Month: July 2018

Major U.S. trading partners including the European Union, China and Japan voiced deep concern at the World Trade Organization (WTO) on Tuesday about possible U.S. measures imposing additional duties on imported autos and parts.

Japan, which along with Russia had initiated the discussion at the WTO Council on Trade in Goods, warned that such measures could trigger a spiral of countermeasures and result in the collapse of the rules-based multilateral trading system, an official who attended the meeting said.

More than 40 WTO members — including the 28 countries of the European Union — warned that the U.S. action could seriously disrupt the world market and threaten the WTO system, given the importance of cars to world trade.

The United States has imposed tariffs on European steel and aluminum imports and is conducting another national security study that could lead to tariffs on imports of cars and car parts. Both sets of tariffs would be based on concerns about U.S. national security.

U.S. President Donald Trump said on June 29 that the probe would be completed in 3 to 4 weeks.

But the European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to countermeasures by its trading partners on $294 billion of U.S. exports.

A Russian official told the WTO meeting that the issue of U.S. investigations had been raised over the past year in different WTO meetings, only to see things change for the worse.

The United States was losing its reputation as a trusted trade partner, the Russian delegate told the meeting, adding that the United States could soon start an investigation into the case for import tariffs on uranium products.

China, Canada, Switzerland, Norway, Turkey, Costa Rica, Hong Kong, Venezuela, Singapore, Brazil, South Korea, Mexico, Qatar, Thailand and India all echoed the same concerns and said they doubted the U.S. tariffs were in line with WTO rules.

The U.S. diplomat at the meeting said the matter was already the subject of formal disputes at the WTO, so it should not be on the committee’s agenda, the official who attended the meeting said.
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Worried that Walmart’s $16 billion deal to takeover India’s biggest e-commerce company will force millions of mom and pop stores out of business, hundreds of shop owners in several cities have led protests against the U.S. retail giant.

India’s fast-growing retail trade is dominated by millions of small traders that have long opposed efforts by Walmart to establish its stores in the country. Now they are concerned its entry in the online market will drive down prices, making them uncompetitive, and are demanding the government block the deal.

WATCH: Anjana Pasricha’s video report

Raising slogans such as “Walmart Go Back” at a sit-in protest Monday in New Delhi, Praveen Khandelwal, the secretary general of the Confederation of All India Traders expressed fears that “Walmart will dump globally sourced material in India and ultimately the level playing field will be vitiated.” He says they fear practices like “deep discounting and predatory pricing” by large chains with deep pockets will “kill the competition.”

Although Walmart has eyed India’s retail market for more than a decade, its efforts to make inroads have been hampered by tough regulations for overseas retailers in opening brick and mortar stores. The regulations are meant to protect the livelihood of 15 million small store owners.

Flipkart Deal

But Walmart’s deal with Indian e-commerce retailer Flipkart, which sells goods ranging from soaps to appliances, clothes and accessories, will allow it to access Indian consumers through the online route and establish a foothold in a fast growing market. In the past five years, millions in India have begun logging onto websites to shop and the e-commerce market is expected to grow exponentially during the next decade. Flipkart has approximately 100 million users.

In a statement, Walmart said it has been supporting local manufacturing in India by sourcing from small and medium suppliers, farmers and businesses run by women. “Our partnership with Flipkart will provide thousands of local suppliers and manufacturers access to consumers through the marketplace model,” Rajneesh Kumar, senior vice president, Walmart India, stated.

But that has failed to reassure Indian shopkeepers and traders. Ajay Bajaj, of Bajaj Vacco in New Delhi, has been selling household appliances for more than five decades and sells his goods through online companies like Flipkart. He is not opposed to e-commerce, but he says he worries Walmart will make his business unviable as it procures cheaper goods from countries like China.

“Our apprehension is only that instead of me or my colleagues who are producing in India, if foreigners were to come here and make produce [goods] elsewhere and then sell here, first of all we will be out, because it will certainly be survival of the fittest and also the money game,” says Bajaj.

$700 billion market

But retail analysts dismiss worries that cheaper goods sourced from outside India would be a threat to small shop owners.

Ankur Bisen of retail consultancy, Technopak, points out that such products already flood the Indian market and are sold in thousands small stores across the country. “You are getting containers of Diwali lighting, containers of idols, of cheap stationery in India, why are you not stopping that?” he questions. “Same mom and pop stores are selling Chinese goods, they are selling imported goods.”

The protests against Walmart this week were however much smaller than those witnessed about a decade ago when traders feared the U.S. retailer would be allowed to open stores.

India’s retail market is worth about $700 billion. “It’s a growing space, it’s a profitable space,” says Bisen pointing out there is ample space for big and small retailers.

But traders continue to be suspicious, pointing out that Walmart has traditionally been a brick and mortar retailer. “Walmart is an off-liner, why Walmart is coming through e-commerce? Naturally there is a hidden agenda to control the vibrant retail trade of the country,” says Khandelwal.
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Halima Sheikh Ali is the proud owner of one of the few ATMs in Wajir town in northeast Kenya. But rather than doling out shilling notes, it dispenses something tastier: a fresh pint of camel milk.

