YCLOAK

Yemen’s government says it is giving civil servants and pensioners pay raises, after protests against the country’s woeful economy nearly paralyzed a major port city Sunday.

Officials have not said when the raises would take effect or how much they will be.

Demonstrations against the economy in the port of Aden continued Monday. Many shops were closed, and some people burned tires in the streets.

Some of the marchers demanded to be paid in dollars, accusing senior officials of taking their salaries in the U.S.-based currency while paying the rank-and-file in the increasingly weak Yemeni rial.

The rial has lost more than half its value against the dollar since Iranian-backed Houthi rebels seized the capital of Sanaa in 2014, sending the Western-recognized government into exile in Saudi Arabia.

It has since returned to set up shop in Aden.

Airstrikes

Meanwhile, the Houthis are demanding a war crimes investigation against the Saudi-led coalition after an airstrike last month that killed 40 children.

In an appeal Monday to the International Criminal Court, the Houthis asked the court to look into its “humanitarian conscience.”

A coalition missile struck a market in a Yemeni town near the Saudi border last month, killing 51 people. Among the dead were 40 children on a school bus coming back from a summer camp outing.

The coalition called the airstrike a “mistake.” It promised to hold those behind the attack legally responsible and to compensate the victims.

But the Houithis accuse the Saudis of being both the “judge and the jury” and “making light” of the civilian deaths.

U.N. human rights officials have said they believe both sides in Yemen may be responsible for war crimes.

The Saudi-led airstrikes have compounded the misery in Yemen, which is not only one of the world’s poorest nations, but is also on the edge of famine.

The U.N. has said about 80 percent of Yemeni civilians lack enough food and medical care.

The coalition airstrikes have obliterated entire neighborhoods, including hospitals and schools.
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The Iranian rial hit a record low against the U.S. dollar on the unofficial market Monday amid a deterioration in the economic situation and the reimposition of sanctions by the United States.

The dollar was being offered for as much as 128,000 rials, according to foreign exchange website Bonbast.com, which tracks the unofficial market.

The currency has been volatile for months because of a weak economy, financial difficulties at local banks, and heavy demand for dollars among Iranians who fear the pullout of Washington from a landmark 2015 nuclear deal and renewed U.S. sanctions could shrink Iran’s exports of oil and other goods.

A set of U.S. sanctions targeting Iran’s oil industry is due to take effect in November.

Last week, Iran’s parliament sacked the minister of economic affairs and finance, the latest in a continuing shakeup of top economic personnel. In early August, Iranian lawmakers voted out the minister of labor; in July, President Hassan Rouhani replaced the head of the central bank.

Protests linked to the tough economic situation in Iran erupted last December, spreading to more than 80 cities and towns and resulting in 25 deaths.

Sporadic protests, led by truck drivers, farmers and merchants in Tehran’s bazaar, have continued since then and have occasionally resulted in violent confrontations with security forces.
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When President Donald Trump pulled the plug on an upcoming trip to North Korea by his secretary of state, he pointed a finger of blame at China and the global superpower’s trade practices.

In his recent trade breakthrough with Mexico, Trump praised the country’s outgoing president for his help on border security and agriculture.

Both developments offered fresh evidence of how Trump has made trade policy the connective tissue that ties together different elements of his “America First” foreign policy and syncs up them with his political strategy for the 2020 presidential election.

Trump’s 2016 triumph was paved in part by his support among blue-collar voters in Midwestern manufacturing states that narrowly supported him over Democrat Hillary Clinton, including Michigan, Wisconsin, Ohio and Pennsylvania.

His aggressive trade tactics, epitomized by tariffs and standoffs with longtime economic partners and allies, are aimed at reversing what he has long viewed as unfair trade deals while maintaining support among largely white, working-class voters who have been hurt by the loss of manufacturing jobs.

“Trump understands that economic policy is foreign policy and vice versa,” said Stephen Moore, a former Trump campaign adviser and visiting fellow at The Heritage Foundation. “The most important element of foreign policy is to not just keep the world safe but to also promote America’s economic interest. That’s what Trump does — this is America First.”

It’s also good politics, in Trump’s view.

“It’s a populist position. But it’s also a popular position with a lot of Americans,” Moore said.

As he puts a high premium on trade gains, Trump is intertwining the issue with a host of top foreign policy concerns.

Trump, asked by reporters last week about North Korea living up to its commitments to denuclearize, said “part of the North Korean problem is caused by our trade disputes with China,” pointing to the U.S. trade imbalance with China.

“We have to straighten out our trade relationship because too much money is being lost by us,” Trump said. “And as you know, China is the route to North Korea.”

Trade has been a common refrain at the president’s rallies, where he has vowed to pursue “fair and reciprocal trade.”

“We don’t want stupid trade like we had for so long,” Trump said during a rally in Duluth, Minnesota, in June.

Trump’s second year as president has been marked by a number of trade disputes with traditional U.S. allies and global rivals alike, an approach cemented by his tweet that “trade wars are good.”

He imposed tariffs on steel and aluminum imports in March, prompting retaliation from the European Union and other American allies. Later in the month, Trump announced tariffs on China to combat what he called the theft of U.S. technology from a wide range of goods and services.

China struck back with its own sanctions on a variety of U.S. products, including Midwest farm-produced soybeans in a way to hit hard against the president’s base of voters. The two sides have clashed during the spring and summer, raising the stakes in their trade fight.

In late July, Trump and European Commission President Jean-Claude Juncker reached a temporary deal at the White House to avert tariffs on automobile imports and a ramping up of their trade dispute — although the threat still remains.

After a breakthrough with Mexico, Trump’s team has been engaged in talks with Canada aimed at creating a new version of the 24-year-old North American Free Trade Agreement.

While previous administrations have often used a carrot-and-stick approach to trade as a way to forge agreements, before Trump’s arrival trade agendas had emphasized multi-lateral and bilateral deals aimed at maintaining U.S. leadership around the world, promoting American values and improving human rights.

This administration, by contrast, “is leveraging foreign policy tools to achieve its trade goals,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Critics say Trump’s insistence on trade concessions could hamper his ability to move forward in other areas.

On North Korea, for example, Trump has sought to turn his meeting with Kim Jong Un into a vivid example of how his unconventional style can bring longstanding U.S. adversaries to the bargaining table.

But by raising China’s trade practices as essential to any progress to ensuring North Korea gets rid of its nuclear weapons, Trump runs the risk of getting bogged down in both areas — and having little to show for it.

Mixing foreign policy and trade policy introduces so many variables it’s “virtually impossible to close on a precise policy decision,” said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC in Columbus, Ohio. “You’re constantly chasing after the next issue as opposed to having a very targeted approach to the objective.”
…

Tanned and wearing a swimsuit, So Myong Il walks to the barbecue pit and throws on some clams.

 

He obviously loves the beach he’s on as well as the rugged, emerald Chilbo mountains that rise abruptly behind it. He loves them enough to forget, for a moment at least, that he is a senior official sent to deliver an ideology-soaked pitch singing their praises and instead lets the natural beauty surrounding him speak for itself.

 

Comrade So sees great things for North Korean attractions like this.

Hotels, big and small. Tourists from all over the country, maybe the world. “As long as we have the leadership of our respected Marshal,” he says, referring to leader Kim Jong Un, “our future will be bright indeed.”

 

So wouldn’t think of questioning the leader, but there is a hint of apprehension in his voice. And he isn’t alone.

 

North Korea is pushing ahead with a new strategy of economic development and the intensified diplomacy with China, South Korea and the United States that such a move requires. But hopes for a better future are mixed with concern over potential downsides of political or social volatility, and something that’s harder to articulate: a fear of the unknown – even if it appears far more promising than the arduous path the country has been on for decades.

Even before announcing in January that he had sufficiently perfected his nuclear arsenal and could start to focus on other things, Kim has held economic development to be his primary long-term concern.

 

He has allowed markets and entrepreneurialism to flourish and, since succeeding his father as leader seven years ago, has dramatically transformed the skyline of the capital, Pyongyang, with several high-rise districts. The transformation in the east coast city of Wonsan, where Kim has a summer villa, has been almost as spectacular.

