LUPICINIO INTERNATIONAL TRADE NEWSLETTER
VENEZUELA TO REOPEN BORDER WITH COLOMBIA AFTER YEARS-LONG CLOSURE
Venezuela will reopen its border with Colombia on Tuesday, Venezuelan Vice President Delcy Rodriguez said in a state television address on Monday, after a nearly three-year closure due to political tensions.
Venezuela closed the border in February 2019 as the Venezuelan opposition, backed by Bogota and Washington, attempted to bring humanitarian aid into the country its land border with Colombia against the wishes of President Nicolas Maduro.
WTO HIKES TRADE FORECASTS BUT CAUTIONS ON PANDEMIC RISK
The World Trade Organization revised upwards its forecasts for growth of global goods trade this year and in 2022, but warned of a two-track recovery leaving poor countries behind and downside risks from the COVID-19 pandemic and supply chain problems.
The WTO said on Monday it expected merchandise trade would grow this year by 10.8% after a fall of 5.3% in 2020. In March, it had forecast 2021 growth of 8.0%.
The Geneva-based trade body said that trade growth should slow to 4.7% in 2022, more than its previous forecast of 4.0%, with trade approaching its pre-pandemic long-term trend.
Director-general Ngozi Okonjo-Iweala described the upgrades as good news but not a cause for complacency, with risks of new outbreaks or variants of the coronavirus.
U.S. TRADE CHIEF TAI SEEKS TALKS WITH CHINA, WON’T RULE OUT NEW TARIFF ACTIONS
Top U.S. trade negotiator Katherine Tai on Monday pledged to exclude some Chinese imports from tariffs imposed by former President Donald Trump while pressing Beijing in “frank” talks over its failure to keep promises made in Trump’s trade deal and end harmful industrial policies.
Tai said the United States would keep all options open as it continues to push China to stop pouring billions of dollars of state subsidies into its semiconductor, steel and other industries that Washington says harm U.S. companies.
Unveiling the results of a months-long “top-to-bottom” review of China trade policy, Tai said she will seek a meeting with Chinese vice premier Liu He in coming days to review China’s failure to comply with the “Phase 1” trade deal launched in February 2020, including a shortfall of promised U.S. goods purchases.
“Above all else, we must defend – to the hilt – our economic interests,” Tai told an event hosted by the Center for Strategic and International Studies think tank. “That means taking all steps necessary to protect ourselves against the waves of damage inflicted over the years through unfair competition.”
BRAZIL ELIMINATES TARIFFS ON IMPORTS OF CERTAIN IT AND TELECOMMUNICATIONS EQUIPMENT
Brazil’s communications minister Fabio Faria said on Monday that the government has eliminated import tariffs on 20 types of information technology and telecommunications equipment.
Faria said on Twitter that portable radios, LCD and LED screens and internet routers were among the types of equipment affected by the measure.
AUSTRALIA’S TRADE SURPLUS SURPRISES WITH RECORD HIGH ON COMMODITY DEMAND
Australia’s trade surplus unexpectedly grew to a record in August as strength in liquefied natural gas and coal exports more than offset a pullback in iron ore prices, a windfall to mining profits and tax receipts.
Figures from the Australian Bureau of Statistics out on Tuesday showed the surplus on international trade jumped to A$15.1 billion ($11.0 billion) in August, from A$12.7 billion the month before. That was the highest on record and confounded analysts’ forecasts of a drop to A$10.3 billion.
Exports climbed 4.1% in the month to A$48.5 billion led by LNG, hard coking coal and thermal coal, courtesy of strong energy demand in Asia. Both prices and volumes were higher, eclipsing a sharp fall in prices for iron ore, Australia’s number one export earner.
Demand for energy in Asia has only got hotter as shortages of electricity in China led to blackouts and countries compete for LNG and coal shipments ahead of winter.
Australian goods exports to China alone stood at A$18.6 billion in August, up 55% on a year earlier and showing little impact from ongoing trade and political tensions with Beijing.
Imports fell 1.5% in August to A$33.4 billion, with the drop mainly in capital goods while consumption good imports were led higher by cars.
Trade in services remains around half of pre-pandemic levels with Australia’s international borders still shut to tourists and students.
The ABS said that due to problems with sourcing reliable data on services it would stop reporting the figures from January, while seeking means to improve the statistics.
EU TO CONSIDER A BITTER PILL TO SWALLOW TO END TRUMP’S TRADE WAR
Europe is coming to the bitter realisation that it will probably have to make a once unthinkable concession to end the trade war that US President Donald Trump ignited and that his successor, Joe Biden, is continuing.
Many Europeans had hoped Biden would repeal Trump’s steel and aluminium tariffs, but he has not done so, even though the tariffs were imposed in 2018 on the highly questionable grounds that they were necessary to protect “national security.” Lowering Trump’s tariff defence shield would expose Biden to retaliation from politically sensitive steel communities such as Ohio and Pennsylvania.
Under Trump, the EU accused Washington of bullying for trying to force Brussels to accept self-imposed restrictions on steel and aluminium exports to end the tariff standoff. But the Europeans are now conceding that they may have to swallow a compromise under Biden that is uncomfortably similar to the one they so adamantly rejected under Trump.
