CANADA ECONOMICS
VENEZUELA
Global Affairs Canada. May 13, 2018. Canada’s Minister of Foreign Affairs to attend Lima Group meeting on Venezuela
Ottawa, Ontario - The Honourable Chrystia Freeland, Minister of Foreign Affairs, today announced she will attend the meeting of Lima Group foreign affairs and finance ministers on the Venezuela crisis to be held in Mexico City, Mexico, on May 14, 2018.
As the political and economic situation in Venezuela continues to deteriorate, the human suffering and subsequent migration of people out of the country has reached alarming levels, threatening the security of the region.
Current conditions manufactured by the Maduro regime for the presidential elections scheduled on May 20 do not allow for a free, fair, transparent and democratic process. Canada is committed to supporting the Venezuelan people in their struggle to restore democracy.
Quotes
“Canada rejects the holding of an illegitimate presidential election that bars the opposition and a free press—and only serves to further entrench a dictatorial regime. With my fellow Lima Group ministers, I will continue to advocate on behalf of the Venezuelan people, who deserve to have their democratic and human rights respected. We will discuss methods to hold the regime to account.”
- Hon. Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs
“Canada stands with the Venezuelan people and supports their desire for democratic and economic stability. Working with our international partners, we are committed to helping build a more peaceful and prosperous world—one where democracy can flourish through a global economy that works for everyone.”
- Hon. Bill Morneau, Minister of Finance
Quick facts
- The Lima Group was established on August 8, 2017, in Lima, Peru, to coordinate participating countries’ efforts and apply international pressure on Venezuela. Meetings of the group have been regularly attended by Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Guyana, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru and Saint Lucia.
- The Lima Group, which met most recently on February 13, 2018, in Lima, Peru, is committed to closely monitoring events in Venezuela and applying pressure on Venezuela’s government until the full restoration of democracy in the country is achieved.
- Canada hosted the third ministerial meeting of the Lima Group in Toronto, Ontario, on October 26, 2017. The group discussed options to broaden cooperation with other international partners, maintain pressure on the Maduro regime and translate the group’s unwavering support for the Venezuelan people into further concrete actions. For Canada, this has involved two rounds of sanctions imposed on the Maduro regime.
- Finance ministers from the hemisphere, Europe and Japan have met twice this year to discuss the situation in Venezuela. On the margins of the G20 finance ministers’ meeting in March, ministers agreed to work together to prevent corrupt Venezuelan officials from abusing the international financial system. In April, ministers concurred that Venezuela’s recovery from the crisis will take time and will require a comprehensive international response in the event of a transition to a democratic and reform-oriented government. The May 14 meeting in Mexico City will be the first time that finance ministers have been included in a meeting of the Lima Group.
Canada and the Venezuela crisis: http://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/response_conflict-reponse_conflits/crisis-crises/venezuela.aspx?lang=eng
CANADA - US
Global Affairs Cnada. May 10, 2018. Foreign Affairs Minister to hold bilateral meeting with U.S. Secretary of State
The Honourable Chrystia Freeland, Minister of Foreign Affairs, will hold a bilateral meeting with Mike Pompeo, U.S. Secretary of State, on Friday, May 11, 2018, in Washington, D.C.
DoS. May 11, 2018. Remarks. Mike Pompeo, Secretary of State. Treaty Room. Washington, DC
SECRETARY POMPEO: Good afternoon, everyone. Very nice to see you.
FOREIGN MINISTER FREELAND: Great to see you, Mr. Secretary.
SECRETARY POMPEO: Welcome, welcome. We’re looking forward to our visit. Our great partners to the north are always that – great partners, and I am confident that the foreign minister and I will have a great relationship as well.
FOREIGN MINISTER FREELAND: Okay. Well, thank you very much, Mr. Secretary. The Secretary of State and I spoke, I think maybe less than an hour after your confirmation when you were in the plane.
SECRETARY POMPEO: Yes, exactly. I was on my way to Brussels, yes, ma’am.
FOREIGN MINISTER FREELAND: And it’s a pleasure to meet you in person.
(In French.) Thank you.
SECRETARY POMPEO: Thank you. Thank you all.
