Eleven countries aiming to forge an Asia-Pacific trade pact after the United States pulled out of an earlier version will sign an agreement in Chile in March, Japan’s economy minister said on Tuesday, in a big win for Tokyo.

Trade officials had been meeting in Tokyo to resolve rifts including Canada’s insistence on protections for its cultural industries such as movies, TV and music.

An agreement is a win for Japanese Prime Minister Shinzo Abe’s government, which has been lobbying hard to save the pact, originally called the Trans-Pacific Partnership.

In one of his first acts as U.S. president in January 2017, Donald Trump pulled the United States out of the original 12-nation treaty.

Abe has painted the deal as a spur to growth and reform in Japan and a symbol of commitment to free and multilateral trade at a time when Trump stresses “America First” policies.

Speaking at the World Economic Forum in Davos, Switzerland, Canada’s Prime Minister Justin Trudeau called the agreement the “right deal.”

Canada’s trade minister said in a statement it included an improved arrangement on autos with Japan and the suspension of intellectual property provisions that had been a concern.

The timing of the deal is significant for Canada, which is trying to diversify its exports. U.S., Canadian and Mexican negotiators opened a key week-long round of talks to modernize NAFTA on Tuesday.

Japanese Economy Minister Toshimitsu Motegi said the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), or TPP-11, would be an “engine to overcome protectionism” emerging in parts of the world.

He added Japan would explain the importance of the deal to Washington in hopes of persuading it to join.

Ministers from the 11 countries, including Japan, Australia and Canada, agreed in November on core elements to move ahead without the United States, but demands by countries including Canada for measures to ensure the deal protects jobs blocked a final agreement.

“This outcome reaffirms the CPTPP countries’ collective commitment towards greater trade liberalization and regional integration,” Singapore’s Ministry of Trade and Industry said in a statement.

Australian Prime Minister Malcolm Turnbull said last week the new agreement would leave a door open for eventual U.S. participation.

Canada, which wanted protection of its cultural industries, and Vietnam, which has worried about labor protection rules, will exchange separate side letters with other members on those topics at the time of the signing, Motegi said.
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China and South Korea are protesting U.S. President Donald Trump’s decision to impose steep tariffs on washing machines and solar panels, a move that is fueling concerns in Asia that more U.S. protectionist measures are forthcoming.

Trump said Tuesday that the U.S. was also considering raising tariffs on steel and aluminum.

“We’re looking at it; we’re looking at a lot of things,” he told reporters.

South Korean Trade Minister Kim Hyun-chong called the tariffs “excessive” and said they violate World Trade Organization rules. Kim said South Korea planned to file a petition against the U.S. at the WTO.

The tariffs significantly impact South Korea’s Samsung Electronics and LG Electronics, which have captured about one quarter of the U.S. washing machine market that is dominated by American companies Whirlpool and General Electric.

Samsung said the tariffs are “a tax on every consumer who wants to buy a washing machine.”

China, the U.S.’ largest trade partner and the world’s biggest solar panel manufacturer, said the tariffs are an “overreaction” that would hurt the global trade environment.

Beijing’s Commerce Ministry said it would collaborate with other WTO members to “resolutely defend its legitimate interests,” without offering specifics.

Trump has frequently criticized China for engaging in what he believes are unfair trade practices that have led to the elimination of U.S. jobs.

“After a year’s preparation, Trump is ready to take action to address the huge trade deficit with China and get even,” said Zhang Yi, chief economist with the Beijing-based Capital Securities.

Washington will impose tariffs of up to 50 percent on large washing machines over a three-year period and up to 30 percent on solar panels over four years.

They were imposed after the U.S. International Trade Commission found that the imported products were “a substantial cause of serious injury to domestic manufacturers.”
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A trade group representing U.S. auto parts makers on Monday urged the Trump administration to adopt NAFTA automotive rules that cover research, engineering, design and software development work as part of North American regional value content goals.

The proposal from the Motor and Equipment Manufacturers Association (MEMA) was sent to U.S. Trade Representative Robert Lighthizer as a sixth round of negotiations to revise the North American Free Trade Agreement began in Montreal.

U.S. demands for sweeping changes to automotive content rules are among the most contentious issues in the NAFTA talks, including a requirement that half the value of all North American vehicles come from the United States and a far higher content requirement of 85 percent from North America.

