Airline industry group IATA said it remains concerned about protectionist rhetoric from the United States and other governments, but also sees the new U.S. administration’s plans to invest in infrastructure as positive for the industry.

IATA’s Director General Alexandre de Juniac told reporters in Abu Dhabi on Tuesday that the group had recently held a meeting with U.S. President Donald Trump’s administration, which he described as “positive”. However, he also said the group was “heavily concerned” about plans by governments “to raise barriers on borders for trade and for travel.”

He did not say when the meeting took place.

“It was the opportunity for us to meet the new administration, to express our view and to understand what the new administration had in mind for aviation,” de Juniac said, adding that U.S. plans looked positive in terms of investment in infrastructure and regulation.

IATA and its members were critical of President Trump’s Jan. 27 executive order that blocked refugees and nationals of seven Muslim majority countries from traveling to the United States.

Many in the industry have said the ban was rolled out haphazardly without clear communication, causing chaos and confusion at airports globally. The Trump administration’s revised travel ban is due to come into effect on Thursday.

As well as in the United States, IATA is still concerned about “significant” protectionist rhetoric in Europe and other parts of the world, although it would take time before protectionist measures are felt in the industry, De Juniac said.

This year has started off better than expected, he said.

Passenger demand reached a five-year high in January.

However, IATA said in December that it expects profit in the airline industry to fall this year after a five-year rally and de Juniac said that view remained unchanged.
…

Most analysts predict the U.S. central bank will boost interest rates slightly on Wednesday as the economy nears full employment and inflation rises modestly.

Leaders of the U.S. Federal Reserve are gathered in Washington through Wednesday to debate interest rate policy.  

Experts at Moody’s Investor Service say the Fed will raise rates a quarter of a percent and predicts a couple of similar increases later this year.  Moody’s says even with several increases, rates will still be low enough to encourage growth.

The Fed slashed the benchmark interest rate nearly to zero during the recession to bolster growth and fight unemployment.  Many economists say declines in unemployment mean the economy no longer needs such help.

If officials keep interest rates too low for too long, they risk sparking an abrupt inflationary jump that could force the Fed to raise rates high and fast, disrupting the economy.  Officials raise interest rates to cool the economy and fend off inflation.  Overall, the Fed is trying to guide the economy toward full employment while keeping prices increases around two percent a year.

More evidence of economic strength was published Tuesday, as leaders of many of the largest U.S. companies raised their outlook for hiring, sales, and investment for the next six months.  The Business Roundtable represents companies that employ 15 million people and generate $6 trillion in annual revenues.  

These CEOs are eager to see promised cuts in taxes and regulation carried out in ways that help their businesses grow.
…

Aspiring property moguls take note – the town of Tiller, Oregon, is for sale, asking price just $3.5 million. For an extra $350,000, you can have the old school too.

The mostly uninhabited, unincorporated town about 225 miles (362 km) south of Portland originally went up for sale in 2015, but that did not include the building that used to house the school, said Garrett Zoller, the owner of Land and Wildlife, the real estate firm selling the 250-acre (100-hectare) town.

The current deal, at a reduced price, includes six houses and an apartment, industrial and commercial lots, and a building that once housed a gas station and general store. Adding the school, on an adjacent parcel, swing sets and all, would set a buyer back about $3.85 million.

About 250 people live in the surrounding area. But aside from the family that owns and is now selling the town, only two residents remain in Tiller itself, a former teacher who lives next to the school, and the pastor of the local church. Neither of their parcels is for sale, Zoller said in a phone interview on Monday.

The emptying out of the town came as timber harvesting declined in the region and the town’s mill closed, he said.

“When the federal money started dwindling away for timber, basically the mill shut down,” Zoller said. “And when the mill shut down, a lot of the loggers started having to go away.”

The family that owns Tiller now, he said, accumulated the town lot by lot as other families left.

Daydreamers aside, a complete town could also be an opportunity for a developer, Zoller said, since part of the town has already been divided for a 13-acre (5-hectare) subdivision.

He said he had fielded calls from would-be buyers ranging from Chinese investors to people interested in starting medical facilities and hemp-growing operations.
…

China is witnessing a rare protest from heads of some major Chinese companies who say government controls on the outflow of funds are hurting their ability to strike business deals overseas. Starting late last year, the government began imposing strict controls on currency transfers in a desperate bid to curb outbound investments and stop the yuan from weakening. 

