A seller holds a piece of Gouda cheese at the cheese market in Gouda, Netherlands April 18, 2019. REUTERS/Yves Herman
April 19, 2019
GOUDA, Netherlands (Reuters) – Surrounded by 15-kg (33 lb) wheels of cheese ready to be carted away in horse-drawn carriages, a dairy farmer in the Dutch city of Gouda faces off against a cheese trader wearing traditional wooden clogs.
Staring each other in the eyes, they clap their hands together until they seal a deal, recreating an auction ritual that dates back to medieval times.
These days the historical cheese market — now a tourist attraction — operates under a shadow.
Two famed Dutch cheeses, Gouda Holland and Edam Holland, are among the many artisanal European products threatened with U.S. tariffs the Trump administration announced on April 8.
“If they cannot be exported to America, we will have to find another outlet,” said Jan de Goeij, a retired cheesemaker who plays the part of trader. He knows that would mean accepting lower prices.
“So we are very concerned about that threat from Trump. I hope it won’t happen.”
The United States could impose $11 billion worth of European export products with tariffs over subsidies for Airbus, and Europe threatens to retaliate over U.S. tax breaks for Boeing, a dispute that seems far removed from the Dutch cheese industry.
The Dutch, the world’s second-largest agricultural exporter after the United States, send 78 million euros ($88 million)worth of cheese products to the U.S. every year, according to Statistics Netherlands.
Ironically, Gouda gave U.S. Ambassador to the Netherlands Pete Hoekstra an honorary title – Waegemeester, or “Master of the Scales” – just days before the tariff threat was announced.
“I don’t think Ambassador Hoekstra should give that honorary title back,” said Gouda cheese producer Johan de Wit.
“If we now ask it back we will only get negative effects.”
Gouda and Edam cheeses can be made anywhere in the world by farmers who follow the correct processes. But the “Gouda Holland” and “Edam Holland” geographical designations can only refer to cheeses made entirely in the Netherlands.
(Reporting by Toby Sterling; Editing by Robin Pomeroy)
FILE PHOTO: General Motors Chief Executive Officer Mary Barra announces a major investment focused on the development of GM future technologies at the GM Orion Assembly Plant in Lake Orion, Michigan, U.S. March 22, 2019./File Photo
April 18, 2019
DETROIT (Reuters) – General Motors Co’s top executive, Mary Barra, received a compensation package worth just under $22 million in 2018, slightly less than the previous year, according to the No. 1 U.S. automaker’s proxy statement released on Thursday.
GM also said two members of the board of directors – former chairman of the joint chiefs of staff, retired Admiral Michael Mullen and the former CEO of ConocoPhillips , James Mulva – will not stand for re-election. The Detroit company did not name replacements, meaning the number of board members will drop to 11.
GM and the rest of the auto industry are facing an expected decline in U.S. demand this year, slowing sales in the world’s largest auto market in China and potential costly tariffs that could be imposed by the administration of U.S. President Donald Trump as it negotiates new trade deals with China, Europe and Japan.
GM is also investing heavily in developing electric and self-driving technologies.
Barra’s total compensation package was valued at $21.87 million, slightly below the $21.96 million she received in 2017. Barra, GM’s chairman and chief executive, was paid $22.58 million in 2016. GM said Barra’s pay was 281 times that of the median company employee.
Barra’s pay package included a salary of $2.1 million, unchanged from 2017; stock awards worth almost $11.1 million; options worth more than $3.4 million and a performance award worth almost $4.5 million, according to the proxy.
Barra is GM’s highest paid executive. Chief Financial Officer Dhivya Suryadevara received slightly more than $5.5 million in total compensation, and Chuck Stevens, who she replaced last September, received just under $7 million, according to the proxy.
Former President Dan Ammann, who now heads GM’s Cruise automation unit, received just under $9 million, while Mark Reuss, who replaced Ammann as president, received almost $7.4 million, according to the proxy.