Canada and Mexico have said the U.S. targets are unworkable, but have not responded with counter-proposals.

They are expected to do so at the Montreal talks ending Jan 29. Lack of progress in bridging the gap on autos could jeopardize the negotiations and increase the chances that President Donald Trump follows through on his threat to seek a U.S. withdrawal from NAFTA.

The U.S. auto industry, including MEMA and trade groups representing Detroit and foreign-brand automakers, have largely sided with Canada and Mexico in arguing that the U.S. proposals would hurt the industry’s competitiveness.

The MEMA letter to Lighthizer makes no mention of the proposed U.S. and regional content targets, and focuses instead on recommendations that its members believe will help retain and grow automotive jobs in the United States.

“We think it lines up very well with the president’s initiatives and his stated goals for NAFTA and other free trade agreements,” Ann Wilson, MEMA’s senior vice president of government affairs, told Reuters. “What we have been trying to do is find other ways of getting to the president’s objectives without getting to a 50 percent domestic requirement.”

Counting the well-paid engineering, design, research and software development as part of a vehicle’s value content would provide an incentive for companies to retain jobs doing this work now largely done in the United States.

The proposal also urges the Trump administration to preserve “tariff-shifting” for automotive parts as a means to retain the higher value-added work being done on sophisticated automotive electronics and other systems.

Currently, companies that import components and materials into North America and convert them into automotive parts can “shift,” or apply, NAFTA tariff-free benefits to such inputs.

For example, off-the-shelf electronics parts from Asia such as lidar and radar units, cameras, sensors and circuit boards currently gain this benefit as they are assembled into vehicle crash avoidance systems. Steel tubing converted to fuel injectors also can gain such benefits.

But the current USTR autos proposal would require that virtually all components be subject to a “tracing list” to verify their North American origin so they can count toward regional value targets.

The tracing list would be expanded to steel, glass, plastic resins and other materials, under the proposal.

Industry executives have argued that these requirements are likely to push auto and parts companies to source more products outside the region and simply pay the low 2.5 percent U.S. tariffs on many parts.

MEMA also urged Lighthizer to negotiate an agreement that provides incentives to U.S. companies to train and expand the U.S. workforce, as parts companies struggle to fill open positions amid rising retirements. The group also urged that aftermarket parts be subject to the same NAFTA rules as original equipment parts.
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China invited Latin American and Caribbean countries to join its “One Belt, One Road” initiative on Monday, as part of an agreement to deepen economic and political cooperation in a region where U.S. influence is historically strong.

Chinese Foreign Minister Wang Yi said the region was a natural fit for the initiative, which China has leveraged to deepen economic and financial cooperation with developing nations.

“China will always stay committed to the path of peaceful development and the win-win strategy of opening up and stands ready to share development dividends with all countries,” Wang said at a meeting between China and 33 members of the Community of Latin American and Caribbean States (CELAC).

Representatives from China and CELAC signed a broad agreement to expand ties in the second time China has met with CELAC – a bloc formed in Venezuela in 2011 that does not include the United States or Canada.

Though it had few specific details, the agreement is part of an evolving and more aggressive Chinese foreign policy in Latin America as the United States, under President Donald Trump, has taken a more protectionist stance.

The “One Belt, One Road” initiative, proposed in 2013 by Chinese President Xi Jinping, promotes expanding links between Asia, Africa and Europe, with billions of dollars in infrastructure investment.

Wang emphasized projects to improve connectivity between land and sea, and cited the need to jointly build “logistic, electricity and information pathways.”

The so-called Santiago declaration, signed by China and CELAC delegates, also calls for bolstering trade and taking action on climate change.

Chile Foreign Minister Heraldo Munoz, who has criticized Trump in the past, said the agreement marked an “historic” new era of dialogue between the region and China.

“China said something that is very important, that it wants to be our must trustworthy partner in Latin America and the Caribbean and we greatly value that,” said Munoz. “This meeting represents a categoric repudiation of protectionism and unilateralism.”

China has sought a bigger role overseas since Trump was elected, presenting its Regional Comprehensive Economic Partnership trade agreement as an alternative to the Trans-Pacific Partnership, which the United States has abandoned.

The country is already testing U.S. dominance in Latin America, offering the region $250 billion in investment over the next decade. It is the top trading partner of many countries in the region, including Brazil, Chile and Argentina.

