Argentina’s Cabinet Chief Says Harvest Should Bring Economic Relief

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Argentina’s financial crisis, which has been marked by exchange rate volatility and soaring inflation, should start abating in November and December, with large foreign currency inflows from the wheat harvest, cabinet chief Agustin Rossi told Reuters on Friday.

 

Argentina’s prolonged financial crisis has been aggravated by a ferocious drought that reduced crucial agricultural exports by an estimated $20 billion this year.

 

“This situation ends in November, December of this year,” Rossi, who is also a vice-presidential candidate in October elections, told Reuters from his office at the Casa Rosada presidential palace in Buenos Aires.

 

“Next year you will not have a drought, you will have savings of $4 billion because you will have the first stage of the Nestor Kirchner gas pipeline (which will transport natural gas from the Vaca Muerta shale formation) in operation,” Rossi said.”This will lead to a favorable trade balance and recover reserves, and imply a more controlled exchange rate. This immediately lowers inflation and recovers the purchasing power of wages.”

 

Rossi said that Argentina should not devalue the currency to calm inflation, which went over 115% in the last 12 months, while its poverty level is nearing 40%. That has triggered deep concern in the ruling Peronist bloc, which hopes to triumph in October with current Economy Minister Sergio Massa as the presidential candidate and Rossi as his running-mate.

 

The government has been keeping access to foreign currency restricted to prevent further draining of central bank reserves, and Rossi said that a further devaluation of the peso would only cause more difficulties.

 

“(Inflation) does not go down with abrupt devaluation… We do not believe that this is necessary in Argentina,” Rossi said.The center-left government is hoping to close an agreement with the International Monetary Fund (IMF) before presidential primaries in August for fresh cash injections through the end of the year, under the framework of an existing $44 billion loan.

 

“We are optimistic, we believe that we will find a way,” Rossi said of the IMF talks.The coalition government of President Alberto Fernandez has struggled with frequent clashes between its factions during its four years in office, but Rossi said that would not be repeated in a future Peronist government, with a new broad consensus among the candidates.

 

Most pollsters believe Massa’s Peronists will face an uphill battle against opposition candidates, however.
Source: U.S.News

 

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EU Removes Post-Fukushima Curbs on Japan Food Imports

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The European Union agreed on Thursday to remove restrictions on Japanese food imports, imposed after the 2011 Fukushima nuclear accident, with the hope that Japan will ease its controls on EU farm produce.

 

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¿Does Mercosur seek a ‘win-win’ trade agreement with the EU?

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Brazilian President Luiz Inacio Lula da Silva said on Tuesday that the Mercosur bloc of Brazil, Argentina, Paraguay and Uruguay wants its trade agreement with the European Union to be a “win-win” situation.

 

Lula has criticized some of the European Union’s requests for the deal, including an addendum attaching sustainability and climate change commitments and introducing penalties for nations failing to comply with climate goals.

 

“We don’t want impositions on the Mercosur,” Lula said in a live broadcast on social media. “It’s a deal of strategic partners, so one cannot threaten the other. Let’s sit down and work out our differences.”

 

The European Commission and the South American bloc struck the deal in 2019 after lengthy negotiations, but it was then put on hold largely due to European concerns over Amazon deforestation.

 

Leaders of the Mercosur gather for a summit in Argentina on Tuesday, with Brazil set to take the group’s temporary presidency for the next six months.

 

The Brazilian leader said he would work for the deal to be completed in that period, despite calling some of the European Union’s demands “unacceptable”.

 

In addition to fearing environmental sanctions, Lula has also been a vocal critic of a procurement clause allowing European companies to sell to Brazil’s public sector, which he says could “kill” some Brazilian companies.

 

Lula recently met with French President Emmanuel Macron and European Commission President Ursula von der Leyen to discuss the deal.

 

Von der Leyen visited Latin America in June and said she hoped the deal would be finalized by the end of the year at the latest.

 

 

“The European Union made a proposal, we sent a response, then they sent a letter imposing some conditions that we don’t accept,” Lula said. “We are now preparing a response letter saying what we want so the agreement can be consolidated.”

