Category Archives: Business

economy and business news

US Proposes NAFTA Sunset Clause, Raising Tensions in Talks

Washington has increased tensions in talks to renew the North American Free Trade Agreement by insisting that any new deal be allowed to expire after five years, two officials familiar with the negotiations said on Thursday.

Canada and Mexico both strongly oppose the concept of a so-called sunset clause, a provision that had been floated earlier.

But the officials, who asked not to be identified because the talks are confidential, said the U.S. side formally proposed it late on Wednesday during the fourth of seven scheduled rounds to update the rules governing one of the world’s biggest trade blocs.

The Trump administration says the clause, causing NAFTA to expire every five years unless all three countries agree it should continue, is to ensure the pact stays up to date.

But Mexico and Canada insist there is no point updating the pact with such a threat hanging over it, arguing the clause would stunt investment by sowing too much uncertainty about the future of the agreement.

“It’s a source of total uncertainty,” said one of the NAFTA government officials familiar with details of the negotiations.

U.S. President Donald Trump says NAFTA, originally signed in 1994, has been a disaster for the United States and has frequently threatened to scrap it unless major changes are made.

Business and farm groups say abandoning the 23-year-old pact would wreak economic havoc, disrupting cross-border manufacturing supply chains and slapping high tariffs on agricultural products.

Trade between the United States, Canada and Mexico has quadrupled under NAFTA, now topping $1.2 trillion a year. As well as the sunset clause, the United States wants to boost how much North American content autos must contain to qualify for tax-free status and eliminate a dispute settlement mechanisms that Canada insists must stay.

Some trade observers said it is difficult to see how negotiators could reach an agreement given U.S. demands that many see as nonstarters.

The head of Unifor, Canada’s largest private sector labor union, said it was clear the United States did not want a deal.

“NAFTA is not going anywhere. This thing is going into the toilet,” Jerry Dias told reporters on Thursday.

Despite clear signs of impatience from Canada in particular, U.S. negotiators have yet to submit their proposal on rules of origin for the auto sector. That looked unlikely to come before Friday, another official familiar with the talks said.

Trump on Wednesday repeated his warnings that he might terminate the pact and said he was open to doing a bilateral deal with either Canada or Mexico if three-way negotiations fail.

He was speaking at the White House with Canadian Prime Minister Justin Trudeau, who said Canada was “braced” for Trump’s unpredictability but taking a serious approach to the NAFTA talks.

Negotiators were also set to cover the difficult issue of government procurement on Thursday.

Canada and Mexico want their companies to be able to bid on more U.S. federal and state government contracts, but this is at odds with Trump’s “Buy American” agenda. U.S. negotiators have countered with a proposal that would effectively grant the other countries less access, people familiar with the talks say.

On automotive rules of origin, NAFTA negotiators face tough new U.S. demands to increase regional vehicle content to 85 percent from 62.5 percent, with 50 percent required from the United States, according to people briefed on the plan.

The rules of origin demands are among several conditions that the U.S. Chamber of Commerce has labeled “poison pill proposals” that threaten to torpedo the talks.

U.S. Commerce Secretary Wilbur Ross said on Wednesday that he believed higher percentages for automotive content would be achieved, and “car companies will adapt themselves to it.”

However, a study released on Thursday by the Motor Equipment Manufacturers Association, which represents U.S. auto parts makers, showed the higher content requirements would lead to the loss of up to 24,000 U.S. jobs, as some companies would forgo NAFTA’s tariff-free benefits and ship in more components from other countries.

Evergrande Property Magnate Seizes Top Spot On China Rich List

China has a new richest man, according to the annual Hurun rich list of the country’s top movers and shakers.

Xu Jiayin, the chairman of developer China Evergrande Group, has seized top spot – beating out more familiar faces such as Alibaba Group Holding Ltd’s Jack Ma and rival property magnate Wang Jianlin of Dalian Wanda Group.

Xu’s reported $43 billion wealth – a gain of around $30 billion against last year – comes on the back of a surge in Evergrande’s shares, up over 450 percent so far this year amid plans to cut debt and focus on profit over scale.

The Hurun Report, established in 1999, is the leading China-based organization ranking the wealth of the country’s rich and famous, and its list gives a temperature check on the winners and losers in China.