 

Last year alone, Chinese companies struck deals overseas worth $225 billion; but according to data compiled by Bloomberg, there have only been $19 billion in acquisitions abroad, announced by Chinese companies so far this year, a 74 percent drop from the previous year. 

Beijing asked banks to closely scrutinize money transfers, and reject requests from certain companies to move funds to foreign countries for investments in late 2016, a year when Chinese companies struck deals overseas worth $225 billion. China feels that massive fund outflows put pressure on the Chinese Yuan, which has been steadily devaluing against the U.S. dollar since early last year. 

The government clampdown has had a significant effect. According to Bloomberg’s data, there has only been $19 billion in acquisitions abroad announced by Chinese companies so far this year, a 74 percent drop from the previous year. 

Feeling the pinch

 

On the sidelines of high-level political meetings in Beijing, a time typically seen as an opportunity to build consensus and not air dissent, business leaders who attended the talks were blunt in their criticism of the controls.

 

Zhang Yichen, chief executive officer of investment firm Citic Capital Holdings, told reporters that it is almost impossible to use the yuan to invest overseas.

 

“To say that capital controls don’t have any impact – it’s a lie,” said Zhang.

 

Zheng Yuewen, chairman of Chinese drugmaker Creat Group, said, “The foreign exchange management is so strict now that it’s almost impossible to move funds out.”

 

Investments plunge 

 

Over the past two months, China’s outbound investments have nearly been cut in half and government controls are a key reason for this, Julian Evans-Pritchard, China economist for Capital Economics, told VOA.

 

“It has certainly hurt a lot of Chinese companies who are active in the overseas market,” he said. “But I don’t think the government is going to ease controls until outbound flows come down to the level it is comfortable with.”

 

According to China’s Ministry of Commerce, outbound investments plunged by 39.5 percent in December 2016 and 35.7 percent in January of this year as the government began applying the brakes. The drop was dramatic when compared to the surge seen in the previous two months when outbound investments increased 48.4 percent in October and 76.5 percent in November of last year. 

 

The government’s control of fund outflows could become even more stringent as the U.S. Federal Reserve is expected to review interest rates this week. A rate increase would make it more lucrative to invest in the United States, and make it increasingly difficult for Beijing to stem the exodus of money, analysts said. 

 

Standing firm

 

Although the blunt remarks from CEOs were aimed at persuading officials such as the head of the People’s Bank of China and others to loosen restrictions, the government is showing little sign of budging.

At a press conference on the sidelines of the Beijing meetings, People’s Bank of China Chairman Zhou Xiaochuan stuck to the government’s view that curbs were necessary to manage the currency. He also blamed “irresponsible investments” made by Chinese companies in foreign markets for causing the problems.

 

Zhong Shan, China’s minister of commerce, said a small number of companies was investing “blindly and irrationally overseas” and running into a range of financial problems. He said that is hurting the image of Chinese investors overseas; but, he did assure investors that what he called “normal investments” would not be impacted.

 

“There are clearly some who are of the view that China is cooling down, that it is not encouraging investments overseas, but this view is incorrect,” said Zhong.

 

Analysts agree that not all investments are off limits, but the government’s statements downplay the impact controls are having. A quick glance at the numbers reveals that clearly there are some types of investments authorities are looking to slow.

 

No superheroes

 

Right now, there is a big focus on property developers looking to invest overseas, said Andrew Collier, managing director of Orient Capital Research. Media and entertainment investments are also facing challenges, he said, but adds the government is being very selective about just who it is saying no to.

 

“They are focusing most of their opposition on deals where they feel have no value to the Chinese country,” Collier said. In some cases, the government is saying, “It might be nice for you and your business to expand your business overseas, but we don’t think that making films about superheroes is going to benefit the Chinese economy.”

 

Chinese companies such as Dalian Wanda have been ramping up investments in Hollywood and entertainment over the past year. Last Friday, however, a $1 billion deal for the Chinese conglomerate to purchase Dick Clark Productions – which produces the Golden Globe Awards – fell through.

 

At the same time, however, a $43 billion deal between ChemChina and Swiss crop protection and seed group Syngenta is moving forward.

 

“That is a very large deal, and so far there has been no opposition to it,” Collier said. “If you have a deal for a-half-a-billion or a billion dollars it might get a lot of attention in the press, but it is actually not that much money compared to some of the other stuff that is still committed to be going forward.