GM’s annual investor meeting is scheduled to be held online on June 4.
One shareholder proposal requests the board adopt as policy the naming of an independent board chairman, a proposal that at the 2017 annual meeting received 41 percent voting support. GM opposes the proposal.
(Reporting by Ben Klayman; Editing by Lisa Shumaker)
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., April 9, 2019. REUTERS/Brendan McDermid
April 18, 2019
(Reuters) – Following are five big themes likely to dominate thinking of investors and traders in the coming week and the Reuters stories related to them.
The 100 years since the Fed’s creation in 1913 is said to be the century of central banking. Well, since the 2008-2009 crisis, we’ve certainly lived through a decade of central banking. But with monetary policy taken to the limit to lift growth and inflation, can central banks do any more?
Of late, some of the economic and business confidence data is giving rise to hopes rate-setters might just be able to hold fire on further action for now. German and Japanese PMIs ticked modestly higher from March, and from China to the United States, the hope is that spring will bring some green shoots on the economic front. Central banks in Japan, Canada and Sweden hold meetings in coming days so we may get some clues on what they are thinking.
ECB Vice President Luis de Guindos and Olli Rehn, widely tipped to succeed ECB Governor Mario Draghi, will also be quizzed on the subject at upcoming speeches, especially since sources tell Reuters “a significant minority” of ECB rate-setters doubt any recovery is underway. Central bankers in Australia and New Zealand have sounded similarly gloomy. A decade of central banking and planning is not over yet
(GRAPHIC: ECB balance sheet – https://tmsnrt.rs/2Hz4sUC)
(GRAPHIC: The Federal Reserve’s balance sheet – https://tmsnrt.rs/2ULcay0)
The working thesis through the early months of 2019 was that U.S. economic growth would continue to tail off as tailwinds faded from last year’s $1.5 trillion tax cut and headwinds picked up from a weaker global economy, partial federal government shutdown and trade wars. Indeed, that looked to be the case as most economic data through the first quarter fell short of forecasts. As a result, Citigroup’s U.S. economic surprise index came to near the most negative in around two years.
But one closely tracked gauge of quarterly gross domestic product, the Federal Reserve Bank of Atlanta’s GDPNow model, has rebounded sharply in recent weeks and may be signaling that the advance reading of first quarter GDP may not be quite so grim.
A month ago, GDPNow estimated an annualized 0.2 percent growth, which would have been the lowest since a one-off GDP contraction in the first 2014 quarter. Now the model forecasts quarterly growth will come in at 2.4 percent. That would not only top current estimates of 1.8 percent but would mean growth actually accelerated from the fourth quarter’s 2.2 percent.
One factor behind the turnaround was a surprise narrowing in the U.S. trade deficit as Chinese imports plunged in the face of President Donald Trump’s tariffs. By some estimates, trade could now contribute as much as one percentage point to first quarter GDP after being a washout in the fourth quarter.
(GRAPHIC: U.S. GDP – in for a surprise? – https://tmsnrt.rs/2VPQsJN)
As we said above, central banks don’t have much ammunition left in their arsenal. The toolbox is probably lightest at the Bank of Japan.
At the G20 meeting in Washington, BOJ Governor Haruhiko Kuroda said he was ready to expand monetary stimulus if needed. But he also said he had no plans to change the central bank’s forward guidance, or the message it sends to signal policy intentions to financial markets. To many, that sounded like a man backed into a corner.
Kuroda has a chance to prove otherwise at the upcoming BOJ meeting. Expectations are thin though, given the BOJ’s balance sheet is already bigger than the country’s economy and Japanese financial institutions are suffering immense pain from the prolonged monetary easing.
The world’s No. 3 economy may have contracted in the first quarter, and whether it recovers depends much on first, whether China recovers too and second, on whether the trade conflict between the other two powers sharing the podium reaches a resolution.