“[E]verybody wants this to go away because it is a remnant of Trump and it stands in the way of better EU-US relations,” said one EU trade diplomat, capturing the general mood of demand for peace in Brussels.
The backdrop to the conciliatory tone is a new diplomatic format – the Trade and Technology Council – in which Washington and Brussels are trying to move past Trump-era antagonism to cooperate in areas such as robotics, microchips and artificial intelligence. Its first session was held on 29 September.
CHINA RISKS SLOWER GROWTH WITHOUT MORE MARKET COMPETITION, SAYS US.
China risks slowing growth if it does not do enough to stimulate market competition, allowing the private sector to play a bigger role in the economy and a greater flow of cross-border investment, according to a report released on Tuesday.
“[W]ithout market-oriented change, China will struggle to maintain growth potential exceeding 3% per year by the middle of this decade,” according to the report released by US think tank Atlantic Council and consultancy Rhodium Group.
China’s economic growth has gradually slowed from 2011 to 2020, with single-digit expansion compared to the relatively large gains in the years immediately following its accession to the World Trade Organization in late 2001. China has set a target for its economy to grow by at least 6 per cent by 2021, after achieving 2.3 per cent growth in 2020, the year the pandemic hit.
While China has made progress in some areas such as trade, where it has cut tariffs to a level comparable or lower than OECD economies, recent policy signals are at odds with a market-oriented course, the report said.
The report notes that Beijing’s sweeping measures this year against private companies in sectors ranging from technology to education have raised the prospect of greater state control in the coming years.
U.S. SUSPENDS AUTHORISATION TO SHIP NUCLEAR MATERIAL TO CHINA’S CGN
The US nuclear energy regulator last month suspended the shipment of radioactive materials and a hydrogen isotope used in reactors to China’s largest state-owned nuclear company, CGN, reflecting Washington’s concern about the build-up of atomic weapons in the country.
The Nuclear Regulatory Commission said in the order, dated 27 September, that the White House had determined that the suspension was “[N]ecessary to promote the national security interests of the United States and to enhance the common defence and security of the United States consistent with the Atomic Energy Act of 1954”.
The export suspension covers radioactive materials and deuterium for CGN, or China General Nuclear Power Group, its subsidiaries or related entities. Deuterium is a non-radioactive isotope of the element hydrogen used in heavy water fission reactors in nuclear power plants.
The suspension further strengthens controls put in place in 2018 by former President Donald Trump’s administration on shipments to China of civilian nuclear technology to prevent it from being used for military or other unauthorised purposes.
AN AGREEMENT ON GLOBAL TAXATION IS JUST THE START OF THE STRUGGLE
The deal to overhaul the global tax system is almost done. Now comes the hard part: making it work.
Negotiators from more than 130 countries will meet on Friday to hammer out the final details of an initiative that has been years in the making to force the world’s biggest companies to pay more into national coffers. Ireland, one of the last holdouts, is on the verge of backing proposals that would radically alter the way companies such as Apple and Johnson & Johnson pay taxes around the world.
But among officials, attention has already shifted to the next phase of implementing the complex agreement. Countries such as France and the United States have yet to decide which governments can tax the corporate giants, while policymakers around the world are desperate for additional revenue to help their economies recover from the pandemic.
Ongoing talks, facilitated by the Organisation for Economic Cooperation and Development, have yet to work out the details of how the next global tax plan will work, with several officials already pointing to 2023 as the year when the new system will take full effect.
Divisions in Washington over the corporate tax revisions that US President Joe Biden has outlined, which are central to the global deal, could scupper US participation. European countries such as Italy and the UK have to reduce their own national digital taxes, which have focused mainly on Silicon Valley companies.
And policymakers still have to draft complicated international agreements to override countries’ existing tax laws, negotiations that are likely to last well into 2022. Senior policymakers acknowledge those difficulties, but expect to address those details once a deal is secured later this week.
EU APPROVES MANDATE TO NEGOTIATE GIBRALTAR TREATY WITH UK
Negotiations for a post-Brexit treaty on Gibraltar’s relationship with the EU are set to begin after EU governments approved a mandate for talks.
The EU Council gave the green light to the European Commission’s mandate on Tuesday, paving the way for formal negotiations between the bloc and the UK to “establish a comprehensive and balanced agreement” “without prejudice to sovereignty and jurisdiction issues”.
Spain and the UK reached a last-minute deal in late 2020 to avoid a hard border between Gibraltar and Spain. The deal allowed Gibraltar to be part of the Schengen passport-free area, with Madrid’s sponsorship. It paved the way for the demolition of the controversial 1.2-kilometre physical barrier separating the two territories, moving border controls to Gibraltar’s port and airport. However, such an agreement is not legally binding and must be translated into an international treaty between the EU and the UK.
To appease the British, who rejected the first draft of the mandate, the Council agreed to include a reference to Spain requesting support from the border agency Frontex to control the border during the first four years of the agreement.
The talks, which should be concluded by the end of the year, will be led by Commission Vice-President Maroš Šefčovič on the EU side, and by the head of the UK Mission to the EU, Lindsay Croisdale-Appleby.
IKEA TO MOVE MORE PRODUCTION TO TURKEY TO SHORTEN SUPPLY CHAIN
Swedish flat-pack furniture giant IKEA is planning to move more production to Turkey to minimise problems with global supply chains and rising shipping costs, the company’s finance director for Turkey said.