Still, Wang played down the idea of a race for influence.

“It has nothing to do with geopolitical competition. It follows the principle of achieving shared growth through discussion and collaboration,” Wang said in his remarks. “It is nothing like a zero sum game.”

In recent years, Chinese companies have moved away from merely buying Latin American raw materials and are diversifying into sectors such as auto manufacturing, e-commerce and even

technology businesses such as car-hailing services.

“Our relations with China are very broad, this (CELAC) is one more pathway for Brazil to work with China. Together we identified more areas of cooperation,” said Brazil’s Vice Foreign Minister Marcos Galvao.
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The EU’s justice commissioner is working on a proposal that could oblige member states such as Poland, which has clashed with Brussels over reforms to its courts, to pass tests on the independence of their judicial systems before receiving funding.

Vera Jourova said there was agreement within the executive European Commission to work on ideas to encourage strong judiciaries in planning for the new budget from 2021.

“One way could be to insist that independent justice systems are necessary for effective control of the use of EU funds,” she said. “I would like to propose that link.”

Seven-year budget plan

A Commission spokesman said on Monday the work by Jourova was part of broader preparations for a new, seven-year EU budget plan, due to be published in May, and was in line with policy outlines the EU executive has put forward since last year.

The remarks by Jourova, the Commission’s Czech member, come as the EU executive is challenging Poland, a major recipient of Union funds, to amend judicial reforms which Brussels says will hurt democracy and its oversight of EU trading rules.

Facing the prospect of filling a hole left in the budget by Britain’s exit from the EU, and irritated by Poland and other governments in the ex-communist east on a range of issues, some wealthy Western governments have pushed for a clearer link between getting subsidies and abiding by EU standards.

Warning for Poland

The German commissioner in charge of the budget, Guenther Oettinger, warned Poland this month that it could lose some of its 7 billion euros annual funding if it fails to heed Brussels’ complaints about undermining the rule of law.

More broadly, Jourova is also hoping for a review of EU policy on judicial standards in the second half of this year. EU officials say that might, for example, include regular reviews of the performance of national justice systems, along the lines of existing biennial reviews of government economic policies, which are meant to promote “convergence” toward EU-wide goals.

‘Cohesion’ policy

As a former national official handling the regional funding that is a key part of EU efforts to bring poor regions closer to the prosperity of others, Jourova stressed that she saw any new rules applying to all EU funding for all states, not just to so-called “cohesion” policy. She also said it should not be seen as a punitive measure but designed to encourage good practice.

She also said discussion on the proposals could be used to help simplify some of the hurdles to applying for EU funds.

Any Commission proposal seen as too radical by governments risk being killed off by member states. 

 

 
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The global unemployment rate is stabilizing after years in a slump due to a faltering economy, the International Labor Organization reports in “World Employment and Social Outlook: Trends 2018.”

However, unemployment — which the ILO says stands at more than 192 million people globally — is expected remain persistently high in many parts of the world.

The ILO reports that unemployment in wealthier countries is expected to drop to 5.5 percent this year, the lowest rate since 2007.

The labor situation has improved in emerging and developing economies, as well. However, the report warns that employment growth in these countries will not keep pace with the increased numbers of people entering the labor market.

ILO Director-General Guy Ryder expressed concern that low-quality employment is on the rise. He says nearly 1.4 billion people are in vulnerable jobs, meaning they work in difficult conditions for low wages with little security, and that three out of four workers in developing countries are holding down such jobs.

“Very much more effort needs to be made to improve the quality of jobs,” he said. “Despite the uptick in economic and employment growth, which is welcome, working conditions are failing to improve for a very large share of the global workforce. In addition, the projected employment growth in the service sector can be expected to make only a limited contribution to the improvement of job quality.” 

The report notes that working poverty — defined as having income below the poverty line — is falling in emerging countries, but in developing nations, progress in this area is too slow to keep up with the expanding labor force. It says the number of people living in extreme poverty — at less than $3 a day — is expected to remain at more than 114 million for the coming years.

The report’s authors say the gender gap remains wide, with women more likely to have lower-quality jobs and lower salaries than men.
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The NAFTA trade agreement’s future hangs in the balance this week as negotiators from the United States, Canada and Mexico try to settle major differences over revamping a pact that President Donald Trump has threatened to abandon.

