Asian Markets Fall As US, China Prepare To Sign Trade Pact

Traders work on the floor of the New York Stock Exchange (NYSE) on August 23, 2019 in New York City.  Eduardo Munoz Alvarez/Getty Images/AFP

 

Asian markets fell Wednesday as investors took their foot off the pedal following weeks of gains, with focus on the signing later in the day of the China-US trade deal.

While the mood on trading floors was broadly upbeat as tensions between the economic superpowers eased, analysts warned there will not likely be much more progress on the next phase of talks ahead of the US presidential election in November.

The mini pact, which has de-escalated a two-year standoff that has jolted the global economy, saw the White House halve tariffs imposed on September 1 on $120 billion of Chinese goods and cancel another round set for December 15.

In return, Beijing pledged vast sums to buy US products including pork and soybeans.

Still, the next round of negotiations is expected to be the toughest, with key issues including China’s massive subsidies for state industry and forced technology transfer proving key sticking points.

Treasury Secretary Steven Mnuchin denied a report that it could include provisions to roll back more levies on China after the presidential vote, with progress on phase two the key to measures being removed.

But he did tell Fox Business network: “I think phase one is an enormous step in the right direction.”

Officials said full details would be made public after the signing ceremony in Washington.

‘Constructive process’ 

“We should not expect further tariff relief until after the November presidential elections, suggesting that today’s agreement is probably as good as it gets for 2020,” said National Australia Bank’s Tapas Strickland.

But he added: “Importantly for China… the deal will allow it to re-focus on its domestic economy which should reduce fears of a slowing economy.”

However, Markets.com analyst Neil Wilson, warned that the year could see fresh volatility.

“It’s possible that instead we see Trump threaten China more, dangling the prospect of abandoning the deal and taking an even tougher stance going into the election,” he said in a note.

With few other catalysts to drive buying on Wednesday, regional markets tracked a weak lead from Wall Street.

Tokyo and Shanghai both ended down 0.5 percent, while Hong Kong was off 0.4 percent.

Seoul and Singapore each dropped 0.4 percent, while there were also deep losses in Mumbai, Taipei, Bangkok, Jakarta and Manila, though Sydney and Wellington rose.

Still, with most negative headlines in the rearview mirror, analysts were upbeat.

“Right now we are in a more constructive process,” Omar Aguilar, at Charles Schwab, told Bloomberg TV.

“While the uncertainty is still there, the fact that there’s a laid-out plan for phase one and phase two has already been priced by the market and there is a positive view.”

In early trade, London and Paris both rose 0.2 percent, while Frankfurt was flat.

Key figures at 0820 GMT 

Tokyo – Nikkei 225: DOWN 0.5 percent at 23,916.58 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 28,773.59 (close)

Shanghai – Composite: DOWN 0.5 percent at 3,090.04 (close)

London – FTSE 100: UP 0.2 percent at 7,633.51

Pound/dollar: UP at $1.3029 from $1.3019 at 2145 GMT

Euro/pound: DOWN at 85.44 pence from 85.46 pence

Euro/dollar: UP at $1.1135 from $1.1126

Dollar/yen: DOWN at 109.93 yen from 109.98

Brent Crude: DOWN 15 cents at $64.34 per barrel

West Texas Intermediate: DOWN 16 cents at $58.07 per barrel

New York – Dow: UP 0.1 percent at 28,939.67 (close).

AFP

 

US, Mexico, Canada To Sign Deal Finalising Trade Agreement

Mexican President Enrique Pena Nieto (L), US President Donald Trump (C) and Canadian Prime Minister Justin Trudeau are pictured after signing a new free trade agreement in Buenos Aires, on November 30, 2018, on the sidelines of the G20 Leaders’ Summit.  Martin BERNETTI / AFP

 

The United States, Mexico and Canada will sign an “initial deal” Tuesday finalizing the USMCA trade agreement, Mexican President Andres Manuel Lopez Obrador said.

“There is an initial deal between the governments,” the leftist leader told his daily news conference, as negotiators from the three countries prepared to meet in Mexico City.

“Today it will be signed by… the three countries’ negotiators.”

Lopez Obrador was due to chair a meeting of top officials from the three countries at the presidential palace at 1800 GMT.