The products it hopes to manufacture and then export from Turkey, such as armchairs, bookcases, wardrobes and kitchen cabinets, are currently shipped thousands of miles from East Asia to markets in the Middle East or Europe.
“[B]ecause of the shipping problems we faced during the (Covid) pandemic, we are trying to have more manufacturing in Turkey,” CFO Kerim Nisel, who declined to estimate how much capacity could be moved, told Reuters.
“[W]e all saw in the pandemic that diversification is very important,” Nisel said. “[I]t may not be a good strategy to produce items in one country and then try to transport them around the world.”
The company has seven shops in Turkey and already exports three times as much as it imports into Turkey, where it currently produces textiles, glass, ceramics and metal products for global export.
Nisel said the cost of a container from East Asia had jumped to $12,000 from $2,000 before last year’s COVID-19 outbreak. “It is more rational for them to be manufactured closer to where they are sold. That’s why we want them to be manufactured in Turkey.”
IKEA’s move follows similar moves by other European brands such as Benetton, which is bringing production closer to home by boosting manufacturing in Serbia, Croatia, Turkey, Tunisia and Egypt with the aim of halving production in Asia.
PRICE GOUGING: THE GLOBAL ECONOMY CAUGHT IN THE PERFECT STORM
From beef bowls in Tokyo to fried chicken in London, consumers are beginning to feel the pinch of rising costs coursing through the global economy.
The upturn as coronavirus restrictions ease has highlighted supply chain shortages, with companies struggling to find workers, ships and even fuel to power factories, threatening the fledgling economic recovery.
Britain’s biggest chicken producer said the country’s 20-year binge on cheap food is ending and food price inflation could reach double digits.
Shortages of warehouse porters, lorry drivers and butchers, as the world’s fifth-largest economy grapples with Brexit and COVID, are exacerbating the strains on international businesses.
IKEA is hiring more ships, buying containers and diverting goods as the world’s biggest furniture brand tries to mitigate a “perfect storm” of disruption.
CHINESE EXPORTS RISE 28% IN SEPTEMBER; SURPLUS WITH US GROWS.
China’s exports rose at a slightly faster pace in September as demand for imports of iron ore and other commodities slowed as the property construction boom cooled and authorities tightened restrictions on energy use.
Customs data showed exports rose 28.1 per cent to $305.7 billion. This is slightly higher than the 26 per cent increase recorded in August, and above economists’ forecasts. Imports rose 17.6 per cent to $240 billion, less than the 33 per cent increase in the previous month.
EU PROPOSES EASING CONTROLS ON UK TRADE WITH NORTHERN IRELAND
The European Union offered Britain a package of measures to ease the transit of goods to Northern Ireland, but it seemed unlikely to end tensions over post-Brexit trade rules for the province as it fell short of the review London has demanded.
BRITAIN ENVISAGES TRANS-PACIFIC TRADE DEAL NEXT YEAR, BUT NO DATE YET FOR U.S. DEAL
The UK does not know when it will be able to reach a full trade deal with the United States, but hopes to join a trans-Pacific trade partnership next year, British Trade Minister Anne-Marie Trevelyan said on Wednesday.
Trevelyan took office last month and met for the first time with many of her senior counterparts in person earlier this week, including US Trade Representative Katherine Tai at a meeting of ministers from the Group of 20 major economies.
Both Britain and the United States want a free trade deal, but there is no timetable for talks yet, Trevelyan told Reuters.
“[W]e don’t have a date on the agenda. What we have is an ongoing dialogue about the opportunity to look sector by sector at the key areas that we know will go into that full and comprehensive agreement in full swing,” Trevelyan said.
U.S. HOPES TO REACH DEAL WITH EU ON METALS TARIFFS BY END OF OCTOBER
The United States is hopeful it can resolve its trade dispute with the European Union over steel and aluminium tariffs before the end of October, a source familiar with the discussions said on Wednesday.
U.S. Trade Representative Katherine Tai met on Tuesday with EU trade chief Valdis Dombrovskis, who told a Washington think tank last month that he was “cautiously optimistic” a deal could be reached.
“[W]e are hopeful that we can reach an agreement by the end of the month,” the source, who spoke on condition of anonymity, told Reuters.
USTR and EU spokesmen declined to comment on the talks. The US Commerce Department, which administers the “Section 232” tariffs of 25 per cent on steel and 10 per cent on aluminium, did not immediately respond to a request for comment.
On Tuesday, USTR said Tai and Dombrovskis discussed “ongoing efforts to address global overcapacity in the steel and aluminium sectors and the shared challenges posed by non-market economies”.
AUSTRALIA OPEN TO CHINESE INVESTORS, BUT SECURITY ISSUES CRUCIAL – FIRB
Australia is not closed to Chinese investors, but concerns about national security and critical infrastructure protection are now key factors determining approval of deals, the head of its Foreign Investment and Review Board (FIRB) said on Thursday.
Chinese investment in Australia has fallen by more than 50 per cent to about A$12 billion ($8.86 billion) in the past four years due to Beijing’s tighter capital controls and deteriorating relations between the two countries.
