Asia-Pacific could face higher prices of grains and meat after Russia suspended a U.N.-brokered deal that had allowed safe grain shipments out of the Black Sea.
Over the weekend, the Russian foreign ministry said it “can no longer guarantee the safety of civilian dry cargo ships participating in the Black Sea Grain Initiative and will suspend its implementation from today for an indefinite period.” This followed an Ukrainian attack on its fleet in Sevastopol.
Meat production and consumption are key in Asia and for many Asian countries, grains such as wheat, corn, and soybeans are needed for animal feed to produce beef, pork, poultry as well as fish, authors Genevieve Donnellon-May and Paul Teng wrote in a research note published by Singapore think tank RSIS.
Major Black Sea exporters Russia and Ukraine account for about a third of the world’s wheat exports, 15% of the world’s corn exports and about 2.1% of the world’s soybean exports, the pair said, adding that Asian countries are particularly hit because many import from the region.
“For consumers in Asia, expect to pay even higher prices for food, including for meat, due to the prolonged conflict alongside rising energy costs and inflation,” Donnellon-May told CNBC.
“It’s going to get worse in Asia-Pacific with countries impacted by higher [priced] fertilizer, fuel, and food prices, further exacerbating Covid-related disruptions to the supply chains and climate change-induced extreme weather events, which have impacted agricultural production and food security.”
“Consumers throughout Asia-Pacific should expect to pay more for basic foodstuffs and also for meat.”
1 million metric tons less of cereals in the market could create an increase in prices of around 0.5%
Bfk92 | E+ | Getty Images
Before Russia halted its participation, the Black Sea Grain initiative had unlocked 9 million metric tons of grain worth $3 billion, said Maximo Torero, chief economist of the United Nation’s Food and Agriculture Organization.
“In practical terms, it means that 1 million metric tons less of cereals in the market could create an increase in prices of around 0.5%. So, the short-term impact shouldn’t be too big,” Torero told CNBC’s “Squawk Box Asia” on Monday, adding that the longer the situation prevailed the higher prices would rise.
Describing the situation in the Black Sea, Torero said there were 97 loaded vessels waiting to depart, 15 inbound vessels waiting for inspection and another 89 which had applied to join the initiative.
The latest update of the FAO’s food price index indicated global food prices had fallen for the sixth month in a row in September. Cereal prices fell too but leapt in September on fears about the Black Sea Grain Initiative’s continuation beyond November.
Donnellon-May said Asia-Pacific countries that could be hardest hit by the latest development in the Black Sea include Indonesia, which recently booked Ukrainian wheat cargoes, and Pakistan, where a government agency recently bought about 385,000 tons of wheat, likely from Russia and Ukraine.
Laos, Thailand, Malaysia, Sri Lanka and Bangladesh too could struggle.
The U.N. and other international bodies have urged Russia to walk back its decision on the grain deal.
PRAGUE — U.S. Trade Representative Katherine Tai traveled more than 4,000 miles to prevent a transatlantic trade war over electric vehicles, but her EU counterparts signaled on Monday that they would be a tough crowd to win round.
The growing spat hinges on U.S. legislation that encourages consumers via tax credits to “Buy American” when it comes to choosing an electric car.
At a time when the U.S. and Europe want to present a united front against Russia, this protectionist measure has triggered outrage in many EU countries, including France and Germany, two leading European carmaking nations. Beyond the EU, China, Japan and South Korea have also voiced concern.
After speaking with Tai at a meeting of EU ministers in Prague, the bloc’s trade chief Valdis Dombrovskis predicted it would be difficult to resolve the dispute.
“It will not be easy to fix it — but fix it we must,” he said.
Among the 27 EU countries, anxiety about the U.S. measure is growing. Sweden’s new trade minister, Johan Forssell, whose country takes over the presidency of the Council of the EU in January, told POLITICO on Sunday that aspects of the U.S. legislation were “worrying” and “not in accordance with [World Trade Organization] rules.”
Another senior official stressed: “It’s not only one or two member states, which are concerned … It’s also the small ones; they will have no access at all” to the U.S. market.
French President Emmanuel Macron and German Chancellor Olaf Scholz agreed over lunch last week that the EU should retaliate if Washington pushed ahead with the controversial bill. Macron floated the idea of a “Buy European Act” to strike back.
The new tax credits for electric vehicles are part of a huge U.S. tax, climate and health care package, known as the Inflation Reduction Act, which passed the U.S. Congress in August.
The idea is that a U.S. consumer can claim back $7,500 of the value of an electric car from their tax bill. To qualify for that credit, however, the car needs to be assembled in North America and contain a battery with a certain percentage of the metals mined or recycled in the U.S., Canada or Mexico.
Czech Trade Minister Jozef Síkela, whose country currently holds the presidency of the Council of the EU, said that European carmakers wanted to qualify for the scheme, just as the North Americans do.
In its current form, the bill is “unacceptable,” and “is extremely protective against exports from Europe,” said Síkela as he walked into Monday’s meeting. “We simply expect that we will get the same status as Canada and Mexico.”
U.S. Trade Representative Katherine Tai and European Commission Executive Vice President Valdis Dombrovskis | Jim Watson/AFP via Getty Images
“But we need to be realistic,” Síkela told reporters later. “This is our starting point in the negotiations and we’ll see what we’ll manage to negotiate at the end.”
In a bid to soothe tensions, a joint task force was set up last week by the European Commission and the U.S. The task force is supposed to meet at the end of this week, although the exact date isn’t yet fixed, according to thesenior official.
Asked whether Brussels would retaliate should no agreement be struck with Washington, Dombrovskis took a cautious approach: “Setting up this task force is already … a response of us, raising those concerns … At this stage, we are focusing on a negotiated solution before considering what other options there may be.”
The midterm elections in the U.S., where President Joe Biden’s Democrats look likely to lose ground, compound the difficulties.
It doesn’t seem like the tensions will be eased by the next Trade and Technology Council, which takes place between U.S. and European negotiators in early December.
Dismay over the U.S. subsidies has overshadowed the preparatory work for the next TTC meeting, for which the EU and businesses on both sides of the Atlantic want to see rapid concrete results to avoid the perception that the format is simply a talking shop.
Tai herself had no immediate comment in Prague, but later released a statement on her meeting with Síkela that gave no hint of a breakthrough.
“Ambassador Tai and Minister Síkela discussed the ongoing work of the Trade and Technology Council, and the importance of achieving meaningful results for the December TTC Ministerial and beyond. They also discussed the newly-created U.S.-EU Task Force on the Inflation Reduction Act,” the statement said.
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In an unexpected move, furniture giant Ikea has sent a solo indie developer a cease and desist letter reviewed by Kotaku, demanding he make changes to his unreleased survival horror game set in an Ikea-like furniture store. Lawyers representing Ikea are claiming that the game commits trademark infringement because some press outlets have drawn comparisons between their official brand and the game. The Swedish firm have given developer Jacob Shaw just ten days to “change the game and remove all indicia associated with the famous Ikea stores.”
The Store Is Closed is an unreleased co-op survival game, that’s just in the final week of a successful Kickstarter campaign that’s raised just over $49,000. Created by a lone developer, going by the studio name Ziggy, the game describes itself as “being set in an infinite furniture store.”
“You’ll need to craft weapons, and build fortifications to survive the night,” continues the blurb. “Explore the underground SCP laboratories and build towers to the sky to find a way out.” You know, like in a real Ikea? Crucially, nowhere in any of the game’s promotional materials, on its Steam, during its Kickstarter campaign—nowhere—has the word “Ikea” ever been uttered.
Yet despite this, and despite the game absolutely not being on sale anywhere, Ikea’s New York lawyers, Fross Zelnick, have written to Shaw demanding that he entirely change anything in the game that might remind people of their brand.