Growth in China stabilized this year, but while the world’s second largest economy averted a hard landing, some major corporations have buckled under the weight of their debt or been sanctioned by authorities over risky investments overseas.

Wanda’s Wang – who took top spot for the last two years – dropped to fifth in the list after Wanda sold off much of the firm’s hotel and theme park assets to rivals in July, after coming under regulatory scrutiny over its high leverage.

Close behind Evergrande’s Xu were China’s top tech titans – Alibaba’s Jack Ma and Tencent Holdings Ltd’s Pony Ma, who has seen his firm’s value rise on the popularity of its WeChat messaging app and its popular online games.

The list also underlined those who have fallen from grace in corporate China.

Jia Yueting, founder of sprawling conglomerate LeEco that once looked to rival both Tesla Inc and Netflix, dropped to 1,978th place from 31st last year.

Yang Kai, chairman of embattled Huishan Dairy – 66th last year – dropped off the list entirely as his firm fights off creditors amid billions of dollars of unpaid debt.

On the up was Wuxi Pharma Tech’s Li Ge and his wife, propelled by China’s push towards drug innovation, Zhang Lei of fast-growing online news portal Toutiao and Li Shufu of carmaker Geely Automobile Holdings Ltd.

“It has been a good year for manufacturing, cars, education, TMT and healthcare,” Hurun founder Rupert Hoogewerf said.

While many of those on the 2,000-strong list were members of the National People’s Congress and Chinese People’s Political Consultative Conference, only a few were delegates at the upcoming five-yearly Party Congress that begins next week.

These included corn magnate Li Denghai, alcohol billionaire Wu Shaoxun and Pan Gang of dairy giant Yili.

The list, with a combined wealth of $2.6 trillion, saw average wealth rising 12.5 percent – faster than broader economic growth – pointing to the growing financial muscle of China’s super-rich elite.

Odd Mix of Industry, Environmentalists Fight Trump Coal, Nuclear Plan

The Trump administration says coal is back and nuclear energy is cool. Not at the expense of natural gas, wind and solar, insists an unusual coalition of business and environmental groups.

Dow Chemical, Koch Industries and U.S. Steel Corp. are standing with environmentalists in opposing an Energy Department plan that would reward nuclear and coal-fired power plants for adding reliability to the nation’s power grid and are pressuring the administration to shift course.

Energy Secretary Rick Perry says the plan is needed to help prevent widespread outages such as those caused by Hurricanes Harvey, Irma and Maria and a 2014 “polar vortex” in the Eastern and Central U.S. The plan aims to reverse a steady tide of retirements of coal and nuclear plants, which have lost market share as natural gas and renewable energy flourish.

“The continued loss of baseload generation … such as coal and nuclear must be stopped,” Perry wrote in a Sept. 28 letter urging the Federal Energy Regulatory Commission to adopt the new rule. “These generation resources are necessary to maintain the resiliency of the electric grid” amid sharp shifts in the U.S. energy market.

Perry’s plan coincides with President Donald Trump’s vow to achieve U.S. “energy dominance” while ending what he and other Republicans call a “war on coal” waged by the Obama administration. Perry, who has said he wants to “make nuclear energy cool again,” is certain to face questions about the plan and the opposition at a congressional hearing Thursday.

Critics see a bailout

The plan would compensate power plant owners that maintain a 90-day fuel supply protected against the elements. Critics say it could result in subsidies worth billions of dollars.

Environmental groups say the plan would boost dirty fuels and harm consumers, while the energy industry warns about interference in the free market and manufacturers complain about higher energy prices that could be passed on to consumers.

“Rick Perry is trying to slam through an outrageous bailout of the coal and nuclear industries on the backs of American consumers,” said Kit Kennedy, an energy policy expert for the Natural Resources Defense Council. “This radical proposal would lead to higher energy bills for consumers and businesses, as well as dirtier air and increased health problems.”

A coalition of industry groups, ranging from the American Council on Renewable Energy to the American Petroleum Institute and the Natural Gas Supply Association, also blasted the plan, saying it could harm “entire industries and their tens of thousands workers.”

