|Trade News Archive: 15 May - 21 May|
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U.S. international economic and trade policy.|
|Monday, May 20, 2013|
U.S. Charges Three NYU Researchers In Chinese Bribery Case
Washington Free Beacon
Comment: "U.S. authorities brought criminal charges against three New York University researchers on Monday, alleging they conspired to take bribes from Chinese medical and research outfits for details about NYU research into magnetic resonance imaging technology."
EU arms second front in China trade war with Huawei probe
Comment: "Beijing has vowed to retaliate, warning that people in glass houses should not throw stones. China is already bristling over the Commission’s plans for sanctions on €21bn (£17.7bn) of Chinese solar panels, the EU’s biggest ever trade case.
The move has angered Germany, even though cheap Chinese imports have pushed Germany’s top solar firms Q-Cells and Solarworld into bankruptcy or debt restructuring."
U.S. and Europe Prepare to Settle Chinese Solar Panel Cases
New York Times
Comment: "The goal of the current tariffs, and of the price and quantity regulations that could replace them, is to protect American and European manufacturers from what they and the Obama administration describe as unfair competition. Western manufacturers and the administration say that Chinese solar panels are heavily subsidized by the Chinese government and then dumped in foreign markets at prices far below the cost of production."
In China, Weighing Economic and Political Freedoms
New York Times
Comment: "changes to state-owned enterprises are unlikely to be on the table. And any sweeping changes that are agreed upon will take months, or longer, to be put into place. With the economy struggling, some may question whether the government can wait nearly a year for substantive changes. I would guess it can, though no one should expect the rest of this year to be an easy one for China’s economy."
White House Sets U.S.-China Summit for California in June
New York Times
Comment: "Mr. Obama and Mr. Xi will meet on June 7 and 8 at Sunnylands, the Walter and Leonore Annenberg estate in Southern California, the White House said. Mr. Obama already had travel scheduled on the West Coast at that time, officials said, so they decided that Sunnylands, a less formal setting, would provide a better environment for the two men to get to know each other. To prepare for the meeting, Thomas E. Donilon, the president’s national security adviser, will travel to Beijing from May 26 to 28."
Hackers From China Resume Attacks on U.S. Targets
New York Times
Comment: "Three months after hackers working for a cyberunit of China’s People’s Liberation Army went silent amid evidence that they had stolen data from scores of American companies and government agencies, they appear to have resumed their attacks using different techniques, according to computer industry security experts and American officials."
Time to Admit China Is a Military Competitor
Comment: "The U.S. and China are engaged in a long-term peacetime competition with economic, diplomatic and, yes, military components. The sooner Washington begins speaking honestly about our relationship with China, the sooner we’ll have policies that adequately address the challenges facing our two countries."
Obama schedules China summit, Africa trip
Comment: "President Obama and President Xi will hold in-depth discussions on a wide range of bilateral, regional and global issues," said White House spokesman Jay Carney. "They will review progress and challenges in U.S.-China relations over the past four years and discuss ways to enhance cooperation, while constructively managing our differences, in the years ahead."
New York Times
Comment: "Even companies with the best intentions can’t guarantee the well-being of workers in a slippery, writhing global supply chain, with layers of temporary subcontractors. As The Economist points out, the disaster in Dhaka makes it hard for any company to claim credibly that it can be sure that its products are “ethically sourced.”
|Sunday, May 19, 2013|
To Help Worker Safety, Bring Back Managed Trade
Comment: "But without quota-granted guaranteed market access, cost-cutting became all the more important for smaller exporting countries simply to preserve their new gains. As U.S. trade data demonstrate, most of the freed-up customers were won by the huge Asian producers that enjoyed big natural and government-created cost advantages. For example, China’s share of U.S. apparel imports rose to 33.44 percent from 26.07 percent during the first two years of quota-free trade (2005-07) alone. Indonesian and Vietnamese sales boomed, too."
A small reduction in imports would yield great benefits for Michigan economy
Detroit Free Press
Comment: "As manufacturing goes, so goes America’s entire economy — for a still heavily indebted nation urgently needs to change its business model from borrow-and-spend to earn-and-produce. Few states have a bigger stake in American reindustrialization than Michigan, where manufacturing totals 15.8% of the economy, compared with 12.3% for the nation as a whole."
|Friday, May 17, 2013|
Turkey seeks seat at U.S.-EU trade table
Comment: "Trade was high on the agenda in a meeting on Thursday between U.S. President Barack Obama and Turkish Prime Minister Tayyip Erdogan. The Turkish leader is worried a deal could hurt his nation's commerce with Europe and the United States.