Senior officials from the three nations will meet in Montreal for a week starting on Tuesday in the sixth and penultimate round of talks to modernize the 1994 North American Free Trade Agreement.

Trump, who entered office last year pledging to undo what he described as disastrous trade deals, has portrayed NAFTA as grossly unfair to the United States and its workers.

Canada and Mexico, which initially dismissed most of Washington’s demands as unworkable, now say there is room to maneuver. But that still may not be enough to satisfy Trump and impatient U.S. officials.

U.S. threats to walk away from NAFTA, which underpins much of the more than $1 trillion in annual trilateral trade among the three nations, have put markets on edge. The talks are supposed to wrap up by the end of March to avoid clashing with Mexico’s general elections in July.

Trump, who blames NAFTA for killing off hundreds of thousands of U.S. manufacturing jobs and says it has led to a large U.S. trade deficit with Mexico, tweeted last Thursday that “NAFTA is a bad joke!”

Over the last 10 days the Republican president has generated confusion by indicating that he might extend the deadline for talks while saying that walking away from the table would be the best idea.

A council advising Canadian Foreign Minister Chrystia Freeland on NAFTA has concluded that Washington is most likely to announce that it wants out of the pact. It met with Freeland, who says a positive result is still quite possible, last week.

“There is still a shred of optimism, but I have to say the consensus around the room … felt like it’s not if, it’s when he’s going to pull the plug,” Rona Ambrose, a council member and former Canadian minister, told CTV television.

Canadian Trade Minister Francois-Philippe Champagne stressed that Ottawa will not compromise its economic interests.

“Canada will not accept proposals that would be harmful to our economy and to Canadians,” he said in a speech in Montreal on Monday.

Nevertheless, a large majority of economists polled by Reuters are betting the treaty will be renegotiated successfully with only marginal changes.

Freeland met Mexican Economy Minister Ildefonso Guajardo in Toronto on Monday to iron out details of the negotiations, and they agreed it will be critical to tackle some of the most complicated issues, Mexico’s Economy Ministry said in a statement.

Cautious Optimism

Canada and Mexico initially said they would not even discuss U.S. demands to set minimum levels of North American content for the auto sector, a clause that would terminate the deal if it is not renegotiated every five years, and to end the so-called Chapter 19 dispute mechanism.

Sources close to the talks say Canada and Mexico will now be more flexible on the auto content and dispute resolution issues.

“We have got areas we are going to fight for, obviously, but that doesn’t mean we can’t be creative, nimble, clever,” said one Canadian source familiar with Ottawa’s strategy.

“There can be very strong lines (in the sand) … it’s not to say you don’t talk around them. Sometimes you find creative ways without necessarily compromising,” said the source, who requested anonymity given the sensitivity of the situation.

In Mexico, some of the pessimism palpable in late December has given way to cautious optimism that progress towards a deal is possible in Montreal if the Trump administration is prepared to give ground on its toughest proposals.

Jaime Zabludovsky, one of the Mexican negotiators of the original NAFTA accord and an adviser to the private sector on the current talks, said the negotiations in Montreal would be a decisive test of the countries’ ability to make progress.

“I think we’re at a make-or-break moment,” he said in an interview.

One Mexican source familiar with the process said he expected further talks through March and mentioned the possibility that final discussions could, if necessary, be postponed until after the Mexican elections.
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In Davos this week, participants can experience “a day in the life of a refugee.” Or hear about ways to uphold the Paris climate accord and promote free trade. Or rub elbows with any number of leaders of African countries.

 

Enter Donald Trump.

 

The World Economic Forum in Davos, Switzerland, is meant — pretentiously perhaps — to be a place for the world’s decision-makers to put their power to good use. The theme this year is “Creating a Shared Future in Fractured World,” an ambition not likely to turn up on the U.S. president’s Twitter feed.

Instead, Trump will bring his zero-sum message of “America First,” and will speak last among the parade of world leaders — from places like India, France and Canada — who are gathering from Tuesday to Friday in the Swiss snows.

 

As with most things Trump, there are stark contrasts between how attendees view his visit. Some are happy and hope for dialogue. Others unabashedly say they wish he would stay away and accuse him of a lack of compassion and vision for the world that are out of place in Davos.

 

“I find it quite sad he’s coming to the WEF, but I imagine nothing can be done about it,” said Buddhist monk Matthieu Ricard, a longtime disciple of the Dalai Lama.