 

As Kim prepares for the 70th anniversary of North Korea’s founding on Sept. 9, his ambitious development plan is being implemented, from the small-time renovation of town halls to the almost biblical-scale mobilization of “soldier-builders,” who are working around the clock to turn the remote northern city of Samjiyon into yet another showcase of Pyongyang-style socialism.

 

Economic development – and how U.S. capital and know-how could speed it along – was President Donald Trump’s big carrot when he met with Kim in Singapore three months ago to try to negotiate a denuclearization deal.

 

But Kim’s diplomatic overtures aren’t intended to open the door to American capitalists, a scenario that would make any good party cadre shudder. They are aimed at breaking down support for sanctions and getting the U.S. to step out of the way. Kim’s game is to play China and the U.S. off each other, grab whatever concessions he can along the way and adjust his position as the situation evolves.

 

In the meantime, lest anyone get the wrong idea, the ruling Workers’ Party of Korea has begun churning out paeans to socialism in its daily newspaper along with anti-capitalism, anti-imperialism screeds that underscore North Korea’s official opposition to essentially anything that might be considered the American way of life. Or, as it’s known in the jargon of North Korea’s propaganda machine, “the imperialists’ bourgeois ideological and cultural poisoning.”

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The past few months have been tense in Pyongyang.

 

Restrictions on some of the movements of foreign diplomats have been tightened, for example, and even requests by The Associated Press to interview government officials or to speak with regular citizens have mostly been denied.

 

Uncertain of where it might all end up, state-run media have provided only limited coverage of Kim’s meetings with Trump in June and his multiple summits with Chinese President Xi Jinping and South Korean President Moon Jae-in. Reports have portrayed Kim as the consummate statesman, firmly in charge of a carefully considered strategy to make his country safer and more prosperous.

 

Kim is ardently wooing South Korean investment to help him build the very things Trump was offering: infrastructure, particularly roads and railways, and the development of selected tourism zones. After a high-profile chill last year, he is also actively courting Beijing, which continues to be an essential source of fuel, a key market for North Korea’s coal and other natural resources and a fairly reliable check on U.S. power in the region.

 

Pyongyang’s explanation for the shift in its foreign policy has been consistent: Having successfully built a credible nuclear deterrent to U.S. aggression, Kim is reaching out to Seoul to join hands in a “for Koreans, by Koreans” effort to secure a lasting peace on the Korean Peninsula, unhindered by the meddling of foreign powers.

 

Undoubtedly, images of the leader smiling and shaking hands with Trump, whose face had never been on the front pages of their newspapers before, signaled a major and bewildering change to many North Koreans.

 

But officials have made sure they don’t have much time to ruminate on it.

 

Normal routines of work and study have been put on hold for large segments of the populace who have been mobilized for the development projects. Tens of thousands of people in Pyongyang, meanwhile, have spent the past several months feverishly preparing for mass rallies and mass games to mark the anniversary.

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Mount Chilbo, a collection of rocky peaks and a stretch of largely untouched seashore on the country’s northeastern fringe, is one of North Korea’s most cherished natural wonders.

 

The first hotel for non-Korean visitors opened in the 1980s, followed in 2004 by homestay-style lodgings near the beach, said So, a North Hamgyong Province People’s Committee official. Together they have a capacity of fewer than 100 guests and only operate from April until early November.

 

Many North Koreans bring tents and sleep on the beach.

 

But even in this rustic corner of the country, the pressure to contribute to Kim’s grand development scheme is keenly felt.

 

So said he would soon travel to China to discuss possible areas of cooperation.

 

As an indicator of Kim’s success with Beijing, tourism from China is already on the rise. Pyongyang’s longer-term goal, however, is to tap the South Korean market. The idea is that, if handled properly, South Korean tourism would present a chance to promote the North in a positive light and boost its image within South Korea.

 

That’s a gamble too.

Back in the late 1990s and early 2000s, South Koreans were allowed to visit in a highly regulated and controlled manner, and massive investment from South Korean businesses helped the North fund infrastructure projects in the same Wonsan-Mount Kumgang area that Kim is focusing on now. But it ended badly in 2008 when a South Korean woman who entered a restricted area was shot to death by a North Korean soldier.

 

So said he believes Chilbo, like Kim’s pet projects in Wonsan, could be a big draw for tourists. But he worries about where the money will come from and what might be lost.

 

“Whatever we do, we need to protect the natural beauty of this place,” he said.”I think there will be many changes in the coming years. Plans are being discussed. But nothing is decided.”

 
…

The International Organization for Migration reports more than 270 Nigerian migrants who recently returned from Libya have completed a skills training course to help them start their own businesses.

Migrants attending this weeklong event in the Nigerian capital Lagos have shared stories of the business frustrations that drove them to try to go to Europe in search of better economic opportunities.

U.N. migration agency spokesman, Paul Dillon, told VOA the migrants also have shared stories of the abuse and suffering they endured at the hands of smugglers and traffickers in Libya. At the same time, he said returnees enrolled in this business course have spoken of their hopes for the future.

“The goal of these types of initiatives is always to give people options and providing them with business skills training, for example. It certainly does that.Start up a small business at home, get hired on by a local company, build your life back in Nigeria. I think that is the goal and also to encourage formal migration efforts,” he said.

This is the 21st training course since the program was started in April 2017. IOM reports more than 2,000 Nigerian returnees have participated in courses given in Lagos, Edo, Nassarawa, Kano and Kaduna States.

Dillon said many of the returnees have become involved in collective reintegration schemes or community-based projects, such as fruit juice, palm oil and plantain processing factories.

He said training now is focused on creating more sustainable businesses, not just on regular trading, buying and selling. Therefore, he said there is greater concentration on agriculture-related businesses, which are more sustainable and more beneficial to the returnees’ communities.

He said IOM, together with the Ministry of Labor and the Lagos Chamber of Commerce and industry are organizing a job fair at the end of September.This, he said, will give returnees the opportunity to meet leaders in Nigeria’s private sector and to search for jobs to match their skills.
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Investment banks which lost out on big payouts for the work on the shelved listing of oil giant Aramco are lining up for a raft of other projects as Saudi Arabia pursues reforms.

Banks including JPMorgan and Morgan Stanley worked for months to prepare what would have been the biggest ever stock market debut. But the plan to sell 5 percent of the company for a targeted $100 billion was pulled.

The bankers were paid retainer fees but were expecting around $200 million would be shared among all the banks involved when the deal was done.

Now, they are pinning their hopes on other projects from a privatization program that is part of Riyadh’s economic reform plan to loosen its reliance on oil. Without the funds from the Aramco sale, the government is looking to raise money in other ways, creating new opportunities for the banks, bankers say.

Teams from JP Morgan and Morgan Stanley that worked on the IPO, have been shifted to advise on Aramco’ planned acquisition of up to $70 billion in petrochemicals firm Saudi Basic Industries (SABIC), three people familiar with the details of the transaction told Reuters.

HSBC, which was also an adviser on the Aramco IPO, is expected to play a role in putting together the debt to fund that purchase, they said.

One of the sources said the issue could exceed the 2016 sovereign bond issue of $17.5 billion, which was a record for the kingdom. Aramco said earlier this month it was in “very early-stage discussions” with the kingdom’s Public Investment Fund (PIF) to acquire the stake in SABIC but has not said how it will finance the deal.

Spokespeople for JP Morgan, Morgan Stanley and HSBC declined to comment on their role in the Sabic deal. None of those banks have confirmed they were involved in the Aramco IPO. Other deals are expected to be forthcoming.

“The PIF[sovereign wealth fund] has had to reconsider its budget in the last three months, after finding out that they wouldn’t be getting $100 billion from the Aramco IPO right away,” said a banker in Saudi Arabia.

“So there’s been a flurry of activity as they look to raise cash in other ways. A lot of these are smaller deals, $1 billion here and there, but all geared toward financing their commitments for big infrastructure projects without slowing down their timelines.”

The banker did not give details of the other deals. PIF officials did not respond to a Reuters request for comment.

After Reuters reported last week that the Aramco deal had been shelved, Energy Minister Khalid al-Falih said the government was committed to conducting the IPO at an unspecified date in the future.

