Day: May 8, 2018

Canadian and U.S. negotiators held “constructive” talks to revamp the North American Free Trade Agreement (NAFTA) on Tuesday as efforts focused on agreeing to new rules for the auto sector, Canadian Foreign Minister Chrystia Freeland said.

Freeland, U.S. Trade Representative (USTR) Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo are meeting in Washington this week in search of a breakthrough in the grinding talks to renegotiate NAFTA that began last August.

Hopes for a deal hinge substantially on the three countries’ ability to update rules for the automotive sector, the central plank of the Trump administration’s push to make changes to NAFTA that bring more jobs and investment to the United States.

After a brief meeting with Lighthizer, Freeland told reporters she had held “good, constructive” talks with the U.S. team and that discussions focused on auto rules of origin.

“We are definitely making progress. I am not going to predict the day, hour and minute that we will be finished. We are certainly very, very hard at work, negotiators from all three sides,” she said.

The meetings would continue, the minister added. She, Guajardo and Lighthizer would be in touch by phone “and we’ll get together today again as needed,” Freeland said.

Guajardo and Mexican Foreign Minister Luis Videgaray later entered the USTR offices to meet Lighthizer and other U.S. officials without taking questions from reporters.

U.S. President Donald Trump initiated the talks to retool the 1990s-era trade agreement, threatening to dump NAFTA if it cannot be changed to his satisfaction.

Trump blames NAFTA for causing U.S. manufacturing jobs to be moved to Mexico. The pact’s supporters say the integration of North America has helped U.S. industry be more competitive.

Earlier Tuesday, Freeland said that Canada was looking for a “good deal, not just any deal,” on NAFTA and that her government would take the time required to reach that objective.

To do so, the three sides must narrow their differences on U.S. demands to overhaul rules for the auto sector.

Auto tussle

Mexico’s automotive industry has described the latest U.S. plan, which includes raising North American auto content to 75 percent from the current 62.5 percent over a period of four years for light vehicles, as “not acceptable.”

The U.S. proposal would also require that 40 percent of the value of light passenger vehicles and 45 percent for pickup trucks be built in areas with wages of $16 per hour or higher, which would create problems for lower-cost Mexico.

Mexico’s government has said it would put forward its own plan for the industry this week, and Jerry Dias, president of Canadian private sector union Unifor, told reporters he believed the discussions on the Mexican proposals had already begun.

High-level discussions over NAFTA have intensified since Lighthizer in early March floated the idea of agreeing to a deal in principle in a matter of weeks. But there has been no clear sign of a conclusive breakthrough on the most contentious issues.

With a presidential election less than two months away in Mexico, time is running out to strike a quick deal.

Major differences remain between the three on several U.S. demands, including autos, the future of the pact’s dispute-resolution mechanisms, and a U.S. proposal for a sunset clause that could automatically kill the deal after five years.
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Walmart’s online grocery delivery partnerships with ride-hailing services Uber and Lyft have ended, according to two sources, a potential setback for the retailer’s ambitions to challenge Amazon.com head-on with speedy delivery of groceries to people’s homes.

The end of the Walmart partnerships, which has not been previously reported and was confirmed by Walmart and Uber, undercuts a vision the ride-hailing companies laid out: a service that can efficiently deliver anything on-demand,

including people and cargo, at the touch of a smartphone app.

“It is incredibly hard to deliver people and packages together,” said a source with a delivery company that works with Walmart and has direct knowledge of the matter. “They are two completely different business models.”

The decision marks an abrupt end to a business relationship that Walmart and Uber announced with much fanfare less than two years ago. At Walmart’s shareholders meeting in June 2016, CEO Doug McMillon touted the company’s investments in technology and spoke about the partnerships in front of a cheering crowd of 14,000 employees.

Soon after, Uber’s grocery delivery service was launched and expanded to four markets. As recently as March, just before Uber ended the arrangement, Walmart said Uber would be a partner in its plans to deliver groceries to more than 40 percent of the country.

“There was clearly some lack of communication there,” said one of the sources with knowledge of the partnerships ending.

Walmart spokeswoman Molly Blakeman confirmed the end of the tie-ups when asked by Reuters, but did not detail the reasons behind the decision. She said Walmart will use other delivery service providers in the four markets where it had previously used Uber.

“Customers shouldn’t notice any difference as the transition takes place,” said Blakeman, who added that the partnership with Lyft never expanded beyond the initial test market of Denver.

Blakeman said the end of the partnerships will not impact Walmart’s plans to scale grocery delivery as they are not tied to any single provider.

