not we decide to put up Canada or just do a separate deal with Canada," Mr Trump said.
He also threatened Canada with tariffs on cars and said he wanted to get rid of the name Nafta, which he said has "bad connotations".

Where does Canada stand?

Canadian Prime Minister Justin Trudeau has spoken with Mr Trump since the breakthrough with Mexico was announced.
They "had a constructive conversation" and "look forward to having their teams engage this week with a view to a successful conclusion of negotiations," Mr Trudeau's office said. Canadian negotiators are set to meet their US counterparts on Tuesday.
Mr Trudeau also spoke to outgoing Mexican President Enrique Pena Nieto on Sunday, and the leaders shared their commitment to reaching a successful conclusion of Nafta "for all three parties".
US President Donald J. Trump (L), hosting the Mexican delegation, talks with Mexican President Enrique Pena a Nieto on the phone to announce a trade deal in the Oval Office of the White HouseImage copyrightEPA
Image captionUS President Trump (L) announced the new trade deal in front of a Mexican delegation

Why now?

Negotiators want to strike a deal before the newly elected Mexican president, Andres Manuel Lopez Obrador, takes office in December. Mr Obrador has been reluctant to continue Mr Pena Nieto's opening up of Mexico's energy sector, which could complicate negotiations.
In order to meet that deadline, the Trump administration must present the US Congress with a deal at least 90 days in advance - by the end of this month, which is Friday.
However, President-elect Obrador said on Monday that a two-way agreement with the US was just the first step in a new treaty.
"We're very interested in it remaining a three-country deal," he told journalists on Monday. "The free-trade agreement should remain as it was originally conceived."

Will Canada join?

A spokesman for Canadian Foreign Minister Chrystia Freeland said the country is "encouraged" by the progress made by the US and Mexico but did not comment on the specific terms.
The US and Canada have been at loggerheads on a range of trade matters, including Canadian protections for its dairy industry and US tariffs on steel and aluminium.
"We will only sign a new Nafta that is good for Canada and good for the middle class. Canada's signature is required," spokesman Adam Austen said.
In a telephone call with Mr Trump, which was televised, Mexican President Enrique Pena Nieto stressed the importance of an agreement that includes Canada.
But Mexico's Foreign Minister Luis Videgaray said his country is prepared to strike a bilateral US-Mexico deal.
"If for any reason the government of Canada and the United States do not reach a Nafta agreement, we already know that there will still be a deal between Mexico and the United States," he said at a news conference in Washington.

What's in the agreement?

Nafta covers more than $1tr (£780bn) in annual trade.
The update is to include provisions to govern intellectual property, digital trade and investor disputes, among other issues.
In the preliminary agreement announced on Monday, the US and Mexico agreed that 75% of a product must be made in the two countries to receive tax-free treatment, which is more than in the existing deal, the US said.
On cars, the two sides also settled on rules that will require 40%-45% of each vehicle to be made by workers earning at least $16 an hour.
That provision is aimed at discouraging firms from locating plants in lower-wage Mexico.
The pact would be good for 16 years, the US said. The two sides also agreed to review the trade pact every six years - but that review will not carry the threat of automatic expiration as the US had initially proposed.

Can they meet the tight deadline?

Legislatures in all three countries have the final say over trade pacts.
In the US, Republicans, who typically support free trade, have pressed the White House to strike a deal, arguing that the relatively open borders have benefited US farmers and other groups.
Senator John Cornyn, a Republican from Texas, called the development a "positive step".
"Now we need to ensure the final agreement brings Canada into the fold and has bipartisan support," he said.
The US Chamber of Commerce, a powerful business group that supports Nafta, also said it is critical that the agreement remain trilateral.
A truck drives next to the US/Mexico border fence as heading to Otay commercial Port of entry in Tijuana, Baja California state, Mexico on August 27, 2018.Image copyrightAFP
Image captionA truck drives next to the US/Mexico border fence

Monday, August 27, 2018

Reuters News - Mexico, U.S. closing in on NAFTA deal, talks to resume Monday

WASHINGTON (Reuters) - U.S. and Mexican trade negotiators are close to squaring away bilateral differences on the North American Free Trade Agreement (NAFTA) and will resume talks on Monday morning, Mexican Economy Minister Ildefonso Guajardo said on Sunday.