Bankers wary

The bankers are nevertheless wary after the Aramco experience. It highlighted the hurdles of doing business in a country governed by an absolute monarchy where public protest and political parties are banned. It also added to uncertainty after scores of top royals, ministers and businessmen were rounded up in an anti-corruption campaign last November.

The preparation for the listing was launched by Crown Prince Mohammed bin Salman two years ago and some bankers had flown to the kingdom hundreds of times to work in the Dhahran camp, a gated compound for the oil group’s residents.

A different source said Aramco had demanded it deal only with the very top bankers.

Another person familiar with the Aramco deal said he had made more than 20 trips to Dhahran over 18 months but with little to show for it. He said his team would “give the same presentation each time without getting much feedback.”

Bankers also say the fees are modest in comparison to those paid by other countries.

“The deal flow is huge but there’s a worry that the fees coming from these projects are low,” said a Gulf-based banker who spoke on conditions of anonymity.

“Saudi Arabia is lower than Hong Kong and Dubai when it comes to fees,” he said. “It’s all substandard.”

 

Typical fees for banks doing IPOs in more developed markets are around 1 percent of the overall deal while estimates from bankers and analysts for an Aramco IPO was 0.2 percent.

The 35 banks who worked on Chinese internet giant Alibaba’s $21.8 billion float, led by six main underwriters, pocketed an estimated $300 million among them, according to Thomson Reuters data.

‘Plenty of deals’

Still, the rewards from a privatization that analysts expect to generate ($9 billion to $11 billion) by 2020 are too big for bankers to ignore.

HSBC is already advising Saudi International Petrochemical Company on a potential merger with Sahara Petrochemical, which is being advised by Morgan Stanley, according to disclosures from March.

U.S. bank Citigroup obtained a license to conduct capital markets business in Saudi Arabia last year after an absence of almost 13 years.

Moelis is preparing to apply for an advisory license in Saudi Arabia and U.S. boutique investment bank Evercore opened an office in Dubai in 2017.

The government is also trying to make it easier to do deals, changing the law to allow alternatives to traditional debt finance.

“There are plenty of deals to be made from bigger players looking to consolidate their market position and buy out competitors,” said Mohammed Fahmi, the Dubai-based co-Head of EFG Hermes Investment Banking.

“Good stories will continue to see a following.”
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The film industry organization that presents the Academy Awards is also developing young talent through a program called Academy Gold — an internship and mentoring program for students and young professionals from communities currently underrepresented in Hollywood. Some of the participants are either immigrants or children of immigrants who are trying to create an unorthodox career path for themselves. VOA’s Elizabeth Lee reports from Los Angeles.
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Owning your home is the most popular definition of the American Dream. But in today’s economy, more Americans are opting out of buying or renting. Some are choosing to live in housing cooperatives, or “co-living” arrangements, where tenants rent bedrooms and sometimes a bathroom, but share kitchens and other rooms. Tatiana Vorozhko and Dmitriy Savchuk of VOA’s Ukrainian Service visited a co-living house in Brooklyn, N.Y., to find out why some are choosing another version of the American Dream.
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A new U.S. study finds that when temperatures around the world start creeping up, insects that eat crops will not only become hungrier, their numbers will grow. Scientists say this will mean more insect damage to wheat, corn and rice crops, and therefore less food on the dinner table. VOA’s Mariama Diallo reports.
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Community and conservation groups in Myanmar have branded a planned highway linking a port project to Thailand an “ecological and social disaster,” saying it would uproot indigenous people from their homes and farms.

Critics said an environmental and social impact assessment for the road project, approved by the Myanmar government in June, failed to adequately specify compensation for loss of land and livelihoods, among other problems.

“This is a road to an ecological and social disaster (in Myanmar),” said Christy Williams, Myanmar director for the World Wide Fund for Nature (WWF), an international conservation group.

The highway is considered strategically important to both nations as it would link Thailand to a deep-sea port and planned Special Economic Zone (SEZ) in Dawei, a town on the Myanmar side of an isthmus divided between the two countries.

The industrial complex would serve as a gateway to Southeast Asia’s markets, with goods trucked between Dawei and Thailand, avoiding the need for ships to sail southward through the Malacca Straights, the world’s busiest shipping lane.

​Region of rich biodiversity

But Williams said the planned road would pass through a region of “huge ecological importance with rich biodiversity.”

The assessment looked only at the effects on people and the environment within 500m (550 yards) of the road, he added, but the impact will affect a much wider area.

He said WWF had been working with communities and provided “extensive recommendations and solutions” to the Myanmar government and Myandawei Industrial Estate Co. Ltd, the Thai firm developing the road and SEZ, but these had “been ignored.”

The impact assessment failed to address many issues brought forward by residents during consultation sessions, said Thant Zin, director of the Dawei Development Association, a local civil society group.

“Our main concerns over the project are forced relocation of thousands of local indigenous people, potential industrial pollution … land grabbing and livelihood issues, and human rights violations in project area,” he said.

A spokesman for Myanmar’s environment ministry did not respond to repeated requests for comment.

Gunn Bunchandranon, a spokesman for Myandawei Industrial Estate Co. Ltd, said the highway’s impact assessment was in line with the laws of both Myanmar and Thai.

He said people from affected communities who attended public consultations did not raise any concerns about compensation for loss of land.

However, a 2015 draft of the impact assessment provided by conservation group EarthRights International included the minutes of one such meeting where the land compensation question was raised.

Risk of renewed conflict

Myanmar residents have also expressed fear that the highway could reignite conflict between the government and Myanmar’s oldest armed group, the Karen National Union (KNU), according to Ben Hardman of EarthRights International.

Those concerns did not make it into the impact assessment, Hardman said.

The KNU signed a cease-fire agreement with the military in 2012, ending six decades of fighting. In 2015 it signed a national cease-fire agreement (NCA), along with other armed ethnic groups.

But relations with the government remain tense, and the KNU claims control over territory the highway would pass through.

Saw Tah Doh Moo, the group’s secretary general, said the NCA required that the KNU be consulted about any development projects in areas under its control.

However, neither the company nor the government have officially discussed the road project with them, he said.

“I don’t want to say what would happen, but it would undermine the NCA,” he told the Thomson Reuters Foundation by phone. “We have to think about how to respond.”
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U.S. President Donald Trump notified Congress on Friday of his intent to sign a trade agreement with Mexico after talks with Canada broke up earlier in the day with no immediate deal to revamp the tri-nation North American Free Trade Agreement.

U.S. Trade Representative Robert Lighthizer said U.S. officials would resume talks with their Canadian counterparts next Wednesday with the aim of getting a deal all three nations could sign.

All three countries have stressed the importance of NAFTA, which governs billions of dollars in regional trade, and a bilateral deal announced by the United States and Mexico on Monday paved the way for Canada to rejoin the talks this week.

But by Friday the mood had soured, partly on Trump’s off-the-record remarks made to Bloomberg News that any trade deal with Canada would be “totally on our terms.” He later confirmed the comments, which the Toronto Star first reported.

“At least Canada knows where I stand,” he later said on Twitter.

Ottawa has stood firm against signing “just any deal.” 

​’Making progress’

But at a news conference Friday afternoon, Canadian Foreign Minister Chrystia Freeland expressed confidence that Canada could reach agreement with the United States on a renegotiated NAFTA trade pact if there was “goodwill and flexibility on all sides.”

“We continue to work very hard and we are making progress. We’re not there yet,” Freeland told reporters.

“We know that a win-win-win agreement is within reach,” she added. “With goodwill and flexibility on all sides, I know we can get there.”

The Canadian dollar weakened to C$1.3081 to the U.S. dollar after The Wall Street Journal first reported that the talks had ended Friday with no agreement. Canadian stocks remained 0.5 percent lower.

Global equities were also down following the hawkish turn in Trump’s comments on trade.

Lighthizer has refused to budge despite repeated efforts by Freeland to offer some dairy concessions to maintain the Chapter 19 independent trade dispute resolution mechanism in NAFTA, The Globe and Mail reported Friday.

However, a spokeswoman for USTR said Canada had made no concessions on agriculture, which includes dairy, but added that negotiations continued.

The United States wants to eliminate Chapter 19, the mechanism that has hindered it from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to cut the mechanism. For Ottawa, Chapter 19 is a red line.

