Friday, June 14, 2019

BBC News - Brexit: UK firms 'not even close to ready' for no deal

By Ben Chu
lorry next to customs sign at French terminalImage copyrightREUTERS
Many UK businesses "are not even close to being ready for a no-deal" Brexit, figures seen by Newsnight suggest.
In February, HMRC launched the Transitional Simplified Procedures scheme, aimed at easing imports in the event of the UK leaving the customs union and single market abruptly.
Less than 10% of the firms estimated to require the status had applied for it as of 26 May, Newsnight has found.
HMRC said it had plans to ensure "as many traders as possible are ready".
The Transitional Simplified Procedures (TSP) would allow UK firms to import goods from mainland Europe without filling out new customs declarations at the border. UK businesses would also be allowed to postpone the payment of import duties for one year.
But figures show that only 17,800 firms had applied for the TSP as of 26 May. That's less than 10% of the total of 240,000 firms estimated to require the status by 31 October, when the UK's latest Article 50 extension is due to expire.
"If it really is this low we're far, far away from being day one no-deal Brexit ready - it's a very low number," said Mike Spicer from the British Chambers of Commerce.
"The TSP data is terrible," said Matt Griffith of the Bristol Chamber of Commerce.
"The top level lesson is that most small firms are not even close to being ready for a No Deal scenario."
A Cabinet note leaked to the Financial Times on Wednesday reveals ministers have been warned that it would take "at least four to five months" to improve trader readiness for new border checks.
It also suggests that officials are considering "financial incentives to encourage exporters and importers to register for new schemes".
Meanwhile the leading Conservative leadership candidate, Boris Johnson, has promised supporters the UK will leave the EU with or without a deal on 31 October, should he become prime minister.

How to get TSP status

Before firms can register for TSP they have to apply for an 'Economic Operator and Registration Identification' (EORI) number from HMRC.
UK businesses that have only ever traded inside the EU will not have an EORI number. But in the event of no deal, an EORI number will be a basic legal requirement for companies to be able to import and export.
So far 69,000 firms had signed up for EORI status by 26 May - less than a third of the 240,000 EU-trading UK firms estimated to need one, the figures seen by Newsnight show.
In February, then financial secretary to the Treasury Mel Stride, urged businesses against leaving things "until the last minute".
In September 2018, December 2018 and January 2019, HMRC wrote directly to 145,000 VAT-registered businesses that only trade with the EU advising them to apply for an EORI number.
But there are an additional 95,000 non-VAT registered companies that HMRC said also needed to take action, bringing the total to 240,000.
HMRC says that it only takes firms 10 minutes to register for an EORI number online and claims it has the capacity to sign up 11,000 businesses per day.
But the British Chambers of Commerce and the Federation of Small Businesses have said that HMRC should automatically issue EORI numbers to companies that need them, rather than waiting for them to apply.
An HMRC spokesperson said: "HMRC has well-developed plans in place to ensure the UK will have functioning tax and customs processes for UK-EU trade in the event of no deal.
"Many businesses have already registered with HMRC as international traders - accounting for around two thirds of the trade carried out by UK VAT registered businesses that only trade with the EU.
"HMRC's plans include actions and easements to ensure that as many traders as possible are ready on day one to keep trading."