Initially signed in November 2018, the United States-Mexico-Canada Agreement is meant to replace the 25-year-old North American Free Trade Agreement (NAFTA), which President Donald Trump complains has been “a disaster” for the US.

But Mexico is the only country to ratify it so far.

In Washington, opposition Democrats — acutely aware of the need to win back blue-collar voters they lost to Trump in 2016 — have insisted on greater oversight of Mexican labor reforms promised under the new deal, including wage hikes and increased power for unions.

AFP

Trump Will Not Impose Tariffs On EU Cars – Juncker

 

The outgoing president of the European Commission Jean-Claude Juncker said Friday he believes the US will not impose new tariffs on imported European cars in the coming days.

President Donald Trump’s administration has been threatening since last year to impose tariffs on auto imports to defend the US automaking sector, a symbol of American manufacturing.

After postponing such measures in May, Trump is due to decide by mid-November whether to impose the supplemental tariffs on cars built in EU countries — a step particularly feared by the big German automakers.

READ ALSO: Five Killed, 120 Injured In Iran Earthquake

But in an interview with a German newspaper, Juncker said he was “fully informed” on the issue and that Trump “will not do it”.

“Trump will criticise a little, but there will not be tariffs on cars,” he told the Suddeutsche Zeitung published Friday.

If adopted, it would mark the latest escalation of the trade conflict between Brussels and Washington, coming only weeks after the US imposed new punitive taxes on European products worth $7.5 billion.

That increase came in mid-October, four days after the World Trade Organization (WTO) gave Washington a green light to take retaliatory trade measures against the EU over its subsidies to European aerospace giant Airbus.

The United States also imposed heightened tariffs last year on EU-made steel and aluminium products.

On November 3, US Secretary of Commerce Wilbur Ross suggested Washington may not need to impose new customs taxes on auto imports.

“We’ve had very good conversations with our European friends, with our Japanese friends, with our Korean friends,” Ross said.

China Says Agreed With US To Remove Tariffs As Trade Deal Progresses

(FILES)(COMBO) This combination of file pictures created on April 4, 2017 shows US President Donald Trump in St. Louis, Missouri on October 9, 2016 and China’s leader Xi Jinping in Beijing on December 5, 2012. Ed Jones, Paul J. RICHARDS / AFP

 

China and the United States have agreed a plan to remove tariffs imposed on two-way goods in stages, the commerce ministry said Thursday, as negotiators try to hammer out a trade deal.

“In the past two weeks, the negotiation leaders of the two sides have held serious and constructive discussions on properly resolving their core concerns and agreed to roll back the additional tariffs in stages, as progress is made towards a (final) agreement,” ministry spokesman Gao Feng said at a press conference.

More details later.

China Trade Deal Will Help Farmers, Says Trump

 

President Donald Trump again Monday said a trade deal is imminent with Beijing which will help American farmers hurt by retaliation in the grinding conflict between the economic powers.

“We’re looking probably to be ahead of schedule to sign very big portion of the China deal, and we will call it phase one,” Trump told reporters.

The deal will “take care of the farmers” as well as “some of the other things” like banking, he said in another of his impromptu briefings before departing on a trip to Chicago.

Washington and Beijing have exchanged blows for over a year, with tariffs now impacting hundreds of billions of dollars in two-way trade.

US farmers were the first to be targeted with steep duties on soybeans and pork and the Trump administration has rolled out millions of dollars in support programs to help farmers caught in the crossfire.

Now with the 2020 presidential election approaching, and Trump under pressure from the impeachment inquiry in Congress, US trade officials have focused on getting a partial deal in the books.

The US president confirmed that he expects to sign the pact with his Chinese counterpart Xi Jinping on the sidelines of the APEC summit in Santiago in mid-November.

The Chinese Commerce Ministry said Saturday both sides agreed to “properly address each other’s core concerns.”

China will lift a ban on US poultry imports while the United States will import Chinese-made cooked poultry and catfish products, it said in a statement.

US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with China’s Vice Premier Liu He on Friday and said they were “close to finalizing some sections of the agreement,” although they have released few details.

Both sides have said discussions will go on continuously at the deputy level and the top trade officials will have another call “in the near future.”