 

Source: U.S.News
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North American Trade Pact on 3rd Anniversary: Optimism Is Rising for US and Mexican Workers

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To President Donald Trump, America’s trade relationship with Mexico was intolerable. He seethed over the U.S. trade deficit and the shuttered factories in America’s heartland. “No longer,’’ he vowed six years ago, “are we going to allow other countries to break the rules, to steal our jobs and drain our wealth.”

 

So Trump pressured Mexico and Canada to replace their mutual pact with one more to his liking. After a couple of years of negotiations, he got what he wanted. Out was the North American Free Trade Agreement. In was the U.S.-Mexico-Canada Agreement.

 

The USMCA, which Trump hailed as “the fairest, most balanced and beneficial trade agreement we have ever signed,” will reach its third anniversary Saturday.

 

The trade pact hasn’t proved to be the economic bonanza Trump boasted it would be. It couldn’t have been, given that trade makes up less than a third of America’s $26 trillion economy.Yet while the the deal’s overall impact has been slight, it has nevertheless been helping workers on the ground. It’s just that the beneficiaries have so far been mostly in Mexico. Novel provisions of the pact have enhanced the ability of long-exploited Mexican workers to form unions and secure better wages and working conditions.

 

Trade officials and experts predict, though, that the benefits will also flow, in time, to U.S. workers, who no longer must compete with severely underpaid Mexican laborers without real bargaining power.

 

“U.S. workers win when workers in other countries have the same rights,’’ said Cathy Feingold, director of the AFL-CIO’s international department.

 

Thea Lee, a deputy undersecretary at the U.S. Labor Department, suggested that the pact and Mexico’s reforms haven’t been around long enough to yield measurable help to American workers yet. “We’re going to see the positive results first for Mexican workers because Mexico is undergoing a massive, comprehensive, ambitious labor market reform,” she said.

 

In some ways, the USMCA as a whole has fallen short of Trump’s promises.

 

Take the trade deficit with Mexico. Despite Trump’s insistence that the USMCA would pull more manufacturing back to the United States, the gap between what America sells and what it buys from Mexico keeps widening: It has surged from the $64 billion gap in 2016 that so irritated Trump to a record $139 billion last year.

 

The former president also predicted that exports of U.S. auto parts to Mexico would rise by $23 billion. They have increased since 2020 — but only by about $8 billion.

 

“I don’t expect that we’re ever going to be able to say that (the USMCA) accomplished very much,’’ said Alan Dierdorff, a professor emeritus of economics and public policy at the University of Michigan. “I don’t think it hurt much. But I don’t think it helped much.’’

 

Trump said the pact would create 76,000 auto industry jobs. Since January 2020, vehicle and parts manufacturers have actually added nearly 90,000 jobs. And North American commerce has flourished. America’s trade with Canada and Mexico — exports plus imports — reached a record $1.78 trillion last year. That was up 27% from 2019 and was above a 20% gain in trade with China over the same period.

 

But it’s hard to tease out which economic gains can be credited to the USMCA and which happened for a variety of unrelated reasons. That is especially true in light of the unusual economic tumult of the past three years: A devastating pandemic, followed by severe labor shortages and supply chain backlogs and a resurgence of rampant inflation.

 

Also complicating any effort to calculate the USMCA’s impact is President Joe Biden’s own aggressive efforts to rejuvenate American industry with trillions of dollars in infrastructure spending and subsidies.

 

For all of Trump’s bombast, the USMCA actually left in place much of the pact it replaced. NAFTA erased most of the import taxes that the United States, Mexico and Canada imposed on each other’s goods. It created a duty-free regional bloc meant to compete with the European Union and China. That structure remains mostly in place.

 

“It’s still pretty much the same as NAFTA,” Dierdorff said.

 

Still, some substantive changes have occurred. When NAFTA took effect in 1994, for instance, the internet, e-commerce and smartphones weren’t part of everyday business. The new pact updated North American trade rules for the digital age.

 

The USMCA, for instance, bars the United States, Mexico and Canada from hitting each other with import taxes on music, software, games and other products sold electronically; allows the cross-border use of electronic signatures and authentication; and protects companies from having to disclose in-house source codes and algorithms.