Erdogan wrote to Obama earlier this year raising concern about the impact of such a deal on Turkey, most of whose trade is with Europe, and urged Washington to work in parallel on a similar deal with Ankara, Turkish officials said."
Philly Fed: Manufacturing tumbles
Comment: "Analysts were shocked by the numbers. In a note to investors, Ian Shepherdson of Pantheon Macroeconomic Advisors called the national numbers "awful." However, he noted that the decline is "very unlikely to continue -- the ISM manufacturing survey points to small increases in output. But for now it looks terrible, and it is broad-based."
|Thursday, May 16, 2013|
Japan storms back on weak yen but Asia trembles
Comment: "Retail sales are soaring as a “wealth shock” electrifies the economy. The Nikkei index has risen has 70pc since November, with foreign hedge funds among the first to jump on the bandwagon.
The weaker yen is already delivering a powerful punch, accounting for almost half the growth. The currency has dropped 30pc against the dollar and China’s yuan since August, and 37pc against the euro.The yen-slide - or "Enyasu" - has raised concerns that Japan is exporting deflation through a "beggar-thy-neighbour" push for export share, a claim rejected by Tokyo."
America's New Manufacturing Boomtowns
Comment: "In many ways California represents the antithesis of the other western manufacturing economies, with its lethal combination of high energy prices and strict regulation. According to the California Manufacturing and Technology Association, the Golden State lost a full third of its industrial base from 2001 to 2010, and has yet to participate in the nation’s industrial recovery. Since 2010, manufacturing employment nationwide has grown more than 4% while in California industrial jobs have barely grown."
Why Our Economy Struggles to Create Jobs
Comment: "As I have discussed in both editions of my book and numerous blog articles, this loss of manufacturing firms and jobs was mainly the result of "predatory mercantilism"; i.e., unfair competition/product dumping by China and other Asian nations and the fact that a large number of multinational and American companies outsourced manufacturing offshore and/or set up plants in China and other parts of Asia. These companies literally outsourced American jobs in an attempt to compete with the "China price," take advantage of less stringent environmental regulations, reduce taxes, and thereby maximize profits."
Business Outlook Survey
Comment: "The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from 1.3 in April to -5.2 this month. The current activity index has shown no pattern of sustained growth over the past seven months, generally alternating between positive and negative readings (see Chart). The number of firms reporting decreased activity this month (29 percent) edged out those reporting increased activity (24 percent). Other current indicators showed similar weakness this month. The demand for manufactured goods remained weak, with the current new orders index declining from -1.0 to -7.9. The shipments index also indicated weakness, decreasing more sharply from 9.1 to -8.5"
China Shows Concern at Yen Weakness as Japan Growth Rises
Comment: "Japan’s policy of monetary easing “makes it hard for China to increase exports to Japan,” Shen Danyang, a ministry spokesman, said at a briefing in Beijing today. The rising yuan is eroding profit margins of Chinese exporters, he said."
New Jobless Claims Rise, and Housing Starts Fall
New York Times
Comment: "Jobless claims rose sharply last week, while housing starts tumbled in April and a gauge of underlying inflation pointed to weak demand.
The data could feed fears over the impact of a government austerity drive that began in January and could also raise pressure on the Federal Reserve to continue to buy bonds to support the economy."
Foxconn Audit Finds a Workweek Still Too Long
New York Times
Comment: "Foxconn has been under intense scrutiny for several years because of working conditions inside its factories. Investigations by The New York Times, outside groups and Apple’s own supplier responsibility officials have found illegal amounts of overtime, crowded working conditions, under-age workers and improper disposal of hazardous waste. Industrial accidents have injured and killed Foxconn workers, and the company also experienced a wave of worker suicides."
House Democrats press Bangladesh on worker protections
Comment: "The April 24 collapse of the eight-story Rana Plaza building in a suburb of Dhaka killed more than 1,100 people – mostly low-paid garment workers – and renewed scrutiny of worker protections in Bangladesh, which trails only China among the world's leading apparel exporters.
The day before, an engineer had warned the building owner that the structure was unsound and urged people to keep out. Instead, thousands of workers were allowed to re-enter the next day, setting the stage for the deadly collapse just hours later."
U.S. may strip Bangladesh of tariff breaks
Comment: "Requests by labor groups to exclude Bangladesh from tariff breaks have been pending for several years, but USTR said in documents published in the federal register that “the lack of progress by the government of Bangladesh in addressing worker rights issues . . . warrants consideration of possible withdrawal” of benefits."