VIDEO: https://www.state.gov/secretary/remarks/2018/05/282042.htm
The Globe and Mail. 14 May 2018. U.S. assault against WTO plunges global trading body into deeper uncertainty
BARRIE McKENNA, Columnist
Foreign Affairs Minister Chrystia Freeland was in Washington last week in a last-ditch effort to find common ground with the United States in North American freetrade agreement talks. Meanwhile at the World Trade Organization in Geneva, Canada was taking veiled shots at the United States for undermining the global trading system. The juxtaposition of co-operation on NAFTA and talking tough at the WTO demonstrates Ottawa’s increasingly uneasy relationship with its largest trading partner. On the one hand, the Trudeau government needs to make nice to get a NAFTA deal. But it’s also alarmed by the Trump administration’s increasingly militant trade posture. The May 8 statement, signed by Canada and 40 other WTO members, admonishes countries for increasing global trade tensions and engaging in protectionism.
The United States isn’t named in the statement. But the message is clearly aimed at the Trump administration, which has taken an end-run around the WTO by imposing unilateral steel and aluminum tariffs on dozens of countries, and threatening more against China.
MANDEL NGAN/AFP/GETTY IMAGES
Canadian Foreign Affairs Minister Chrystia Freeland , left, and U.S. Secretary of State Mike Pompeo address the media ahead of a meeting to discuss the North American free-trade agreement in Washington on Friday.
The signatories urge WTO members to stop “taking protectionist measures.” The statement also stresses the need to fill “all current and future vacancies” on the WTO dispute-settlement body – an apparent reference to the United States, which has been systematically blocking the naming of new judges to the organization’s seven-member appeals tribunal in recent months.
“We underline the necessity of members to contribute to keeping the WTO effective, relevant and responsive,” according to the statement, signed by a disparate collection of developed and developing countries.
The words themselves are “relatively anodyne,” but they point to growing angst among many countries about the future of the WTO, says trade lawyer Matthew Kronby, a former Canadian trade negotiator.
“It reflects broad concerns among the membership as to the WTO’s capacity to address major substantive and institutional challenges and remain relevant,” says Mr. Kronby, a partner at Bennett Jones in Toronto. “It wouldn’t be hyperbole to call these concerns existential.”
The Trump administration has been waging a war of words, and actions, against the WTO. Earlier this month, U.S. Commerce Secretary Wilbur Ross slammed the WTO as a keeper of an “obsolete set of rules,” which he says are designed to benefit exporting countries such as China “to the detriment of importing countries.”
U.S. President Donald Trump has similarly accused the WTO of being unfair to the United States, while giving China unfair “perks and advantages.”
Last week’s joint statement is one manifestation of a growing pushback from countries worried the United States and others are undermining the rules-based global trading system, and the WTO.
Mr. Ross is partly right that the WTO hasn’t kept up with the times. But that is mainly due to the failure of the Doha round of global trade talks – an effort to modernize WTO rules that stalled over disagreements between rich and poor countries.
Even WTO director-general Roberto Azevedo has acknowledged that the organization’s rules need an upgrade.
Nor is the United States alone in its frustration that the WTO has not been more effective in getting China and its powerful state-run enterprises to play by the same rules as the rest of the world.
Unfortunately, the Trump administration’s aggressive trade posture has pushed many countries to side with China in its showdown with the United States. The European Union, for example, has joined India and Russia in backing China’s case at the WTO seeking compensation due to the tariffs on steel and aluminum.
The WTO statement is similarly making strange bedfellows. Canada signed the letter along with Hong Kong, a special administrative region of China.
“It has been an unfortunate accomplishment of U.S. trade policy in recent months to cause most of the world to rally to China’s side because of our disregard for the WTO and the global system,” former U.S. treasury secretary Lawrence Summers argued in a recent op-ed in The Washington Post.
“Not only does having many others on its side make it easier for China to resist the United States, but it also undercuts the effectiveness of our sanctions.”
The WTO’s future was already uncertain before Donald Trump.
The organization doesn’t stand a chance if the world’s largest economy treats it as a pinata, rather than using U.S. influence to push for reform.