“We pursue a non-discriminatory investment policy … both in terms of areas in which to invest … (and) in terms of where we come from. (and) in terms of sourcing, the country from which the investment comes,” FIRB Chairman David Irvine told the Citi Investment Conference.
He noted that 20% of the transactions approved last year had some form of Chinese involvement.
“[W]e continue to welcome investment applications from Chinese interests. If they are in areas of national security interest, they will be subject to the same kind of consideration as other people investing in those areas.”
UAE AND SOUTH KOREA TO START FREE TRADE TALKS
The United Arab Emirates and South Korea agreed on Thursday to begin negotiations on a bilateral trade agreement aimed at expanding economic ties.
The UAE announced last month that it would seek economic agreements with South Korea and seven other countries, including India, Britain and Turkey.
The Comprehensive Economic Partnership Agreement (CEPA) between the UAE and South Korea will include agreements to reduce greenhouse gas emissions and develop green technologies, South Korean trade minister Yeo Han-Koo said.
“[O]ur goal is to turn our CEPA into a next-generation free trade agreement,” he told a press conference in Dubai.
UAE Minister of State for Foreign Trade Thani Al Zeyoudi said, alongside Yeo, that negotiations would begin in two months and that an agreement could be reached within a year.
TURKEY EXPANDS SALES OF ARMED DRONES TO ETHIOPIA AND MOROCCO – SOURCES
Turkey has expanded its exports of armed drones by negotiating sales deals with Morocco and Ethiopia following their successful use in international conflicts, according to four sources familiar with the deals.
Any shipment of drones to Ethiopia risks stoking friction in already strained relations between Ankara and Cairo, which is at odds with Addis Ababa over a hydroelectric dam on the Blue Nile.
Two Egyptian security sources said Cairo had asked the United States and some European countries to help it freeze any deal. A third Egyptian source said any deal would have to be raised and clarified in talks between Cairo and Ankara as they try to repair ties.
Turkey, Ethiopia and Morocco have not formally announced any agreements on armed drones, but several sources familiar with the deals provided details to Reuters.
PUTIN SAYS CRYPTOCURRENCIES TOO UNSTABLE FOR USE IN OIL CONTRACTS
Russian President Vladimir Putin said cryptocurrencies were too unstable to be used to settle oil contracts, but still deserved a place as a means of payment.
The Russian leader made the remarks in an interview with CNBC that was published on the Kremlin’s website on Thursday. He was asked whether he could see oil contracts being denominated in cryptocurrencies rather than dollars in the future.
INDONESIA’S SEPTEMBER TRADE SURPLUS BEATS ESTIMATES ON STRENGTH IN COMMODITIES
Indonesia’s trade surplus in September was larger than expected as exports rose on the back of booming commodity prices, government data showed on Friday, bolstering hopes for a quick economic recovery.
The resource-rich country posted a trade surplus in September of $4.37 billion, according to data from the country’s statistics office. This was above the median estimate of $3.84 billion, according to analysts previously polled by Reuters.
Indonesia posted a record surplus of $4.74 billion in August. It has posted a trade surplus every month since May 2020.
Analysts said strong exports should cushion the economic impact of Indonesia’s devastating COVID-19 wave in the third quarter.
The trade surplus would also help Southeast Asia’s largest economy reduce its current account deficit, making its financial market less vulnerable to capital outflows and allowing the central bank to keep monetary policy accommodative for longer.
“[T]he surplus remains large due to rising commodity prices, which is positive for our economy and (dollar) liquidity outlook,” said Fakhrul Fulvian, chief economist at Trimegah Sekuritas.
EUROPEAN NEW CAR SALES FALL IN SEPTEMBER – ACEA
European car registrations plunged by more than 25 per cent in September due to a lack of vehicle supply because of the ongoing semi-conductor shortage, industry data showed on Friday.
New passenger car registrations fell 25.2 per cent in the European Union, Britain and European Free Trade Association (EFTA) countries compared with last year, according to figures from the European Automobile Manufacturers Association (ACEA).
EU-UNITED KINGDOM TALKS AND FISHING THREAT PUT BREXIT BACK ON TRACK
The Brexit row intensified on Friday over Northern Ireland and fisheries sticking points in France, almost a year after a free trade deal officially sealed the split between the European Union and the United Kingdom.
Top Brexit negotiators from both sides returned to talks, with the troubled Northern Ireland trade issues taking centre stage. Failure to find a common solution could lead to suspension of the trade deal and even retaliatory measures between the two sides. The EU is seeking a deal by Christmas.
“O]bviously, there is still quite a big gap. And that’s what we’ve got to sort out,” said UK chief negotiator David Frost, going into a lunch with his EU counterpart, Maros Sefcovic.
To make matters worse, fish could also be on the menu, with French fishermen more likely to blockade ports over what they see as British duplicity in refusing to grant them all the fishing licences they want.
IRANIAN SUPERTANKER LEAVES VENEZUELA TO TRANSPORT HEAVY OIL
An Iranian-flagged supertanker was set to leave Venezuelan waters on Saturday with 2 million barrels of heavy crude oil provided by state oil company PDVSA, according to documents seen by Reuters and ship-tracking services.