Uber put a stop to the grocery partnership when it informed Walmart in March that it would cease delivery operations on June 30, Uber spokeswoman Ellen Cohn told Reuters. The retailer was Uber’s largest partner for its ‘Rush’ service, which delivered groceries as well as clothes, flowers and other goods.

Uber will shutter the entire Rush program at the end of next month. “We are coordinating with Walmart to make this change as seamless as possible,” Cohn said.

Lyft declined comment and deferred to Walmart on the issue.

For Walmart, which is the country’s largest grocer and gets 56 percent revenue from groceries, the partnerships offered a fast solution to expand its online grocery offerings and improve overall revenue from internet shoppers.

For example, Walmart delivers groceries in China through a partnership with ecommerce company JD.com Inc, and in Japan through an alliance with Rakuten.

But the retailer was recently punished for its fourth-quarter online sales performance, which investors say is key to the company’s future.

Last-mile competition

Last-mile delivery of packages is an intensely competitive business, with companies ranging from Amazon to United Parcel Services Inc, FedEx Corp and the U.S. Postal service, as well as startups like Instacart and Deliv, vying for a share.

Since the dot-com boom, companies have tried to crack the business model for online grocery delivery. The rush to solve the technological and logistical challenges has gotten even more frenzied since Amazon acquired high-end grocery chain Whole Foods Market Inc for $13.7 billion last year, a deal that has intensified competition in the sector.

Former Uber Chief Executive Travis Kalanick touted the idea of carrying a person in the backseat and a bag of groceries in the trunk as the ultimate cash-generating transportation service in a smart-phone era.

The delivery service marked the first time Uber publicly committed to a business outside of ride-hailing that was supposed to be meaningful to its bottom line and support its stratospheric valuation, although the private company never offered exact dollar projections.

But startup investors and experts in on-demand delivery say there is a much different set of logistical and economic challenges for moving around cargo than people, requiring a single company to be proficient in two distinct business models.

Uber’s Cohn said Rush was “an experiment” and the company has turned its focus and resources to UberEats, a restaurant delivery service that in the fourth quarter last year generated $1.1 billion, or about 10 percent of Uber’s overall revenue.

New partners

Walmart has added startups Deliv, Postmates and DoorDash to its list of delivery partners. These companies have the singular business of delivering goods, not people, and drivers have more experience safely transporting perishables.

It remains unclear if these startups will step in and replace Uber in the various markets they served.

A particular challenge for companies such as Postmates, however, will be offering rush delivery in suburban and rural areas, where most Walmart stores are located. Such startups have been most successful in urban centers, where there is a high density of customers and couriers can use bicycles or walk to deliver multiple packages in one trip.

“Density has been a challenge historically for all types of delivery companies, all the way back to the Pony Express,” said Ben Narasin, a partner at venture capitalist firm NEA who has been critical of the on-demand delivery business model. “The reality is that the far-away drives will likely be subsidized.”
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The worst drought in living memory has hit vineyards in South Africa’s Western Cape hard, reducing grape harvests and adding to pressure on the region’s centuries-old wine industry, officials said on Tuesday.

In its latest wine harvest report, industry body Vinpro said South Africa’s wine-grape production was down 15 percent from last year, and would lead to a production shortfall of 170 million liters of wine and prices rising as much as 11 percent.

South Africa’s wine sector, which dates back to the arrival of the first European settlers in the 1650s, employs 300,000 people directly and indirectly and contributed about $3 billion to the economy in 2015, according to an industry study.

The government has declared the drought a disaster in the Western Cape, the country’s main wine-producing region around the tourist city of Cape Town. Besides vineyards, it has decimated wheat crops and cut apple, grape and pear exports, most of which go to Europe.

Vinpro managing director Rico Basson said more than a third of vineyards were operating at a loss and overall numbers were shrinking as farmers uprooted vines to make way for more profitable fruit crops or simply failed to replace old vines.

Over the last decade, the amount of land used for growing grapes had shrunk by 9 percent, he said.

The problems in South Africa mirror those in other wine-growing countries and are likely to fuel concerns about changes in weather patterns as a result of global warming.

Globally, wine output fell to its lowest in 60 years last year due to unfavorable weather, especially in Europe, according to the international wine organization OIV.

In April, the OIV said South Africa, the world’s eighth largest producer, had produced 1.1 billion liters of wine in 2017, a 3 percent increase on the previous year.

The Western Cape’s historic vineyards, nestled in mountains to the east of Cape Town, are a major draw for tourists, with tens of thousands of overseas visitors enjoying tours and tastings every year.
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Former President Robert Mugabe will not appear before Zimbabwe’s parliament as scheduled on Wednesday to answer questions on diamond mining operations, a legislator said.