(GRAPHIC: BOJ’s bloated balance sheet limits further easing – https://tmsnrt.rs/2DjVE16)
3/TAKING A DIP IN EUROPE
The United States is widely seen as heading into an earnings recession (defined as two straight quarters of negative year-on-year earnings growth) but Europe might, at least for now, escape one.
European firms are expected to deliver their first quarter of negative earnings growth since 2016 – the latest I/B/E/S Refinitiv analysis predicts Q1 earnings to fall 3.4 percent year-on-year. But it expects results to pick up again in Q2.
So despite this quarter’s poor outcome, hopes for a bounce-back could keep equities buoyant. After all, sentiment is already rock bottom – investors surveyed by Bank of America Merrill Lynch named “short European equities” the most crowded trade for the second month running.
The auto sector will be in focus in coming days with a flurry of earnings from Michelin, Continental, Daimler, Peugeot, and Renault. These stocks are particularly sensitive to growth in China and will be watched as the stirrings of a recovery were felt in recent Chinese GDP data .
(GRAPHIC: Earnings chart latest April 17 – https://tmsnrt.rs/2Ip8LCj)
5/ RUSSIAN ROULETTE
The past two years have seen an increasingly bitter rift open up between President Donald Trump’s Republican supporters and his Democrat critics over the alleged collusion between Russia and Trump’s campaign in the 2016 U.S. election.
That may not be defused even after Special Counsel Robert Mueller’s 400-page report on the subject is unveiled by Atttorney General William Barr. He has already told lawmakers the investigation “did not establish that members of the Trump campaign conspired or coordinated with the Russian government in its election interference activities.”
But that is unlikely to stop U.S. politicians from continuing their clamor for sanctions against Russia. As for investors, their appetite for Russian assets has not so far been dented. After plummeting last year, foreign buying of rouble-denominated government bonds has recovered sharply so it remains to be seen whether that bullishness continues.
Meanwhile, Ukraine — the reason behind the original 2014 sanctions on Russia — looks set to elect comedian Volodymyr Zelenskiy as president. Could the election of a new leader bring about some rapprochement between Kiev and Moscow? Watch this space.
(GRAPHIC: Foreign investors dipping their toes back in OFZs – https://tmsnrt.rs/2XiDZyC)
(Reporting by Dan Burns in New York, Marius Zaharia in Hong Kong; Sujata Rao, Helen Reid and Tom Arnold in London; Editing by Andrew Cawthorne)
FILE PHOTO: U.S. Treasury Secretary Steven Mnuchin and Japanese Finance Minister Taro Aso attend the IMF and World Bank’s 2019 Annual Spring Meetings, in Washington, April 13, 2019. REUTERS/James Lawler Duggan/File Photo
April 18, 2019
By Stanley White
TOKYO (Reuters) – Japanese Finance Minister Taro Aso will travel to the United States on April 25 to meet Treasury Secretary Steven Mnuchin on the sidelines of a summit between Japanese Prime Minister Shinzo Abe and U.S. President Donald Trump, a source said on Thursday.
Aso and Mnuchin may discuss provisions against currency manipulation that the United States hopes to include in a trade agreement with Japan, said the source, who has direct knowledge of the matter.
Currencies are a sensitive subject for Japan because it has been criticised for keeping the yen weak with monetary easing.
Tokyo has long argued that its monetary policy is aimed at generating inflation and not intended to gain an advantage in trade by weakening the yen, but there are lingering concerns this could become a flashpoint in trade talks with the United States.
Japanese Economy Minister Toshimitsu Motegi held two days of discussions with U.S. Trade Representative Robert Lighthizer earlier this week towards an agreement the U.S. side hopes will lower its trade deficit.
The meeting between Motegi and Lighthizer came after Trump and Abe agreed last September to start trade talks in an arrangement that protects Japanese automakers from further tariffs while negotiations are under way.