The cargo is part of a deal struck by PDVSA and its counterpart National Iranian Oil Company (NIOC) that swaps Iranian condensate for Venezuela’s Merey crude. The swaps are aimed at alleviating an acute shortage of diluents that has reduced Venezuela’s oil production and exports, Reuters reported last month https://www.reuters.com/business/energy/exclusive-under-us-sanctions-iran-venezuela-strike-oil-export-deal-sources-2021-09-25.
The Dino I, a very large crude carrier (VLCC) owned and operated by the National Iranian Tanker Company (NITC), finished loading Venezuelan oil at PDVSA’s Jose Port late on Friday, according to documents, a source and tracking service TankerTrackers.com.
The bilateral oil trade could constitute a violation of U.S. sanctions imposed on both countries, the U.S. Treasury Department told Reuters last month, citing government orders setting out the punitive measures.
FORD TO INVEST ABOUT $300 MILLION TO MAKE ELECTRIC CAR PARTS AT UK PLANT
Ford said on Monday it would invest up to 230 million pounds ($316 million) to build electric car components at its Halewood factory in northern England.
The plant will produce about 250,000 power units a year from mid-2024, the first in-house European location to make electric vehicle parts for Ford, which has pledged to make its car line-up for the continent all-electric by 2030.
The government is contributing to the investment through its Automotive Transformation Fund, as brands step up their electrification plans ahead of the combustion engine ban, and countries compete with each other to secure jobs.
The UK government typically provides around 10% of the total value of investment for automotive companies.
“[T]his is an important step, marking Ford’s first inward investment in the manufacture of all-electric vehicle components in Europe,” said Ford of Europe President Stuart Rowley.
INDIA AND ISRAEL TO START FREE TRADE DEAL TALKS NEXT MONTH
India and Israel agreed to resume talks on a free trade agreement from November, with the aim of signing a deal by mid-2022, the two countries said on Monday.
Ties between the two countries have grown closer in Indian Prime Minister Narendra Modi’s seven years in office, and in that time several strategic, military and technological partnerships have been formed.
The free trade talks were announced after the countries’ foreign ministers met in Jerusalem, where they also agreed on mutual recognition of vaccination certificates and expanded cooperation on water and agriculture, the countries said in a statement.
“[W]e continue with our policy of connections, and we have seen in India a very important ally for many years. India also brings with it new opportunities for cooperation,” Israel’s Foreign Minister Yair Lapid said.
India intends to sign new trade agreements with several countries, including Australia, the United Arab Emirates, the United Kingdom and Canada, to boost exports and help the country recover more quickly from its coronavirus-induced slowdown.
JAPANESE EXPORT GROWTH SLOWS; IMPORT COSTS DAMPEN HOPES OF RECOVERY
Japanese export growth weakened in September to a seven-month low, while rising imports added to concerns that pandemic-induced global supply chain problems could derail the country’s fragile economic recovery.
Exports are losing steam at a time when a weak yen and rising oil prices have pushed up import costs, hurting Japan’s resource-poor terms of trade and potentially undermining Prime Minister Fumio Kishida’s pledge to redress wealth disparities.
RAW MATERIAL SUPPLY PROBLEMS HURT GERMAN INDUSTRIAL EXPORTS – IFO
German export expectations for October fell to the worst value since February 2021 as raw material supply bottlenecks have been hurting the industrial sector, the Ifo economic institute said on Tuesday.
Export expectations fell to 13 points in October from 20.5 points the previous month and the worst-hit industries are electrical equipment, chemicals and automobile manufacturing, Ifo said.
U.S. SENATORS URGE BIDEN TO AVOID SANCTIONS ON INDIA OVER RUSSIA DEAL
Two US senators have urged President Joe Biden to waive sanctions against India over its purchase of Russia’s S-400 air defence system, saying such a punitive move would jeopardise growing cooperation.
FRANCE’S MACRON ASKS CHINA’S XI JINPING FOR A SIGNAL BEFORE COP26
French President Emmanuel Macron on Tuesday called on Chinese President Xi Jinping during a phone call to send the world a “decisive signal” on climate change ahead of a COP26 summit in Scotland on the issue, the French presidency said in a statement.
Macron encouraged Xi to significantly raise China’s targets for efforts to tackle the climate crisis and to make “concrete” progress in ending China’s dependence on coal.
Macron also called for greater reciprocity in rebalancing the trade relationship between Europe and China, especially in terms of market access.
China is one of the major emitters that has yet to present a new climate target. It has pledged to reach carbon neutrality by 2060 and to stop increasing its emissions by 2030, although it has not set a date when its emissions will peak.
BIDEN ANNOUNCES $100 MILLION SPENDING ON ASEAN SUMMIT
President Joe Biden on Tuesday announced a $100 million initiative aimed at strengthening the US relationship with the organisation of Southeast Asian nations.
Biden made the new spending announcement at a virtual summit with the 10-member Association of Southeast Asian Nations. It is the first time since 2017, when President Donald Trump took part in the summit, that a US president has participated in a meeting of the bloc.
The engagement comes as Biden seeks to bolster US presence in the Pacific in the face of China’s growth as an economic and national security adversary.
Biden called the US relationship with the bloc “essential”.
“[I] want all of you to hear directly from me about the importance that the United States attaches to its relationship with ASEAN,” Biden said. “You can expect to see me show up and reach out to you.”