Thursday, June 13, 2019

BBC News - Olives pitting US against EU in global trade fight

Olive treeImage copyrightGETTY IMAGES
Image captionOlive farmers have found themselves at the centre of a global trade dispute
A trade battle is leaving a bitter taste in the mouths of Spain's olive growers.
Tariffs levied against them by the US last year have cost the industry $27m (£20.8m) and are likely to have lasting effects on Spain's olive-growing regions.
Antonio De Mora, general-secretary for Spain's Association of Table Olive Producers and Exporters (ASEMESA), says olive farming is a vital industry for Andalusia and nearby regions where there are few alternatives for jobs.
"The harvest of black olives has been greatly reduced as a result of the decrease in demand," he says.
"It is impossible to replace such an important market as the US in the short and medium term."
Spanish olive farmersImage copyrightGETTY IMAGES
Image captionUS tariffs are likely to have lasting effects on Spain's olive-growing regions.
In June 2018 the US imposed tariffs on black olives from Spain, which it said were being sold below market value. It placed tariffs of up to 25.5% to counteract the alleged dumping and an additional duty of up to 27.02% to counter what Washington deemed were unfair subsidies from the European Union.
According to ASEMESA, exports of black olives have fallen by 60% since the tariffs were imposed.
Spain is the world's largest olive producer and exporter: the country exported $67.6m (£52.4m) worth of olives to the US in 2017 before any tariffs were put in place.
"If the customs duties remain, we will certainly lose the majority of the US black olive market," says Mr De Mora.

Farmers against each other

In January, Cecilia Malmstrom, the European Union's trade commissioner, petitioned the World Trade Organization (WTO) to address this matter.
She said in a tweet these tariffs were "unjustified, unwarranted and go against the rules" of the WTO.
The original complaint came from two California-based olive producers, Bell-Carter Foods Inc and Musco Family Olive Co. The companies claimed that Spanish growers were selling their olives at 70% below their true market value.
California is the main olive growing state in the US with a climate similar to the Mediterranean. For nearly a century the US industry focused on "ripe olives" - the black olives that Americans typically use on pizza and in salads.
But in the late 1990s, many farmers began to switch to producing olive oil.
According to Sam Israelit, owner of Spanish Oaks Ranch in central California, many farmers switched because olive oil generated more value per-tonne than the ripe fruit.
"Consumers are willing to pay $20-25 for a good bottle of olive oil - and table olives just don't get that margin."
Olive processingImage copyrightGETTY IMAGES
Image captionMost Californian olive farms focus on olive oil, allowing Spanish producers to dominate the ripe olive market
This switch allowed Spanish producers to become even more dominant in the US - and left Bell-Carter Foods and Musco Family Olive as the only two major producers of US table olives.

Bigger battle

In the summer of 2017, US Commerce Secretary Wilbur Ross announced his department would investigate the claims of olive dumping.
Under President Trump's administration, the number of investigations into unfair trade practices has risen significantly.
According to the US Commerce Department, 137 new investigations into claims of dumping and subsidies had been opened by the end of 2018. That's an increase of more than 300% compared to the number of investigations undertaken in the first two years of the Obama administration.
But some say the tariffs on olives and other products are just a smoke screen to go after the wider global trade system, which President Trump and his supporters have called "rigged".
US President Donald Trump and former Spanish Prime Minister Mariano RajoyImage copyrightGETTY IMAGES
Image captionUS President Donald Trump and former Spanish Prime Minister Mariano Rajoy met in Washington in 2017
"Olives for me are a pretext," says Tomas Garcia Azcarate, a researcher at the Spanish National Research Council. He says the US is using the olive duties as a way to attack the EU's common agricultural policy (CAP) which gives subsidies to farmers.
"The economic consequence [to olives] is not the most important element here, this is a test case," says Mr Garcia Azcarate.
Antonio De Mora and ASEMESA argue Spanish producers can sell their products at such low prices because of technological efficiencies and not government subsidies.
But the potential consequences to the EU's CAP are what some say held Cecilia Malmstrom and the EU from bringing this case to the WTO sooner.
Steve Suppan, senior policy analyst for the Institute for Agriculture and Trade Policy, says Europe regards this as a "stalking horse for an attack on the CAP" and the effects could "undermine the support that the EU gives its farmers".
If Europe loses the olive fight it could open the doors to challenges against other agricultural products.
All this comes as the US and EU prepare to thrash out a free trade deal of their own. US producers would like to see agriculture included in negotiations but so far EU officials have refused to include it.

What now?