“For 100 Kenyan shillings ($1), you get one liter of the freshest milk in Wajir County,” she says, opening a vending machine advertising “fresh, hygienic and affordable camel milk” in order to check the liquid’s temperature.

One of the world’s biggest camel producers, East Africa also produces much of the world’s camel milk, almost all of it consumed domestically.

In the northeast Kenyan county of Wajir, demand is booming among local people, who say it is healthier and more nutritious than cow’s milk.

“Camel milk is everything,” said Noor Abdullahi, a project officer for U.S.-based aid agency Mercy Corps. “It is good for diabetes, blood pressure and indigestion.”

But temperatures averaging 40 degrees Celsius (104 degrees Fahrenheit) in the dry season, combined with the risk of dirty collection containers, mean the liquid can go sour in a matter of hours, he added, making it much harder to sell.

To remedy this, an initiative is equipping about 50 women in Hadado, a village 80km from Wajir, with refrigerators to cool the milk that remote camel herders send them via tuk-tuk taxi, plus a van to transport it daily to Wajir.

There a dozen women milk traders, including Sheikh Ali, sell it through four ATM-like vending machines, after receiving training on business skills such as accounting.

“The (milk) supply and demand are there. We just have to make it easier for the milk to get from one point to another,” said Abdullahi.

The project, which is part of the Building Resilience and Adaptation to Climate Extremes and Disasters (BRACED) program, is funded by the U.K. Department for International Development (DFID) and led by Mercy Corps.

Fresh and Lucrative

Asha Abdi, a milk trader in Hadado who operates one of the refrigerators with 11 other women, said she used to have to boil camel’s milk — using costly and smoky firewood — to prevent it turning sour.

“I spent 100 shillings ($1) a day on firewood, and the milk would often go bad by the time it got to Wajir as the (public) transport took over three hours,” she said.

Now Abdi and the other women in her group send about 500 liters of fresh milk to Wajir every day — a trip that takes just over an hour by van. They then reinvest the profits in other ventures.

“With the milk money I bought 20 goats,” said Abdi as she rearranged bags of sugar in her crowded kiosk. “But my dream would be to export the camel milk to the United States,” she added. “I hear it’s like gold over there.”

Drought-safe Investment

Amid hundreds of camels roaming stretches of orange dirt outside of Hadado, Gedi Mohammed sits under the shade of a small acacia tree.

“The (tuk-tuk) drivers should be here soon to buy my camel milk,” he said, sipping the precious liquid from a large wooden bowl.

In Kenya’s largely pastoralist Wajir County, prolonged drought is pushing growing numbers of the region’s nomadic herders to see camels — and their milk — as a drought-safe investment.

Mohammed, who used to own over 100 cows, said he exchanged them a decade ago for camels, “which drink a lot of water but can then survive eight days without another drop, when a cow will die after two days.”

But even camels suffer when the weather is really dry, he added.

“Drought is bad for business because with less food and water the camels produce less milk,” he said, impatiently waving at a teenage boy to fetch a straying camel.

“Business would be better if I had a vehicle to transport the milk to buyers myself,” said Mohammed, who said he has to travel ever-longer distances to find pastures for his animals. “Right now I rely on the (tuk-tuk) drivers to find me, and you never know how long they will be.”

Technical Issues

Back in Wajir, Sheikh Ali said her group’s cooled milk ATM allows her to save about 5,000 shillings ($50) per month, as she no longer has to buy firewood to boil milk and can sell the fresh liquid at a higher price.

But although the vending machines are proving popular, they also have been plagued by technical issues, said Amina Abikar, who also works for Mercy Corps in Wajir.

“Sometimes the machines break down, or indicate that there is no milk left when there are still 100 liters” inside, she explained.

“So we have to wait for the machine supplier’s technician to travel all the way from Nairobi. It would be better to train someone locally,” she said.

Also slowing down business growth is the high rate of illiteracy among women involved in the project, Abikar said.

Sheikh Ali, who cannot read or write, relies on her son to operate the machine and check its various indicators.

“I would love to do it myself but I don’t know my ABCs,” she said, adding that she still feels “proud that I am one of the only fresh milk traders in Wajir.”
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A Portuguese tech firm is uncorking an Android smartphone whose case is made from cork, a natural and renewable material native to the Iberian country.

The Ikimobile phone is one of the first to use materials other than plastic, metal and glass and represents a boost for the country’s technology sector, which has made strides in software development but less in hardware manufacturing.

A Made in Portugal version of the phone is set to launch this year as Ikimobile completes a plant to transfer most of its production from China.

“Ikimobile wants to put Portugal on the path to the future and technologies by emphasizing this Portuguese product,” chief executive Tito Cardoso told Reuters at Ikimobile’s plant in the cork-growing area of Coruche, 80 km (50 miles) west of Lisbon.

“We believe the product offers something different, something that people can feel good about using,” he said. Cork is harvested only every nine years without hurting the oak trees and is fully recyclable.