“Our client has learned that you are developing a video game, ‘The Store is Closed’,” the legal letter explains, “which uses, without our client’s authorization, indicia associated with the famous IKEA stores.”
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A gift for literally everybody. Gifts under $20, $10, and even $5. It’s Wish, the catch-all shop for all of the above.
It then goes on to list the infringing aspects of Shaw’s game.
“Your game uses a blue and yellow sign with a Scandinavian name on the store, a blue box-like building, yellow vertical stiped shirts identical to those worn by IKEA personnel, a gray path on the floor, furniture that looks like IKEA furniture, and product signage that looks like IKEA signage. All the foregoing immediately suggest that the game takes place in an IKEA store.”
Shaw gave me access to an early alpha build of the game, during which the “blue box-like building” and “blue and yellow sign” appear, in their totality, on the menu screen. After that, you don’t see them. There’s currently no branding at all in-game. The store is called “STYR.” Clearly a joke spelling of “STORE,” it is, by coincidence, a Swedish word, meaning “controls.” You know what’s not a Swedish word? “Ikea.” It’s the initials of its founder, a farm he grew up on, and a nearby village. Notably, stores like Tiffany have a trademark over the color that they use in their packaging, so in some ways Ikea isn’t coming completely out of left field here.
Then there are the claims that it has “furniture that looks like Ikea furniture.” But Shaw disputes that he designed any furniture with Ikea in mind. “I bought generic furniture asset packs to make this game,” Shaw said, meaning that this is furniture that can be featured in any game for a price. “I don’t know what that means.” The game does, however, have a grey path on the floor. It is also common for stores to have signage that tells the customer where to go.
Ikea’s argument hinges that the game infringes on their brand because press sites have made the association, rather than the game itself aligning naming Ikea.
One headline says, ‘Someone Has Made a Survival Horror Game Set In IKEA.’ Another headline says, ‘The Backrooms meets Sons of the Forest in new IKEA horror game.’
Those were the two headlines we could find, but it’s possible there are more. The letter also includes the subheadings of these stories as part of the evidence, going on to then state:
“Further, numerous comments by readers of these stories make an association with IKEA stores.”
Based on all this, Shaw has been told that his “unauthorized use of the IKEA indicia constitutes unfair competition and false advertising under Sections 43(a) of the U.S. Trademark Act, 15 U.S. C § 1125(a), and state unfair competition and false advertising laws.”
The lawyers then tell the developer, “You can of course easily make a video game set in a furniture store that does not look like, or suggest, an IKEA store.” The presumed game development experts go on to explain, “You can easily make changes to your game to avoid these problems, especially since you do not plan to release the game until 2024.”
They then immediately go on to inform Shaw that he has “ten working days of the date of this letter” to make all such changes, removing all their claimed “indicia.” Grey paths and all. The game is not up for sale yet.
Ikea is a company that saw revenues of $25.4 billion last year, and Jacob Shaw is some guy in the UK who tried to raise £10,000 ($11,575) on Kickstarter, so Shaw says he has no choice but to comply. While he’s seeking legal advice, he’s certain he’ll have to capitulate, given the costs involved in challenging anything.
“I was going to spend the last week of my Kickstarter preparing an update for all the new alpha testers,” Shaw told Kotaku. “But now I’ve got to desperately revamp the entire look of the game so I don’t get sued.”
Clearly owners of trademarks have a legal imperative to protect them, lest they lose them and their brand becomes recognized as generic. Presumably that’s part of Ikea’s motivation here, as overreaching as it might seem to anyone not familiar with trademark law. Hopefully simply removing the blue box building on the menu screen should really be enough to get rid of the rest of this nonsense, not least because the U.S. luxuriates in far more reasonable allowances for spoof than the U.K.
We’ve contacted Ikea in both the U.S. (from where the threats originate) and the U.K. (where the game is based), along with trademark experts, to ask for comment, and will update should they reply.
BERLIN/PARIS — After publicly falling out, Olaf Scholz and Emmanuel Macron have found something they agree on: mounting alarm over unfair competition from the U.S. and the potential need for Europe to hit back.
The German chancellor and the French president discussed their joint concerns during nearly three-and-a-half hours of talks over a lunch of fish, wine and Champagne in Paris on Wednesday.
They agreed that recent American state subsidy plans represent market-distorting measures that aim to convince companies to shift their production to the U.S., according to people familiar with their discussions. And that is a problem they want the European Union to address.
The meeting of minds on this issue followed public disagreements in recent weeks on key political issues such as energy and defense, fracturing what is often seen as the EU’s central political alliance between its two biggest economies.
But even though their lunch came against an awkward backdrop, both leaders agreed that the EU cannot remain idle if Washington pushes ahead with its Inflation Reduction Act, which offers tax cuts and energy benefits for companies investing on U.S. soil, in its current form. Specifically, the recently signed U.S. legislation encourages consumers to “Buy American” when it comes to choosing an electric vehicle — a move particularly galling for major car industries in the likes of France and Germany.
The message from the Paris lunch is: If the U.S. doesn’t scale back, then the EU will have to strike back. Similar incentive schemes for companies will be needed to avoid unfair competition or losing investments. That move would risk plunging transatlantic relations into a new trade war.
Macron was the first to make the stark warning public. “We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” the French president said Wednesday night in an interview with TV channel France 2, referring specifically to state subsidies for electric cars.
Scholz and Macron agreed the EU must act if the US progresses a ‘Buy American’ act offering incentives for companies investing on US soil, which would particularly affect French and German electric vehicle industries | David Hecker / Getty Images
Macron also mentioned similar concerns about state-subsidized competition from China: “You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house,” Macron said, adding: “[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation.”
Crucially, Berlin — which has traditionally been more reluctant when it comes to confronting the U.S. in trade disputes — is indeed backing the French push. Scholz agrees that the EU will need to roll out countermeasures similar to the U.S. scheme if Washington refuses to address key concerns voiced by Berlin and Paris, according to people familiar with the chancellor’s thinking.
Scholz is not a big fan of Macron’s wording of a “Buy European Act” as it evokes the nearly 90-year-old “Buy American Act,” which is often criticized for being protectionist because it favors American companies. But the chancellor shares Macron’s concerns about unfair competitive advantages, the people said.
Earlier this month, Scholz said publicly that Europe will have to discuss the Inflation Reduction Act with the U.S. “in great depth.”
In a blow to Germany’s industrial core, chemical giant BASF announced plans Wednesday to reduce its business activities and jobs in Germany, with company chief Martin Brudermüller citing heightened gas prices — which he criticized for being six times as high as in the U.S. — as well as increasing EU regulation as the reason.
“The decisions of a successful company like BASF show that we need to improve the overall attractiveness of Germany as a business location,” German Finance Minister Christian Lindner said in a tweet, vowing to take various measures such as “tax relief for private investments.”
Before bringing out the big guns, though, Scholz and Macron want to try to reach a negotiated solution with Washington. This should be done via a new “EU-U.S. Taskforce on the Inflation Reduction Act” that was established during a meeting between European Commission President Ursula von der Leyen and U.S. Deputy National Security Adviser Mike Pyle on Tuesday.
The taskforce of EU and U.S. officials will meet via videoconference toward the end of next week, underlining the seriousness of the European push.
On top of that, EU trade ministers will gather for an informal meeting in Prague next Monday, with U.S. trade envoy Katherine Tai planning to attend to discuss the tensions.
In Brussels, the Commission is also looking with concern at Macron’s wording of a “Buy European Act,” which evokes protectionist tendencies that the EU institution has long sought to fight.
“Every measure we take needs to be in line with the World Trade Organization rules,” a Commission official said, adding that Europe and the U.S. should resolve differences via talks and “not descend into tit-for-tat trade war measures as we experienced them under [former U.S. President Donald] Trump.”