Trump argues Canada’s hefty dairy tariffs are hurting U.S. farmers, an important political base for his Republican Party.

But dairy farmers have great political clout in Canada too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election.

At a speech in North Carolina on Friday, Trump took another swipe at Canada. “I love Canada, but they’ve taken advantage of our country for many years,” he said.
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Coca-Cola is hoping for a caffeine-fueled boost with the acquisition of British coffee chain Costa.

Costa is Britain’s biggest coffee company, with over 2,400 coffee shops in the U.K. and another 1,400 in more than 30 countries, including around 460 in China, its second-biggest market. Coca-Cola said Friday it will buy the Costa brand from Whitbread for 3.9 billion pounds ($5.1 billion) in cash.

The deal, expected to close in the first half of 2019, comes on the heels of Coca-Cola’s announcement earlier in August that it was buying a minority ownership stake in sports drink maker BodyArmor for an undisclosed amount. Coca-Cola’s other investments in recent years have included milk that is strained to have more protein and a push into sparkling water.

The move is Coca-Cola’s latest diversification as health-conscious consumers, at least in America, move away from traditional soda.

Rival PepsiCo, meanwhile, recently bought carbonated drink maker SodaStream, which produces machines that allow people to make fizzy drinks in their own homes.

Coca-Cola already owns the Georgia and Gold Peak coffee brands, which make bottled and canned drinks, but the purchase of Costa could allow it to compete with brands like Starbucks.

Coffee is growing by 6 percent a year, making it one of the fastest-growing beverage categories in the world, said James Quincey, Coca-Cola president & CEO.

“Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” he said.

Coca-Cola has over 500 brands in its stable including Fanta, innocent smoothies and Powerade sports drinks. In 2017, it generated operating income of $9.7 billion on revenues of $35.4 billion.

Without being specific about expansion plans, Quincey said in a video posted on Coca-Cola’s website that the company would “over time” look to take Costa “to more people in more places.”

Costa doesn’t currently have a presence in North or South America, but Quincey indicated that one potential early expansion route would be to use Costa’s vending operation and grow the company’s ready-to-drink products. In addition to its shops, Costa has self-serve coffee machines in grocery stores and gas stations.

Whitbread bought Costa for 19 million pounds in 1995, when it had just 39 shops. In recent years, Whitbread has invested heavily in Costa’s expansion overseas, but had been looking to siphon off the business to generate funds for the expansion and for its other business, the budget hotel chain Premier Inn.

Then Coca-Cola got in touch with what Whitbread said was a “highly compelling” offer. The Whitbread board unanimously backed the deal.

Whitbread will use a “significant majority” of the net cash proceeds — around 3.8 billion pounds after taking into account such things as transaction costs — returning cash to shareholders. Some will be used to pay down debt and to make a contribution to the pension fund.

Doing so, Whitbread said, would “provide headroom” to further expand the Premier Inn budget hotel chain in Britain and Germany.

Whitbread’s share price soared 17 percent in early afternoon trading in London.

Nicholas Hyett, equity analyst at London-based stockbrokers Hargreaves Lansdown, said Costa will get “lots of care and attention” from Coca-Cola.

“Its global reach should turbo-charge growth in the years to come, and hot drinks are one of the few areas of the wider beverages sector where the soft drinks giant doesn’t have a killer brand,” he said.
…

Ports and ground terminals in nearly every state handle goods that are now or will likely soon be covered by import tariffs. Port executives worry that this could mean a slowdown in shipping that would have ripple effects on truckers and others whose jobs depend on trade.

The Associated Press analyzed government data and found that from the West Coast to the Great Lakes and the Gulf of Mexico, at least 10 percent of imports at many ports could face new tariffs if President Donald Trump’s proposals take full effect.

Since March, the U.S. has applied new tariffs of up to 25 percent on nearly $85 billion worth of steel and aluminum and various Chinese products, mostly goods used in manufacturing.

Trump said in a recent tweet, “Tariffs are working big time.” He has argued that the tariffs will help protect American workers and force U.S. trading partners to change rules that the president insists are unfair to the United States.

In New Orleans, port officials say a tariff-related drop in shipments is real, not merely a forecast. Steel imports there have declined more than 25 percent from a year ago, according to the port’s chief commercial officer, Robert Landry.

The port is scouting for other commodities it can import. But expectations appear to be low.

“In our business, steel is the ideal commodity,” Landry said. “It’s big, it’s heavy, we charge by the ton so it pays well. You never find anything that pays as well as steel does.”

The port of Milwaukee imports steel from Europe and ships out agricultural products from the Midwest. Steel imports haven’t dropped yet because they are under long-term contracts, said the port director, Adam Schlicht. But there has been “an almost immediate halt” in outbound shipments of corn because of retaliatory duties imposed by the European Union on American products.

Much of the corn, he said, “is just staying in silos. They are filled to the brim.”

Many other ports have been humming along and even enjoyed an unexpected bump in imports during June and July as U.S. businesses moved up orders to ship before the new tariffs took effect. That started with manufacturing goods and is now spreading to retail items for back-to-school and Christmas.

“Some of my retail customers are forward-shipping the best they can to offset proposed tariffs,” says Peter Schneider, executive vice president of T.G.S. Transportation, a trucking company in Fresno, California.

Port officials were encouraged by this week’s announcement that the United States and Mexico had reached a preliminary agreement to replace the North American Free Trade Agreement, hoping it might lead to reduced trade barriers. Canada’s participation in any new deal to replace NAFTA, though, remains a major question mark.

The port officials continue to worry, though, that Trump will make good on a plan to expand tariffs to an additional $200 billion in Chinese imports — a list that includes fish and other foods, furniture, carpets, tires, rain jackets and hundreds of additional items. Tariffs would make those items costlier in the United States. And if Americans buy fewer of those goods, it would likely lead to fewer container ships steaming into U.S. ports.

The impact will be felt keenly at West Coast ports like Los Angeles and Long Beach.

Los Angeles Mayor Eric Garcetti, relying on information from his port officials, said his port — the biggest in the United States — could suffer a 20 percent drop in volume if the additional $200 billion in tariffs are imposed against Chinese goods.

Jock O’Connell, an economist in California who studies trade, said he doubts a downturn would be so severe — that would match the slump that accompanied the global recession of 2008 — “but we will see a definite impact.”

Here are some of the key findings from the AP analysis:

–  U.S. tariffs will cover goods that are imported at more than 250 seaports, airports and ground terminals in 48 states.

• At 18 of 43 customs districts — including those representing ports around Los Angeles, San Francisco, New Orleans and Houston — at least 10 percent of their total import value could be covered by new tariffs if all Trump’s proposals take effect.

• Retaliatory duties by China and other countries cover $27 billion in U.S. exports.

Eugene Seroka, executive director of the Los Angeles port, worries that “if tariffs make it too expensive to import, there will be an impact on jobs.”

Seroka and others don’t expect layoffs on the docks. Union longshoremen — whose average pay last year on the West Coast was $163,000, according to the Pacific Maritime Association, which negotiates for the ports — often have contract provisions ensuring that they are paid even if there’s no work. And there are fewer of them than there were a few decades ago because the advent of shipping containers has reduced the need for people on the docks.

Dwayne Boudreaux, an International Longshoremen’s Association official in Louisiana, said, though, that his stevedores are handling about 10 percent less steel from Japan because of the new tariffs.

“We don’t think it’s going to [get] worse,” he said. But, he added, “who knows — that could change from the next press conference.”

The impact might be greater on truck drivers and warehouse workers. Fewer will be needed, according to O’Connell.

Many drivers who deliver shipping containers from the dock to warehouses are independents contracted by trucking companies, and they don’t get paid if there is nothing to haul. Some might leave the profession, said Weston LaBar, CEO of the Harbor Trucking Association in Long Beach, California.

“It’s hard to retain drivers,” he said. “If we don’t have work for those drivers, we’re worried they will leave for some other segment of the trucking business or go into another business, like construction.”

Less shipping means less revenue for the ports — something that could limit their ability to pay for expansion and improvement projects, according to Kurt Nagle, president of the American Association of Port Authorities. He said U.S. ports are in the midst of a planned $155 billion in infrastructure spending from 2016 through 2020.