Amy Farrell, senior vice president of the American Wind Energy Association, said the proposal could “upend competitive markets that save consumers billions of dollars a year.”

Oil, gas: Let markets work

Marty Durbin, executive vice president of the petroleum institute, the top lobbying group for the oil and gas industry, said officials “need to be careful that government doesn’t put its thumb on the scale” in energy markets. “It’s better to let markets choose, which is what the United States is seeing with the growth of natural gas” as the leading U.S. electricity source, Durbin said.

The Industrial Energy Consumers of America, a trade group that represents Dow, Koch Industries and other manufacturing giants, is among those lobbying against the plan. In a letter to Congress, the group called the proposal “anti-competitive” and said it could distort or “destroy competitive wholesale electricity markets, increase the price of electricity to all consumers” and harm U.S. manufacturing.

The manufacturers and other critics say there is no evidence of a threat to the grid’s day-to-day reliability that would justify the emergency action Perry is seeking.

Indeed, in a report commissioned by Perry and delivered in August, the Energy Department said “reliability is adequate today despite the retirement of 11 percent of the generating capacity available in 2002, as significant additions from natural gas, wind, and solar have come online since then.”

Gerry Cauley, CEO of the North American Electric Reliability Corp., an international regulatory authority, said at a conference in June that “the state of reliability in North America remains strong, and the trend line shows continuing improvement year over year.”

Coal, nuclear groups hail plan

Even so, coal and nuclear groups hailed the plan. National Mining Association President and CEO Hal Quinn called Perry’s action “a long-overdue and necessary step to address the vulnerability of America’s energy grid,” while Maria Korsnick, president and CEO of the Nuclear Energy Institute, said disruptions caused by hurricanes and other extreme weather events show that “the urgency to act in support of the resiliency of the electric grid has never been clearer.”

The Energy Department seeks final action by mid-December, although industry groups and some members of Congress have pushed for a delay.

Sen. Maria Cantwell, D-Wash., said the energy commission should reject Perry’s plan.

“Secretary Perry has embraced an obsolete view of the grid (that) would bail out coal and nuclear power plants at the expense everyone else,” she said.

First Latina Makes History in Fortune 50 Most Powerful Women List

The ranking of the 50 most powerful women by Fortune magazine is out. The list include such stalwarts as General Motors Mary Barra and PepsiCo’s Indra Nooyi. But it also seven newcomers, including the first foreign-born Latina CEO on the Fortune 500, Geisha Williams. VOA Correspondent Mariama Diallo was at their annual gathering in Washington this week and has this report.

World Bank: Sub-Saharan Africa to Grow at Slower Rate This Year

 Economic growth in sub-Saharan Africa is expected to be 2.4 percent in 2017, the World Bank said on Wednesday, down from the 2.6 percent projected in April.

It said the downgrade was due to a number of reasons, including Nigeria’s failing to meet expectations but also broader conditions.

“Regional per capita output growth is forecast to be negative for the second consecutive year, while investment growth remains low, and productivity growth is falling,” it said.

Growth across the region, however, was seen rising 3.2 percent in 2018 and 3.5 percent in 2019, forecasts unchanged from earlier this year.

In its latest Africa Pulse report, the Bank said the region would be helped by better commodity prices. Sub-Saharan African economies have been hit by lower commodity prices which slowed growth in the last few years, cutting government revenues.

Albert Zeufack, World Bank chief economist for Africa, said the region’s growth recovery would partly be driven by the continent’s two largest economies — Nigeria and South Africa — exiting recession.

He said the two countries need “deeper reforms” to get back to pre-2014 levels of growth and their political uncertainty needs to be reined in. He said they make up about half of sub-Saharan Africa’s GDP growth.

The World Bank said Nigeria’s economy, the largest in the continent, was expected to expand by 1 percent in 2017.

South Africa’s economy, hit by political worries, was expected to grow just 0.6 percent this year.

Trump Discusses NAFTA Renegotiation with Canada and Mexico

U.S. President Donald Trump and Canadian Prime Minister Justin Trudeau meet at the White House Wednesday to discuss the renegotiation of the North American Free Trade Agreement amid growing animosity over how to reshape the pact.

Trade experts predict the fourth round of the talks will probably stall as the U.S. aggressively pushes for controversial changes to a rule governing how cars are made.