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PARIS — Emmanuel Macron called for a “Buy European Act” on Wednesday to protect carmakers on the Continent in the face of competition from China and in response to the United States’ own controversial scheme to incentivize domestic production.
Speaking on TV channel France 2, the French president criticized the European Union as being “too open” on the topic of state subsidies for electric cars as it seeks to accelerate its transition to greener energy sources.
“We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” Macron said. “You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house.”
France has been leading the charge against Washington’s recent Inflation Reduction Act, which includes tax incentives for U.S. consumers to “Buy American” when it comes to choosing an electric car. The European Union, South Korea, Japan, China and Russia have all complained at the World Trade Organization that this measure violates international trade rules by unfairly discriminating against foreign manufacturers.
French Finance Minister Bruno Le Maire also recently slammed the U.S. scheme as “jeopardizing the level playing field” and raising the risk of a “new trade war.”
Macron said in the TV interview he had discussed an EU response to U.S. trade barriers during a lunch with German Chancellor Olaf Scholz at the Elysée Palace earlier on Wednesday. However, it was unclear whether the two leaders share the same view on exactly what steps to take.
“[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation,” Macron said.
Relations between the French president and his German counterpart have been fraught amid disagreements over energy, defense and the economy. But discontent over the U.S. legislation appears to be an area where they converge, given both their countries host major carmakers like Renault and Mercedes-Benz.
According to an adviser to the French presidency, the two leaders agreed to push the European Commission to prepare a response to the U.S. Inflation Reduction Act.
Giorgio Leali contributed reporting.
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LONDON — If his key appointments are any indication, the Rishi Sunak era in Britain could actually be … kind of dull.
The new U.K. leader reappointed existing ministers, brought back old hands and largely kept critics on side as he sought to reassure nervous markets, allies and enemies that the U.K. is no longer a hotbed of chaos.
But the prime minister did, at least, have room to take revenge on a number of his most vocal detractors, and refused to offer any kind of promotion to his defeated leadership rival, Penny Mordaunt.
Sunak entered No. 10 Downing Street Tuesday with a promise to “fix” the “mistakes” made by his predecessor Liz Truss, after her radical economic prospectus spooked financial markets and helped jack up U.K. borrowing costs — swiftly bringing down her government amid bitter Tory recriminations and sparking a second Tory leadership race in two months.
Emerging from the wreckage of the Conservative Party, Sunak had pledged to put politics aside and “build a government that represents the very best traditions of my party.”
Nothing to see here
The biggest news of the reshuffle was that there wasn’t much news. Multiple figures who served under Sunak’s predecessor Liz Truss, including some who backed his rival Boris Johnson in the latest Conservative leadership race, kept their posts or were moved to other senior roles.
Sunak’s most important appointment was to keep Jeremy Hunt in post as chancellor, sticking by a Cabinet veteran who Truss had brought in from the cold just two weeks earlier to rip up her failed economic agenda.
James Cleverly was kept on as foreign secretary, while Ben Wallace remained as defense secretary — keeping two key ministries tasked with shaping Britain’s foreign policy intact. Chris Heaton-Harris stayed on as Northern Ireland secretary, while Nadhim Zahawi was moved from the Cabinet Office to become the Conservative Party chairman. All four men had backed Johnson in the leadership contest last week, leaving fellow Boris supporters in the party relieved.
“At this early stage of the reshuffle it looks as if Rishi is aiming to unite the party rather than divide it,” said Tory MP and Johnson ally Michael Fabricant. “Perhaps one of the mistakes Liz Truss made was to pack the Cabinet only with her supporters. That always creates a volatile situation.”
In an eyebrow-raising move, Suella Braverman, a darling of the party’s right who made her own bid for the leadership earlier this year, returned as home secretary less than a week after being fired over a sensitive information leak. Her reappointment looked like a debt being repaid following her unexpected backing of Sunak at the weekend.
Trade Secretary Kemi Badenoch and Culture Secretary Michelle Donelan, both Truss picks over the summer, kept their jobs too.
One Cabinet minister who did not back Sunak in either leadership race said the appointments were clearly a bid for unity: “He has put people in positions with a track record of delivery.”
Senior figures from other wings of the party were impressed too. “The new prime minister is clearly serious about including people from all sides of the party in his new Cabinet,” said Nicky Morgan, a former chair of the centrist One Nation Conservatives grouping in parliament and now a member of the House of Lords. “This is a very encouraging start to his term.”
Soft revenge
Others key allies of Sunak’s opponents were handed demotions, but allowed to remain in Sunak’s top team.
Thérèse Coffey, a close friend of Truss who served as her deputy prime minister and health secretary, was demoted to the environment, food and farming brief. Alok Sharma, who backed Johnson in the second race, kept his job overseeing the COP climate summits, but will no longer attend Cabinet — a clear step down.
But it was the treatment of Mordaunt, the last candidate standing against Sunak in the latest leadership race, that most ruffled feathers. She kept her relatively junior Cabinet-attending job as leader of the House of Commons, a decision seen in Westminster as a snub given widespread expectations that she was due a major promotion.
One former Cabinet minister argued the failure to promote Mordaunt looked like “an act of revenge, or small-mindedness.” Mordaunt had refused to drop out of the latest leadership race until it was clear she did not have sufficient nominations from fellow MPs to make the next round.
Leader of the House Penny Mordaunt leaves No. 10 Downing Street following Prime Minister Rishi Sunak’s cabinet reshuffle | Leon Neal/Getty Images
Yet some argued the very act of keeping her in post was in itself an olive branch, while one person familiar with the discussions on her appointment said she had been offered a different role, but refused it. One of Mordaunt’s allies insisted she was pleased to keep her existing brief.
A Downing Street official insisted: “This Cabinet brings the talents of the party together. It reflects a unified party and a Cabinet with significant experience, ensuring that at this uncertain time there is continuity at the heart of government.”
But there were plenty of rewards too for key Sunak supporters. Close allies Oliver Dowden, Michael Gove and Steve Barclay were handed roles in the Cabinet Office, communities department and health department respectively, just weeks after Truss made clear they had no place in her administration.
Simon Hart was made chief whip, while Gillian Keegan was promoted to the Cabinet for the first time as education secretary and Grant Shapps was moved from his week-long stint heading up the Home Office (to replace the sacked Braverman) to the business department.
To make space for the new appointments, Sunak allowed himself a few ruthless sackings — although he did permit Cabinet ministers to technically resign to spare their blushes.
Ministers seen as close to Johnson, including Brandon Lewis and Kit Malthouse, were fired, as was Robert Buckland, who supported Sunak in the first leadership race only to shamelessly switch to Truss when it became clear she would win.
Jacob Rees-Mogg, one of Sunak’s most vocal critics and a cheerleader for Johnson, was also dispensed with, as well as top Truss lieutenants Ranil Jayawarenda and Simon Clarke. Rees-Mogg had once branded Sunak a “socialist” — although he hastily recanted that criticism Tuesday morning as the new PM picked his top team.
Having told the Tories at the weekend they must “Back Boris” or go “bust”, it was not enough to save him from his fate.
An earlier version of this story included an inaccurate previous ministerial brief.
LONDON — It took one bruising campaign defeat and six weeks of exile — but on Tuesday, Rishi Sunak will finally become U.K. prime minister.
He faces the toughest in-tray of any British leader since World War II, entering No. 10 Downing Street as the country hurtles into winter with energy bills, hospital waiting lists, borrowing costs and inflation all soaring.
The challenge has been magnified by Liz Truss’ brief crash-and-burn premiership. As a result of her now-infamous mini-budget, which was scrapped almost in its entirety after causing chaos in financial markets, the Conservatives are trailing the opposition Labour Party by over 30 percentage points in opinion polls.