IRAN SAYS NUCLEAR TALKS WITH SIX POWERS TO RESUME IN LATE NOVEMBER
Iran’s talks with six world powers aimed at reviving a 2015 nuclear deal will resume by the end of November, its top nuclear negotiator said on Wednesday, as Western concerns grow over the Islamic Republic’s nuclear advances.
“I had a very serious and constructive dialogue with @enriquemora_ on the essential elements for successful negotiations. We agreed to start negotiations before end of November,” Ali Bagheri Kani wrote on Twitter after meeting EU officials in Brussels.
“The exact date will be announced in the course of next week,” he added.
In April, Tehran and six powers began discussing ways to save the 2015 nuclear pact, which then US President Donald Trump abandoned three years ago. Trump then reimposed tough sanctions on Iran that have devastated its economy by squeezing its oil exports.
EU PLEDGES TO “FAITHFULLY” IMPLEMENT GLOBAL BANK CAPITAL RULES FROM 2025
The European Union on Wednesday published draft legislation to “faithfully” implement the latest batch of tougher global bank capital rules from 2025, two years later than internationally agreed.
After the initial package of rules, European banks hold roughly three times as much capital as in the run-up to the 2007-09 global financial crisis, which saw governments bail out collapsing lenders.
Brussels says its proposals will modestly increase capital requirements by less than 9% on average by 2030, but banks argue that the hit will be greater in practice and make it harder for them to help the economy recover from COVID-19.
The European Parliament and EU states have the final say on the European Commission’s proposals to transpose the global “Basel III” bank capital accord, and haggling and adjustments are likely.
“We are implementing the Basel III agreement faithfully, taking into account some European specificities, and making sure that it does not lead to a significant overall increase in capital requirements,” European Commission Executive Vice-President Valdis Dombrovskis told reporters.
CITIGROUP PLANS MORE INVESTMENT IN SAUDI ARABIA AND SEEKS BANKING LICENCE
Citigroup wants to obtain a banking licence in Saudi Arabia to further boost its business in the kingdom by expanding into trade finance and treasury solutions, a senior executive said.
Citi obtained a Saudi capital markets licence in 2017, allowing it to return to the kingdom in 2018 after a 13-year absence.
It advised Saudi Aramco on its $29.4bn listing in 2019, in what was the world’s largest initial public offering, as well as on several sovereign and corporate bond deals.
“We have seen significant growth during this time and we remain very keen to make more investments locally in the market,” Ebru Pakcan, head of Citi’s EMEA emerging markets business, told Reuters on the sidelines of the Saudi Arabia FII investment conference.
“As our clients make more investments across multiple sectors with growth potential, we are keen to expand our capabilities and services locally over time by obtaining a banking licence.”
Citigroup’s client business model is built around serving multinational companies globally, as well as providing opportunities to global investors in a local market.
“When we work with those global companies, especially in cash management and trade finance and other treasury solutions, being a deposit-taking institution with local payment and collection capabilities becomes important,” he said.
Western financial institutions have expanded in Saudi Arabia since the government unveiled plans to privatise state assets and adopted reforms as part of an economic strategy to reduce dependence on oil.
Standard Chartered this year began offering banking services through its branch in Saudi Arabia after it was granted a banking licence in 2019.
Pakcan said Citigroup plans to hire more people in Saudi Arabia, potentially doubling or tripling the team in the coming years.
He also said the UAE will be one of its global wealth management hubs, focusing on Gulf Cooperation Council (GCC) countries and emerging markets.
Elsewhere in emerging markets, he said Citigroup is “watching closely” markets such as Ghana in Africa and Uzbekistan in Central Asia as the markets evolve and continue to attract more multinational companies.
SUDANESE ARMY DISSOLVES TRANSITIONAL GOVERNMENT IN COUP.
The head of Sudan’s armed forces said the power-sharing agreement with civilian members of the country’s sovereign transitional council “turned into a conflict” over the past two years, “threatening the peace and unity” of Sudan.
“This has provoked the military, as the founding authority of the [transitional phase], and derived from national responsibility, to protect the security of this country,” said General Abdel Fattah al-Burhan, who headed the council.
“We feel an obligation, as the military, quick support forces and other security apparatuses of the country, to see the danger and take measures to protect the advantages of the December revolution,” Burhan added.
COULD BE FROM WASHINGTON POLITICIANS: CUBA HIGHLIGHTS JOB CREATION IN THE PRIVATE SECTOR.
The Ministry of Economy and Planning (MEP) approved on Wednesday 60 new private SMEs and 4 cooperatives, bringing the total number of authorised applications to 168 and all provinces of the country already have at least one of these economic actors.
Of the total, 39 have food production as their main economic activity and 34 are involved in manufacturing, including the manufacture of construction materials.
In terms of their origin, 101 are reconversions of pre-existing businesses, while 67 are newly created. In this sense, the 162 SMEs and 6 cooperatives approved so far have created some 2377 new jobs in the economy.
U.S. SECRETARY OF STATE BLINKEN IN PARIS. WILL PRESIDENT MACRON AND MINISTER JEAN-YVES LE DRIAN DISCUSS FREEDOM ACT LAWSUITS AGAINST CMA-CGM, SOCIETE GENERALE, BNP PARIBAS AND PERNOD RICARD?