The current trade war was foreshadowed in January by steep U.S. tariffs on imported solar panels and washing machines. It exploded with the U.S. tariffs of 25 percent on imported steel and 10 percent on aluminum. Then came two rounds of duties targeting about $50 billion in imports from China — punishment against that country for pressuring U.S. companies to transfer technology and intellectual property to Chinese companies.

Along the way, China, the European Union, Turkey, Canada and Mexico imposed retaliatory duties on U.S. goods including farm products and Harley-Davidson motorcycles.

This week, the U.S. Trade Representative’s office finished six days of hearings on a plan to hit another $200 billion in Chinese imports with 10 percent duties. Trump has said that if China continues to retaliate he could eventually add tariffs on $450 billion in Chinese goods, nearly 90 percent of that country’s 2017 exports to the U.S.

Trade wars are usually temporary. President George W. Bush abandoned his steel tariffs after less than two years.

Milwaukee’s port director worries, however, that damage from the current trade dispute could linger. Canada is increasing corn exports to Europe, and Brazil is trying to pick up the slack in soybean exports to China.

“Others are already picking up that business,” Schlicht said.
…

Top NAFTA negotiators from Canada and the United States increased the pace of their negotiations Thursday to resolve final differences to meet a Friday deadline, with their Mexican counterpart on standby to rejoin the talks soon.

Despite some contentious issues still on the table, the increasingly positive tone contrasted with U.S. President Donald Trump’s harsh criticism of Canada in recent weeks, raising hopes that the year-long talks on the North American Free Trade Agreement will conclude soon with a trilateral deal.

“Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time,” U.S. President Donald Trump told Bloomberg Television. “I think we’re close to a deal.”

Trilateral talks were already underway at the technical level and Mexican Economy Minister Ildefonso Guajardo was expected to soon rejoin talks with U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, possibly later on Thursday, people familiar with the process said.

Trump said in a Bloomberg interview: “Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time,” Trump said. “I think we’re close to a deal.”

Negotiations entered a crucial phase this week after the United States and Mexico announced a bilateral deal on Monday, paving the way for Canada to rejoin talks to modernize the 24-year-old accord that underpins over $1 trillion in annual trade.

The NAFTA deal that is taking shape would likely strengthen North America as a manufacturing base by making it more costly for automakers to import a large share of vehicle parts from outside the region. The automotive content provisions, the most contentious topic, could accelerate a shift of parts-making away from China.

A new chapter governing the digital economy, along with stronger intellectual property, labor and environmental standards could also work to the benefit of U.S. companies, helping Trump to fulfill his campaign promise of creating more American jobs.

Trump has set a Friday deadline for the three countries to reach an agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

The U.S. president has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

Dairy, dispute settlement

One sticking point for Canada is the U.S. effort to dump the Chapter 19 dispute-resolution mechanism that hinders the United States from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

Trump also wants a NAFTA deal that eliminates dairy tariffs of up to 300 percent that he argues are hurting U.S. farmers, an important political base for Republicans.

But any concessions to Washington by Ottawa is likely to upset Canadian dairy farmers, who have an outsized influence in Canadian politics, with their concentration in the provinces of Ontario and Quebec.

 “Ultimately, we’ve got huge issues that are still to be resolved,” said Jerry Dias, head of Canada’s influential Unifor labor union. “Either we’re going to be trading partners or we’re going to fight.”
…

U.S. President Donald Trump has signed proclamations permitting targeted relief from steel and aluminum quotas from some countries, the U.S. Commerce Department said on Wednesday.

Trump, who put in place tariffs on steel and aluminum imports in March, signed proclamations allowing relief from the quotas on steel from South Korea, Brazil and Argentina and on aluminum from Argentina, the department said in a statement.

“Companies can apply for product exclusions based on insufficient quantity or quality available from U.S. steel or aluminum producers,” the statement said. “In such cases, an exclusion from the quota may be granted and no tariff would be owed.”

Trump, citing national security concerns, placed tariffs of 25 percent on steel imports and 10 percent on aluminum imports.

The tariffs on steel and aluminum imports from the European Union, Canada and Mexico took effect June 1, and Commerce Secretary Wilbur Ross said May 31 that arrangements had been made with some countries to have non-tariff limits on their exports of the two metals to the United States.

Ross said the arrangement with South Korea was for a quota of 70 percent of average steel exports to the United States in the years 2015 to 2017.

The Brazilian government said at the time the U.S. quotas and tariffs on Brazil’s steel and aluminum exports were unjustified but that it remained open to negotiate a solution.

Brazilian semi-finished steel exports to the United States are subject to quotas based on the average for the three years from 2015-2017, while finished steel products will be limited to a quota of 70 percent of the average for those years.
…

The leaders of the United States and Canada expressed optimism on Wednesday that they could reach new NAFTA deal by a Friday deadline as negotiators prepared to talk through the night, although Canada warned that a number of tricky issues remained.

Under pressure, Canada rejoined the talks to modernize the 24-year-old North American Free Trade Agreement after Mexico and the United States announced a bilateral deal on Monday. Canadian Foreign Minister Chrystia Freeland said late on Wednesday that talks were at “a very intense moment” but said there was “a lot of good will” between Canadian and U.S. negotiators.

“Our officials are meeting now and will be meeting until very late tonight. Possibly they’ll be meeting all night long,” Freeland said. She and U.S. Trade Representative Robert Lighthizer had agreed to review progress early on Thursday.

U.S. President Donald Trump has set a Friday deadline for the three countries to reach an in-principle agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

Trump has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

“They (Canada) want to be part of the deal, and we gave until Friday and I think we’re probably on track. We’ll see what happens, but in any event, things are working out very well.” Trump told reporters at the White House.

The upbeat tone contrasted with Trump’s harsh criticism of Canada in recent weeks, railing on Twitter against Canada’s high dairy tariffs that he said were “killing our Agriculture!”

Canadian Prime Minister Justin Trudeau said he thought the Friday deadline could be met.

“We recognize that there is a possibility of getting there by Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada,” he said at a news conference in northern Ontario on Wednesday.

“No NAFTA deal is better than a bad NAFTA deal.”

 Freeland, who is Canada’s lead negotiator, was sidelined from the talks for more than two months, and will be under pressure to accept the terms the United States and Mexico worked out.

She declined comment on the issues still in play, but said on Tuesday that Mexico’s concessions on auto rules of origin and labor rights had been a breakthrough.

Ottawa is also ready to make concessions on Canada’s protected dairy market in a bid to save a dispute-settlement system, The Globe and Mail reported late on Tuesday.

Sticking points

One of the issues for Canada in the revised deal is the U.S. effort to dump the Chapter 19 dispute resolution mechanism that hinders the United States from pursuing anti-dumping and anti-subsidy cases. U.S. Trade Representative Robert Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

To save that mechanism, Ottawa plans to change one rule that effectively blocked American farmers from exporting ultra-filtered milk, an ingredient in cheesemaking, to Canada, the Globe and Mail reported, citing sources.

Trudeau repeated on Wednesday that he will defend Canada’s dairy industry.

Earlier on Wednesday, the Trump administration’s own anti-dumping duties on Canadian paper, used in books and newsprint, were thrown out by the U.S. International Trade Commission.

The independent panel ruled that about $1.21 billion in such paper imports from Canada were not harming U.S. producers.

Other hurdles to a NAFTA deal include intellectual property rights and extensions of copyright protections to 75 years from 50, a higher threshold than Canada has previously supported.

Some see the tight time-frame as a challenge.

“There’s nothing here that is not doable for Canada,” said Brian Kingston, vice president for international affairs at The Business Council of Canada.

“We’ve got the best negotiators in the world, but they can only stay awake so many hours of every day.”
…

The U.S. economy expanded at a 4.2 percent annual rate in April, May and June, the Commerce Department said Wednesday.

The second-quarter growth figure for gross domestic product was one-tenth of a percentage point higher than initial estimates.

“The economy is in good shape,” said PNC Bank Chief Economist Gus Faucher. He wrote that this was the best “year-over-year increase in three years.”

But Faucher also said growth above 4 percent was “unsustainable” and that the economy was “set to slow somewhat in the second half of 2018,” hitting 3.4 percent growth for the whole year. He predicted U.S. economic growth would slow further in 2019 and 2020 as the “stimulus from tax cuts and spending increases fades.”