Temba Mliswa, who leads the parliamentary committee on mines, said the clerk of parliament hadn’t written to Mugabe to invite him to appear.

“It has been delayed but that resolution still stands,” Mliswa said. “He will have to appear before the committee whether he likes it or not.”

The committee had ordered the 94-year-old Mugabe to face legislators over his previous pronouncements that the state had been deprived of at least $15 billion in diamond revenue by mining companies.

Mugabe said in March 2016 the country was robbed of the revenue by diamond companies, including joint ventures between Chinese companies and the army, police and intelligence services, whose operations were shielded from public scrutiny.

Specifically, he said Zimbabwe lost $15 billion from the Marange gem fields, more than 400 kilometers (250 miles) east of the capital. He later expelled the companies and replaced them with a state-owned diamond company.

Mliswa said a new date for Mugabe to testify would be set.

The questioning on Wednesday would have been Mugabe’s first public appearance since the army deposed him last November in a de facto coup.
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Trade negotiations between China and the United States continue early next week in Washington D.C., but analysts say after the first round, the differences between the two sides are huge. Some believe the differences are so fundamental and big that an escalation of tariffs is unavoidable.

According to a widely circulated copy of Washington’s demands, President Donald Trump’s delegation not only asked Beijing to cut its trade deficit with the United States by $200 billion by 2020, but to also sharply lower tariffs and government subsidies of advanced technologies.

Beijing wants the United States to no longer oppose granting China market economy status at the World Trade Organization, amend an export ban against Chinese tech company ZTE Corp and open American government procurement to Chinese technology and services among other demands.

View to escalation

Scott Kennedy, a China scholar at the Washington-based Center for Strategic and International Studies, said the first round made it clear just how far apart the U.S. and China are in their views of what’s fair, what they want and expect the other side to do.

“I think we’re still headed toward escalation with both sides adopting tariffs in the next few weeks, but at least now we know what the fight is about,” Kennedy said. “It’s about whether or not China should be a market economy, or what you know whether it should be able to maintain its state capitalist system without any constraints.”

China joined the WTO in December of 2001 as a non-market economy and after 15 years it was expected the granting of the status as a market economy would naturally follow — along with its opening up.

But that is not what has happened, and the United States and European Union have refused to grant China market economy status.

Beijing insists it should be regarded as a market economy regardless of whether other countries believe it fits the definition. Under Xi Jinping, the Communist Party has moved to assert greater control over business and the economy.

Competition vs. compensation

It has also become increasingly clear that China’s definition of reform and that of the West are strikingly different.

In an interview with VOA earlier this year, William Zarit, chairman of the American Chamber of Commerce, said that while many used to assume China would continue to carry out Western style economic reforms initiated in the early 2000s, that is no longer the case.

“In the last four or five years, we’ve seen that reform has taken a different direction, that the Chinese economy is on a different trajectory and that is more support for state-owned enterprises,” Zarit said. “And when I hear reforms now, it is more about making state-owned enterprises more efficient and not necessarily competitive in a fully market-based economy.”

But Song Hong, an economist with the Chinese Academy of Social Sciences, argues that China has fulfilled its WTO obligations and it is the United States and European Union that have broken their promises to grant the country market economy status.

He said Washington’s demands to slash the trade deficit by $100 billion a year does not make economic sense. He also said the demand for China to lower tariffs and put the two countries on equal footing is impossible.

“The market in China is of course not as open as the U.S. market because China remains a developing country, which is no match to the U.S.,” Song Hong said. “The per capita income level in China around $10,000 vs. the U.S.’s some $50,000. How can both countries be equal?”

Talks as clock ticks

Some Chinese state media reports have tried to sound upbeat about the meetings focusing on the two sides agreed to keep talking, despite their differences.

On Monday, the White House announced a Chinese delegation led by Liu He, China’s vice premier and a top aide to Chinese leader Xi Jinping, will visit the United States early next week.

At the same time, however, the clock is ticking on U.S. threats to implement up to $150 billion in tariffs on Chinese goods. A day after Liu arrives in Washington, there will be a public hearing to discuss tariffs and the Trump administration’s investigation into China’s trade policies and practices.

If no agreement is reached by May 23, Washington would be well within its right to go ahead with the tariffs, analysts note. To which, China has promised to promptly reply.

Kennedy said that while the United States has used unilateral penalties in the past, this time around the chances of escalation are a lot higher.

“Not only are the disagreements deeply fundamental, China is much more powerful and ambitious than it used to be. And so it’s not likely to cave easily,” he said.

Brian Kopczynski contributed to this report.
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