On Monday, Sunak told MPs he was ready to hit the ground running as he addressed them for the first time since becoming Tory leader. Over the days and months ahead, he will need to carry out his first ministerial reshuffle without further fracturing his party; oversee the first budget since the last one wreaked havoc on the economy; and determine what support to offer voters with their energy bills past this spring.
Prime ministers tend to think of their first 100 days as a way to set the tone for their premierships. For Sunak, who has just over two years to govern before he is required to face a general election, that first impression is going to be particularly important.
October 25 — Meeting with the king and first speech outside No. 10 Downing Street
Sunak will become the prime minister Tuesday after an audience with King Charles III, where he will ask the monarch for permission to form a government.
Sunak will then address the country for the first time as prime minister from the steps outside No. 10 Downing Street at around 11.35 a.m.
To much of the British public, the former chancellor is a familiar face who announced the wildly-popular furlough scheme during the coronavirus pandemic in 2020.
His task now will be to reassure people that the government will support them during another difficult economic period — only this time he is in a much tougher position. The popularity he gained during the pandemic has waned, and he is taking over after a major government crisis — the third Tory prime minister to hold office within three months.
October 25 — First reshuffle
The first big political test for Sunak will be his Cabinet reshuffle. Tory MPs believe he will learn the lesson from Truss’ first and only one, where she divvied up roles between her allies and left almost everyone who didn’t back her out in the cold.
“I think his reshuffle will be more unifying, bringing in people from all wings and will not be as destabilizing as Liz’s,” an MP who did not back Sunak predicted.
Sunak’s leadership rival Penny Mordaunt is expected to be handed a major Cabinet position | Dan Kitwood/Getty Images
Sunak is likely to make at least his major Cabinet appointments Tuesday afternoon, so they are in place to line up alongside him on the House of Commons’ front bench when MPs grill him during so-called prime minister’s questions (PMQs) on Wednesday.
His biggest decision will be whether to keep Jeremy Hunt — who was drafted in by Truss in a last-ditch effort to save her premiership — as chancellor. He is also likely to hand a big job to his leadership rival Penny Mordaunt.
Close Sunak allies who are likely to get promotions include Mel Stride, the current chairman of the Treasury select committee, Craig Williams, Claire Coutinho and Laura Trott. Tory big beast Michael Gove could see a return to Cabinet.
October 26 — First PMQs
Sunak will go head-to-head as prime minister with Keir Starmer, the Labour leader, for the first time on Wednesday.
Unlike his predecessor, Sunak won’t have much to worry about from his own side — Tory MPs have largely rowed behind him since he became their leader on Monday, with many expressing relief that the perpetual state of crisis of the Truss government has ended.
But MPs will want him to demonstrate that he can land blows against Starmer at a time when Labour is streets ahead in the polls. Sunak told Tory MPs on Tuesday that their party faced an “existential threat” as a result of its low poll ratings.
October 28 — Deadline to form a government in Belfast
If a power-sharing arrangement is not in place at Stormont by Friday, a fresh set of elections to the Northern Irish assembly will have to be triggered.
Calling these elections — the second set in seven months — could be one of the Sunak government’s first acts and an indication of successive Tory prime ministers’ failure to deal with the political crisis in Northern Ireland.
The Democratic Unionist Party issued a fresh warning on Monday night that it would not participate in the assembly unless Sunak takes action on the post-Brexit Northern Ireland protocol agreed with the EU.
October 31 — First budget
The next budget was penciled in for October 31 by Kwasi Kwarteng, the Truss-era chancellor who wanted to use it to reassure financial markets still reeling from his last one.
The timing of the budget — widely derided by Tory MPs because of the optics of holding it on Halloween — was intended to give the Bank of England time to react before its own key meeting on November 3, where it will set interest rate levels for the weeks ahead.
In its biggest test so far, Sunak’s government will have to decide whether to stick with that date; what actions to take to reassure the markets; and how to fill the enormous hole in the U.K. public finances.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, said: “If his chancellor is Jeremy Hunt and Sunak is comfortable with the way things are proceeding for next Monday, then going ahead has lots of advantages.
“You get the announcement out before the Bank of England makes its next inflation figure, and you get the Office for Budgetary Responsibility forecasts out there, which helps show the markets you are serious about them.
“The case for changing that date is much stronger if Sunak says, ‘Actually, I want to do something different to what Jeremy Hunt has been planning, and I need more time,’” Emmerson added.
November 3 — Bank of England rates meeting
The Bank of England’s monetary policy committee is expected to raise interest rates at its meeting on November 3, triggering a fresh hike in people’s mortgages.
This is the point when many people will realize for the first time that they will have to make much larger mortgage repayments once their current fixed-rate deals come to an end.
Sunak made combating inflation and keeping mortgages low a central theme of his leadership campaign over the summer. Reacting to the rates decision and ensuring the government works closely with the Bank of England to combat inflation will be a key test of his premiership.
November 6 — COP27 summit in Egypt
Sunak made a point of telling Tory MPs on Tuesday that he is committed to the U.K.’s goal of achieving net-zero carbon emissions by 2050.
The question now is whether he attends the COP27 climate summit in Sharm El Sheikh, Egypt. Truss reportedly planned to go, despite her skepticism of aspects of the net-zero agenda.
If Sunak does go to Egypt, it could be his first foreign trip in office (unless he decides to make a quick visit to Ukraine beforehand) and his first opportunity to present himself on the world stage.
November 8 — Boundary changes
The Boundary Commission for England will publish its new constituency map on November 8.
At this point, some Tory MPs will know with near certainty that their constituencies are being carved up between neighboring areas, with some forced to jostle with colleagues over who will get to stand where.
It will be a political headache for Sunak to deal with, and any MPs whose safe seats become marginal will sense their political careers coming to an end — and will have less of an incentive to support him in key votes in the months ahead.
November 13 — G20 meeting in Indonesia
The next big foreign trip coming down the track is the G20 summit in Bali, Indonesia.
The meeting will be an opportunity for Western powers to present a united front against Russia following its invasion of Ukraine and against China’s increased aggression toward Taiwan, but also to hold talks behind closed doors. There have been reports that both China’s Xi Jinping and Russian Vladimir Putin will attend.
Sophia Gaston, the head of foreign policy at the Policy Exchange think tank, said this was shaping up to be “one of the most extraordinary summits of modern history, with a violent war raging in Ukraine and the leading protagonist, Vladimir Putin, on the guest list alongside other autocratic leaders and outraged democratic allies.”
“As well as promoting free trade and the rules-based international order, Sunak would likely see the G20 as an opportunity to build support for his proposed ‘NATO-style’ technology alliance,” Gaston said. “He may well also debut a new U.K. message on the net-zero transition.”
Late November or early December — Chester by-election
Labour whips are preparing to trigger a by-election in the city of Chester in late November or December.
The by-election is taking place because the city’s MP Christian Matheson resigned after a parliamentary watchdog recommended he be suspended for sexual misconduct.
Matheson sits on a 6,164-vote majority, and the seat has traditionally been a swing seat flipping between the Tories and Labour. It was Conservative up until 2010.
Based on current polling figures, Labour should win a significantly larger majority than it currently has, though by-elections do suffer from small turnouts and so unexpected results are not uncommon. A dramatic Tory defeat would set alarm bells ringing in the party.
Another by-election could be triggered in the coming months if, as expected, Boris Johnson elevates his ally and MP Nadine Dorries to the House of Lords in his resignation honors. That would likely be the first by-election in a Tory-held seat fought with Sunak as party leader.
December 31 — U.K. deadline for joining trans-Pacific trade bloc
The U.K. government has said it hopes to conclude negotiations on joining the CPTPP — a trade agreement signed by 11 countries including Australia and New Zealand — by the end of the year.