Earlier, Guajardo told reporters the two sides were likely “hours” away from reaching a common position, but in the evening he said more work still needed to be done, and that talks would start again on Monday at 9 a.m. local time in Washington.
“We’ve continued making progress,” Guajardo said.
The Mexico-U.S. discussions have focused on crafting new rules for the automotive industry, which U.S. President Donald Trump has put at the heart of his drive to rework the 24-year-old pact he says has been a “disaster” for American workers.
Canada has sat out the most recent phase of the year-long discussions, and once it rejoined the talks, the three sides would need to work for at least another week, Guajardo said.
Leaving the offices of U.S. Trade Representative (USTR) Robert Lighthizer late on Sunday, Mexican Foreign Minister Luis Videgaray said Canada would return once bilateral issues were resolved. “But we haven’ve finished this stage yet,” he said.
The two sides have been gradually nearing agreement on autos, and one source close to the negotiations said at the weekend there was now “little” separating the two.
Industry sources say they are close to agreeing on raising the regional automotive content threshold for tariff-free access under NAFTA to around 75 percent from 62.5 percent.
Still, the Trump administration has been seeking to impose a cap on Mexican car and SUV exports to the United States that could be sent duty-free or at a 2.5 percent tariff, complicating the auto talks, three people with knowledge of the matter said.
Two automakers say the United States want Mexican exports of cars and SUVs to be capped at about 2 million units, up from some 1.77 million exported in 2017, excluding pickup trucks.
Including pickups, Mexico exported more than 2.3 million vehicles to the United States last year.
Mexico’s economy ministry declined to comment. A USTR representative did not respond to a request for comment.
Trump said on Saturday that Washington could reach agreement with Mexico “soon” as the chief trade negotiator of Mexico’s incoming president signaled possible solutions to energy rules and a contentious U.S. “sunset clause” demand.
Since Mexico’s July 1 presidential election, the bilateral talks have been complicated by divisions between the incoming and outgoing Mexican administrations over energy policy.
The team of leftist Mexican President-elect Andres Manuel Lopez Obrador has resisted enshrining the 2013-14 opening of the oil and gas sector enacted by outgoing President Enrique Pena Nieto in the new NAFTA, people close to the talks say.
Long skeptical of foreign companies entering the Mexican oil industry, Lopez Obrador opposed Pena Nieto’s energy reform.
Jesus Seade, the incoming Mexican government’s chief NAFTA negotiator, said the issue had been “ironed out” at the NAFTA talks, without going into detail. He said this week it was not a “substantive” matter and that Lopez Obrador’s team had wanted to check the terms were consistent with the Mexican constitution.
If three-way talks run into September, final approval of the deal in Mexico will likely pass to Lopez Obrador, because under fast track authority, the U.S. Congress needs 90 days’ notice to vote on a new NAFTA once the renegotiation is finished.
Lopez Obrador is due to take office on Dec. 1.
Reporting by Sharay Angulo; Additional reporting by David Shephardson and Dave Graham; Writing by Christine Murray; Editing by Dave Graham, Lisa Shumaker and Chris Reese

Friday, August 24, 2018

Bloomberg News - Mauritius Gets African Backing in Dispute With U.K. Over Islands

Mauritius has the support of the African Union and about 30 other countries in its battle to regain control off an Indian Ocean archipelago administered by the U.K., Prime Minister Pravind Jugnauth said.
The International Court of Justice in the Hague will hold three days of hearings from Sept. 3 about the dispute over the Chagos archipelago, Jugnauth told reporters Friday in the capital, Port Louis. The United Nations in June 2017 asked the court for an advisory opinion about the U.K. separation of Chagos from Mauritius in 1965, three years prior to the latter’s independence, he said.
“Mauritius, 30 countries and the African Union have made written submissions” to the court, Jugnauth said. The ICJ judgment will be referred to the UN and will be a “crucial step in completing the decolonization of Mauritius,” he said.
The Chagos archipelago includes the island of Diego Garcia, home to a U.S. military base that’s been used to launch bomber jets for wars in Iraq and Afghanistan. The request to the ICJ excludes Diego Garcia, Jugnauth said,

Thursday, August 23, 2018

BBC News - US-China trade war: New tariffs come into force

Chinese factory worker uses machine
US President Donald Trump's trade war against China has moved up a gear as it brings in a 25% tax on a second wave of goods worth $16bn (£12.4bn).
The move ratchets up the dispute which began in July. The US imports far more goods from China than it exports to it.
There are fears that more tariffs could cause further damage to companies and consumers. Goods affected this time include motorcycles and aerials.
China immediately imposed retaliatory taxes on the same value of US products.

Why did this start?