Portugal is the world’s largest cork producer and the phone also marks the latest effort to diversify its use beyond wine bottle stoppers.

Portuguese cork exports have lately regained their peaks of 15 years ago as cork stoppers clawed back market share from plastic and metal. Portugal also exports other cork products such as flooring, clothing and wind turbine blades.

A layer of cork covers the phone’s back providing thermal, acoustic and anti-shock insulation. The cork comes in colors ranging from black to light brown and has certified antibacterial properties and protects against battery radiation.

Cardoso said Ikimobile is working with north Portugal’s Minho University to make the phone even “greener” and hopes to replace a plastic body base with natural materials soon.The material, agglomerated using only natural resins, required years of research and testing for the use in phones.

The plant should churn out 1.2 million phones a year — a drop in the ocean compared to last year’s worldwide smartphone market shipments of almost 1.5 billion.

Most cell phones are produced in Asia but local manufacture helps take advantage of the availability of cork and the “Made in Portugal” brand appeals to consumers in Europe, Angola, Brazil and Canada, Cardoso said.

In 2017, it sold 400,000 phones assembled in China in 2017, including simple feature phones. It hopes to surpass that amount with local production this year. Top-of-the-line cork models, costing 160-360 euros ($187-$420), make up 40 percent of sales.
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The U.S. Chamber of Commerce on Monday denounced President Donald Trump’s handling of global trade disputes, issuing a report that argued tariffs imposed by Washington and retaliation by its partners would boomerang badly on the American economy.

The Chamber, the nation’s largest business lobbying group and a traditional ally of Trump’s Republican Party, said the White House is risking a global trade war with its push to protect U.S. industry and workers with tariffs.

The group’s analysis of the harm each U.S. state could suffer from retaliation by U.S. trading partners painted a gloomy picture that could bring pressure on the White House from Republicans ahead of congressional elections in November.

For example, nearly $4 billion worth of exports from Texas could be targeted by retaliatory tariffs, the Chamber said, including $321 million in meat the state sends to Mexico each year and $494 million in grain sorghum it exports to China.

Trump has slapped tariffs on billions of dollars’ worth of steel and aluminum imports from China, the European Union, Canada and others, prompting retaliation against U.S. products.

He is considering extending the levies to the auto sector.

The Chamber, which says it represents the interests of three million companies, had praised Trump for slashing business taxes in December, but mounting trade tensions have opened a rift with the White House.

“The administration is threatening to undermine the economic progress it worked so hard to achieve,” Chamber President Tom Donohue said in a statement. “We should seek free and fair trade, but this is just not the way to do it.”

Asked at a briefing about the Chamber’s report, White House spokeswoman Sarah Sanders told reporters: “The president is focused on helping protect American workers and American industries and create a fair playing field.”

The Chamber is expected to spend millions of dollars ahead of the November elections to help candidates who back free trade, immigration and lower taxes. It has already backed candidates who share those goals in Republican primaries.

Retaliation

Perhaps most unsettling to businesses and investors, Washington and Beijing have engaged in tit-for-tat tariffs and threatened retaliation that has raised the prospect of a trade war between the world’s two largest economies.

The United States is set to impose tariffs on $34 billion worth of additional goods from China on July 6. China has threatened to retaliate in kind with its own tariffs on U.S. agricultural products and other goods.

Although Trump has previously been persuaded to back off trade threats based on the fact that they would hurt states that supported him in the 2016 presidential election, he has taken a more aggressive tack in recent months.

On Monday, he threatened to take action against the World Trade Organization after media reports said he wanted to withdraw from the global trade regulator. Trump says the WTO has allowed the United States to be taken advantage of in global trade.

Trump initially granted Canada, EU members and other nations exemptions on the metal tariffs — 25 percent on steel and 10 percent on aluminum. But he lifted the exemptions the same week he met with Group of Seven leaders in Quebec last month.

Trump railed against his trading partners during the meeting, according to sources, and withdrew his support for a joint communique after leaving the summit, angering and bewildering some of Washington’s closest allies.

Retaliation for his tariffs came swiftly.

Early last month, Mexico imposed tariffs on U.S. products ranging from steel to pork and bourbon, while the EU levied duties of 25 percent on 2.8 billion euros of U.S. imports, including jeans and Harley-Davidson motorcycles.

Harley-Davidson, which dominates the heavyweight U.S. motorcycle market, subsequently announced it would shift some U.S. production overseas to avoid higher costs for EU customers.

Trump slammed the company’s move, saying it was tantamount to surrender, and threatened punitive taxes.

Canada, a member of the North American Free Trade Agreement (NAFTA) with the United States and Mexico, on July 1 imposed retaliatory measures on C$16.6 billion ($12.63 billion) of American goods, including coffee, ketchup and whiskey.

Global equities fell Monday as investors worried about an escalation of the trade disputes.

The Chamber based its state-by-state analysis on data from the U.S. Department of Commerce and government agencies in China, the EU, Mexico and Canada.
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