INTERNATIONAL TRADE
US. CHINA. The Globe and Mail. 14 May 2018. Ahead of trade talks, Trump pushes reversal of U.S. ban on China’s ZTE. Trump: Ban was imposed after ZTE violated agreement not to sell U.S. tech to Iran
VALERIE VOLCOVICI
KAREN FREIFELD
American companies are estimated to provide 25 per cent to 30 per cent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.
WASHINGTON - U.S. President Donald Trump said on Sunday he will help Chinese technology company ZTE Corp. “get back into business, fast,” after being crippled by a U.S. ban, a concession to Beijing ahead of high-stakes trade talks this week.
ZTE suspended its main operations after the U.S. Commerce Department banned American companies from selling to the firm for seven years as punishment for ZTE breaking an agreement reached after it was caught illegally shipping U.S. goods to Iran. Mr. Trump’s instructions to the Commerce Department, delivered in a tweet, come as Chinese and U.S. officials prepare for talks in Washington with China’s top economic official, Liu He. to resolve an escalating trade dispute between the world’s two largest economies.
Mr. Trump’s proposed reversal will likely ease relations between the United States and China.
The world’s two biggest economies have already proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains as well as business investment plans.
In trade talks in Beijing earlier this month, China asked the United States to ease crushing sanctions on ZTE, one of the world’s largest telecom equipment makers, according to people with knowledge of the matter.
Mr. Trump’s reversal could have a significant impact on shares of American optical components makers such as Acacia Communications Inc. and Oclaro Inc., which saw their stock prices fall when U.S. companies were banned from exporting goods to ZTE.
ZTE paid more than US$2.3billion to 211 U.S. exporters in 2017, a senior ZTE official said on Friday.
“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Mr. Trump wrote on Twitter, saying he is working with Chinese President Xi Jinping on a solution.
The U.S. Commerce Department, ZTE and the Chinese embassy in Washington could not immediately be reached for comment.
The U.S. government launched an investigation into ZTE after Reuters reported in 2012 the company had signed contracts to ship millions of dollars’ worth of hardware and software from some of the best known U.S. technology companies to Iran.
ZTE pleaded guilty last year to conspiring to violate U.S. sanctions by illegally shipping U.S. goods and technology to Iran and entered into an agreement with the U.S. government. The ban is the result of ZTE’s failure to comply with that agreement, the Commerce Department said.
The ban came two months after two Republican senators introduced legislation to block the U.S. government from buying or leasing telecommunications equipment from ZTE or Huawei, citing concern the companies would use their access to spy on U.S. officials.
Without specifying companies or countries, Federal Communications Commission Chairman Ajit Pai, recently said “hidden ‘backdoors’ to our networks in routers, switches, and other network equipment can allow hostile foreign powers to inject viruses and other malware, steal Americans’ private data, spy on U.S. businesses, and more.”
ZTE relies on U.S. companies such as Qualcomm Inc., Intel Corp. and Alphabet Inc’.s Google. American companies are estimated to provide 25 per cent to 30 per cent of the components used in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.
Claire Reade, a Washingtonbased trade lawyer and former assistant U.S. trade representative for China affairs, said that the ZTE ban was a shocking blow to China’s leadership and may have caused more alarm in Beijing than Mr. Trump’s threats to impose tariffs on US$50-billion in Chinese goods.
“Imagine how the United States would feel if China had the power to crush one of our major corporations and make it go out of business,” Ms. Reade said. “China may now have strengthened its desire to get out from a under a scenario where the United States can do that again.”
Even though ZTE was probably “foolish” in not understanding the consequences of violating a Commerce Department monitoring agreement, she said the episode makes it less likely that China would make concessions on U.S. demands that it stop subsidizing efforts to develop its own advanced technology, she said.
Other experts said Mr. Trump’s policy reversal was unprecedented.
“This is a fascinating development in a highly unusual case that has gone from a sanctions and export-control case to a geopolitical one,” said Washington lawyer Douglas Jacobson, who represents some of ZTE’s suppliers.
Mr. Trump’s announcement drew sharp criticism from a Democratic lawmaker on Sunday who said the move was jeopardizing U.S. national security.
“Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat,” Representative Adam Schiff, a Democrat, said on Twitter. “You should care more about our national security than Chinese jobs.”
ZTE suppliers including Acacia, Oclaro, Lumentum Holdings Inc., Finisar Corp., Inphi Corp. and Fabrinet, all fell sharply after the ban was announced.
Shares of Acacia, which got 30 per cent of its total revenue in 2017 from ZTE, hit a record low after the ban was announced. Oclaro, which earned 18 per cent of its fiscal 2017 revenue from ZTE, fell 17 per cent.
US. CHINA. REUTERS. MAY 14, 2018. Trump's comments on China's ZTE draw security concerns
WASHINGTON (Reuters) - President Donald Trump’s pledge to help China’s ZTE Corp “get back into business, fast” and save Chinese jobs after a U.S. ban crippled the technology company drew condemnation from some lawmakers on Monday over trade and security concerns.
“I hope this isn’t the beginning of backing down to China,” Republican U.S. Senator Marco Rubio said on Twitter, saying Chinese competition had “ruined” many U.S. companies.
“(The) problem with ZTE isn’t jobs & trade, it’s national security & espionage. Any telecomm firm in #China can be forced to act as tool of Chinese espionage without any court order or any other review process,” Rubio, a former Trump rival, said. “We are crazy to allow them to operate in U.S. without tighter restrictions.”
Trump’s reversal on Sunday came as high-level trade talks were to resume this week between the world’s two largest economies. Washington’s tough stance on Chinese trade practices have put the countries on course for a possible trade war.
“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he and Chinese President Xi Jinping were working together on a solution for ZTE (000063.SZ) (0763.HK), China’s second-largest maker of telecommunications equipment.
The White House said later that U.S. officials were in contact with Beijing about ZTE and that Trump expected Commerce Secretary Wilbur Ross to make an independent decision.
In April, the Commerce Department banned U.S. companies from selling to ZTE for seven years after it illegally shipped U.S. goods to Iran and North Korea.
ZTE, whose shares remain suspended, has not commented on Trump’s statement.
Sources briefed on the matter said Beijing had demanded the ZTE issue be resolved as a prerequisite for broader trade negotiations.
Chinese Foreign Ministry spokesman Lu Kang on Monday said China “greatly appreciates the positive U.S. position on the ZTE issue” and that Chinese Vice Premier Liu would visit Washington from Tuesday to Saturday.
U.S. concessions over ZTE could also smooth the way for U.S. chipmaker Qualcomm Inc’s (QCOM.O) $44 billion takeover of NXP Semiconductors (NXPI.O), which has been delayed by a lengthy antitrust review by China’s Ministry of Commerce.
Top Senate Democrat Chuck Schumer said on Monday that Trump was trading a crackdown on intellectual property theft for selling goods in the short run.
“One of the few areas where the president and I agreed, and I was vocally supportive, was his approach towards China. But even here he is backing off, and his policy is now designed to achieve one goal: make China great again,” he said in a statement.
ZTE Corp
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Democratic U.S. Senator Ron Wyden echoed Schumer’s comments.
“Unilateral concessions before an upcoming trade negotiation. This may be the art of the deal for China but it’s a big loser for American workers, companies, and national security,” he said.
Reporting by Valerie Volcovici and Karen Freifield, Steve Holland, David Lawder, Chris Sanders and David Morgan in Washngton; Michael Martina, Sue-Lin Wong and Matthew Miller in Beijing; and John Ruwitch in Shanghai; Editing by Peter Cooney, Philip McClellan and Martin Howell
US. CHINA. REUTERS. MAY 14, 2018. ZTE employees in China cheer Trump tweet
Sijia Jiang
HONG KONG (Reuters) - Employees of ZTE Corp (000063.SZ)(0763.HK), the Chinese telecom equipment maker, are cheering a tweet by U.S. President Donald Trump that suggested a resolution is in sight for a devastating ban on sales to the Chinese company.
In an unexpected reversal of a hardline U.S. stance on the issue, Trump said on Twitter on Sunday that he and Chinese President Xi Jinping were working together to give ZTE “a way to get back into business, fast”, citing the loss of many jobs in China.