Trump has made clear he is unhappy with Japan’s trade surplus with the United States – much of it from auto exports – and wants a two-way agreement to address it. During the talks this week, Washington highlighted the “very large trade deficit with Japan – $67.6 billion in goods in 2018,” according to the USTR statement.
The United States is also locked in a trade war with China, which has weighed on the global economy as both countries have slapped punitive tariffs on each other’s goods.
(Editing by Chris Gallagher and Jacqueline Wong)
FILE PHOTO: The Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 27, 2019. REUTERS/Brendan McDermid/File Photo
April 17, 2019
By Pete Schroeder
WASHINGTON, (Reuters) – Labor markets remained tight across the United States as businesses struggled to find skilled workers and wages grew modestly, the Federal Reserve said on Wednesday in its latest report on the economy.
The U.S. central bank’s “Beige Book” report, a glimpse of the economy based on conversations with business contacts across all 12 of the Fed’s districts, found economic activity grew at a slight-to-moderate pace in March and early April. A few districts reported some strengthening in economic growth.
Prices have risen modestly since the last Beige Book, with tariffs, freight costs and rising wages often cited as key factors, the Fed said. It added that consumer spending was mixed but suggested sluggish sales for both general retailers and auto dealers.
Wages grew moderately in most districts for both skilled and unskilled workers, with only three reporting slight growth in workers’ pay, the Fed said.
Businesses in most districts reported shortages of skilled workers, mainly in manufacturing and construction, but also in technical and professional roles. Companies have responded to the tight labor market by boosting bonuses and benefits packages, along with raising wages moderately, according to the report.
Employment increases were most highly concentrated in highly-skilled jobs.
In terms of the manufacturing sector, the Fed said contacts in many districts reported that trade-related uncertainty was weighing on activity.
Several Fed districts said flooding and severe weather in the Midwest was affecting agricultural production. The Kansas City Fed reported that recent blizzards and flooding could weigh on the farming sector in the coming months, as it had resulted in damaged infrastructure and losses of cattle and crops.
The impact of the 35-day U.S. government shutdown that began in late December appeared muted. The Richmond Fed reported a few federal contractors saw business starting to return to normal and the San Francisco Fed saw higher-than-expected retail sales once the government reopened.
The Fed held interest rates steady at its last policy meeting in March, sticking with the “patient” approach adopted by policymakers in January, given little sign of rising inflation and the growing concerns about trade tensions and slowing global growth.
The Beige Book gives the Fed a sense of what central bank officials are hearing in their own districts, which in turn could inform their thinking when it comes to the economy and the Fed’s stance on rates.
The latest Beige Book was prepared by the St. Louis Fed based on information collected on or before April 8, 2019.
(Reporting by Pete Schroeder Editing by Paul Simao) (([email protected]; 202-310-5485)
FILE PHOTO: European Union flags fly outside the European Commission headquarters in Brussels, Belgium, April 10, 2019. REUTERS/Yves Herman
April 17, 2019
By Philip Blenkinsop
BRUSSELS (Reuters) – Planes, tractors, food and handbags featured on a list of U.S. imports worth $20 billion that the European Union said on Wednesday it could hit with tariffs in a transatlantic aircraft subsidy dispute.
The 28-nation bloc said this week it was ready to open negotiations with the United States to cut industrial duties, but has now detailed plans that could lead to a new tit-for-tat trade conflict between the two global powers.
Transatlantic tensions were enflamed again on Wednesday when Washington said it would end a ban against U.S. citizens filing lawsuits against foreign companies operating in Cuba, with EU firms seen among the targets.
The two sides have been battling for almost 15 years at the World Trade Organization over subsidies given to U.S. planemaker Boeing and its European rival Airbus.
Washington last week issued a seven-page list of EU products to target for tariffs, from large aircraft to dairy products and wine, to counteract $11 billion of harm it says EU subsidies for Airbus have caused.
Brussels has responded with its own list of some $20 billion worth of U.S. imports, also including planes and wine.