Securing this deal was one of Truss’ priorities. For Sunak it would represent both a concrete foreign policy achievement and an indication that the U.K. is successfully building closer diplomatic ties with countries in the Indo-Pacific after Brexit.
Talks around the partnership have thrown up some diplomatic obstacles, with China reacting angrily to U.K. trade officials meeting Taiwanese counterparts. Both China and Taiwan have applied to join the CPTPP.
There have been suggestions that the evidence against him is so damning that Johnson could face temporary suspension from parliament or even be kicked out as an MP. The inquiry may have formed part of Johnson’s decision not to stand for the Tory leadership contest.
If the privileges committee says Johnson should be sanctioned once it concludes its inquiry, Sunak will have to judge his response and decide whether to whip Tory MPs to back its recommendations even if that provokes Johnson’s ire. There is also the risk that Sunak himself will be dragged into the probe, given he too was fined over the Partygate scandal.
Among other things, the probe will examine the impact of the economic policies that Sunak designed as chancellor during the pandemic, putting his decisions under scrutiny.
His “Eat Out to Help Out” scheme — which encouraged people to dine in restaurants during the post-lockdown summer of 2020 — could become a focus, with critics claiming it drove up coronavirus-related infections and deaths.
February — Energy support nears its end
By the time Sunak’s first 100 days are up, there will be pressure on the government to explain how it will support people with their energy bills past the spring if wholesale gas prices haven’t drastically fallen. Hunt has already rolled back the Truss government’s two-year guarantee and instead capped people’s energy bills at an average of £2,500 for just six months. That policy ends in April.
The Institute for Fiscal Studies’ Emmerson said: “We’ve got a big generous offer from the government through this winter — although prices are still a lot higher than they were last year, they will be nowhere near as high as they would have otherwise been.
“The prime minister and chancellor will spend a lot of time thinking about how they replace that scheme. In some ways, it’s very similar to the kind of furlough scheme that Sunak had during the pandemic — very generous, big scheme with lots of crude edges to it,” he said.
“It’s understandable wanting to get in place quickly to support people, but how do you get out of it? Do it too quickly and that’s too much pain for too many people — keep it in place for too long, and that’s very expensive to the government.”
It’s just one of so many enormous decisions the new PM faces in his first 100 days.
Arkhom Termpittayapaisith, Thailand’s finance minister, speaks at the meeting of finance ministers of the Asia-Pacific Economic Cooperation in Bangkok on Oct. 20, 2022.
Andre Malerba | Bloomberg | Getty Images
Asian economies are well-equipped to withstand economic headwinds next year, the U.S. Treasury said following the conclusion of the APEC Finance Ministers’ Meeting in Thailand last week.
During the two-day meeting, finance ministers in Asia-Pacific also pledged not to adjust exchange rates for competitive purposes,recognizing that “excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability.”
Many Asian currencies have crumbled against the U.S. dollar as the Federal Reserve persists with interest rate hikes in an effort to combat inflation. Last week, the Japanese yen weakened past 150 against the U.S. dollar crossing a psychological level for the first time since August 1990.
Despite sluggishness in China and the the diversity of economic strengths among countries, Asia is well placed to tackle downturns ahead, U.S. Deputy Treasury Secretary Wally Adeyemo said during a press conference in Singapore on Friday.
“Ultimately, I have come away from APEC with a sense that the economies in this region have the tools to manage through the headwinds that they face,” Adeyemo said following the APEC meeting.
“Spending time in Asia is the best possible reminder of the vitality of the region’s economy as well as its increasing centrality.”
Adeyemo said in line with the Indo-Pacific Economic Framework, he had used his time in Asia to move toward the U.S.’s goal of being more economically integrated with Asia. He added that U.S. legislation such as the CHIPS Act could help the region generate economic activity.
“Put simply, we are positioning the U.S. to be the preferred economic partner for countries like Singapore and others who have joined IPEF as well as for other economies in the world,” he said.
“Ultimately I have come away from with a sense that the economies in this region have the tools to manage through the headwinds that they face”: Wally Adeyemo
Bloomberg | Bloomberg | Getty Images
On IPEF — the U.S.-led framework for economic and trade matters in the region — Adeyemo said he has had discussions with various countries which have agreed to participate in some of the framework’s four modules of trade, supply chain, clean economy and fair economy.
During the APEC meeting, member countries also agreed to use all available policy tools including monetary, fiscal and structural to manage inflationary pressures, the chair’s statement said.
Some economies acknowledged the importance of improving debt transparency while others pointed to the impact of tightening economic conditions that could lead to debt distress.
Chinese leader Xi Jinping on Sunday secured an unprecedented third term as general secretary of China’s Communist Party, according to the state-run Xinhua News Agency.
The appointment comes after a week-long party congress during which the 69-year-old leader tightened his grip over the country, making him possibly the world’s most powerful individual, according to some analysts. And it paves the way for him to get another five-year term as the country’s president at the annual legislative session in March and to continue his confrontational line with the West.
Beijing has grown increasingly aggressive on both the military and economic fronts while cozying up to a warmongering Russia.
At 69, Xi has has surpassed the informal retirement age of 68 and could be in a position for life-long rule. In 2018, Xi scrapped the presidential two-term limit, allowing him to rule indefinitely.
In a dramatic scene on Saturday during the highly choreographed meeting, former Chinese President Hu Jintao was unexpectedly escorted out of the closing ceremony of the Communist party congress, in what was seen by some as a sign of Hu deterring health and by others as a symbolic scene of Xi’s strengthened powers.
He appointed to the party’s Politburo Standing Committee, China’s top governing body, officials who analysts say are his proteges and allies. Among them they mention for example Wang Huning, described as the ideologue who has shaped Xi’s nationalist views; Cai Qi, whose ties with Xi go back over two decades; and Ding Xuexiang, a close Xi aide who often travels with the president.
Russian President Vladimir Putin sent a congratulatory message to Xi on his third term, the Kremlin said. Putin told the Chinese president that he looked forward to further developing the “comprehensive relationship and strategic alliance between our two states.”
German Chancellor Olaf Scholz is planning a trip to China next month and is set to be the first Western leader to greet Xi as the newly re-appointed leader. EU leaders at a meeting on Friday discussed the bloc’s line over China.
While Scholz insisted that the EU must remain a beacon of global trade, even with China, others such as outgoing Italian Prime Minister Mario Draghi said that many leaders during the discussion stressed that “we must not repeat the fact that we have been indifferent, indulgent, superficial in our relations with Russia.”
And they also stressed that “those that look like business ties … are part of an overall direction of the Chinese system, so they must be treated as such,” Draghi added.
Europe, the world’s largest economic bloc, enjoyed stable trade surpluses for a decade but the war in Ukraine and the ensuing energy crisis have tipped the Continent into a spiraling external deficit unseen since the launch of the euro.
The terms-of-trade shock maxed out in August, the latest month for which trade figures are available. And, even though energy prices have since eased, European leaders are still scrambling to shore up supplies of affordable oil and gas to replace lost Russian deliveries. A harsh winter looms.
A breakdown of the trade figures shows that the EU’s manufacturing trade surplus has nearly halved this year.
Can Europe bounce back? Or will its industrial base become hollowed out as industry moves offshore? And will the eurozone, and the EU more broadly, end up being saddled with the chronic external deficits that have long plagued the United States and, more recently, destabilized Britain? POLITICO breaks it down for you:
What’s going on?
The eurozone’s negative trade balance with the rest of the world in August stood at €50.9 billion, the highest deficit ever recorded, compared to a €2.8 billion surplus a year ago, according to the latest Eurostat numbers.
The trade deficit for the EU as a whole spiraled to €64.7 billion.