The US and EU have 60 days to negotiate a settlement over the Spanish olives. If no deal is reached then the EU could ask a panel of WTO judges to make a ruling.
Even here there is a catch: the US has been blocking the appointment of judges to the WTO's appellate body, the world's top trade court. There are just three judges left on that panel, which usually has seven.
pizzaImage copyrightGETTY IMAGES
Image captionSome argue this battle is part of larger US efforts to break down the WTO
The US has accused WTO judges of overreaching and violating procedures. But some countries say this is part of a larger effort to break down the WTO which US President Trump has called "the worst deal ever made".
That has left Spanish olive growers feeling like pawns. Without other markets to replace their US sales, many of these farmers may be left as casualties of a broader battle to reshape global trade.

Wednesday, June 12, 2019

Reuters News - Shares snap seven-day hot streak; U.S. inflation next hurdle

by Marc Jones
LONDON (Reuters) - World share markets snapped a seven-day winning streak on Wednesday as the White House took a tough line on trade talks with China, while an impending reading on U.S. inflation was set to refine the odds of an early cut in interest rates there.
Europe’s main markets and Wall Street futures both followed Asia lower. London’s FTSE, the DAX in Frankfurt and CAC40 in Paris fell 0.4% to 0.6% as traders trimmed June’s near 4% gains.
Benchmark government bonds rallied as the caution returned. FX dealers kept the dollar near an 11-week low as they waited to see whether the U.S. inflation numbers would bolster their bets on the first U.S. rate cuts since the financial crisis.
“I think we are in for a very nervous wait until next week’s FOMC meeting,” Saxo Bank’s head of FX strategy, John Hardy, said.
“You have had the markets taking out aggressive positions on where the Fed is going to go and everybody is wondering whether they are ready to deliver as much, in terms of guidance, as has been priced in.”
Chinese inflation was in the mix, too. Figures overnight showed it picked up to a 15-month high of 2.7%, mainly because of surging pork prices. Excluding food, inflation rose only 1.6% and suggested plenty of scope for more stimulus.
MSCI’s broadest index of Asia-Pacific shares outside Japan had slipped 0.6% after two days of gains and after Wall Street’s recent rally had stalled on Tuesday.
Japan’s Nikkei dipped 0.3% and Shanghai blue chips fell 0.7% following a 3% jump the day before.
Hong Kong’s Hang Seng lost 1.7% as demonstrators stormed roads next to government offices to protest against a bill that would allow people to be sent to China for trial.
“The impact was short-lived in the past,” noted Alex Wong, director at Ample Finance Group in Hong Kong. “This time people will look at how the U.S. reacts to this kind of news. The U.S. attitude towards Hong Kong and China are also not the same.”
President Donald Trump said on Tuesday he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five “major points”, which he did not specify. He said interest rates were “way too high” and the Federal Reserve had “no clue”.
Fed policymakers will meet on June 18-19. With trade tensions rising, U.S. growth slowing and hiring in May declining, markets have priced in at least two rate cuts by the end of 2019. Futures imply around an 80% chance of a rate cut as early as July.
That might change depending on what U.S. consumer price data show later in the session. Headline inflation is expected to slow to 1.9%, with the core rate steady at 2.1%.


Trump also alarmed currency markets by tweeting that the euro and other currencies were “devalued” against the dollar, putting the United States at a “big disadvantage”.
The euro gained to $1.1336, just short of the recent three-month high of $1.1347. The dollar fell against the yen to 108.25 and stalled on a basket of currencies at 96.608.
“The President’s tweets on the USD have the potential to have much more lasting impact in the coming election year,” said Alan Ruskin, global head of G10 FX strategy at Deutsche Bank. “Global conditions are nicely set for what has colorfully been described as a ‘currency war’ or a currency race to ‘the bottom’.”
The Turkish lira weakened before a central bank meeting that’s expected to leave Turkey’s main interest rate unchanged at 24%. In commodity markets, all the chatter of rate cuts kept gold near 14-month highs at $1,335.51 per ounce.
Oil prices dropped over 2% as concern about a global economic slowdown offset expectations that OPEC and its allies will extend their supply curbs.
Hedge fund managers have been liquidating bullish oil positions at the fastest rate since late 2018 amid growing economic fears.
Brent crude futures fell $1.4 cents to $60.87, while U.S. crude lost $1.2 to $52.10 a barrel.
Additional reporting by Wayne Cole in Sydney, editing by Larry King