The 11-page list also features a diverse range of agricultural produce from dried fruit to ketchup, as well as frozen fish, tobacco, handbags, suitcases, tractors, helicopters and video game consoles.
It is now open to a public consultation until May 31 and could then be revised.
Both sides have said they would prefer a settlement that did not lead to the imposition of tariffs.
“We must continue to defend a level-playing field for our industry. But let me be clear, we do not want a tit-for-tat,” EU Trade Commissioner Cecilia Malmstrom said in a statement
WTO arbitrators have yet to set amounts of damages or countermeasures in each case, but the U.S. case against Airbus is more advanced, with a ruling expected in June or July. Damages for the EU’s Boeing complaint could come early in 2020.
Washington and Brussels are already in conflict after U.S. President Donald Trump subjected EU steel and aluminum imports to punitive tariffs. The EU responded with duties on 2.8 billion euros ($3.2 billion) of U.S. imports.
Brussels then chose politically sensitive products, such as whisky from Kentucky and Harley Davidsons from Wisconsin.
An EU official said the new list was drawn up with the aim of having minimal impact on EU businesses, but also to serve as a deterrent and to cause discomfort to the other side.
It includes some 7 billion euros worth of aircraft; steam coal is in, but coking coal, used by steelmakers, is not; U.S. soybeans, which the EU has pledged to promote, have also been left out.
The two sides had appeared to reach a detente last July when Trump agreed not to impose tariffs on EU-produced cars and parts as long as the two sides negotiated on trade, including the removal of tariffs on “non-auto industrial goods.”
The European Union declared itself ready on Monday to start formal talks to do just that.
The Commission is proposing two sets of negotiations – one to cut tariffs on industrial goods, the other to make it easier for companies to show that products meet EU or U.S. standards.
However, it has insisted that agriculture not be included, putting it at odds with Washington, which wants farm products to be part of the talks.
(Reporting by Philip Blenkinsop; Editing by Alissa de Carbonnel and Gareth Jones)
FILE PHOTO: RWE CFO Markus Krebber attends the annual shareholders meeting of German power supplier RWE in Essen, Germany, April 26, 2018. REUTERS/Thilo Schmuelgen
April 17, 2019
By Tom Käckenhoff, David French and Vera Eckert
ESSEN, Germany (Reuters) – German utility RWE expects to spend heavily in the U.S. green energy market as it maps out its future as a global renewables champion after its pending asset swap with peer E.ON.
“We expect to spend several billions of euros on the expansion of the U.S. renewables business in the next few years,” chief financial officer Markus Krebber told Reuters in an interview.
RWE is trying to shed its image as coal-heavy, closing many of its German plants in return for compensation that is yet to be negotiated, and has demonstrated the bulk of its future profits will come from renewables.
Krebber said its global spending would focus on onshore wind and photovoltaics (PV) in the United States and Europe, where offshore wind spending would be significant too, with PV also highly relevant in Australia.
By taking over the renewable energy assets of subsidiary Innogy and of E.ON within the sector carve-up, RWE will develop into Europe’s third-biggest renewables company and the world’s number five, with installed capacity of 10 gigawatts.
Globally, “we will invest more than 1.5 billion euros (per year), and this could be as much as 2.5 billion euros with partners’ money”, Krebber said.
RWE on Wednesday increased its credit line with a consortium of 27 international banks to 5 billion euros ($5.7 billion) in order to fund the renewables business integration.
In the United States, it will inherit a 3 GW renewables portfolio from its two German peers and seek to expand that to 8 GW.
The main emphasis would be on onshore wind between the Great Lakes and down to the Gulf of Mexico, Krebber said.
RWE would develop and construct the assets itself, not invest in existing ones.
Investment conditions in U.S. renewables are attractive because prices for plants have come down, while remuneration for production will be lucrative even after federal tax credits expire.