ZTE was last month hit by a move by Washington to forbid U.S. firms supplying the Chinese company with components and technology after it was found to have violated U.S. export restrictions by illegally shipping goods to Iran. It has since said that it has suspended its main business operations.
Trump’s tweet was reposted widely by ZTE employees on social media with comments expressing relief, taking it as a sign of a an impending settlement.
“Wow! Breaking good news!” a ZTE manager wrote on her WeChat account, pointing to Trump’s remark that the U.S. “Commerce Department has been instructed to get it done”.
“Almost there,” wrote another ZTE employee.
According to a source close to the company, ZTE management welcomed the latest development and planned to negotiate with the U.S. side for a resolution under the guidance of the Chinese government.
The news boosted telecom and semiconductor related stocks in China, which were among the best performing on Monday.
Zhong Fu Tong Group (300560.SZ), a communication network maintenance service provider and ZTE supplier, rose by the daily limit of 10 percent.
ZTE employees contacted by Reuters all expressed surprise and optimism at the turn of events, although some also voiced concern that it was still unclear how long it would take to lift the ban and at what cost.
“In any case, there are probably going to be layoffs, if the company has to pay another big fine,” said one employee, who declined to be named. He added that meetings were being held to discuss resumption of production.
In response to a Reuters request for comment, ZTE’s press department said it was preparing a statement.
Edison Lee, an analyst with Jefferies, expressed caution about the news in a investors’ note, saying that “it does not mean the tech-focused trade conflict between China and the US is over”.
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Lee said Trump appeared to have made the move as a goodwill gesture at China’s request in order for trade talks to continue and because he expected concessions from China.
Reporting by Sijia Jiang; Editing by Philip McClellan
US. CHINA. REUTERS. MAY 13, 2018. In concession, Trump will help China's ZTE 'get back into business'
Valerie Volcovici, Michael Martina
WASHINGTON/BEIJING (Reuters) - U.S. President Donald Trump pledged on Sunday to help ZTE Corp “get back into business, fast” after a U.S. ban crippled the Chinese technology company, offering a job-saving concession to Beijing ahead of high-stakes trade talks this week.
Trump’s unexpected announcement was a stunning reversal, given Washington’s tough stance on Chinese trade practices that have put the world’s two largest economies on course for a possible trade war.
Sources briefed on the matter said Beijing had demanded the ZTE issue be resolved as a prerequisite for broader trade negotiations.
“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter, saying he and Chinese President Xi Jinping were working together on a solution for ZTE.
The U.S. Commerce Department last month banned American companies from selling to the firm for seven years as punishment for ZTE breaking a 2017 agreement after it was caught illegally shipping U.S. goods to Iran and North Korea, an investigation dating to the Obama administration.
The penalty cut off ZTE’s access to key components such as semiconductors, prompting China’s second-largest maker of telecommunications equipment to say last week that it had suspended its main operations.
During trade talks in Beijing earlier this month, Chinese Vice Premier Liu He told U.S. Treasury Secretary Steven Mnuchin that China would not continue talks on broader bilateral trade disputes unless Washington agreed to ease the crushing sanctions on ZTE, two people briefed on those meetings said.
“The message was, ‘we have to deal with ZTE before we continue talks’,” one of the people said.
Both sources, who declined to be identified given the sensitivity of the matter, said China was willing in principle to import more U.S. agriculture products in return for Washington smoothing out penalties against ZTE, but they did not offer details.
Chinese Foreign Ministry spokesman Lu Kang told a regularly scheduled news briefing on Monday that China “greatly appreciates the positive U.S. position on the ZTE issue”.
He said that Liu would travel to Washington from Tuesday to Saturday to continue trade talks.
For U.S. chipmaker Qualcomm Inc, which has seen its $44 billion takeover of NXP Semiconductors delayed by a lengthy antitrust review by China’s Ministry of Commerce, reconsideration of the ZTE penalty could smooth the way for the deal to move forward.