U.S. President Donald Trump cheered the news:

But Senate Minority Leader Chuck Schumer, a New York Democrat, had a different take on the report.

“No amount of President Trump tweets can change the fact that real wages are declining,” he said in a statement, adding that the cost of living — particularly gas and health care costs, “thanks in large part to Republicans and the Trump administration” — is “continuing to climb.”

Wednesday’s report from the Commerce Department was a routine revision; such changes are made as more complete data become available.

Growth figures were boosted by a decline in imports, particularly petroleum, and by some temporary factors.

One of those factors was a surge in soybean exports, which were rushed at a faster-than-usual pace to beat tariffs imposed by China in retaliation for new tariffs imposed by the Trump administration on Chinese goods.

The new second-quarter figures were nearly double those of the first quarter.
…

British officials have been turning to Japan for tips on how to dodge American sanctions on Iran, according to local media.

Britain is already seeking from Washington exemptions from some U.S. sanctions, which are being re-imposed by President Donald Trump because of the U.S. withdrawal earlier this year from a controversial 2015 nuclear deal with Tehran. The British are especially keen to maintain banking links with Iran and to import Iranian oil.

According to local media, U.K. officials have been asking their Japanese counterparts how they managed in the past to sidestep some aspects of the pre-2015 sanctions regime, which allowed Tokyo to sign oil deals with Iran as well as insurance contracts without incurring U.S. penalties.

Re-imposed U.S. sanctions penalize any foreign companies that deal with Iran by barring them from doing business in America. That threat has already persuaded more than 50 Western firms to shutter their operations in Iran, including French automakers Renault and Peugeot and the French oil giant Total as well as Germany’s Deutsche Bahn railway company and Deutsche Telekom.

Seeking waivers

British ministers have publicly announced that they are hoping to secure waivers from sanctions for oil imports, tanker insurance and banking. There is particular concern, say British officials, about the position of a gas field 240 miles from Aberdeen which is jointly owned by BP and a subsidiary of Iran’s state-controlled oil company.

According to The Times newspaper, British diplomats and Treasury officials have discussed with their Japanese counterparts what options they may have of evading penalties, if British firms continue to trade with Iran. Britain’s Foreign Office hasn’t commented on the specific claims in report. But in a general statement it says: “We are working with European and other partners, to ensure Iran continues to benefit from sanctions relief through legitimate business, for as long as Iran continues to meet its nuclear commitments under the deal.”

Faltering Iranian economy

On Tuesday, Iranian president Hassan Rouhani was grilled by the country’s lawmakers, who for the first time in his five-year tenure called him before parliament to answer questions about the country’s faltering economy amid the tightening U.S. sanctions.

They asked him about high unemployment, rising food prices and the collapsing value of the Iranian currency. Rouhani, who overcame the opposition of hardliners in the first place to sign the 2015 nuclear deal with the U.S. and other world powers, insisted Iran would overcome the “the anti-Iranian officials in the White House.”

He added: “We are not afraid of America or the economic problems. We will overcome the troubles.” His answers didn’t reassure lawmakers, who voted to reject most of them. Earlier this month the parliament impeached the economy and labor ministers amid growing anger about the economy.

In order to try to keep open financial channels with Tehran and facilitate Iran’s oil exports, the European Union has taken steps to counter renewed U.S. sanctions, including forbidding EU citizens and firms from complying with them.

The European Commission updated a blocking statute on August 7, which bans companies from observing the sanctions — unless expressly authorized by Brussels to do so. It would allow EU firms to recover damages arising from the sanctions. But many companies say they are fearful of losing current or potential business in the U.S.

“Under these conditions it is very difficult,” according to the Director for International Relations at BusinessEurope, a lobby group, Luisa Santos. She says even small and medium-sized businesses which don’t trade with U.S. will face significant challenges because they will need financing from Western banks.

The first round of U.S. nuclear sanctions on Iran officially snapped back into place earlier this month but the more biting sanctions will be re-imposed on November 4 as Washington seeks to pummel the Iranian economy. The first phase U.S. sanctions prohibit any transactions with Iran involving dollars, gold, precious metals, aluminum, steel, commercial passenger aircraft, shipping and Iranian seaports.

 

Earlier in August, Woody Johnson, the U.S. ambassador to Britain, cautioned there would be trade consequences for Britain, which he described as the closest U.S. ally, unless London breaks with the EU and abides by the re-imposed sanctions on Tehran.

The envoy also delivered a clear ultimatum to British businesses, instructing them to stop trading with Iran or face “serious consequences.”

Trump’s decision in May to withdraw from the 2015 nuclear deal, signed by his predecessor Barack Obama, in which Tehran agreed to nuclear curbs in return for sanctions relief, paved the way for the restoration of unilateral American economic penalties on Iran.

The U.S. administration blames Iran for fomenting instability in the Middle East and encouraging terrorism. Trump has described the 2015 nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), as a “horrible, one sided” agreement.

U.S. officials say Iran has used the money going into the country after the 2015 deal, when sanctions were eased, not to improve the lives of ordinary Iranians but to increase spending on the military and proxy forces in the Middle East, including Hezbollah in Lebanon and militants in Yemen.
…

Negotiators from Canada and the United States are holding detailed trade negotiations in Washington as they seek to work out a replacement for the North American Free Trade Agreement.

The talks come after the United States and Mexico agreed to a bilateral trade deal this week while leaving the door open for Canada to join and preserve what has been a trilateral trade relationship for more than 20 years.

Canadian Foreign Minister Chrystia Freeland met with U.S. Trade Representative Robert Lighthizer on Tuesday for what she said were “very constructive” initial talks before more specific negotiations between the two sides on Wednesday.

Freeland said some of the details of the U.S.-Mexico agreement, particularly what she called “significant concessions” by Mexico on rules regarding automotive labor and parts origin, have given Canada optimism about the talks in Washington.

“The fact that Mexico was able to do something that I think must have been quite difficult for Mexico and make those concessions does really set the stage for some productive conversations for us here this week.”

It is unclear if the United States and Canada will resolve their long-standing disputes over duties on automobiles and dairy products that have persisted through months of NAFTA negotiations.

Freeland was also due to meet with Mexican trade officials who were still in Washington.

Final details of the U.S.-Mexico deal have yet to be worked out, but Lighthizer said he believes the tentative agreement is a win for both countries that creates more jobs for farmers and other workers.

To escape tariffs, the deal calls for 75 percent of “auto content” – parts and amenities – to be made in either the U.S. or Mexico, up from the current 62.5 percent North American content. In addition, 40 to 45 percent of the auto content must be produced by workers earning $16 or more an hour.

The average hourly pay for U.S. auto workers is more than $22 an hour, but in Mexico it is now less than $3.50 an hour. With the increase in labor costs, it likely will boost the cost of buying a vehicle.

“I think it’s going to modernize the way we do automobile trade, and I think it’s going to set the rules for the future at the highest standards in any agreement yet negotiated by any two nations for things like intellectual property, and digital trade, and financial services trade, and all of the things that we think of as the modernizing, cutting-edge places that our economy is going,” Lighthizer said.

“So this is great for business,” he said. “It’s great for labor. It has terrific labor provisions in it. Stronger and more enforceable labor provisions than have ever been in an agreement by a mile. Not even close.” 

However, lawmakers in both countries still need to approve the pact in the coming months.

Some of the agreement mirrors elements contained in the Trans-Pacific Partnership, the 12-nation Pacific Rim trade pact that Mexico and the U.S. both agreed to, before President Donald Trump withdrew the United States. It requires Mexico to allow more collective bargaining for workers and calls for more stringent air quality and marine life protections.

The accord is set to last for six years, at which point the United States and Mexico will review it, and if both sides agree, they would extend it for 16 more years.

But the agreement does not end steel and aluminum tariffs Trump imposed on Mexico earlier this year, leading to Mexican levies on U.S. imports. 