Germany is more of a gamble because once feed-in tariffs go, projects must win long-term financing via auctions.
Krebber also said Asian renewables would lend themselves to investment either before 2025, or in the second half of the next decade.
“Offshore wind would be attractive in a densely populated country like Japan,” he said, also mentioning South Korea and India.
The company expects to benefit from an expansion of liquefied natural gas (LNG). Its trading division sees “significant” increases in volumes this year after 10 million tonnes were transacted in 2018.
RWE would also tap distributing capacities at a possible LNG terminal in Germany. Krebber expects final investment decisions for at least one, possibly two terminals this year.
“I appreciate we talked about renewables but also growth in gas,” he said. “It will be decisive in transforming the company.”
(Reporting by Tom Käckenhoff in Essen, David French in New York and Vera Eckert in Frankfurt; Editing by Georgina Prodhan, Michelle Martin and Dale Hudson)
FILE PHOTO: Trucks are pictured at a truck stop along I-95 in Darien, Connecticut, U.S. January 16, 2019. REUTERS/Jessica Resnick-Ault
April 17, 2019
By Stephanie Kelly and Jessica Resnick-Ault
(Reuters) – At a truck stop in Ridgefield, New Jersey, driver Paul Richards reviews a notebook where he tracks miles driven and what he is hauling. His paycheck is down about 25 percent from the same period a year ago, and his weekly miles have dropped as well.
“This hasn’t been a very good week,” said Richards, who carries building materials and recycled goods through the U.S. Northeast. “Last week wasn’t, either.”
Across the United States, drivers, regional operators and industry officials say the $700 billion U.S. trucking sector slipped in late 2018, with the fall continuing into this year. While the decline in freight rates and hauling does not suggest the United States is headed into a recession, that softness is consistent with slippage in the economy as a whole.
The effects have been uneven nationwide, with weaker orders and miles in the U.S. Midwest and Southeast than on the West Coast, economists and regional officials said.
Trucking accounts for 70 percent of U.S. shipment tonnage, and is key to supplying the manufacturing, construction and retail sectors, all of which showed sluggishness in the first quarter. The most common factors for the decline include the U.S.-China trade war and weakness in the Farm Belt.
An ACT Research index of truck carrier volumes that surveys about 60 fleets crossed into negative territory in November for the first time since July 2016. It briefly returned to positive territory in January but dipped again in February. It matches forecasts for a soft first quarter for U.S. gross domestic product, which is expected to come in at 1.8 percent growth, according to Reuters polling.
“Clearly, the economy is slowing down,” Kenny Vieth, president of ACT Research, said in a recent interview. “When the economy moderates, the trucking industry can be exceptionally worse than the overall economy because of the deep cyclical trend that characterizes the industry.”
To be sure, another indicator, the American Trucking Associations tonnage index, is at a healthy level at 117.4, still far above recession-era levels between 2008 and 2012, when it remained below 90.
(GRAPHIC: Truck tonnage and U.S. real GDP: https://tmsnrt.rs/2OjFgls)
The industry’s softness is not uniform nationwide. Reuters spoke to 47 out of 50 state trucking associations, and of those that responded, 16, including Illinois, Wisconsin, Ohio and Tennessee, said activity had slowed. Another 16 said there was little change, and the rest could not say one way or another.
Shipments in the Midwestern and Southeastern United States have been hit harder than other regions, according to Bobby Holland, vice president and director of Minneapolis-based U.S. Bank Freight Data Solutions. In the Midwest, export tariffs on crops have hurt agricultural sales, and auto production is also moderating, he said.
Neal Kedzie, president of the Wisconsin Motor Carriers Association, said activity started to slow at the end of 2018. Brokers had been connecting trucking companies known as carriers with requests from those who needed to haul freight. Now, though, carriers are starting to reach out to brokers to find loads.
“Carriers are having to do more searching on their own versus the brokers, who (before) had so much to deliver that they couldn’t find enough trucks,” Kedzie said.