 
…

Political tension between China and Taiwan has affected cooperation on safety standards leading to a large number of cosmetic and food imports being stopped from entering China, the head of China’s quality watchdog said on Tuesday.

China deems Taiwan a wayward province to be taken back by force if necessary, though proudly democratic Taiwan has shown no interest in being ruled by autocratic China.

China is deeply suspicious of Taiwan President Tsai Ing-wen, who took office last May, believing she wants to push for the island’s independence, a red line for Beijing. Tsai says she wants to maintain peace with China.

Beijing has cut off official communication with Taipei because Tsai has refused to accept China’s view that the island is a part of China, and has put pressure on the trade-reliant island diplomatically and economically.

China’s quality chief Zhi Shuping told reporters on the sidelines of China’s annual meeting of parliament that, although cosmetic and food imports do not account for a large percentage of China’s imports from Taiwan, a large number of imports of those products were substandard.

“Originally we had lots of cooperation, but now certainly it has been obstructed. Some information is not as smooth as it had been in the past,” Zhi said, referring to the period after Tsai took office.

Things would get better if Taiwan recognized the “1992 consensus”, he said.

The “1992 consensus”, agreed with Taiwan’s previous China-friendly Nationalist government, acknowledges Taiwan and China are part of a single China, but allows both sides to interpret who is the ruler.

“Communication would be a lot smoother,” Zhi said. “We all belong to one China, and blood is thicker than water.”

Defeated Nationalist forces fled to Taiwan in 1949 after losing a civil war with the Communists.

Some Taiwanese companies also don’t really understand China’s standards, Zhi said, and Taiwan’s own quality standards have weak points and loopholes.

“We give feedback on each batch, but rectification is not good enough,” he said.

“We treat everyone in the world the same when it comes to safety. Brothers are brothers, but principles are principles.

Just because you’re a brother doesn’t mean we make things easier for you,” he Zhi said.

There have been repeated safety scandals over made-in-China goods, from tainted baby milk formula and rotten meat to fake rice and toxic toothpaste, unsettling consumers around the world, including in Taiwan.
…

U.S. President Donald Trump this week will unveil a budget expected to massively increase military spending while slashing other federal programs.

The proposal, set to be released Thursday, will offer the most detailed look yet at how Trump intends to move ahead with his so-called “America First” policy.

The budget will likely face significant opposition in Congress, where lawmakers are already bickering over a plan to overhaul the nation’s health care program.

Many of Trump’s fellow Republicans support his plan for a larger military; but, unlike Trump, some want to pay for it by cutting Social Security and Medicare – the two largest federal programs.

Democrats are alarmed about the entire proposal, particularly his plan to cut domestic government programs aimed at protecting the environment and helping the poor.

State Dept., foreign aid cuts

Lawmakers in both parties have also expressed concerns about Trump’s steep proposed cuts to the State Department and foreign aid budgets – a move they say will reduce U.S. influence abroad.

White House officials point out the president’s proposals are only a blueprint and that ultimately Congress must agree on a final budget, but they insist difficult decisions must be made.

“Unfortunately, we have no alternative but to reinvest in our military and make ourselves a military power once again,” White House National Economic Council Director Gary Cohn told Fox News Sunday.

“It’s no different than every other family in America that has to make the tough decisions when they need to spend money somewhere, they have to cut it from somewhere else,” Cohn said.

Defense spending

In a blueprint released last month, White House officials said Trump intends to boost the military budget by $54 billion – one of the largest ever increases in national defense spending. This week’s proposal will outline how the president intends to pay for it.

According to budget documents leaked to the media, Trump will offset the military costs with far-reaching reductions in discretionary spending — the part of the budget that pays for various federal government agencies.

Trump is reportedly considering slashing up to 25 percent of the Environmental Protection Agency budget, 30 percent of the Energy Department budget, and 37 percent of the State Department and foreign aid budget.

Reduction in federal workforce

If passed, those cuts would result in a massive reduction of the federal government workforce, which Trump and his fellow Republicans have long said is bloated and inefficient. It is not clear, however, whether Trump’s plans would actually fulfill his campaign promise to reduce the national debt.

That won’t be clear until May, when the White House releases its plans to reform the tax code and its proposals for mandatory spending, which covers existing programs like Medicare and Social Security.

Trump has said it is not politically possible to reduce spending on Medicare and Social Security – which together account for nearly 40 percent of the federal budget. He is also considering a $1 trillion infrastructure plan to upgrade the country’s roads, airports and rail lines.