 

While his trip — which was still on schedule despite the U.S. government shutdown — may seem incongruous, unwelcome or unexpected, he will be sticking to one key aspect of the WEF’s original ambition in starting the annual forum in Davos 47 years ago: Business. An array of Cabinet officials is also due to tag along, suggesting the U.S. is preparing a big economic and diplomatic push.

Some have suggested it’s ironic that Trump, a self-styled populist despite his penchant for the penthouse, is attending the elite Alpine event. Others speculated he could have felt a need to regain the Davos spotlight for the United States a year after Chinese President Xi Jinping stole the show by casting China as a champion of free trade and stability — and many companies responded by turning greater attention toward it.

 

An administration official said Trump is expected to tout the booming U.S. economy and measures like his recent tax overhaul, while again criticizing trade practices that he sees as unfair toward the U.S. The official, who spoke only on condition of anonymity to discuss internal plans, said Trump made the decision to go because he thinks he has a positive economic message.

 

With Wall Street surging, Trump has some cheerleaders on the economic front — even if they hope he’ll be more accommodating.

 

“I think it’s really good that he’s going,” said Bill Thomas, chairman of business services KPMG International. “The American economy is dependent on global engagement, and I think he’s in Davos because he knows that.”

 

Some wonder whether Trump can win over the Davos set, or whether they might succeed in turning his ear — and give him a chance to reboot his administration’s image abroad.

 

“Corporate America, in terms of economic policies, is very pleased with the way the administration is going,” said Andy Baldwin, a regional managing partner for financial services firm EY. But he acknowledged that Trump controversies elsewhere had “overshadowed some of the policies.”

 

Outside of business, though — whether among human rights advocates, environmentalists, peaceniks or free-trade proponents — Trump is shunned.

 

“Despite its formal name, Davos is about more than economics,” said Kenneth Roth, executive director of Human Rights Watch, in an e-mail. “So while Trump undoubtedly intends to trumpet U.S. economic progress, many Davos participants will question his racist, misogynistic, and xenophobic rhetoric and policies.”

 

“Unless he plans an unexpected apology and reversal, he will face a far colder reception than he probably anticipates,” he said.

 

Parts of the jet-set have it in for Trump. Elton John, whose song title “Rocket Man” Trump used to deride North Korean leader Kim Jong Un, will be in Davos, as will actress Cate Blanchett, who shaped chewing gum into a phallus on late-night TV to mock Trump just days after he took office. So will several African leaders whose countries Trump allegedly dismissed with a vulgarity earlier this month.

 

Small protests have started, and others are expected in Zurich on Tuesday and possibly in Davos on Thursday. A Swiss anti-Trump petition has garnered more than 16,000 supporters online, calling on him to stay away. Authorities are boosting security for only the second visit by a serving U.S. president to Davos, after Bill Clinton in 2000.

 

Some might even see a snub in French President Emmanuel Macron’s decision to not stick around to see Trump even though the White House initially had announced a face-to-face meeting in Davos.

 

In his speech Wednesday, Macron is expected to offer a “lucid” diagnosis about globalization, and raise environmental concerns, an adviser said. Macron’s speech could shape up as a counter narrative, and though he wasn’t expected to mention Trump by name “you can read between the lines,” the adviser said, on condition of anonymity because he was not authorized to speak publicly about the matter.

 

“It’s good to have the president here, if the snow conditions and the situation in Washington allow us,” WEF founder Klaus Schwab told The Associated Press on Monday, alluding to the U.S. government shutdown that could spoil Trump’s plans to attend. The White House has said it’s monitoring the situation day to day, and Schwab said: “At the moment we cannot make a comment on that [Trump’s attendance].”

 

Trump has, in a way, already been on hand in Davos. During last year’s event, which coincided with his inauguration, many attendees gawked at TV sets as Trump declared “America First” from the Capitol steps.

 

When he arrives this year, discretion may be the order of the day: Zurich airport, the closest big hub, has announced a lockdown on press access for the arrival of Air Force One.

 

Switzerland’s Young Socialists party is revving up to protest to register pent-up anger about how Trump lost the popular vote in 2016, but won the election, and suspicions of Russian meddling in that contest.

 

“He’s sexist, he’s racist,” said Tamara Funiciello, the group’s president. “And I don’t think it’s responsible to speak with him.”

 

 

 
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