 

Given how it modernized North American trade, the “USMCA is a marked improvement,’’ said Neil Herrington, the U.S. Chamber of Commerce’s senior vice president for the Americas.

 

Perhaps the most consequential changes the pact wrought were designed to reverse one of NAFTA’s unhappy byproducts for Americans: The old deal incentivized companies to close factories in the United States, ship production to lower-wage Mexico, then export goods back into the United States — duty free.

 

The USMCA sought to make it harder for autos and auto parts to enjoy tariff-free treatment. To qualify, 75% of a car and its parts had to come from North America, up from 62.5% under NAFTA. That meant more content had to come from higher-wage North American workers, not imported cheaply from China or elsewhere. And at least 40% of vehicles would have to originate in places where workers earn at least $16 an hour — that is, the United States and Canada, not Mexico.

 

But those so-called automotive rules of origin stumbled out of the gate. Enforcement was delayed as customs officials faced supply chain backlogs at the height of the COVID crisis.

 

“Border officials were worried about clearing cargo in ports and getting rid of congestion,’’ said Daniel Ujczo, senior counsel at the law firm Thompson Hine in Columbus, Ohio. “They didn’t have a ton of time to deal with USMCA.’’’

 

Even after the auto rules took effect, the United States was slapped down for the way it tried to enforce them. A USMCA trade court, in a case brought by Mexico and Canada, found that Washington was applying the rules more strictly than was allowed.

 

The United States has achieved more success in using the deal to pressure Mexican employers to comply with their country’s labor reforms. Workers there can now vote freely and fairly on joining unions, approving contracts and choosing union leaders. In the past, pro-company unions in Mexico signed contracts behind workers’ backs. Strikes were rare, wages stayed low and union leaders got rich.

 

The USMCA armed the United States, Mexican workers and union activists with a new weapon: The “Rapid Response Labor Mechanism.” This allows the U.S. government to crack down on individual factories in Mexico — by, for example, suspending tariff exemptions for their products – if they violate Mexican labor law.

 

“We took a lot of the key parts of (Mexico’s) labor reform, and we baked them directly into the trade agreement,’’ said Josh Kagan, assistant U.S. trade representative for labor affairs. “We’re holding Mexico to actually implement this labor reform they’ve undertaken.’’

 

So far, the United States has used the mechanism 11 times to demand corrections of labor law violations. Mexico has so far cooperated, by sending law enforcement and labor inspectors to guard ballot boxes in new votes that independent unions have mostly won.

 

Under pressure from a U.S. complaint, Mexican officials and observers oversaw a union vote in which the old union was thrown out. The new union won the right to negotiate — and an 8.5% wage increase, plus bonuses.

 

“If workers had tried a similar organizing effort before, “they would have fired us immediately,” said Manuel Carpio, who works at a General Motors plant in Silao, in the state of Guanajuato.

 

Still, it isn’t a perfect process, said Julia Quiñonez, who organized an independent union at a U.S.-owned auto parts plant, VU Manufacturing, in the city of Piedras Negras, Coahuila, across from Eagle Pass, Texas. The old union joined with the company to try to bar the new union. The two sides are still struggling.

 

“We have heard about other cases where the companies have respected the process and agreed to corrective plans,” Quiñonez said. “But the VU case has been plagued by a lot of deceit, corruption and frustration.’’

 

One problem, Quiñonez said, is that cases tend to be kicked back to the same Mexican courts and authorities that should have enforced the law in the first place.

 

“The obstacles we are facing are the normal resistance you might expect in a system that has been operating for at least 80 years,” she said.

 

The worker provisions in the USMCA were strengthened in negotiations between Trump’s trade team and congressional Democrats. Working on those talks was Katherine Tai, then the chief trade counsel on the House Ways and Means Committee and now Biden’s top trade negotiator.

 

The Biden administration says it views the worker provisions in the USMCA as a model for future trade deals that seek to benefit workers, not just companies that want to expand their exports.

 

“I don’t think anybody knew how the Rapid Response Mechanism process would play out,’’ the Labor Department’s Lee said. “But people have found that it’s working as anticipated and as hoped.’’