President Trump has been sounding off about unfair trade since even before he became president.
During the 2016 election campaign, he said China engaged in the "rape" of the American economy.
He ordered an investigation into Chinese trade policies in August 2017 and has been steadily imposing tariffs on Chinese goods since January this year.
His assertion is that China - and other countries - are taking advantage of US companies by selling their goods too cheaply.
In China, low production costs and a weak currency keep prices competitive. As a result, US imports from China far exceed the amount of goods going in the other direction.
President Trump thinks that by slapping on an extra tax - or tariff - he will make life easier for US companies, whose goods will become cheaper within the US by comparison.
As well as China, Mr Trump's "America First" policies have seen taxes imposed on Mexico, Canada and the European Union, to encourage consumers to buy American products. All of those countries have retaliated.
US President Donald Trump speaks at the White House (April 9, 2018)
President Trump has taken an aggressive stance on trade with China

What goods are involved?

The US has applied new tariffs to a vast range of goods in 279 product categories,including children's cots and bedding, animal medicines, semiconductors, plastics, chemicals and railway equipment, shrimps and shrimp products, handbags and fridges.
China's list of 333 US product categories includes coal, copper scrap, fuel, buses and medical equipment.
Previous items affected included steel, soya beans, fruit, wine, whiskey, the famous Harley Davidson motor bikes and pig products.

What effect are his actions having in the US?

Although Mr Trump states his moves are aimed at protecting US industry and business, dozens of US companies and industry groups have testified to the US Trade Representative's Office that their businesses are being harmed.
Major carmakers recently warned that changes to trade policies were hurting performance.
Demand for their goods in China has fallen as US products are made more expensive by the addition of tariffs - after all, that is tariffs are designed to do.
And there are even warnings that the tariff on children's cots could be harmful to health. "Increasing tariffs on juvenile bedding products would directly promote an increased risk to child safety," claims Sam Shamie, of the Delta Enterprise Corporation.
Kenneth O'Brien of Gemini Shippers Group is particularly vocal in his opposition to tariffs on Chinese imports, which he says "will lead to the destruction of American jobs and the potential bankruptcy of US small businesses".
And as well as making Chinese goods more expensive for US consumers, the price of some US goods may rise, too.
Many of the businesses whose products have had retaliation tariffs applied warn they would not be able to absorb another tax without raising prices for US consumers.
Some businesses welcome the move, though.
The Southern Shrimp Alliance is glad not to have to compete with Chinese shrimp products. It also says these are a health risk to the American public, so there's an additional benefit to the tariffs here.

And what about in China?

China blames the US and has accused it of "unilaterally" heightening tensions between the two economic giants.
The main difference is that Chinese goods are very widely bought in the US indeed, as they are in the rest of the world. Not for nothing is China sometimes called the world's workshop.
The list of US goods taxed in China is typically a higher-end luxury one, whose products are already expensive and less essential.
The range of goods available for China to put retaliatory taxes on is therefore shorter, lessening the immediate impact.
But there are other ways that China can respond. Iris Pang, Greater China economist at ING Wholesale Banking in Hong Kong, says it could make life harder for the US to do business in China, by increasing the cost and amount of red tape.

And the rest of the world?

As the BBC's South Asian business editor, Karishma Vaswani, points out, what hurts Beijing can also hurt countries further afield.
Many goods that are needed for final assembly in China actually come from other South East Asian countries such as Malaysia and Indonesia, and go through Singapore to have some other products added on.
Economists say that means some countries in the Asia-Pacific region could see as much as a percentage point shaved off economic growth.
But, she says, if this trade war continues, the outlook could be far more grim.
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US trade in goods with China
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What are the next steps?

Officials from the US and China are currently holding low-level talks in Washington, but hopes are not high that they will bring the dispute to an end.
The US has threatened a third round of tariffs on an additional $200bn of Chinese goods. These could come as soon as next month.
It has since said those products could be hit with a 25% levy - more than double the 10% originally planned.
China has said it would respond with another tariff on $60bn of US goods.
Meantime, China plans to file a fresh complaint against the tariffs at the World Trade Organization (WTO), which adjudicates in global trade disputes.
China's commerce ministry says it "clearly suspected" the US of violating WTO rules.
It filed an initial complaint at the WTO in July as Mr Trump imposed his first round of tariffs.
Ultimately, all exports from China to the US could face tariffs. The president said in July that he was ready to tax all of the $500bn worth of Chinese imports into the US.
China has retaliated in kind to both hostilities from the US and there's no reason to think it would not respond in the same "toe-to-toe" fashion.