Tuesday, June 11, 2019

BBC News - Brexit shutdown slashes UK car production by 45%

Factory shutdowns designed to cope with disruption from a 29 March Brexit, slashed UK car production in April by almost a half.
Even though Brexit is delayed the factories still closed and production fell 44.5% according to the Society of Motor Manufacturers and Traders (SMMT).
In what it called "an extraordinary month", the SMMT said only 70,971 cars rolled off production lines.
That was 56,999 fewer than in April a year ago.
Production for both home and overseas markets fell by 43.7% and 44.7% respectively.
The SMMT said car firms had brought forward their annual stoppages normally scheduled for the summer holidays.
It said the shutting of factories was part of a raft of costly measures, including stockpiling, training for new customs procedures and rerouting of logistics. It said the factories would not be able to repeat the process for the new 31 October Brexit deadline set by the European Union.
Mike Hawes, SMMT chief executive, said: "Today's figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers.
"Prolonged instability has done untold damage, with the fear of 'no deal' holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation."

Global slowdown

The stoppages in the factories have exacerbated a continuing slow down in the global car industry caused by the trade tensions between the US and China, uncertainties over the arrival of electric and self driving cars, and tougher environmental controls after the VW emissions scandal.
April was the 11th consecutive month of output falls in the UK.
In the year to date, 127,240 fewer cars have been built compared with the same period in 2018 - a decline of more than a fifth.
The SMMT estimated production for the whole of 2019 would be about 10% down on last year. It said the market might pick up by the end of the year if there was a favourable deal between the UK and the EU and a substantial transition period to adapt to trading outside the single market.
But it said a no-deal Brexit would make the declines worse with the threat of border delays, production stoppages and additional costs.
Mr Hawes said: "This is why 'no deal' must be taken off the table immediately and permanently, so industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race."
The Department for Business, Energy and Industrial Strategy said: "The Government wants to see the UK automotive sector continue to grow and attract further investment.
"Through our modern industrial strategy we continue to invest in the future of our automotive industry, including £1bn for research and development into cleaner vehicles, and the Faraday Battery Challenge to develop the next generation of car battery technologies in the UK."

Monday, June 10, 2019

Reuters News - Germany's Maas: Europe will stick to Iran's nuclear deal, but cannot work miracles

TEHRAN (Reuters) - Britain, France and Germany are committed to stick to their commitments from Iran’s nuclear deal with world powers, German Foreign Minister Heiko Maas said on Monday, adding that it was important to keep on talking to avoid a military escalation.
“We want to fulfil our obligations,” Maas said during a joint news conference with his Iranian counterpart Mohammad Javad Zarif in Tehran. “We cannot work miracles, but we will try to avert a failure (of the nuclear deal),” Maas added.
Maas said it was important to continue dialogue with Iran and use those talks also for frank discussions. “The situation in the region here is highly explosive and extremely serious,” Maas said. “A dangerous escalation of existing tensions can also lead to a military escalation.”
Reporting by Sabine Siebold; Writing by Michael Nienaber; Editing by Raissa Kasolowsky

Friday, June 7, 2019

BBC News - The decline of cash in the UK - in charts

Notes and coinsImage copyrightPA
Cash use is falling, with predictions that fewer than one in 10 transactions will be completed with notes and coins in 10 years' time.
Ten years ago, cash was used in six out of 10 payments, but it has been overtaken in popularity by debit cards, driven by the use of contactless technology.
A review of payments, published by banking trade body UK Finance on Thursday, said cash was here to stay, but would play a less important role in the future.
The most recent figures show cash payments are still common, but declining - down 16% from 2017 to 2018, while debit card use is rising.
Cash v debit card over time graph
Contactless payments on debit cards were once used primarily by young adults, but older consumers have adopted the technology, with some of the biggest rises in the last year among pensioners.
Contactless use by age graphic
The use of contactless was given a massive leg-up a few years ago, when it was adopted by the London Underground. Now, however, other regions have caught up with - or overtaken - London in terms of the proportion of adults who make contactless payments.
Theories about the lower take-up in the North West of England include an ageing population in coastal towns sticking with cash, plus the lack of digital access owing to a lack of connectivity in areas such as the Lake District.
Contactless use by region graphic