 

Source: U.S.News

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Panama Canal Postpones Depth Restrictions After Much-Needed Rain

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 The Panama Canal will postpone depth restrictions that were set to affect the largest ships crossing the key waterway, the canal authority said, after much-needed rain provided relief to the strained maritime passage.

 

A series of measures were scheduled to go into effect on June 25 and July 9 requiring ships to float at higher depths, meaning they needed to carry less cargo or otherwise shed weight and impacting trade at one of the world’s busiest commercial crossings.

 

Panama’s rainy season had been slow to give respite to a months-long drought. However, rains are expected to dump between 70 mm (2.76 in) and 80 mm (3.15 in) of precipitation into the Panama Canal basin over the next 72 hours, according to the country’s weather service.

 

Neo-Panamax ships can continue to sail at the previous depth limit of 44.0 feet (13.41 m) and Panamax ships can move at 39.5 feet (12.04 m), the canal authority said in an advisory to customers seen by Reuters.

 

The administration did not specify when the measures would be postponed until, but said it would continue to monitor water levels and “announce future draft adjustments in a timely manner.”

 

The canal authority had previously announced another tightening, set for July 19, but did not refer to this in its client advisory. Officials did not immediately respond to a Reuters request to clarify.

 

Since the beginning of the year, the canal had instituted a number of depth restrictions as a drought, caused by the El Nino weather phenomenon, had put pressure on its water supplies.

 

 

Source:  U.S.News
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US and UK Back New ‘Atlantic Declaration’ for Economic Cooperation

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Britain and the United States backed a new “Atlantic Declaration” on Thursday for greater cooperation on pressing economic challenges in areas like clean energy, critical minerals and artificial intelligence.

 

The joint declaration described the partnership as the “first of its kind” in covering the broad spectrum of the two countries’ economic, technological, commercial and trade relations.

 

Under the plan, Britain and the United States will strengthen their supply chains, develop technologies of the future and invest in one another’s industries, British Prime Minister Rishi Sunak’s office said.

 

Sunak and U.S. President Joe Biden also agreed to launch a new civil nuclear partnership as part of their clean energy cooperation, which will include setting up new infrastructure over the long term and cutting reliance on Russian fuel.

 

The two countries also agreed to work together on ensuring the safe development of AU technology, starting with Britain hosting a global summit later this year.

 

The United States was looking to Britain to help lead a common approach on AI safety and regulation, Biden said at a joint news conference with Sunak in Washington.

 

The two nations will also begin negotiations on a critical minerals agreement, which would allow some UK firms to access tax credits available under the U.S. Inflation Reduction Act.

 

The minerals, such as lithium, nickel, cobalt, graphite and manganese, are critical for batteries for electric cars, smartphones and solar panels.

 

Britain and the United States will also co-operate on telecoms technology including 5G and 6G and quantum technologies, the Atlantic Declaration said.

 

The declaration also included a commitment in principle to a UK-U.S. “data bridge” which would make it easier for British businesses to transfer data freely to U.S. organisations without red tape.

 

Source: U.S. News

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New Zealand-UK Free Trade Agreement to Start Benefiting Exporters

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 New Zealand companies will start to benefit from the country’s new free trade agreement (FTA) with the United Kingdom with the pact now in force, the government said on Wednesday.

 

 

“The benefits which begin flowing from the FTA today, provide a further big boost to our economy,” said New Zealand Prime Minister Chris Hipkins a statement.

 

New Zealand forecasts the deal with its seventh-largest trading partner will add NZ$1 billion ($634.40 million) to GDP each year and save NZ$37 million in tariffs annually. The UK estimates the deal will add 800 million pounds to its GDP.

 

The agreement comes as London seeks to pivot towards the Indo-Pacific in light of its departure from the European Union. It has also signed a FTA with Australia.

 

“This is a major delivery milestone and sits alongside the seven new or upgraded FTAs secured since 2017, which is helping to contribute to record earnings for our exporters,” said Trade Minister Damien O’Connor.

 

Britain has also agreed with New Zealand to increase the age of eligibility for working holiday visas to 35 from 30, letting people stay for up to three years at a time.