Northeast shipments were strong last year, U.S. Bank said, but state officials in Maine, Connecticut and Rhode Island all told Reuters that early 2019 has been weaker.
A year ago, Larry Hobson was driving 14 hours a day hauling refrigerated food from Tennessee to New England. Now he is working eight or nine hours a day, and his paycheck has dropped by about $1,000 a week because of the decrease.
“I am a lot less busy,” he said at a service center in Darien, Connecticut.
Graphic: https://tmsnrt.rs/2HP3V0ZMidwest, Southeast see shipment growth contract, click
(GRAPHIC: regional shipment growth: (https://tmsnrt.rs/2NRPt8O)
Spot total rates for freight have slumped as well, averaging $1.85 per mile in March, according to DAT Solutions, a freight exchange company. That’s the lowest seasonally since 2017.
That weakness is starting to show up in company results. In mid-March, Chattanooga, Tennessee-based Covenant Transportation Group Inc warned of weak first-quarter results, saying average freight revenue per tractor was down 5 percent in early 2019 from the year-ago period, with average miles down more than 11 percent.
“The truckload freight environment has been weaker this year from late January through mid-March,” CEO David Parker said in a statement last month. Covenant shares are down more than 20 percent in the last six months.
Analysts have lowered quarterly per-share estimates for J.B. Hunt Transport Services Inc, Covenant and service company Knight-Swift Transportation Holdings Inc by 9 percent, 40 percent and 5 percent, respectively, according to Refinitiv Eikon data.
“There’s no doubt that we have been seeing a deceleration in volumes,” said Bob Costello, chief economist for the American Trucking Associations (ATA). “This is an indication that the economy is decelerating.”
(Reporting by Stephanie Kelly and Jessica Resnick-Ault in New York; Writing by Stephanie Kelly; Editing by David Gaffen and Matthew Lewis)
Japan’s Minister of Economic Revitalization Toshimitsu Motegi speaks during the signing agreement ceremony for the Trans-Pacific Partnership (TPP) trade deal, in Santiago, Chile March 8, 2018. Picture Taken March 8, 2018. REUTERS/Rodrigo Garrido
April 16, 2019
WASHINGTON (Reuters) – Japan’s Economy Minister Toshimitsu Motegi said on Tuesday that no agreement had been reached on individual trade issues with the United States after two days of talks with U.S. Trade Representative Robert Lighthizer.
Motegi told journalists in Washington he hoped to reach a “good result” on the talks “at an early stage.”
He said he may accompany Prime Minister Shinzo Abe when he visits the United States next week for talks with President Donald Trump on North Korea and trade.
The two-day trade talks came after Trump and Abe agreed last September to start trade talks in an arrangement that protects Japanese automakers from further tariffs while talks are underway.
Abe has stressed that the new framework would be a Trade Agreement on Goods, or TAG, not a more wide-ranging free trade agreement that included investments and services that Japan had resisted.
Motegi said on Monday he confirmed with Lighthizer that new trade talks would proceed based on the nations’ joint statement issued last September. It said talks “will respect positions of the other government,” drawing lines on autos and Japan’s agriculture sector.
(Reporting by David Lawder in Washington; Writing by Malcolm Foster in Tokyo; Editing by Richard Chang)
FILE PHOTO: Pigs nearing market weight stand in pens at Duncan Farms in Polo, Illinois, U.S. April 9, 2018. REUTERS/Daniel Acker
April 16, 2019
By Chris Prentice and Tom Polansek
NEW YORK/CHICAGO (Reuters) – China would likely lift a ban on U.S. poultry as part of a trade deal and may buy more pork to meet a growing supply deficit, but it is not willing to allow a prohibited growth drug used in roughly half the U.S. hog herd, two sources with knowledge of the negotiations said.
The United States and China are trying to hammer out a deal to end a months-long trade war that has cost the world’s two largest economies billions and roiled global financial markets and supply chains.