So far, 40% of the European Union (EU)-based defendants in Title III Freedom Act lawsuits filed since 2019 are based in France.
The companies are among the thirty largest French-based companies: CMA CGM S.A., headquartered in Marseille, France (2020 revenues of approximately $31 billion); BNP Paribas, headquartered in Paris, France (2020 revenues of approximately $45 billion; assets of approximately $2.8 trillion); Societe Generale S.A., based in Paris, France (2020 revenues of approximately $23 billion; assets of approximately $1.6 trillion); Pernod Ricard S.A., based in Paris, France (2020 revenues of approximately $9.3 billion).
The Trump Administration on 2 May 2019 made Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (known as the “Liberty Act”) operative.
Title III authorises lawsuits in U.S. District Courts against companies and individuals who are using a certified claim or an uncertified claim when the owner of the certified claim or uncertified claim has not received compensation from the Republic of Cuba or a third party that is using (“trafficking”) the asset.
USDOT AUTHORISES A THIRD US CARGO CARRIER TO OPERATE FLIGHTS TO CUBA.
On 14 July 2021, the US Department of Transportation (USDOT) granted an emergency waiver to Skyway Enterprises, Inc. and IBC Airways, Inc. to operate cargo flights from the United States to the Republic of Cuba until 30 November 2021. Swift Air, L.L.C. was awaiting approval.
On October 12, 2021, after considering the specific circumstances presented, the State Department provided its opinion that only the cargo portion of the proposed humanitarian operation would be in the foreign policy interests of the United States, and would be consistent with the State Department’s specified exceptions to the suspension of charter flights between the United States and Cuba.
Against this background, we find that it would be in the public interest to grant the requested waiver in part, to operate the proposed flights only as cargo, and to deny the request to the extent that the applicant intends to offer passenger services.
Finally, on 13 October 2021, the USDOT granted an emergency exemption to Swift Air, L.L.C.
OIL PRICES HIT HIGHEST LEVELS IN YEARS
Oil prices hit their highest level in years on Monday as demand recovers from the COVID-19 pandemic, driven by a growing habit of power generators to switch from expensive gas and coal to fuel oil and diesel.
Shortages of natural gas and coal from Asia to Europe are driving increased demand for oil products for power generation. This has coincided with the post-pandemic recovery of the major economies, leading to a significant market contraction.
TOP OIL EXPORTER SAUDI ARABIA AIMS TO ACHIEVE NET-ZERO CARBON EMISSIONS BY 2060, SAYS CROWN PRINCE MBS
The country aims to achieve its goal “through its circular carbon economy approach in line with the kingdom’s development plans”, bin Salman told the Saudi Green Initiative forum.
State-owned Aramco, the world’s largest oil company, plans to achieve the same by 2050, Aramco chairman and CEO Armin Nasser told the forum.
The crown prince added that Saudi Arabia will plant more than 450 million trees as part of the first phase of afforestation initiatives and rehabilitate degraded lands to increase protected areas in the kingdom to more than 20 per cent, the Saudi Press Agency reported.
The Saudi Green Initiative forum is being held in Riyadh on Saturday to bring together business, international NGOs and environment and climate ministers ahead of the COP26 talks, which will take place from 31 October to 12 November at the Scottish Event Campus in Glasgow.
ISRAEL TO BUILD 1,300 SETTLEMENTS IN THE OCCUPIED WEST BANK
Israel has announced plans to build more residences for Jewish settlers in the occupied West Bank, prompting immediate condemnation from Palestinians, peace activists and neighbouring Jordan.
The announcement on Sunday by the Ministry of Construction and Housing in the government of right-wing Prime Minister Naftali Bennett said tenders had been issued for 1,355 housing units in the occupied West Bank, which was seized by Israel during the 1967 Six-Day War.
The new settlement housing units will be built in seven settlements, according to the housing ministry statement, and are in addition to more than 2,000 settlement units announced last August.
Housing minister Zeev Elkin, a member of the right-wing New Hope party, said in a statement that “strengthening the Jewish presence [in the West Bank] was essential to the Zionist vision”.
CHINA’S CENTRAL BANK SAYS EVERGRANDE RISKS ARE “MANAGEABLE”
China’s central bank broke its silence on China Evergrande Group’s debt crisis, saying the risks to the financial system stemming from the developer’s struggles are “controllable” and unlikely to spread.
Authorities and local governments are resolving the situation on the basis of “market-oriented principles and the rule of law”, People’s Bank of China official Zou Lan said at a briefing on Friday. The central bank has asked lenders to keep credit to the property sector “stable and orderly”, said Zou, who is head of the financial markets department.
THE ENERGY CRISIS: CHINESE COMPANIES SEEK TO INCREASE LNG SUPPLIES FROM THE US
Major Chinese energy firms are in advanced talks with US exporters to secure long-term liquefied natural gas (LNG) supplies, as rising gas prices and domestic energy shortages raise concerns about the country’s fuel security.
At least five Chinese companies, including state-owned majors Sinopec Corp and China National Offshore Oil Company (CNOOC) and local government-backed energy distributors such as Zhejiang Energy, are in talks with US exporters, mainly Cheniere Energy and Venture Global, the sources said.