Will 1,127 deaths move the needle for U.S. shoppers?
Comment: "The scale of the mismanagement and breadth of the human tragedies in Bangladesh powerfully illustrated to the world in one instant what years of abuse, inhumane conditions and unthinkable danger could not: The garment workers in Third World countries take enormous risks and desperate measures to earn a living in Bangladeshi-owned companies that produce clothing for Western retailers."
Cambodian shoe factory collapse kills 2
Comment: "The ceiling of a Cambodian factory that makes Asics sneakers collapsed on workers early Thursday, killing two people and injuring seven, in the latest accident to spotlight lax safety conditions in the global garment industry."
U.S. retailers aren’t signing a new safety agreement for Bangladesh. Here’s why.
Comment: "Nearly all of the major U.S. clothing chains — including Wal-Mart, Target, Gap Inc., and J.C. Penney — declined to sign on to an international safety pact that would require them to pay for inspections and upgrades in Bangladeshi garment factories. The retailers worried that the agreement would give labor groups and others the ability to sue them in U.S. courts."
|Wednesday, May 15, 2013|
After Bangladesh, Seeking New Sources
New York Times
Comment: "The relentless search for new locations has taken on more urgency after the deadliest industrial accident in the global garment industry’s history, a multistory factory collapse in Bangladesh that left 1,127 people dead. Buying from Bangladesh, said Mr. Model, “has been politically incorrect ever since problems started there, so a lot of major players had already been looking for alternatives.”
In global currency war, a new front opens in the South Pacific
Comment: "To date, Japan has been given a pass on its monetary policy, which involves massive asset purchases by the Bank of Japan and a doubling of the money supply. While that almost necessarily impacts the country’s exchange rate — as with anything else, increasing the supply of yen lowers its “price” as expressed in terms of other currencies — it is also taking place in an environment where every other major central bank is doing the same."
Rising yuan poses challenges for exporters
Comment: "A rising number of exporters in the region have secured orders since March, showing a steady recovery of demand for Chinese goods in the overseas market," Xiao said.China's exports in April rose 14.7 percent from a year earlier, compared with 10 percent growth in March, mainly driven by improving external demand, according to the General Administration of Customs.
"However, most exporters in the delta region have told us that the rising yuan value has led to a big profit decline," said Xiao, without elaborating on how much profits have declined."
Producer Prices Post Big Drop; Factory Activity Weak
New York Times
Comment: "Manufacturing production fell 0.4 percent last month after declining 0.3 percent in March, the Fed said. That pushed overall industrial output down by 0.5 percent, more than unwinding March's 0.3 percent advance. Economists had expected industrial output to fall only 0.2 percent last month.
The drop in factory output, which accounts for more than 70 percent of industrial production, was broad-based and in keeping with data earlier this month that showed factory payrolls failed to expand last month."
Empire State Manufacturing Survey
New York Fed
Comment: "After three months of modestly positive readings, the general business conditions index fell
four points to -1.4 in May, pointing to a slight deterioration in business conditions for New York
manufacturers for the first time since January."
The Hollowing Out Of Chinese Manufacturing
Comment: "But they all have to deal with rising labor costs. So strategies are shifting. Companies are using more of what they’d been using for decades in developed countries: automation. Hardly anyone welds manually at assembly plants in high-wage countries. But they do in China. And it’s getting expensive. Nissan for example. About 65% of the welding at its Dongfeng Nissan No. 1 plant, which came on line in 2004, is done by hand. At its No. 2 plant, which began operating last year, only half of the welding is done by hand; the rest by robots. A reaction to the annual 10% wage increases."
Abercrombie & Fitch Signs Bangladesh Safety Plan
New York Times
Comment: "With so many European companies signing on, pressures have increased on American retailers to join, with much of that pressure focused on Gap, the world’s third-largest apparel company, which is often viewed as an industry leader on social responsibility. The plan’s supporters predicted that numerous other American retailers would follow suit if Gap signed on."
Washington Free Beacon
Comment: "Walmart indicated that contractor Fame Jeans had lied to the company about its Bangladeshi production in a statement to the Washington Free Beacon.
Fame Jeans “told us there was no previous production at Rana Plaza,” the factory in question, “but our suppliers have a binding obligation to disclose all factories producing Walmart merchandise,” Walmart spokesperson Megan Murphy said in an emailed statement.Murphy said Walmart was ending its business relationship with Fame Jeans due to its policy on “unauthorized subcontracting.”She stressed that Walmart had no operations in the Rana Plaza factory at the time of the disaster."