Bloomberg reported on Monday that China’s Commerce Ministry had been asked to speed up the review of the deal and Qualcomm’s proposed remedies to protect local companies, after previously shelving the review process amid the trade tensions. It cited people familiar with the matter as its sources. Bloomberg did not say who had asked the ministry to speed up the review.
NXP’s shares rose more than 10 percent in pre-market trade in the U.S. on Tuesday, while Qualcomm gained more than 2 percent.
LINKED TO THE TRADE DISPUTE
Within the Commerce Department, and in U.S. business circles, the U.S. penalty against ZTE was widely seen as based on clear evidence of a company knowingly flouting U.S. regulations - separate from the highly politicized trade row, the sources said.
But Trump’s reversal surprised and frustrated many U.S. officials, who had viewed the penalty on ZTE as final and not open to appeal, the sources said.
“Everyone has been explicitly saying this is not part of the trade conflict. And now the President has overtly linked it to the trade dispute for better or worse, and that is not good if you’re trying to maintain credibility,” the second source told Reuters.
ZTE, whose shares remain suspended, did not have immediate comment.
The U.S. Commerce Department did not have immediate comment and China’s Commerce Ministry did not reply to a request for comment.
White House spokeswoman Lindsay Walters confirmed that U.S. officials were in contact with Beijing about ZTE. She said Trump’s tweet underscored the importance of “free, fair, balanced and mutually beneficial” relations between the United States and China on issues involving the economy, trade and investment.
Trump expects Commerce Secretary Wilbur Ross “to exercise his independent judgment, consistent with applicable laws and regulations, to resolve the regulatory action involving ZTE based on its facts,” Walters said.
Washington and Beijing have proposed tens of billions of dollars in tariffs in recent weeks, fanning worries of a full-blown trade war that could hurt global supply chains and dent business investment plans.
In a second tweet on Sunday, Trump said past U.S. trade talks with China posed a hurdle that he predicted the two countries would overcome.
“China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,” Trump wrote on Twitter.
“But be cool, it will all work out!” he added.
Shortly after Trump’s tweet, a Democratic lawmaker, Representative Adam Schiff, on Twitter questioned the move to help the Chinese company, given numerous warnings about ZTE’s alleged threat to U.S. national security.
“Our intelligence agencies have warned that ZTE technology and phones pose a major cyber security threat,” Schiff said. “You should care more about our national security than Chinese jobs.”
SHOCKING BLOW
It was not clear China would accept Trump’s assertion that Beijing needs to work toward a mutually beneficial outcome.
“The U.S. should be aware that it must become more cooperative and constructive in the trade talks with China,” the China Daily, China’s official English-language newspaper, said in a Monday editorial. The editorial did not mention ZTE.
Trump’s comments on ZTE could have a significant impact on shares of American optical components makers such as Acacia Communications Inc and Oclaro Inc, which fell when U.S. companies were banned from exporting goods to ZTE.
ZTE paid over $2.3 billion to 211 U.S. exporters in 2017, a senior ZTE official said on Friday.
The U.S. government launched an investigation into ZTE after Reuters reported in 2012 the company had signed contracts to ship hardware and software worth millions of dollars to Iran from some of the best-known U.S. technology companies. (Reuters report that exposed the practice.
ZTE relies on U.S. companies such as Qualcomm Inc, Intel Corp and Alphabet Inc’s Google. American companies are estimated to provide 25 percent to 30 percent of components in ZTE’s equipment, which includes smartphones and gear to build telecommunications networks.
Claire Reade, a Washington-based trade lawyer and former assistant U.S. Trade Representative for China affairs, said the ZTE ban may have caused more alarm in Beijing than Trump’s threats to impose tariffs on $50 billion in Chinese goods.
“Imagine how the United States would feel if China had the power to crush one of our major corporations and make it go out of business,” Reade said.
Reporting by Valerie Volcovici and Karen Freifield, Steve Holland, David Lawder, Chris Sanders and David Morgan in Washngton; Michael Martina, Sue-Lin Wong and Matthew Miller in Beijing; and John Ruwitch in Shanghai; Editing by Peter Cooney, Philip McClellan and Martin Howell
US. CHINA. REUTERS. MAY 14, 2018. China says will work with U.S. for positive outcome in trade talks
BEIJING (Reuters) - China said on Monday it is willing to work with the United States for a positive outcome in trade negotiations this week.