RISING FREIGHT FROM CHINA STRAINS RUSSIA’S RAIL NETWORK
Explosive growth in shipping costs is driving Chinese manufacturers to send more goods to Europe by rail via Russia, but the growth in demand is creating bottlenecks and straining network capacity.
With countries frantically replenishing stocks and exporting finished goods as they recover from the pandemic, global seaports are becoming clogged, making rail an attractive alternative.
State monopoly Russian Railways said total container traffic transiting Russia soared 40% in the first nine months of 2021 to 782,000 TEUs (twenty-foot equivalent units), and could reach a record one million TEUs this year.
“At the beginning of the year, the cost of transporting containerised freight by rail between Asia and Europe was twice as much as by sea. Now it is 3.5 times (lower),” the rail company said.
EVERGRANDE’S DEBT PROBLEMS ARE MANAGEABLE, SAYS CHINESE CENTRAL BANK OFFICIAL
The effect of China Evergrande Group’s debt problems on the banking system is manageable, a central bank official said on Friday, in rare official comments on the liquidity crisis at China’s second-largest property developer that has roiled global markets.
Chinese authorities are urging Evergrande to speed up asset sales and the resumption of projects, Zou Lan, head of financial markets at the People’s Bank of China (PBOC), told a briefing, adding that individual financial institutions did not have highly concentrated exposure to Evergrande.
“In recent years, this company did not operate and manage itself well. It did not conduct prudent operations in accordance with changing market conditions, and blindly diversified and expanded its business,” Zou said at the briefing in Beijing.
Chinese authorities and state media have been largely silent on the crisis at Evergrande, which has missed a series of bond interest payments and is $300 billion in debt, making it the world’s most indebted developer.
BIDEN SAYS U.S. WILL DEFEND TAIWAN AGAINST CHINA
US President Joe Biden has said the United States would come to Taiwan’s defence if the island were attacked by China, in comments that appear to deviate from a long-standing US policy of “strategic ambiguity”.
“Yes,” he replied when asked at a CNN briefing about defending Taiwan, whose government has been under increasing military and political pressure from Beijing, which claims the island as its own. “We have a commitment to that.”
The US has for years maintained a policy of “strategic ambiguity” under which it provides key military support to Taiwan, but does not explicitly promise to come to the island’s aid in the event of a Chinese attack.
The White House later told reporters that US policy on Taiwan “has not changed”.
INDIA’S INDUSTRY MINISTER PIYUSH GOYAL SAYS HE WILL HIT BACK IF INDIA FACES UNFAIR TRADE RULES
Commerce and Industry Minister Piyush Goyal on Friday said there are several non-tariff barriers that need to be addressed, and whenever India faces unfair treatment on the trade front, it will take reciprocal action.
Non-tariff barriers to trade are restrictive practices that create impediments in the flow of imports and exports.
“Trade today requires a lot of study, delving into the practices followed by other countries,” Goyal said.
“There are many non-tariff barriers that need to be studied. We have to work to resolve those barriers,” he said at the 54th convocation of the Indian Institute of Foreign Trade (IIFT). “Wherever we find unfair and unfair treatment towards India, India will have to take reciprocal action.”
The minister said India is negotiating free trade agreements with several countries, including the UK, UAE and Australia, and the young talent at the IIFT can help in achieving India’s transformation agenda.
INDIA AND UK CONSIDERING INTERIM TRADE DEAL: FOREIGN SECRETARY HARSH VARDHAN SHRINGLA
India and the UK are exploring the possibility of concluding an interim trade agreement as part of negotiations towards a Free Trade Agreement (FTA), Foreign Secretary Harsh Vardhan Shringla said on Thursday.
Addressing the India Global Forum (IGF) in London virtually from New Delhi, Shringla said British Foreign Secretary Liz Truss’s visit to India, expected for two days from Friday, would add further impetus to the partnership as it coincides with the arrival of the UK’s Carrier Strike Group (CSG) in Mumbai.
“We are negotiating a free trade agreement as things stand. We are also looking at an interim trade agreement,” Shringla said.
UK DEMANDS “SIGNIFICANT CHANGE” TO NORTHERN IRELAND’S TRADE RULES
British Brexit minister David Frost made an impassioned plea to the European Union on Tuesday to allow for “significant change” to post-Brexit rules governing trade with Northern Ireland, saying only that could draw the poison from their relations.
On Tuesday, a day before the EU is expected to present its proposals to solve a standoff over part of the Brexit divorce deal, Frost again warned Brussels London could unilaterally waive some of the terms of its agreement if the bloc failed to budge.
Britain’s fossil fuel dilemma in the spotlight at climate talks.
The UK faces a fossil fuel dilemma: it can show off its green credentials by stopping oil and gas exploitation in the North Sea, but in doing so it will become more reliant on imported fuel.
CONTAINER CRISIS: WHY ARE SO MANY SHIPS QUEUING UP TO ENTER THE UNITED STATES?
Global supply chains are congested. And in California, the United States, this is evident. A record number of vessels carrying containers stand in line in front of the main ports of one of the richest states in the country.
“We are facing an unprecedented increase in cargo at the ports of Long Beach and Los Angeles due to the major production shifts of the global pandemic and decades-long supply chain challenges,” says the Mayor of Long Beach, California.