The White House held off on a massive tariff increase planned for October 15 on $250 billion in Chinese goods but new 15 percent tariffs on another $150 billion in goods are still scheduled for December.

AFP

US Imposes Tariffs On EU Goods, Targeting Airbus, Wine And Whisky

 

The United States imposed tariffs on a record $7.5-billion worth of European Union goods on Friday, despite threats of retaliation, with Airbus, French wine and Scottish whiskies among the high-profile targets.

The tariffs, which took effect just after midnight in Washington (0401 GMT), came after talks between European officials and US trade representatives failed to win a last-minute reprieve.

The WTO-endorsed onslaught from US President Donald Trump also comes as Washington is mired in a trade war with China and could risk destabilising the global economy further.

In the line of fire are civilian aircraft from Britain, France, Germany and Spain — the countries that formed Airbus — which will now cost 10 percent more when imported to the US.

But the tariffs also target consumer products such as French wine, which Trump had vowed to attack in recent months. Wine from France, Spain and Germany will now face 25 percent tariffs.

Speaking in Washington hours before the tariffs were due to come into effect, France’s Economy Minister Bruno Le Maire warned the move would have serious repercussions.

“Europe is ready to retaliate, in the framework of course of the WTO,” he told reporters shortly after meeting with US Treasury Secretary Steven Mnuchin on the sidelines of the International Monetary Fund annual meetings.

“These decisions would have very negative consequences both from an economic and a political point of view.”

Le Maire was due to meet US Trade Representative Robert Lighthizer later on Friday.

He also warned the US against starting another front in its trade conflicts and again called for a negotiated solution.

At a time when the global economy is slowing, “I think that our responsibility is to do our best to avoid that kind of conflict,” Le Maire said.

The Europeans have long advocated negotiation over conflict and they themselves will be able to impose tariffs next year to punish the United States for subsidising Boeing.

But EU officials had already offered in July to call a truce on subsidies for planemakers, in which both sides would admit fault and agree to curtail state aid — to no avail. The two sides have been involved in a row over the subsidies for 15 years.

The tariffs kick in just days after the United States was given the formal go-ahead by the World Trade Organization.

As recently as Wednesday, Trump singled out the Europeans for being unfair with the US on trade, but said his door was open to negotiate a settlement.

‘Very hard’

The Europeans fear above all that Trump will impose heavy duties on imports of European cars around mid-November.

This would be a serious blow for the German automotive sector in particular, even if giants such as Volkswagen or BMW also manufacture in the United States.

“Our products are very hard to bring in (to Europe)” when Europeans easily import their cars into the United States, Trump said.

The Airbus-Boeing row is just one of several issues stoking transatlantic tensions that quickly descended into acrimony when Trump took office in 2017.

Trump embraced a protectionist agenda, slapping import duties on steel and aluminium from the EU and other allies, while also threatening tariffs on cars.

Trade groups in Europe such as winemakers, German tool manufacturers and whisky producers in Scotland have kept a clamour of protest, demanding Washington reverse tack.

The US leader and European Commission President Jean-Claude Juncker agreed in July 2018 to a ceasefire in the conflict to hold trade talks that have so far led nowhere.

The epic legal battle between Airbus and Boeing at the World Trade Organization began in 2004 when Washington accused Britain, France, Germany and Spain of providing illegal subsidies and grants to support the production of a range of Airbus products.

A year later, the EU alleged that Boeing had received $19.1 billion worth of prohibited subsidies from 1989 to 2006 from various branches of the US government.

The two cases were then tangled up in a legal quagmire, with each side being given partial vindication after a long series of appeals and counter appeals.

Trump Warns China Over Trade, Hong Kong

U.S. President Donald Trump speaks to the media at the United Nations (U.N.) General Assembly on September 24, 2019 in New York City. Spencer Platt/Getty Images/AFP

 

US President Donald Trump put China on notice at the United Nations Tuesday, declaring that the time of trade “abuses” by Beijing was “over” and calling on the country to protect Hong Kong’s “democratic ways of life.”

“For years, these (trade) abuses were tolerated, ignored, or even encouraged,” he told the UN General Assembly, arguing that “globalism” had caused world leaders to ignore their own national interests.

“But as far as America is concerned, those days are over,” he said.