According to most analysts, that means Trump will likely continue to run a budget deficit.

The federal debt is expected to grow by nearly $10 trillion over the next decade, according to a recent projection by the nonpartisan Congressional Budget Office.

 
…

U.S. chipmaker Intel agreed to buy driverless technology firm Mobileye for $15.3 billion on Monday, positioning itself for a dominant role in the autonomous-driving sector after missing the market for mobile phones.

The $63.54 per share cash deal is the biggest technology takeover in Israel’s history and the largest purchase of a company solely focused on the self-driving sector.

Intel will integrate its automated driving group with Mobileye’s operations, with the combined entity being run by Mobileye Chairman Amnon Shashua from Israel.

Intel Chief Executive Brian Krzanich said the acquisition, which unites Intel’s processors with Mobileye’s computer vision, was akin to merging the “eyes of the autonomous car with the intelligent brain that actually drives the car.”

Mobileye accounts for 70 percent of the global market for driver-assistance and anti-collision systems. It employs 660 people and had adjusted net income of $173.3 million last year.

Intel said it expected the transaction to close within the next nine months and to immediately boost its non-GAAP earnings per share and free cash flow.

The price represents a premium of around 33 percent to Mobileye’s Friday closing price of $47 a share.

“It’s an area where the company (Intel) has had very little presence – the automotive market, and so this is a tremendous opportunity for them to get into a market that has significant growth opportunities,” said Betsy Van Hees, an analyst at Loop Capital Markets who has a “buy” rating on Intel shares.

“Mobileye’s technology is very critical … The price seems fair,” she added.

Because Mobileye’s Shashua will remain in charge and the combined entity will be based in Israel, analysts said they expected it to be far more difficult for rivals to mount a counter offer for Mobileye.

Shashua and two other senior Mobileye executives stand to do well by the deal: together they own nearly 7 percent of the company. Shmuel Harlap, Israel’s biggest car importer and one of Mobileye’s earliest investors, also holds a 7 percent stake.

Yossi Vardi, seen as the godfather of Israeli high-tech, said the deal was a big endorsement of the whole sector.

“I’m sure that this … will be a very important impetus to create a whole industry related to autonomous and connected vehicles (in the country),” he said.

Battle for self-control

Automakers and their suppliers have been expanding alliances in the race to develop self-driving cars, a sector that once seemed a science-fiction dream but is drawing closer to reality month after month.

Mobileye and Intel are already collaborating with German automaker BMW on a project to put a fleet of around 40 self-driving test vehicles on the road in the second half of this year.

At the same time, Mobileye has teamed up with Intel for its fifth-generation of chips that will be used in fully autonomous vehicles that are scheduled for delivery around 2021.

While Intel is known for hardware chips and Mobileye for collision detection software, their merger promises to create the most complete portfolio of technologies needed for driverless vehicles, including cameras, sensor chips, in-car networking, roadway mapping, machine learning and cloud software, as well as the data-centres needed to manage all the data involved.

Last October, Qualcomm announced a $47 billion deal to acquire the Netherlands’ NXP, the largest automotive chip supplier, putting pressure on other chipmakers seeking to make inroads into the market for autonomous driving components, including Intel, Mobileye and rival NVIDIA.

The Qualcomm-NXP deal, which will create the industry’s largest portfolio of sensors, networking and other elements vital to autonomous driving, is expected to close later in 2017, subject to regulatory and shareholder approvals.

For a dozen years, Mobileye has relied on Franco-Italian chipmaker STMicroelectronics to produce chips that the Israeli company sells to many of the world’s top automakers for its current, third-generation of driver-assistance systems.

Mobileye’s relationships with automakers, leading suppliers and STMicroelectronics will continue uninterrupted, the companies said in their statement, and Mobileye’s current product roadmap will not be affected.

Founded in 1999, Mobileye made its mission to reduce vehicle injuries and fatalities. After receiving an investment of $130 million from Goldman Sachs in 2007, it listed on the New York Stock Exchange in 2014.
…

Vietnam will test U.S. President Donald Trump’s openness to one-on-one trade deals as it starts nudging Washington for an eventual agreement to replace its role in the defunct Trans Pacific Partnership (TPP).

Official media outlets in Vietnam say Prime Minister Nguyen Xuan Phuc told an American business delegation last week he was ready to visit the United States, and that he hoped to meet Trump for a discussion about trade, among other topics.