 

Source: U.S.News
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Australian PM Backs G7 on ‘De-Risking’ Trade With China

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Australian Prime Minister Anthony Albanese said on Sunday that he backed a Group of Seven (G7) joint statement out of Japan stressing the need to ease reliance on trade with China.

 

The G7 rich nations, which increasingly see China as a economic security threat, on Saturday issued a communique from the city of Hiroshima that referred to de-risking, not decoupling economic engagement with the world’s second largest economy.

 

Addressing media in Hiroshima, Albanese, who attended a Quad leaders’ meeting on the sidelines of the summit on Saturday, said according to an official transcript: “I support the G7 communiques about the international relations that we have there”.

 

Albanese said Australia had “for some time” expressed concern about China’s activity, pointing to the “chafing” of an Australian aircraft.

 

In May 2022, a Chinese fighter aircraft dangerously intercepted an Australian military plane in the South China Sea region, according to Australia’s defence department.

 

“We’ve expressed concern in the past, we’ll continue to do so,” Albanese said.

 

“What we need to do is to make sure we work in a way that enhances the peace, security and stability in the region.”

 

China, firmly opposing the G7 statement, has complained to summit organiser Japan, the Chinese foreign ministry has said.

 

The leaders of the United States, Japan, India and Australia – a group known as Quad – said in Hiroshima they sought a region “where no country dominates and no country is dominated”, language that also appeared targeted at China.

 

Albanese’s comments come amid a recent thaw in Australia-China relations, with China set to resume imports of Australian timber, and talks under way about a visit by the prime minister to Beijing.

 

Australia’s main political opposition, the Liberal-National coalition, on Sunday urged Albanese to wait for confirmation on the lifting of trade sanctions before visiting China.

 

“That clarity should be there before the Prime Minister entertains a formal state visit to Beijing,” Shadow Foreign Minister Simon Birmingham told ABC television.

 

 

Source: U.S.News

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China, France Agree to Strengthen Economic Ties

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French Foreign Minister Catherine Colonna and her Chinese counterpart Qin Gang agreed on the need to “develop an economic relationship that is both stronger and more balanced”, the foreign ministry in Paris said after they met on Wednesday.

 

The meeting followed French President Emmanuel Macron’s visit to China in April and came weeks after comments by China’s Paris ambassador about Ukraine sparked a diplomatic rift.

 

Colonna reminded her counterpart “that China had an important role to play in convincing Russia to return to full compliance with the U.N. Charter, in particular the sovereignty and territorial integrity of Ukraine”, her ministry said in a statement.

 

China’s foreign minister Qin Gang said in a separate statement the two countries should explore new areas of cooperation and build a more resilient transnational supply chain.

 

Qin added that China’s determination to promote high-quality development and a high-level opening up is unswerving, and it is willing to work with France and other countries in the world.

 

Qin said the two sides should strengthen cooperation in international affairs and work together to address global challenges including the Ukraine crisis.

 

“China is committed to promoting a political solution to the crisis, maintains communication with all parties and will continue to play a constructive role in that regard, Qin said.

 

Source: U.S.News

 

 

 

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German Industrial Orders Slump Unexpectedly in March

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German industrial orders fell significantly more than expected in March, decreasing by 10.7% from the previous month on a seasonally and calendar adjusted basis, the federal statistics office said on Friday.

 

A Reuters poll of analysts had pointed to a 2.2% decrease.

 

It marks the largest month-on-month decline since 2020 at the height of the COVID-19 pandemic.

 

The vehicle construction sector had a particularly strong impact on the result, with incoming orders falling by 47.4% compared with the previous month. There was a large increase in orders in February that failed to materialise a month later, the office said.

 

“After three increases in a row, new orders literally collapsed in March, thus resumed their downward trend,” Commerzbank’s chief economist Joerg Kraemer said.

 

“Increasing risks for the export-oriented German industry come from the global interest rate hikes. In addition, the impetus from working off orders that had been stuck due to a lack of materials is waning,” Kraemer added.

 

Foreign orders fell by 13.3% from the previous month while domestic orders decreased by 6.8%.

 

Source: U.S.News
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