The US president added that his administration was “carefully monitoring” the way China handles the crisis in Hong Kong.

“The world fully expects that the Chinese government will honor its binding treaty… (and) protect Hong Kong’s freedom and legal system and democratic ways of life”

AFP

Israel, South Korea Announce Free-Trade Deal

South Korean Trade Minister Yoo Myung-hee (L) and Israeli Economy and Industry Minister Eli Cohen stand after signing a free trade agreement between Israel and the Republic of Korea in Jerusalem on August 21, 2019.  Gil COHEN-MAGEN / AFP

 

Israel and South Korea announced Wednesday they have concluded a free-trade agreement to eliminate tariffs on goods ranging from cars and medical equipment to lipstick and video games.

Israeli Economy Minister Eli Cohen called the deal “historic”, saying it was Israel’s first such agreement with an east Asian nation.

It was not clear when the agreement could enter into force.

“The advantage of this agreement will go beyond our economic ties,” Cohen said at a ceremony to announce the deal.

“I’m confident that this will also mark the start of a new era and an even closer friendship between Israel and Korea.”

South Korean Trade Minister Yoo Myung-hee said at the ceremony that “I hope that Israeli companies will take full advantage of Korea as a stepping stone into the vast Asian market.”

Before Wednesday’s ceremony, the pending agreement had been the subject of political controversy in Israel over claims it would not apply to goods from Israeli settlements.

Cohen denied that was the case and said if businesses in settlements were in any way disadvantaged they would be compensated by the government, as is the case with other trade deals.

The issue is a sensitive one in Israel, particularly ahead of September 17 elections. Israeli settlements are viewed as illegal under international law.

Negotiations on the agreement stretched three years.

According to Israel’s economy ministry, trade between the two countries reached $2.5 billion last year, an increase of nearly 15 percent over 2017.

South Korea is home to companies including Samsung, the world’s biggest smartphone and memory chip maker, and carmaker Hyundai.

The deal foresees tariffs removed on Israeli imports of goods including vehicles, industrial machinery and video game consoles, according to Israel’s economy ministry.

Israeli exports to South Korea of goods including medical equipment, fertiliser, wine and cosmetics would also see tariffs eliminated, it said.

Israel is a major exporter of arms and defence equipment, but there was no mention of those being included in the deal.

AFP

Trump Says US ‘Not Ready’ To Make Trade Deal With China

President Donald Trump said Friday Washington wasn’t ready to finalize a trade deal with Beijing, amid lingering worries over the intensifying US-China trade war.

“We’re not ready to make a deal,” Trump told reporters at the White House before heading out on vacation at his New Jersey golf resort.

AFP

African Leaders Set To Sign Landmark Trade Deal At AU Summit

 

 

African leaders will meet Sunday in Niger for the African Union (AU) summit, to sign a landmark free trade agreement, and to discuss looming security and migration crises on the continent.

In a “historic” moment for the 55-member bloc, according to its chairman Moussa Faki, heads of state will officially launch the African Continental Free Trade Area (AfCFTA) at the two-day summit in Niamey, the Nigerien capital.

The agreement comes after 17 years of tough negotiations, and was formalised at the end of April when the agreement had crossed the launch threshold, which required ratification by at least 22 countries.

Nigeria, Africa’s most populous country and largest economy, announced this week it would after all join the pact in Niamey, having unexpectedly pulled back from the agreement last year.

READ ALSO: Buhari Arrives Niamey Ahead Of AU Summit

Nigeria’s chief trade negotiator, Ambassador Chiedu Osakwe, said President Muhammadu Buhari would sign the landmark agreement, “opening Africa up to abundant opportunities.

“We weren’t dragged into this, we are a leading advocate,” Osakwe told AFP. “But it is about assessing how to make it work for Nigeria and indeed the continent.”

State trade ministers agreed the zone should be operational from July 2020, AU Trade and Industry Commissioner Albert Muchanga told AFP, as countries needed time to adapt to the agreed changes.

An official start date will be agreed by heads of state Sunday — with only Benin and Eritrea still to sign the agreement.

There are still key issues that need to be ironed out however, such as setting common criteria to determine rules of origin for traded products.