Vietnam depends heavily on factory exports, which are about 19 percent of a $200 billion economy.

“A trade agreement with the U.S., a very large market, would certainly bring some benefits, that’s clear,” said Marie Diron, senior vice president at Moody’s Investors Service in Singapore. “It would be about, kind of about anchoring these export markets with a trade agreement in place.”

Trump is not expected to prioritize free trade deals in the short term, analysts say, but he may someday consider them. Trade deals usually obligate signatories to cut tariffs on each other’s good or services.  

US companies eye Vietnam market

Nguyen may have a chance at working out a trade deal with the United States because American firms selling products such as fast food, mobile phones and even insurance want more access to Vietnam’s fast-growing middle class.

More than one-third of the country’s roughly 93 million people will be middle class or higher by 2020, according to a Boston Consulting Group study.

“You would expect the direction of goods coming from Vietnam to the U.S. picking up more sharply than the other way around,” said Rahul Bajoria, a regional economist with Barclays in Singapore.

But, he said, “it could be the case there might be some pressure from the large [American] industrial manufacturers like the aircraft manufacturers or train companies. All of them may be much more interested in exporting to Vietnam.”

The United States is Vietnam’s top export market, giving the Asian country a trade surplus last year, with exports worth $38.1 billion and imports of $8.7 billion.

But in January, imports increased 14.6 percent, pointing to a possible soft spot in Vietnam for Western brands. American names such as Apple, Dell and Starbucks are easy to find in cities such as the financial center Ho Chi Minh City.

“The U.S. could export to Vietnam, to a market that’s growing so fast, with 90 plus million people who are very brand conscious, where Western brands have a very high reputation,” said Vojislav Milenkovic, analyst with the business advisory BDG Insights in Ho Chi Minh City.

“You can see this every day on the street. You can see that people are trying to save and to buy high-quality products from the foreign countries,” he said.

But Vietnamese consumers still earn just half of their counterparts in China, Diron said. “For some companies, that could be a hurdle,” she said. China’s market is also much larger that Vietnam’s.

End of TPP

Leaders in Hanoi had hoped the TPP would give them access to the U.S. market plus 10 other countries, including Japan. Trump withdrew the United States from the TPP in January, saying it would hurt the country.

Because of the size of the U.S. economy, Trump’s withdrawal made it effectively impossible for other countries to keep the TPP alive.

Trump said shortly after taking office he could consider one-on-one free trade agreements instead of regional ones.

Japanese Prime Minister Shinzo Abe has said he is open to the idea of a bilateral trade pact with the United States, and members of the U.S. Congress advocate an agreement with Britain.

In a phone call after his election in November, Trump told Nguyen he wanted to strengthen ties with Vietnam and that he was willing to meet in the United States.

In exchange for trade favors, Trump might ask Vietnam to support the U.S. presence in the South China Sea where the United States is trying to resist Chinese maritime expansion, said Oscar Mussons, international business advisory associate with the Dezan Shira & Associates consultancy in Ho Chi Minh City.

Vietnam may need to wait out most of Trump’s current term before getting any trade deals, Bajoria cautioned.

Any deal takes time to negotiate, he said, and the U.S. government may try first to build its relations with China, the world’s number two economy after the United States. “I don’t think there’s scope for an FTA over the next 12 months,” Bajoria said.

Since Trump was elected, Vietnamese leaders afraid that the TPP would die began looking instead to other trade deals.

An agreement reached with the European Union in 2015 is due to take effect next year if it clears hurdles in the European bloc’s parliament.

China is also keen to bolster trade ties, but Vietnam hopes to avoid dependence on the long-time political rival that’s known for unloading cheap mass-produced goods in Vietnam at prices lower than what local companies can charge.
…

King Salman and hundreds of business leaders from Saudi Arabia are in Japan for talks Monday mainly expected to focus on economic ties.

The visit is the first by a Saudi king in 46 years, though Salman visited more recently as crown prince.

Saudi Arabia is one of Japan’s biggest suppliers of crude oil, accounting for about a third of its total imports of oil from the Middle East.

The kingdom is striving to diversify its economy away from its heavy reliance on oil exports, and Salman is on a month-long tour of Asia to advance his kingdom’s economic and business interests.

Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters Monday that Japan is willing to provide support for the economic power in the Middle East.