Foreign Ministry spokesman Lu Kang made the comment at a regular briefing.
Vice Premier Liu He will attend the talks in Washington from May 15 to 19. High-level discussions in Beijing earlier this month appeared to make little progress but there have been signs recently of some easing in tensions.
Reporting by Sue-lin Wong; Writing by Christian Shepherd; Editing by Kim Coghill
China economic data due this week are forecast to show the expansion holding up or even accelerating, and may signal whether escalating trade tensions are weighing on growth.
Industrial production, retail sales, fixed investment and the new jobless rate will be released Tuesday at 10 a.m. in Beijing, which is 10 p.m. Monday in New York.
April factory output is forecast to accelerate, rising 6.4 per cent from a year earlier, according to economists surveyed by Bloomberg last week. Retail sales growth projected at 10 per cent would be a tad weaker than March, while investment growth year-to-date probably slowed to 7.4 per cent.
The reports will be among the first official gauges unaffected by the lunar New Year holiday, which began later than usual this year, in February, skewing yearon-year comparisons for the first three months.
Continued resilience would give policy makers a greater buffer amid rising uncertainty as trade disputes and debt crackdowns could drag on growth later this year.
“We may see firm activity in April and May after a weak March,” but headwinds could gather in the second half of this year, UBS Group AG economists Zhang Ning and Wang Tao wrote in a note. They cited risks from more trade frictions and prolonged negotiations.
With U.S. tariffs potentially hitting Chinese goods as soon as this month, industrial output would come into sharper focus.
If trade talks stall, output of machinery and equipment may be due to weaken further as the Trump administration’s tariff list focuses on technology products. Communications equipment, computers and electronic devices also could suffer.
Another signal would come from industrial output data for the value of exports delivered, a gauge of goods produced for export but not necessarily shipped. Compared with volatile export numbers, it’s a more stable gauge of external demand.
In addition, manufacturers in the statistics bureau sample are relatively large and probably not agile enough to front-load shipments ahead of tariffs, as economists say small exporters likely have been doing.
Another casualty of trade tension may be business confidence to upgrade, expand and spend. Investment data for manufacturers’ spending might edge up and help give a boost to the expansion, according to Zhu Qibing, chief macroeconomy analyst at BOC International China Ltd. in Beijing. However, he added, that momentum could vary across different industries.
Investment in telecommunications manufacturing equipment jumped 15.4 per cent in the first quarter from a year earlier, though that’s poised to weaken if the U.S. steers its purchases elsewhere in coming months.
Drug makers, smelters and chemical producers saw investment fall, but as China pledges to fully open its manufacturing sector to foreign investors, that might be poised to eventually rebound.
Investment data help gauge sentiment in the real estate sector, which UBS estimates makes up almost a quarter of final demand when related need for goods like metals and chemicals are included.
Besides property development investment, which rebounded early this year, home sales will signal how strong demand is and new construction by area indicates supply.
Consumers, the pillar of the more than US$12-trillion economy, are still spending generously.
While total retail sales include purchases by government, businesses and other entities, online sales better highlight buying by individuals. Cosmetics and jewellery surged in March, while shoppers had less of an appetite for communications devices such as phones.
For the second month, the statistics bureau will release an internationally comparable unemployment rate based on household surveys. The headline number may remain stable. A private gauge from recruitment website Zhaopin.com dropped in the first quarter on seasonal effects, as labour demand fell in most sectors except for intermediary and leasing services.
NAFTA
NAFTA REUTERS. MAY 14, 2018. NAFTA math may not add up to more U.S. auto jobs
Nick Carey
DETROIT (Reuters) - Trump administration demands in NAFTA trade negotiations meant to push auto jobs back to the United States may not be enough to spark a shift in where automakers build cars and trucks.
New math to determine what qualifies as vehicle content, what limits apply to allow tariff-free auto imports and how long companies would have to comply under a new NAFTA agreement will likely not move the needle for Detroit automakers in particular, industry executives and supply chain experts said.