The rule currently requires at least 62-percent of the parts of a car sold in North America come from the region to avoid import taxes. The Trump administration is calling for an 85-percent threshold, with a 50-percent requirement for U.S.-specific content.

The U.S. Chamber of Commerce Tuesday accused the Trump administration of attempting to undermine the negotiations with a “poison pill proposals.”

The Trump administration has imposed duties on Canadian Bombardier airliners and lumber exports in recent months and has criticized Canada’s wine and dairy industries. But Canadian officials deny Trump is targeting Canada, saying the aircraft and softwood differences have continued for years.

Canadian Foreign Minister Chrystia Freeland said Trudeau will try to persuade Trump to focus on Mexico, which is also participating in the talks, as a source of potential problems at the negotiations to update NAFTA.

“We are your biggest client,” is the message Freeland said Canada will bring to the table. Freeman said Canada is not the cause of lost U.S. manufacturing jobs under NAFTA, as it buys more from the U.S. than China, Britain and Japan combined.

Mexico

Many U.S. manufacturing jobs have instead relocated to Mexico, where wages are far lower than those in the U.S. Mexico has lured U.S. auto plants and other manufacturers to the country, resulting in a $64 million trade surplus with the U.S. last year. Trump administration officials have promised to cut the surplus.

Mexico Foreign Minister Luis Videgaray warned that an end to NAFTA would significantly damage U.S.-Mexican relations and adversely impact bilateral cooperation in non-trade areas.

Other contentious U.S. proposals opposed by Canada, Mexico and much of the U.S. business community include a five-year sunset provision on deals, an overhaul of NAFTA’s dispute arbitration systems, revisions to intellectual property requirements and new protections for U.S. seasonal produce growers.

Trump: Tax Overhaul Would Boost Stocks Even More

President Donald Trump said Wednesday that the country’s surging stock markets would grow even faster if Congress enacts his proposed overhaul of the country’s tax laws.

Trump is heading to a Pennsylvania airport hangar to talk to a group of truckers about the tax plan, contending they would get “a $4,000 pay raise” with the changes he wants, although economists say that benefit would only materialize over eight years, at a rate of about $500 annually.

Trump’s speech to hundreds of truck drivers, the most common job in 29 of the country’s 50 states, is intended to counter the views of independent analysts that the Republican tax blueprint Trump is advancing would mostly benefit the highest income earners. These analysts contend that at least some middle-income taxpayers would pay more, not less, to the government under Trump’s proposal.

So far, Trump has detailed only some of the specifics of the proposal, including trimming the number of tax rates applying to certain levels of income from seven to three categories under the progressive U.S. tax system of levying higher rates on taxpayers who have earned more than others.

But the Republican-controlled Congress has yet to determine at what levels of income the new rates would apply, leaving the analysts to guess what effects the changes would have on any individual taxpayer. Trump also wants to trim corporate taxes to further boost the U.S. economy, already the world’s largest.

In Twitter comments ahead of his speech, Trump said, “Stock Market has increased by 5.2 Trillion dollars since the election on November 8th, a 25% increase. Lowest unemployment in 16 years and if Congress gives us the massive tax cuts (and reform) I am asking for, those numbers will grow by leaps and bounds.”

The Republican president also took another shot at two of his favorite targets, the national mainstream news media and opposition Democratic lawmakers.

“It would be really nice if the Fake News Media would report the virtually unprecedented Stock Market growth since the election,” Trump said. “Need tax cuts. The Democrats want MASSIVE tax increases & soft, crime producing borders. The Republicans want the biggest tax cut in history & the WALL!” built along the southern U.S. border with Mexico to thwart illegal immigration.

The Trump administration, when it took office in January, predicted it would complete a tax overhaul by August, but now has its sights set on completing the reforms by the end of the year. However, congressional tax-writing panels have yet to hold hearings and Democratic and Republican lawmakers have widely divergent views on what changes should be made.

Under some scenarios, the tax cuts could add to the country’s long-term debt of more than $20 trillion, which would be anathema to many conservative Republican lawmakers. Democratic lawmakers are calling for tax changes to mostly benefit the country’s middle class and lowest-income taxpayers, not the wealthiest.