Trade between the U.S. and Mexico totaled an estimated $615.9 billion in 2017, with the U.S. exporting $63.6 billion more in goods and services than it imported.
…

Canadian Prime Minister Justin Trudeau says his country will negotiate new trade terms with the United States, but will only accept a deal that serves Canada’s interests. Speaking after the United States reached a tentative deal with Mexico to replace the North American Free Trade Agreement (NAFTA), Trudeau said negotiators have made some progress. U.S. President Donald Trump has threatened to increase U.S. tariffs on Canada’s auto imports if a deal is not reached. VOA’s Zlatica Hoke has more.
…

Faced with plunging U.S. orders, surgical glove maker Ren Jiding is hunting for new markets amid Chinese government calls to reduce reliance on the United States. But no other market can absorb the 60 percent of his sales that went to American customers last year.

“Other countries import much less than the United States,” said Ren, a co-owner of Hongyeshangqin Medical Science and Technology Co. Ltd. in the eastern city of Zibo.

From medical products to smartphone chips to soybeans, Beijing is responding to President Donald Trump’s tariff hikes by pushing companies to trade more with other countries. But there are few substitutes for the United States as an export market and source of technology for industries including telecom equipment makers that Chinese leaders are eager to develop.

Beijing has announced tariff cuts and other changes while rejecting U.S. demands to scale back plans such as “Made in China 2025,” which calls for state-led creation of Chinese champions in robotics, biotech and other fields. American leaders say those violate Beijing’s market-opening promises and might erode U.S. industrial leadership.

The response highlights the cost the ruling Communist Party is willing to pay in lost sales and jobs to stick to plans that are fueling conflict with Washington, Europe and other trading partners.

​’Fundamental’ to growth

“China sees its technology and industrial policies as fundamental to its growth,” Tianjie He of Oxford Economics said in an email. “It is thus hard to see China’s leadership committing to significant changes.”

Trump has raised duties on $50 billion worth of Chinese imports, including ultrasound scanners and industrial components that Washington says benefit from improper policies. China retaliated with similar penalties.

The U.S. is poised to raise duties on $200 billion worth of imports, including the gloves made by Ren’s company. Beijing has issued a list of American goods for retaliation.

The impact on China is “small and is containable, at least for the time being,” said Vincent Chan of Credit Suisse. He said the “worst case” outlook if all threatened U.S. tariff hikes go ahead would cut China’s growth by 0.2 percentage point this year and 1.3 percent in 2019.

Chinese leaders have tried to cushion the blow to their own economy by targeting American goods its importers can get from other countries — soybeans from Brazil, gas from Russia, cars from Germany and fish from Vietnam.

Beijing has promised to use revenue from the higher tariffs to help struggling exporters and has ordered banks to lend more freely to them.

The biggest jolt so far came from Beijing’s cancellation of orders for soybeans, the biggest American export to China at $21 billion last year. That hammered farm states that voted for Trump in the 2016 election. It also pushed up prices for Chinese farmers that use soybeans for animal feed and food processors that crush them for cooking oil.

That could be a windfall for Brazil. But China already is its top market and consumes two-thirds of the global supply. Chinese total imports last year of 95 million metric tons were 50 percent more than the South American giant’s entire exports.

​Few sources

“The Chinese can talk all they want about finding other sources of soybeans,” but 80 percent come from the United States, Brazil and Argentina, said Michael Cordonnier, president of Soybean & Corn Advisor Inc., a U.S. research firm.

“If you want to import soybeans, it generally must be from one of those three countries,” Cordonnier wrote in an email.

Regulators also cut import duties on automobiles on July 1 but raised them on vehicles from the United States. That helps luxury brands that import from Germany and Japan.

Replacing markets for Chinese exporters that support tens of millions of jobs will be harder.

The United States bought $430 billion of China’s exports last year, or 20 percent of the $2.2 trillion total. The No. 2 market was the 28-nation European Union at $370 billion.

“We can’t afford to lose the U.S. market,” said David Hu, general manager of Sinohood Bags Factory Ltd. in the southeastern city of Yiwu.

Americans bought 40 percent of Hu’s canvas tote bags last year, including the most profitable customized versions with Christmas and other designs.

“What we export to Europe is lower-end products with lower prices,” said Hu. “We could explore the Indian, Vietnamese or Philippine markets. But the prices they offer would be too low.”

Chinese officials point to potential markets in the Belt and Road Initiative, a multibillion-dollar plan led by President Xi Jinping to boost trade by building ports, railways and other infrastructure across Asia to Europe.

That has brought a flood of contracts to Chinese state-owned builders, but complaints about costs have hurt its appeal. Prime Minister Mahathir Mohamad of Malaysia announced this month the cancellation of plans for Chinese-built projects, including a $20 billion rail line.

“There is potential for development in areas such as Central Asia, Eastern Europe, Africa and South America. But their problems are development imbalance and economic instability,” said Li Yong, a senior fellow at the China Association of International Trade, an industry group.

​Focus on diversification

Local officials have met with exporters to exhort them to “diversify markets,” according to the state press.

Authorities in the central city of Jingzhou visited exporters to help with customs forms, financing and other details, the website China Industry and Commerce News said.

Ren, the surgical glove maker, said his 300-employee company was looking at Europe and developing countries, but demand was sluggish.

Some companies are confident of keeping their U.S. market share. That reflects the possible success of official efforts to develop higher-tech goods instead of competing on price alone.

The general manager of Yihua Electronic Equipment Co. in southern China’s Guangdong said the tariffs should not affect sales of its digital soldering guns, one-fifth of which are sold to the United States.

“With the 25 percent tariffs, ours still are cheaper than similar German- or Japanese-made products,” said the manager, who would give only his surname, Gou. “We are not producing something like shoes and clothing that could be easily replaced.”

Trump’s pressure could encourage Beijing to throw even more resources at nurturing its own technology creators.

China’s search for non-U.S. suppliers could help companies such as Taiwanese chipmaker MediaTek Inc. But redesigning a phone or network gear and then gaining regulatory and customer approval can take a minimum of three to five years.

“For now,” said He of Oxford Economics, “China remains technologically dependent on the U.S.”
…

More than a week after the floodwater began subsiding, animal carcasses are  still floating in Kerala’s backwaters, and in places a nauseating stench rises like a wall when the wake from a passing boat breaks the surface.

These inland lagoons running parallel to the coast are one of the biggest tourist draws in India’s most southwesterly state, but the stain of death and devastation wrought by Kerala’s worst flood in a century will take longer than a season to wash away.

The quaint towns and villages scattered between the lush forests and paddy fields bordering the backwaters are now communities in despair.

Houses in low-lying areas are still submerged, roads are waterlogged and the sewage from drains have washed into channels that are too slow-moving to effectively flush out the effluent.

Sudarsanan T.K., a houseboat owner in the town of Alappuzha,  had been looking forward to the peak tourist season, but as his home disappeared under 2.5 meters (8 feet) of water his family now have to live aboard the boat he would otherwise be renting to tourists from Europe, China, Malaysia and India.

“I’ve nothing left, but this houseboat. I don’t know how I can repay my bank loan in this condition. The bank may take back my boat. I will have nothing at all then,”  Sudarsanan, a 64-year-old father of two, told Reuters.

​Some 1,500 houseboats are tied up at Alappuzha, going nowhere, with many of the owners still paying off loans taken to buy the boats.

Sudarsanan owes about $8,600 on the loan taken eight years ago to buy the boat, and he could have earned up to $7,000 by December if the deluge hadn’t washed away his hopes.

Hundreds of people perished in the flood and more than one million of Kerala’s 35 million people were forced to abandon their homes and take shelter in relief camps.

Blessed with natural beauty, fertile land and bountiful seas, Kerala has been dubbed “God’s own country” by its people, but the Marxists running the state government reckon it will need $3.57 billion to rebuild over the next two years.

“Kerala’s GDP growth may fall by 2 percent,” state Finance Minister T.M. Thomas Isaac told Reuters, forecasting growth of 6 percent for the financial year ending next March.

Crops have been lost, the construction industry was dead for a month, and tourism, which contributes 10 percent of the state’s economy but accounts for about 25 percent of jobs creation, has been badly hit.

Festival washout

For discerning tourists looking for a more laid back Indian experience, Kerala has it all — long sandy beaches, lazy waterways, charming, historic towns like Kochi and the cool, forested hills of the Western Ghats.

Kerala doesn’t draw numbers like the northern tourist circuit, the so-called “Golden Triangle” running from New Delhi to the Taj Mahal in Agra, and Jaipur’s palaces in the desert state of Rajasthan, but it has carved out a sizable niche.