Amaka Anku, Africa analyst at Eurasia group, described the deal as a positive step but said the AfCFTA was still “a long way from taking off”.

The AU estimates that implementing the AfCFTA will lead to a 60-percent boost in intra-African trade by 2022.

At the moment, African countries trade only about 16 percent of their goods and services among one another, compared to 65 percent with European countries.

High security

Also on the summit agenda is security — an issue afflicting the Sahel in particular.

Summit host Niger has faced constant attacks by jihadist groups.

Its fellow members in the G5-Sahel security pact — Chad, Mali, Burkina Faso and Mauritania — will seek backing at the AU summit to push for a greater UN security force to address the terror threat.

The countries hope to activate Chapter VII of the UN Charter, a Nigerien security source told AFP. The chapter allows for the UN Security Council to determine a threat to peace and propose measures, including military deployment, to deal with it.

“No prosperity, no integration is possible without peace,” said Faki, who stressed the importance of an AU Peace Fund launched in 2018 to finance security activities and called on member states to fulfil their financial promises.

So far, only $116 million has been received for the envisaged $400-million fund.

Niamey is under high surveillance, with summit facilities subjected to strict access controls and a heavy security presence.

“We have a special unit of several thousand men” on duty, said Defence Minister Mohamed Bazoum.

The city has been revamped and boasts a brand-new airport, upgraded roads, and new hotels for the occasion.

Migration crisis

The leaders will also discuss boosting intelligence cooperation and the global migration crisis.

An airstrike Tuesday on a migrant detention centre near the Libyan capital, Tripoli, killed 53 and injured more than 130.

The AU’s Peace and Security Council on Friday condemned what it called a “savage attack”, calling for an independent inquiry into the incident.

AU member states needed to quickly repatriate their nationals from Libya “in order to prevent any further exploitation of their fragile situation,” they said in a statement.

Trump To Bypass Congress To Sell Arms To Saudi, UAE

FILES) In this file photo taken on May 20, 2017, US President Donald Trump (L) and Saudi Arabia’s King Salman bin Abdulaziz al-Saud take part in a signing ceremony at the Saudi Royal Court in Riyadh. MANDEL NGAN / AFP

 

President Donald Trump’s administration is bypassing Congress to sell weapons to Saudi Arabia and the United Arab Emirates, citing a threat from Iran, despite lawmakers’ concerns about their possible use against civilians in Yemen, a senator said Friday.

Senator Robert Menendez, the top Democrat on the Senate Foreign Relations Committee, had used his powers to block sales of tens of thousands of precision-guided bombs to Saudi Arabia and the United Arab Emirates, fearing they would contribute to the humanitarian crisis in Yemen, where the US allies are mounting an offensive.

But the administration informed lawmakers that it was bypassing a legally required review by Congress to approve the sales as part of a total of 22 arms transactions to Saudi Arabia, the United Arab Emirates and other nations, Menendez’s office said.

READ ALSO: Trump Congratulates India’s Modi, BJP On ‘BIG’ Election Win

“I am disappointed, but not surprised, that the Trump administration has failed once again to prioritize our long-term national security interests or stand up for human rights, and instead is granting favors to authoritarian countries like Saudi Arabia,” Menendez said in a statement.

“With this move, the president is destroying the productive and decades-long working relationship on arms sales between the Congress and the executive branch,” he said.

“The possible consequences of this decision will ultimately threaten the ability of the US defense industry to export arms in a manner that is both expeditious and responsible,” he said.

The sales come after Trump vetoed a move by Congress to stop US support for the Saudi-led war in Yemen, where tens of thousands have died and millions risk starvation in what the United Nations calls the world’s biggest humanitarian crisis.

Secretary of State Mike Pompeo has resolutely defended the US support for the Saudis, noting that the Huthi rebels who control much of Yemen are allied with US adversary Iran and saying that Huthi rocket attacks into Saudi Arabia could kill Americans taking commercial flights.

AFP

US, China ‘Very Close’ To Trade Deal – Trump

President Donald Trump/AFP

 

President Donald Trump said Thursday that the United States and China are making quick progress toward an agreement to end their trade war.

“We are getting very close to making a deal,” he said ahead of a White House meeting with Chinese trade envoy Liu He. “Progress is being made at a very rapid pace.”