The eurozone’s current account balance — the balance of all trade in goods and services as well as international transfers of capital, such as remittances — hit a €26.32 billion deficit in August, largely driven by the trade deficit in goods, the European Central Bank reported.
Is that a bad thing?
A trade deficit occurs when a country or trading bloc’s imports exceed its exports. A trade surplus is the opposite. Trade deficits are not per se good or bad, although many countries seek a trade surplus, including by setting up tariffs and quotas to artificially boost their trade balance, a practice known as mercantilism.
Is it temporary?
The trade deficit is largely driven by high energy prices, which in August hit a record €350 per megawatt hour. Prices have come down from their peak, trading at around €150/MWh, but they are still a multiple of where they were a year ago.
“Markets have gone from pricing this energy crisis as being temporary, they are now pricing it to be a much longer-term story, albeit not as elevated as it was in August,” said Kristoffer Kjær Lomholt, chief FX analyst at Danske Bank.
“We think that it is a kind of a more long-term thing that is going to weigh on the currencies of economies that are energy importers, where the eurozone, of course, stands out to a very large extent,” he added.
Others believe that the shift, being largely energy related, could resolve itself over time, said Sam Lowe, who covers trade policy at Flint Global.
An EU official also pointed to EU-Russia trade. “The peak in energy prices has made the value of our imports from Russia increase substantially (while the volume of those imports from Russia decreased), and our exports have spiralled down because of sanctions (export controls),” the official said.
Will the EU be less competitive if energy prices remain high?
A negative trade balance and consequently a weaker currency makes imports more expensive. “Net importers will have to pay more for goods and services,” said Lomholt.
On the other hand, a weaker euro could fuel exports, said Matthias Krämer, head of external economic policy at German industry federation BDI. “If the euro currency was a little bit weaker, it could also make Europe’s position on global markets better by making exports cheaper,” he said.
But there’s another way of looking at this. Lowe argued the sustained large eurozone trade surplus was itself problematic, in that it was a function of intra-EU demand being lower than it should be. “Being overly dependent on external demand also leaves the EU quite vulnerable to both external shocks, and political coercion.”
What does that mean for the euro?
“We expect the euro to decline further in coming months as part of this adjustment,” said Robin Brooks, chief economist at the Institute of International Finance.
A negative trade balance or current account deficit puts downward pressure on the value of free-floating currencies, which move with demand of goods: less demand for a country’s exports means less demand for its currency, which in turn lowers its value relative to others. Conversely, strong foreign demand for goods strengthens a country’s currency.
“Foreign investors need to be compensated via a real depreciation of the exchange rate, and generally higher real interest rates,” said Lomholt at Danske Bank.
The Danish lender has recently downgraded its forecast for the € to $ exchange rate to $0.93 in 12 months from virtual parity now, driven in part by the energy price shock. “We have for some time been arguing that €/$ looked overvalued and not undervalued … And just given the additional push to the energy crisis that we got during summer, we saw a case that the euro/dollar [exchange rate] should actually hit even lower,” he said.
Is business freaking out?
A bit.
“The data are not so surprising considering the high energy prices, but they are worrying”, said Luisa Santos, responsible for international relations at BusinessEurope. She called on the EU to try to bring energy prices down and to boost exports by opening new market opportunities via more trade agreements.
Germany, the bloc’s export powerhouse, increased its exports by 14 percent in the first eight months of the year but imports have surged by more than 27 percent, according to national trade figures.
“We’re not performing in a segment which is highly influenced by a cost driven competition,” said Krämer at the German industry federation. “But if this situation will last longer of course some parts of our industry will be more and more under pressure.”
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The San Francisco 49ers have mostly watched as the NFC West division rival Los Angeles Rams have repeatedly swung for the fences to try to win the Super Bowl. That approach worked for the Rams last season. The Niners believe it’s their turn, which is why they pulled off a stunning trade for running back Christian McCaffrey late Thursday night.
The Niners sent second-, third- and fourth-round picks in 2023 and a fifth-round pick in 2024 to the Carolina Panthers for McCaffrey in hopes he can help jump-start a sagging offense.
Through the first six weeks, the 49ers have been plagued by injuries all over the roster, and their offense hasn’t played close to the level of their dominant defense.
Coach Kyle Shanahan doesn’t want a repeat of 2019, when the Niners wasted an elite defense as the offense couldn’t close out the Super Bowl against the Kansas City Chiefs.
Put simply: San Francisco believes it is in a championship window, and trading for McCaffrey sends that message loud and clear to the rest of the league.
How will McCaffrey fit into the 49ers’ offense?
This should be relatively seamless for McCaffrey, who has plenty of experience operating in an outside zone-heavy scheme and brings the type of versatility that will allow Shanahan to mix and match him with the team’s skill-position options. And make no mistake, while McCaffrey will be the team’s No. 1 option at running back, Shanahan will use him in the pass game plenty and create more headaches for defenses, who now have to keep track of him and the likes of receivers Deebo Samuel and Brandon Aiyuk and tight end George Kittle. — Nick Wagoner
Did the 49ers give up too much?
On paper, it seems like it. But when you make an all-in move like this, there’s no price that’s too high if it pays off. The risk is obvious: McCaffrey has missed 23 games in the past two seasons, and he’s joining a team that is consistently snakebit by injury. And while the Niners have a couple of third-round compensatory picks, they’re essentially punting on the 2023 NFL draft. Adding young, cost-effective players is important for a team that has so much high-priced talent and is planning to pay defensive end Nick Bosa an enormous amount of money this offseason. But if McCaffrey, who is under contract through 2025, is healthy and on the field, he gives the 49ers one of the best groups of skill-position players in the league, and the loss of multiple Day 2 picks won’t sting much at all. — Wagoner
Does adding McCaffrey put the 49ers over the top in a tight NFC West?
It should, but that comes with the significant caveat of whether the Niners and McCaffrey can get (and stay) relatively healthy. No team has been more banged up than the Niners in the first six weeks, and while many of those players are expected to return, there are no guarantees when it comes to health. If their injury luck turns for the better, the Niners, who are already 2-0 in the division, have the best roster in the NFC West and should be able to not only win the division but make another deep postseason run. — Wagoner
After firing their coach and getting rid of McCaffrey and Anderson, is this a complete rebuild for the Panthers?
The Panthers might not call it a complete rebuild because the defense is in good shape for next season. Defensive tackle Matt Ioannidis is the only starter not under contract. But this is a complete rebuild when you consider the Panthers will have a new coaching staff, since Matt Rhule already has been fired; a new quarterback, since Baker Mayfield and Sam Darnold aren’t the answer; and a new face of the franchise, since McCaffrey is gone.
On top of that, the receiver room is a mess. DJ Moore is the only legitimate threat now that Robbie Anderson has been traded to the Arizona Cardinals. And none of Carolina’s tight ends are legitimate weapons. Not to mention the offensive line ranks near the bottom of the league in pass win and run win rate. One could argue 2022 first-round pick Ikem Ekwonu has had growing pains thus far at left tackle. He might be better suited for the right side or at guard. So call this what you want, but it’s a rebuild. — David Newton
How does this set up interim coach Steve Wilks?
Wilks never got a fair shake in his one season (2018) as the head coach of the Arizona Cardinals because he didn’t have the talent to compete and coached with mostly an inherited staff. He has the same situation now with Carolina. And now he loses his most valuable offensive asset. McCaffrey was his offense, accounting for 75% of the team’s yardage in Sunday’s 24-10 loss to the Los Angeles Rams. Wilks has to replace him with second-year back Chuba Hubbard and journeyman D’Onta Foreman.
The offense is already rated last in the NFL in total yards and in third-down percentage, and former XFL quarterback PJ Walker is starting his second straight game Sunday against Tampa Bay while Baker Mayfield and Sam Darnold recover from ankle injuries. Owner David Tepper said Wilks would be considered for the full-time job if he does an exceptional job the remainder of this year. Instead, it appears he has been set up for failure once again. This feels like a total tank to build for the future. — Newton
What are the contract and cap implications of the deal?