“We will discuss growth strategy, including our `Saudi Vision’ project,” he said, referring to Japanese collaboration with Vision 2030, a roadmap adopted by the kingdom last year for its development and economic objectives  

He did not confirm reports that the countries would agree to set up a special economic zone in Saudi Arabia.

Salman met with Japanese Foreign Minister Fumio Kishida and was to meet Prime Minister Shinzo Abe later Monday.

Reports say Japan plans to urge that Saudi Aramco, the state-run oil company that is being partially privatized, seek a share listing on the Tokyo Stock Exchange.

Separately, Saudi Arabia’s sovereign wealth fund and Japanese telecoms provider and energy company Softbank have joined forces in setting up a $25 billion private fund for technology investments.

Trade between the countries fell overall last year as oil prices dropped. Japan’s 2.1 trillion yen ($18.6 billion) in imports from Saudi Arabia in 2016, mostly oil and gas, dwarfed its exports of 546.3 billion yen ($4.8 billion). 

The delegation arrived late Sunday on about 10 aircraft. Officials said top hotels and car hire services would be busy handling the unusually large group during its four-day visit.

Salman’s stop in Japan follows visits to Indonesia and Malaysia. He is due to travel on to Brunei, China and the Maldives.

While seeking investment and help with Saudi industrialization and development of its services sector, Salman has also offered help. Earlier, he pledged $1 billion in development finance for Indonesia and closer cooperation for combating transnational crime such as human trafficking, terrorism and the drugs trade.
…

The risk of a steep slide in China’s economy has reduced, the head of a government research center said on Sunday, adding the country had moved through an “L-shaped” pattern of slowing to now “horizontal” growth.

China’s economy grew 6.7 percent last year, according to the government, the slowest pace in 26 years. The country met its growth target with support from record bank loans, a speculative housing boom and billions in government investment.

But as Beijing moves to cool the housing market, slow new credit and tighten its purse strings, China will have to depend more on domestic consumption and private investment.

The government last week trimmed its economic growth target to about 6.5 percent for this year. Li Wei, the director of the Development Research Center of the State Council, China’s cabinet, said many positive economic signs were emerging domestically and internationally, and the risk of a large slide in economic growth had “clearly lowered”.

China’s economic development has gone from a “downward stroke in the L-shape to the horizontal stroke,” the official Xinhua news agency said, citing Li’s comments on the sidelines of China’s annual session of parliament.

The horizontal trend points to long-term steady development, but does not eliminate the possibility of short-term fluctuations, or mean the economic transformation is complete, Li said.

“Our economy still has many difficulties to resolve, so we must prepare to respond to the emergence of possibly relatively large risks,” Li said.

Earlier on Sunday, a vice chairman of the state economic planner said China’s industrial output grew more than 6 percent in January and February, and that the survey-based unemployment rate in 31 major cities was about 5 percent for the two months.

National Development and Reform Commission (NDRC) Vice Chairman Ning Jizhe gave the approximations, which were in line with expectations for official data set to be issued on Tuesday.

Fixed asset investment growth kept pace with the final few months of last year, Ning said.

“China’s economic growth still mainly relies on domestic demand,” he said.

January and February data will be released together in a bid to smooth out seasonal factors caused by the timing of the long Lunar New Year holidays, which began in late January this year but fell in February last year.

China unexpectedly posted its first trade gap in three years in February as a construction boom pushed imports much higher than expected. That upbeat import reading reinforced the growing view that economic activity in China picked up in the first two months of the year.
…

On Feb. 19, 2016, at a campaign rally in North Charleston, South Carolina, then-candidate Donald Trump gave a stump speech in which he railed against American jobs moving to Mexico: “We lose our jobs, we close our factories, Mexico gets all of the work,” he said. “We get nothing.” 

 

That same day a law firm in Mexico City quietly filed on behalf of his company for trademarks on his name that would authorize the Trump brand, should it choose, to set up shop in a country with which he has sparred over trade, migration and the planned border wall. 

 

The Trump trademarks have now been granted by the Mexican Institute of Industrial Property (IMPI). Records show the last three were approved February 21, just more than a month after Trump took office, and a fourth was granted October 6, about a month before the U.S. election.

Recent trademark approvals

 

Trump’s company has notched several trademark wins recently. The Associated Press reported Wednesday that the Chinese government recently granted preliminary approval for 38 trademarks to Trump and a related company. 