Overall, this means that debit cards are used more than any other form of payments in our monthly outgoings, but cash is far from dead.
Number of payments made by a typical adult in 2018

Thursday, June 6, 2019

Reuters News - U.S., Mexico to resume talks over tariffs, border as Trump seeks more progress

WASHINGTON (Reuters) - Mexican and U.S. officials are set to resume talks in Washington on Thursday aimed at heading off punitive tariffs on Mexican goods as President Donald Trump called for Mexico to take more action to curb migration at the southern U.S. border,
The two sides met on Wednesday for discussions led by Vice President Mike Pence in an effort to strike a deal that would satisfy the U.S. president, who has called for the imposition of tariffs from Monday.
Staff-level meetings are scheduled to begin at 2 p.m. (1800 GMT) with Mexican officials at the White House, a White House official said on background.
“They have to step up and they have to step up to the plate, and perhaps they will. We’re going to see if we can solve the problem,” Trump told reporters as he departed Ireland on Thursday to attend events marking the 75 anniversary of D-Day in France.
“We’re having a great talk with Mexico. We’ll see what happens, but something pretty dramatic could happen. We’ve told Mexico the tariffs go on, and I mean it too,” Trump said.
Pence told reporters the U.S. State Department would lead talks on Thursday, but gave no further details.
Mexican officials ramped up efforts to halt the flow of Central American migrants crossing the border to the United States, with Mexican soldiers, armed police and migration officials blocking migrants here along its own southern border with Guatemala.
It was unclear whether the hardening of Mexico’s response would appease Trump, who is struggling to make good on his key 2016 presidential campaign promise to build a wall along the U.S.-Mexico border as part of a hard-line immigration stance.
With efforts to get Mexico and then the U.S. Congress to fund the barrier having failed, Trump threatened to shut down the border completely, before backing off and turning to punitive tariffs.
Last week, Trump said Mexico must take a harder line on the flow of migrants across the border or face 5% tariffs here on all its exports to the United States from June 10, rising to as much as 25% later this year.
The unexpected announcement rattled global financial markets and even Trump’s fellow Republicans fretted about the potential economic impact on U.S. businesses and consumers who would have to absorb the costs.
Mexico would also take an economic hit that analysts have said could spark a recession. Credit ratings agency Fitch downgraded Mexico’s sovereign debt rating on Wednesday, citing trade tensions among other risks, while Moody’s lowered its outlook to negative.
Even with more talks on Thursday, it was unclear when any resolution would come, with Trump in Europe through Friday.
U.S. Secretary of State Mike Pompeo, who attended Wednesday’s discussions with Mexican Foreign Minister Marcelo Ebrard, had no public events scheduled for Thursday. Pence was scheduled to travel outside of Washington for most of the day.
Ebrard said Wednesday’s discussions had focused on migration rather than tariffs and more talks were needed to find common ground.
If the tariffs go ahead, the United States would be in a serious trade dispute with both China and Mexico, two of its top three trading partners.
Mexican President Andres Manuel Lopez Obrador has said he is optimistic a deal will be reached, but Mexican officials have meanwhile prepared a list of U.S. products that may face retaliatory tariffs.
Those would target U.S. products from agricultural and industrial states regarded as Trump’s electoral base, a tactic Beijing has also used with an eye toward his re-election bid in the 2020 U.S. presidential election.
Still, Trump remained confident in his tariff strategy.
“I think China wants to make a deal badly, I think Mexico wants to make a deal badly,” he told reporters in Ireland.
Reporting by Roberta Rampton and Lesley Wroughton in Washington and Steve Holland in Shannon, Ireland; Additional reporting by Alexandra Alper; Writing by Susan Heavey; Editing by Bernadette Baum