Last year, one million foreigners visited Kerala, along with 15 million domestic tourists, but state government and industry officials reckon the flood will result in losses for the tourism sector of $357 million.

The floods struck just as Kerala was gearing up for Onam,

the harvest festival which is one of the highlights of the state’s cultural calendar.

Festivities, including the spectacular Vallam Kali races involving traditional war canoes, some manned by more than 100 paddlers, were postponed.

“Kerala has lost out on one of the best seasons, as the calamity struck during the 10-day run up to Onam,” said Ranjini Nambiar, who heads a travel consultancy.

Thousands of volunteers have joined a clean-up campaign mounted by the state, and Shilendran M., an executive with the CGH Earth luxury hotel chain, expected some kind of order to be restored within the next few weeks.

“The state administration is working on a war footing,” said Shilendran, whose group has more than a dozen properties in Kerala. “We are limping back to normal.”

Hardly anywhere in the state escaped the calamity.

Ernakulam district, the biggest industrial and tourism contributor to Kerala’s economy and home to the historic city of Kochi, suffered major damage, and its busy international airport was shut for nearly two weeks.

Munnar, a hill resort overlooking the tea and cardamom plantations high in the Ghats was cut off, as bridges were washed away and landslides blocked roads.

Once every dozen years a bright purplish-blue bell-shaped flower called the Neelakurinji, blossoms on the slopes around Munnar — and this was one of those years.

The state tourism had marketed 2018 as the Kurunji year, but people in Kerala are more likely to remember the mud.
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The tentative new U.S. trade deal with Mexico is a win for both countries, U.S. Trade Representative Robert Lighthizer believes, creating more jobs for workers and farmers alike.

Final details have yet to be worked out in the trade deal announced Monday, and Canada could join it yet in a broad revision of the 1994 North American Free Trade Agreement.  But some of the specific terms in the U.S.-Mexican agreement are aimed at boosting the manufacture of cars in the two countries to curb the import of vehicles from Asia, especially from China.

To escape tariffs, the deal calls for 75 percent of “auto content” – parts and amenities – to be made in either the U.S. or Mexico, up from the current 62.5 percent North American content.  In addition, wages for some auto workers in Mexico are likely to climb sharply, with the agreement decreeing that 40 to 45 percent of the auto content must be produced by workers earning $16 or more an hour.

The average hourly pay for U.S. auto workers is more than $22 an hour, but in Mexico it is now less than $3.50 an hour.  With the increase in labor costs, it likely will boost the cost of buying a vehicle.

“I think it’s going to modernize the way we do automobile trade, and I think it’s going to set the rules for the future at the highest standards in any agreement yet negotiated by any two nations for things like intellectual property, and digital trade, and financial services trade, and all of the things that we think of as the modernizing, cutting-edge places that our economy is going,” Lighthizer said.

“So this is great for business,” he said.  “It’s great for labor.  It has terrific labor provisions in it.  Stronger and more enforceable labor provisions than have ever been in an agreement by a mile.  Not even close.”  

However, lawmakers in both countries still need to approve the pact in the coming months.

Some of the agreement mirrors elements contained in the Trans-Pacific Partnership, the 12-nation Pacific Rim trade pact that Mexico and the U.S. both agreed to, before President Donald Trump withdrew the United States.  It requires Mexico to allow more collective bargaining for workers and calls for more stringent air quality and marine life protections.

The accord is set to last for six years, at which point the United States and Mexico will review it, and if both sides agree, they would extend it for 16 more years.

But the agreement does not end steel and aluminum tariffs Trump imposed on Mexico earlier this year, leading to Mexican levies on U.S. imports.  

Trade between the U.S. and Mexico totaled an estimated $615.9 billion in 2017, with the U.S. exporting $63.6 billion more in goods and services than it imported.

Trump spoke Monday with Canadian Prime Minister Justin Trudeau about trade negotiations between the two countries.  Canadian Foreign Minister Chrystia Freeland headed to Washington to open new trade talks with Lighthizer, but it was uncertain whether the two countries could quickly resolve long-standing disputes over duties on autos and dairy products that for months have kept them from a NAFTA revision.  

 

 
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With a deal with Mexico out of the way, U.S. trade officials are due to resume talks with Canada on Tuesday to try to salvage the North American Free Trade Agreement as a trilateral accord.

After months of intense negotiations, the United States and Mexico announced an agreement Monday on a thorough overhaul of the 25-year-old free trade pact but President Donald Trump suggested he could cut Ottawa out.

Canadian Prime Minister Justin Trudeau stressed in a phone call with Trump on Monday the aim was to reach a new NAFTA deal.

The leaders “had a constructive conversation” on NAFTA, and “look forward to having their teams engage this week with a view to a successful conclusion of negotiations,” Trudeau’s office said.

Canadian Foreign Minister Chrystia Freeland interrupted a trip to Europe to rush back to Washington to begin talks with US Trade Representative Robert Lighthizer.

But it remains unclear when the trade officials will begin their discussions or whether the first meeting will happen Tuesday after all.

Mexico’s President Enrique Pena Nieto and President-elect Andres Manuel Lopez Obrador both said NAFTA should remain a trilateral deal.

The outlines of a NAFTA 2.0 are now on paper, including provisions on auto trade, tougher worker protections and a provision to review the deal every six years.

“It’s a really good deal for both countries,” President Trump said in announcing the agreement from the Oval Office.

Negotiators have worked for a year to update and rewrite NAFTA but in the last five weeks Washington and Mexico City held talks to resolve their bilateral issues, especially on the auto industry rules, without Ottawa.

Trump stressed that he could go ahead without Ottawa in the new agreement.

“We could have a separate deal or we could put it in the same deal,” Trump said.

He indicated he would take a tough line with Canada on autos and dairy tariffs, long a source of tension between the neighboring countries.

Time pressure

White House economic adviser Larry Kudlow reiterated that point on Tuesday, saying the United States would not accept continued steep tariffs on dairy exports.

“There’s a word that Canada has trouble with — it’s M-I-L-K,” Kudlow said on Fox News.

The Canadian government effectively sets production quotas and the price of milk, which ends up costing consumers a bit more but provides farmers with a stable income.

The system has been in place since the 1970s and has survived several attempts to undo it — as well as the prohibitive tariffs that limit foreign imports.

However, U.S. Treasury Secretary Steven Mnuchin said the administration was keen to get Canada on board quickly.

“The US market and Canadian markets are very intertwined,” Mnuchin said on CNBC. “It’s important for them to get this deal and it’s important for us to get this deal.”

There is some urgency as the United States seems eager to have the issue resolved before the November midterm elections, and Pena Nieto wants to sign it before handing the reins over to Lopez Obrador on December 1.

But Canada may not feel the pressure to hurry, especially at the expense of a good deal.

Trudeau’s government also faces political pressure with elections due in a year, which could make him wary of being seen as capitulating to Trump, especially on the sensitive dairy supply management system.

Freeland’s spokesman Adam Austen said in a statement Canada would “only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”

Mexican officials have insisted all along that the NAFTA must be a trilateral deal, but also acknowledged that either way their country would have free trade commitments with both nations.

Lighthizer said the administration would notify Congress by Friday of the new agreement, which would allow the required 90 days’ notice to get the pact signed by December 1.

However, legislators and former US trade officials say the White House does not have the authority to replace NAFTA with a two-nation trade agreement, and must have the text of the treaty ready by September 30.

Not a sunset clause

The Canadian team could be more amenable to the talks now that the United States has backed away from a controversial and strenuously-opposed provision to require the three nations to renegotiate NAFTA after five years.

Instead, senior US officials told reporters the agreement had been extended for 16 years but would be reviewed every six years.

“It’s an alternative to sunset which we think works,” another senior official said.

A key element of the U.S.-Mexico talks has been content requirements for autos produced in the region in order to qualify for duty-free NAFTA treatment, which Mexico agreed to increase to 75 percent from 62.5 percent.

The two sides also agreed that 40-45 percent of vehicles must be made at “high wage” factories where workers receive $16 an hour, something that could deter off-shoring US auto manufacturing to Mexico.

 

 

 
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