McCaffrey is a one-year rental on a cheap contract for San Francisco, with a $1.035 million salary thanks to Carolina’s offseason contract restructure. Next year it gets more complicated, as McCaffrey is owed $11.8 million. But the 49ers don’t inherit McCaffrey’s signing bonus proration, which lessens his $19.5 million cap hit in 2023 by several million. This is all manageable but still steep for a running back. — Jeremy Fowler
What other teams were involved in talks?
Several contenders at least made the call, but as of midweek talks were slow to develop. Despite hype about their interest, I never got the sense the Buffalo Bills were all-in. Teams I’ve talked to believe the Rams and Denver Broncos were involved to some extent but were unwilling to reach the price point the 49ers ended up paying.
The Panthers also have received multiple trade calls on their other top playmaker, wide receiver DJ Moore, per sources, but the team considers Moore a foundational piece for the roster in the long term. — Fowler
PARIS — U.S. President Joe Biden needs to watch out; France is resuming its traditional role as Europe’s troublemaker on the transatlantic trade front.
It had seemed like the bad blood between Brussels and Washington was easing on Biden’s watch. Facing a common foe in China, the EU and the U.S. last year struck a truce on the tariffs that former President Donald Trump slapped on European steel and aluminium. Over this year, Russia’s war against Ukraine has meant that America and Europe needed to present a united front, at least politically.
Cracks are now starting to re-emerge, however. The EU is furious that the U.S. is pouring subsidies into the homegrown electric car industry. Accusing Washington of protectionism, Europe is now threatening to draw up its own defenses.
Unsurprisingly, French President Emmanuel Macron is leading the charge. “The Americans are buying American and pursuing a very aggressive strategy of state aid. The Chinese are closing their market. We cannot be the only area, the most virtuous in terms of climate, which considers that there is no European preference,” Macron told French daily Les Echos.
Upping the ante, he called on Brussels to support consumers and companies that buy electric cars produced in the EU, instead of ones from outside the bloc.
There are good reasons why the Europeans are fretting about their trade balances.
The war has delivered a huge terms-of-trade shock, with spiraling energy costs hauling the EU into a yawning bloc-wide trade deficit of €65 billion in August, from only €7 billion a year earlier. In one manifestation of those strains, Europe’s growing reliance on American liquefied natural gas to substitute for lost Russian supplies has re-ignited tensions.
Macron’s comments are a reflection of EU consternation over Washington’s Inflation Reduction Act, which incentivizes U.S. consumers to “Buy American” when purchasinga greener car. The EU argues that requiring that car needs to be assembled in North America and contain a battery with a certain percentage of local content discriminate against the EU and other trade partners.
The European Commission hopes to convince Washington to find a diplomatic compromise for European carmakers and their suppliers. If not, that leaves the EU no choice but to challenge Washington at the World Trade Organization, EU officials and diplomats told POLITICO — even if a new transatlantic trade war is the last thing both sides want to spend their time and money on.
Macron’s comments “are clearly a response against the Inflation Reduction Act,” noted Elvire Fabry, a trade policy expert at the Institut Jacques Delors in Paris. “Macron plays the role of the bad cop, compared to the European Commission, which left Washington some political room to make adjustments,” she noted.
‘American domination’
The Commission hopes to find a diplomatic compromise with the U.S. for European carmakers and their suppliers | Ludovic Marin/AFP via Getty Images
France has traditionally been the bloc’s most outspoken country when it came to confronting Washington on a wide range of trade files. Paris, for instance, played a key role in killing a transatlantic trade agreement between the EU and U.S. (the so-called “TTIP”). Its digital tax angered U.S. Big Tech and triggered a trade war with the Trump administration.
More recently, during its rotating Council of the EU presidency, Paris focused on trade defense measures, which will give Brussels the power to retaliate against unilateral trade measures, including from the U.S.
New tensions are bad news for the upcoming meeting of the Trade and Tech Council early December, which so far has had trouble to show that it’s more than a glorified talking shop.
France won’t be left alone in a possible trade war on electric cars. According to Fabry, these tensions will bring Paris and Berlin closer, as the German car industry is also particularly affected by the U.S. measures.
But the “Buy American” approach is not the only bone of contention. The fact that Europe is increasingly relying on gas imports from the U.S. brought European discontent to the next level.
Although gas import prices fell in September from their all-time highs in August, they were still more than 2.5 times higher than they were a year ago. And, taking into account increased purchase volumes, France’s bill for imports of LNG multiplied more than tenfold in August, year on year, by one estimate.
Economy and Finance Minister Bruno Le Maire last week warned that Russia’s war against Ukraine should not result in “American economic domination and a weakening of Europe.” Le Maire criticized the U.S. for selling LNG to Europe “at four times the price at which it sells it to its own companies,” and called on Brussels to take action for a “more balanced economic relationship” between the two continents.
That very same concern is shared by some Commission officials, POLITICO has learned, but also among French industrialists.
It is “hardly contestable” that the U.S. had some economic benefits from the war in Ukraine and suffered less than Europe from its economic consequences, said Bernard Spitz, head of international and European affairs at France’s business lobby Medef.
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After two years of port congestions and container shortages, disruptions are now easing as Chinese exports slow in light of waning demand from Western economies and softer global economic conditions, logistics data shows.
Container freight rates, which soared to record prices at the height of the pandemic, have been falling rapidly and container shipments on routes between Asia and the U.S. have also plunged, data shows.
“The retailers and the bigger buyers or shippers are more cautious about the outlook on demand and are ordering less,” logistics platform Container xChange CEO Christian Roeloffs said in an update on Wednesday.
“On the other hand, the congestion is easing with vessel waiting times reducing, ports operating at less capacity, and the container turnaround times decreasing which ultimately, frees up the capacity in the market.”
The latest Drewry composite World Container Index — a key benchmark for container prices — is $3,689 per 40-foot container. That’s 64% lower than the same time last September after falling 32 weeks in a row, Drewry said in a recent update.
In Europe, sliding container prices and rates reflect declining consumer confidence, Container xChange said.
Nurphoto | Nurphoto | Getty Images
The current index is much lower than record-high prices of over $10,000 during the height of the pandemic but still remains 160% higher than pre-pandemic rates of $1,420.
According to Drewry, freight rates on major routes have also fallen. Costs for routes like Shanghai-Rotterdam and Shanghai-New York have fallen by up to 13%.
The falling freight rates tie in with a “sharp drop” in container shipments that Nomura Bank has observed.
Nomura, quoting data from U.S.-based Descartes Datamyne, said container shipments from Asia to the U.S. for all products except rubber products in September are down year on year.
“We assume that the sharp drop in container shipments largely reflects US retailers stopping orders and reducing inventories due to the risk of an economic slowdown,” Nomura analyst Masaharu Hirokane said in a note on Wednesday, adding that the bank has yet to see signs of a sharp fall in U.S. retail sales.
Port throughput around the world has also dropped. When Shanghai reopened after its recent lockdowns, port traffic volumes lifted but weren’t enough to offset the “wider downturn in port handling levels,” Drewry said.
In Europe, sliding container prices and rates reflect declining consumer confidence, Container xChange said.
“The European market is finding itself flooded with 40-foot high-cube containers. As a result, the region is experiencing a fall in the prices of these boxes,” Container xChange said.
The trends in logistics and supply chains from the past two years have reversed, logistics companies said. During that period, container shortages were constant as a result of delays at ports affected by lockdowns and soaring demand.
But now, demand for containers is falling and so are their rates, Seacube Containers chief sales director Danny den Boer said at the Digital Container Summit held earlier this month.