U.S. President Donald Trump’s administration is pressing Beijing to address concerns over Chinese practices on intellectual property rights, forced technology transfer and industrial subsidies.
Washington is also pushing for greater market access for agricultural products by seeking to reduce tariffs, lift bans and overhaul regulatory processes. The United States has asked Beijing to lift its bans on the drug ractopamine, which some U.S. pork producers use to boost hog growth, and on U.S. poultry, said two sources briefed on the discussions who spoke on condition of anonymity.
China’s negotiators have resisted lifting the ractopamine restriction even though Beijing may boost imports of U.S. pork as its own hog herd is devastated by disease, the sources said.
Huge losses in China’s hog herd due to African swine fever have left the world’s largest pork market facing a protein deficit, stoking hopes among U.S. pork and poultry producers.
“I think that China will do anything possible to make it easier for them to import protein,” said Bob Brown, an independent U.S. livestock market analyst. “This is such a gigantic thing,” he said of African swine fever.
Up to 200 million pigs could be culled or die from infections as the disease spreads through China, reducing the nation’s pork output by 30 percent from 2019, according to Rabobank.
Iowa State University agricultural economist Dermot Hayes said he expects China will import about 4 million to 6 million tonnes of pork in 2020, following losses in Chinese herds. The amount imported from the United States will depend on a trade deal, because Beijing maintains tariffs on shipments of American pork and has alternative suppliers, he said.
The Chinese poultry market also “has tremendous potential” for U.S. producers, said Jim Sumner, president of the USA Poultry and Egg Export Council in Stone Mountain, Georgia, valuing it at $500 million.
“With China’s situation with African swine fever, they’re going to have a real protein shortage in the near future,” he said.
The U.S. Department of Agriculture projects China’s total chicken imports will surge 68 percent this year to 575,000 tonnes, not including popular chicken feet, as African swine fever spurs consumers to turn to proteins other than pork. The disease is fatal to pigs but not harmful to humans.
Beijing has banned all U.S. poultry and eggs since January 2015 due to an avian influenza outbreak, which has been over for years. That caused imports to tank after the United States shipped $390 million worth of poultry and products to China in 2014. The following year, shipments were less than a fifth of that, at $74 million.
China lifted a similar restriction on poultry from France last month, and last year dropped duties on U.S. white-feathered broiler chickens. A total lifting of the ban would reopen the gates for U.S. poultry to compete in the world’s largest, and best-paying, market for products like chicken feet, and benefit companies such as Sanderson Farms Inc..
While it looks increasingly likely China may lift its ban on U.S. poultry, Beijing is seeking a “two-way street” and would want to be able to export some poultry products to the United States as well, two sources said.
China’s Ministry of Agriculture and Rural Affairs did not respond to a request for comment. A spokeswoman for the U.S. Trade Representative’s office declined to comment.
A U.S. meat exporter said officials from the USTR indicated that China will not drop its ban on ractopamine, though trade talks are still ongoing.
Chinese authorities blocked the use of ractopamine in livestock in 2002. They say it can cause health problems in people and is too similar to clenbuterol, an illegal additive in pig feed used to keep meat lean. The European Union also prohibits ractopamine, although the United States and other countries say it is safe.
Keeping the ban on ractopamine could benefit companies such as Smithfield Foods, a subsidiary of Hong Kong-listed WH Group Ltd that already raises most of its hogs without the drug. WH Group declined to comment. Smithfield Foods did not respond to request for comment.
Other U.S. pork producers that use the drug could benefit if China dropped its ban.
“It’s unfortunate news,” Christine McCracken, senior protein analyst with Rabobank in New York, said of the likely continuance of the ractopamine ban.
(Reporting by Chris Prentice in Washington and Tom Polansek in Chicago; Additional reporting by Dominique Patton in Beijing; Editing by Caroline Stauffer and Dan Grebler)