Automakers are unlikely to uproot billions of dollars of investments in plants and supply chains. And those that cannot comply with standards for passenger cars could simply pay tariffs of around $800 to $900 per vehicle and buy low-cost parts from Asia to offset the cost, industry experts said.
“Broadly speaking the (tariff) increase isn’t big enough to make a wholesale change,” said Mark Wakefield, head of the North American automotive practice for consultancy AlixPartners. “No one is likely to shut down an active factory in Mexico and build a new one to replace that in the U.S.”
Tough U.S. proposals on autos are meant to bring back U.S. manufacturing jobs and central to the Trump administration’s approach to renegotiating the North American Free Trade Agreement between Canada, Mexico and the United States.
General Motors Co, soon to be the only Detroit Three automaker building pickup trucks in Mexico, is confident it could comply with content requirements for trucks the United States proposes without shifting production, a person familiar with the company’s plans said.
(Graphic: tmsnrt.rs/2IgOECU)
But GM’s Mexican-made trucks already have a significant share of their value, such as engines, produced in the United States at United Auto Workers union-represented factories, and GM would get another boost if it is allowed to tally engineering done in Michigan.
GM is retooling a high-volume factory to build a new generation of large Chevrolet and GMC pickups in Silao, Mexico. Pickup trucks that do not have enough U.S. or North American content under NAFTA rules could be hit with a crippling 25 percent tariff.
Last year GM churned out more than 400,000 large pickup trucks from Silao, more than 40 percent of its 2017 U.S. pickup truck sales.
Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne said on Friday a revised treaty could prompt FCA to “redirect” some Mexican production but would not cause it to further dial back its presence in Mexico.
In January FCA had said it would shift production of heavy-duty pickup trucks from Mexico to Michigan in 2020 to reduce the profit risks should the United States pull out of NAFTA.
Senior U.S., Canadian and Mexican officials on Friday ended a week of talks without a deal to modernize NAFTA, agreeing instead to resume negotiations soon, ahead of a deadline next week.
RUBIK’S CUBE OF RULES
The United States wants 40 percent of the value of light-duty passenger vehicles and 45 percent of a truck’s content to be built at hourly wages of $16 to qualify for tariff-free import from Mexico.
Those demands are aimed at preserving relatively higher-wage U.S. and Canadian production and pressuring Mexico’s low auto wages.
Mexico wants 70 percent of a vehicle’s content to be made within North America, less than the 75 percent U.S. negotiators propose.
Automakers that do not comply with tougher U.S. or North American content and wage rules, if adopted, could face 2.5 percent tariffs on cars or sport utility vehicles shipped to the United States from Mexico. That may be a level of pain they can live with.
Automakers producing sedans, SUVs and crossovers in Mexico include Ford Motor Co, Toyota Motor Corp, Mazda Motor Corp, Nissan Motor Co Ltd, Honda Motor Co Ltd and Volkswagen AG (VOWG_p.DE).
The U.S. proposal would allow automakers to count salaries for engineering, research, sales, software and product development jobs, a provision favoring Detroit automakers versus foreign brands.
And companies would have two, four or nine years to comply, depending on the specific condition involved.
Still, some automakers are more of a question mark, especially when it comes to trucks. Toyota plans to expand production in Mexico of its Tacoma pickup trucks, part of a realignment of its North American manufacturing that includes a new $1.6 billion assembly plant in Alabama.
It also makes Tacomas in San Antonio, Texas, so could in theory switch production. The automaker declined to comment.
And the Trump administration proposals could complicate matters for electric vehicles and self-driving cars automakers want to build in Mexico. The U.S. proposals call for 75 percent of an electric or autonomous vehicle’s value to be made within North America to avoid tariffs.
Since much of those vehicle’s value can come from batteries made overseas, that means automakers must make up for the content largely on the human side.
Volkswagen AG
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At nine years, electronic vehicles are subject to the longest period until they must comply.
“EVs and AVs have so much electronic content and there is no electronics industry here,” said Kristin Dziczek of the Center for Automotive Research in Ann Arbor, Mich. “Nine years is not enough to build up an electronics industry to that scale.”
Reporting By Nick Carey; Editing by Meredith Mazzilli
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