That sparked outrage from some Democratic senators and critics, who have been pushing Trump to sever financial ties with his global businesses to avoid potential violations of the emoluments clause of the U.S. Constitution, which bars federal officials from accepting anything of value from foreign governments unless approved by Congress.

 

The Mexican trademarks cover a broad range of business operations that can roughly be broken down into construction; construction materials; hotels, hospitality and tourism; and real estate, financial services and insurance. They are all valid through 2026.

 

The same four trademarks were previously held in the name of Donald J. Trump and expired in 2015, a year before the new applications. The new approvals list the trademark owner as the company DTTM Operations LLC, with an address in the Trump Tower on Fifth Avenue in New York.

No new deals abroad

 

As president, Trump has handed management of his business to his two adult sons and vowed to strike no new deals abroad while he is in office. However critics say questions remain about possible conflicts of interest, noting that foreigners could still seek to influence Trump by helping his existing foreign operations or by easing the way for future ones after he leaves the Oval Office.

 

Trump Organization General Counsel Alan Garten said the Mexican government’s decision was not a special favor to the president.

 

“We’re not being granted anything we didn’t have before,” he said. The original trademarks came “years before (Trump) even announced his candidacy.”

 

Garten said the Mexican trademarks originally had two purposes: laying the ground for possible new ventures and keeping other people from using Trump’s name for their own businesses. 

 

He said the trademarks are wholly defensive now.

 

“Circumstances have changed,” Garten said. “He’s been elected and we agreed not to do foreign deals.”

Ethical gray area 

Richard Painter, the chief White House ethics lawyer under George W. Bush, said the Mexican grants are in an ethical gray area: defensive in nature now, perhaps, but setting the president up to profit when he leaves office.

 

“To what extent is this appropriate? I don’t know,” Painter said. “We never had Obama running around the world locking up his name, or Bush.”

 

Intellectual property lawyer Enrique Alberto Diaz Mucharraz is listed on the trademark filings. A junior partner at the Mexico City law firm Goodrich Riquelme y Asociados, he declined to comment citing client confidentiality rules. Phones rang unanswered at the public relations office of IMPI, and there was no response to an emailed request for comment on a list of questions. 

 

Trademarks can prove enormously valuable to companies, especially in countries with a growing number of middle class consumers who recognize the brand, said Ashwinpaul C. Sondhi of A.C. Sondhi & Associates, an investment consultancy in Safety Harbor, Florida.

Why do business in Mexico?

 

Mexican political analyst Alejandro Hope said IMPI is generally considered to be apolitical and the trademark concession was most likely a technical decision. 

 

More remarkable, Hope said, was that the application was filed during a heated campaign when “he had already started using Mexico as a pinata” for political purposes. 

 

“What I find striking is that these guys were thinking about doing business in Mexico while they were trashing Mexico on the campaign trail,” Hope added.

Spotty business record

 

Last decade he and his children aggressively promoted a luxury hotel and condo development with the Trump name on it that was planned for the northern Baja California coast, near Tijuana. In December 2006, 188 units were sold for $122 million during an event at a hotel in San Diego. 

 

But the Trump Ocean Resort Baja Mexico project collapsed, and dozens of buyers who had lost their 30 percent deposits sued in March 2009. Trump settled out of court in November 2013 for an undisclosed sum; in a separate settlement the previous year, developer Irongate, which had licensed the Trump name, agreed to pay the buyers $7.25 million. 

 

On the Caribbean island of Cozumel, near Cancun, Trump tried in 2007 to purchase land for a luxury resort complete with an airstrip and golf course, according to Mexican media reports. It met with local and environmental opposition, and never went anywhere. 

Unpopular in Mexico

 

In all, Trump controls at least 20 trademarks in Mexico, including for Trump Ocean Resort and Trump Isla Cozumel. Others cover activities such as concierge and spa services, alcoholic beverages, golf club operations and home furnishings. For clothing, there’s the Donald J. Trump Signature Collection. 

 

If there are plans to take the Trump brand to Mexico, it could be tough going because of widespread popular anger toward the president for his comments disparaging Mexican immigrants who come to the United States illegally, his threats to tear up the North American Free Trade Agreement and his vows to make Mexico pay for the border wall. 

 

Hope said that if a Trump hotel were in the cards, its prospects could depend a lot on location. 

 

“In Mexico City, I guess they would face a lot of political backlash at this point,” Hope said. Maybe it would fly in more politically insulated areas, like the beach resorts of Cancun or Los Cabos. “But even that would be a hard sell.” 
…