Idle time for containers is also on the rise, Sogese CEO Andrea Monti said at the same conference.
“Containers are stacking up at a lot of import-led ports. Shippers are giving containers away just because containers are being stuck there,” said Container xChange account manager Gregoire van Strydonck at the conference.
India’s Arcon Containers CEO Supal Shah said factories in China have stopped production for the foreseeable future.
“We heard four months,” he said at the Digital Container Summit conference.
“The container depot space is full in China, Europe, India, Singapore and most parts of the world.”
Big data analytics visualization technology with scientist analyzing information structure on screen … [+] with machine learning to extract strategical prediction for business, finance, internet of things
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The Russian invasion of Ukraine has made Chinese military action against Taiwan seem less abstract and heightened interest in the potential economic fallout of a war in the South China Sea. Traditional methods in the economist’s toolkit — computational general equilibrium (CGE) models and econometric analysis — are the gold standard for analyzing trade deals and even sanctions. But they are often inadequate to anticipate the enormity of an unusual events or major conflict.
Helpfully, necessity is the mother of invention, and the growing availability of big data, including open-source intelligence, offers new facets of study.
The current economic analytical toolkit largely revolves around CGE models and econometric analysis. These tools presume we have many precedents and plenty of data representing them and are relatively precise with small deviations from the status quo. But what happens when we face international economic and trade policy questions that we haven’t fully faced before?
For the past few decades, arguably since the end of the Cold War, we have been living in a one-model world. The nature of international trade and economic questions have largely revolved around the themes of liberalization and deregulation. When it comes to those “standard” issues, CGE models have been especially good for contemplating hypotheticals and econometrics for understanding the past.
CGE modeling, a tool of choice for U.S. trade policy analysis, is usually used for ex ante (“before the event” in Latin) questions; that is, the potential effects of a proposed policy. The U.S. International Trade Commission, which is a go-to for independent trade and economic analysis by the House Ways and Means Committee, the Senate Finance Committee, and the U.S. Trade Representative, has used CGE since the early 1990s. They have tackled such questions as “What are the the potential economic effects of a US-UK free trade agreement?” and “What is the likely impact of the US-Mexico-Canada Agreement?” As computational power has increased over the years, these models have gotten more detailed, and can drill down to activity across hundreds of sectors and countries, and even at the subnational (e.g., state) level.
Each tool has its limitations, even in the one-model world. There are entire chapters in trade agreements such as digital trade, electronic commerce, state-owned enterprises, and competition policy which are hard to capture in CGE models. Even among the most sophisticated econometric analysis, it can sometimes be hard to disentangle correlation from causation.
But the one-model world seems to have passed. New geopolitical conflicts, a pandemic, the Ukraine war, Brexit, rising populism and unilateral trade actions, and now China’s increasingly aggressive posture in the Indo-Pacific all have implications for international economic policy. It is hard to characterize any of these disruptions, or potential disruptions, as small deviations from the status quo. We are dealing with unusual events more often these days, and the current toolkit is lacking.
The changing nature of the policy landscape makes this a good time to add something new to the toolbox. That’s where open-source intelligence and big data come in. (Big data include data that are conventional and unconventional, such as text, satellite images, videos, multimedia files, audios, etc.) I think economists interested in the empirical international trade analysis of large disruptions should take note.
Consider a potential Chinese invasion of Taiwan. Where does one even begin to assess its potential economic impact? Much of that depends on what the invasion looks like and which parts of the global economy are vulnerable to a kinetic conflict in the Taiwan Strait and nearby waters.
In a recent policy brief, my colleague Weifeng Zhong and I attempt to address some of that using an unusual open-source data set: a collection of points of interest in Taiwan with detailed coordinates, curated by a malicious Chinese entity. The data suggest that the kind of military planning China may have for Taiwan potentially includes transportation facilities like seaports and information and communications technology facilities like submarine cable landing stations, where subsea cables, the backbone of the world wide web, come to shore.
We argue that a Chinese invasion of Taiwan would not only severely disrupt container shipments in the Taiwan Strait and nearby waters, but also could also knock the island off-grid in the digital economy and break critical links in global value chains, putting high-tech sectors like semiconductor manufacturing in jeopardy. If addressing the scenario with standard CGE modeling, one might see a more formalized look at tariff equivalents or negative productivity shocks — but the real-world version would likely be so upending that even the effects of the most punishing tariffs or productivity strikes would be no match for those of invasion.
The further we wade into uncertain times, the more frequently economists will be called upon to provide information and analysis around rare events. Sometimes, the questions are less about how big the economic effects will be, and more about what the nature of the shock will be. This is where new methods like open-source intelligence and big data are most needed.
India and the United Kingdom (UK) have been going through tough negotiations to hammer out a trade deal but it might not make the Diwali deadline as was anticipated earlier.
According to reports, British Trade Secretary Kemi Badenoch said on Thursday, “We are close… We are still working on a deal,” Adding, “One of the things that has changed is that we are no longer working to the Diwali deadline.”
The remarks come just days after British Home Secretary Suella Braverman had linked the Free Trade Agreement (FTA) to concerns about increased migration of Indians to the UK who are the largest group of visa overstayers.
“Look at migration in this country – the largest group of people who overstay are Indian migrants… I have concerns about having an open borders migration policy with India because I don’t think that’s what people voted for with Brexit,” Braverman had said in The Spectator, a weekly news magazine.
“We even reached an agreement with the Indian government last year to encourage and facilitate better cooperation in this regard. It has not necessarily worked very well,” she added.
The comments did not go down well with New Delhi although there has been some sort of an attempt towards damage control.
When asked about the comments on migration, Ministry of External Affairs (MEA) Spokesperson Arindam Bagchi said, “Wouldn’t want to comment on the statement by UK Home Sec but as far as mobility and consular matters this is a separate issue and there is understanding between both the countries and going forward this will require mutual implementation of these understanding.”
Adding that the “negotiations” have not come to a halt, Bagchi confirmed that the two sides hoped to conclude the agreement by Diwali.
“There are ongoing negotiations on the Free trade agreement, there is interest in both sides to see if we can work towards a deal on FTA that’s beneficial for both the countries at the earliest date, this is a trade negotiation and these matters should be best left to the trade ministers of both the nation’s and they should be dealt by the trade ministers,” he said.
A trade deal between the UK and India is a huge opportunity to deepen our already strong trading relationship worth £24.3bn a year, which will benefit businesses and sectors right across both countries.
A British High Commission Spokesperson in New Delhi added, “We remain clear that we won’t sacrifice quality for speed and will only sign when we have a deal that meets the UK’s interests.”
Interestingly, as part of the round of trade talks, India and the UK signed agreements in the fields of education and nursing on July 21, 2022, to ease short-term mobility for professionals and create employment opportunities.
Amid the controversy over Suella Braverman’s immigration remarks, a British source explained that “business mobility” is not the same as “immigration”.
“Business mobility covers temporary entry for talent to work for a specific time period in a trade partner country. This is a separate issue to that discussed by the Home Secretary,” said the source.
Adding, “Any commitments we seek on temporary entry will aim to encourage the best and brightest talent in India to temporarily work in the UK. Any agreement would be consistent with the points-based immigration system, subject to collective Cabinet agreement.”
What is India-UK FTA?
A Free Trade Agreement between India and the UK is expected to enhance economic growth and prosperity by: increasing import and export flows; increasing investment flows (both outward and inward); enhancing productivity through a more efficient allocation of resources and greater openness to international competition.
On 29 July 2022, both countries concluded the fifth round of FTA talks. Spread over two weeks, both sides were confident in the status of their technical talks, but that seems to be faltering now with delays over the conclusion of the deal.
The UK is keen to gain access to Indian markets for transport equipment, electrical equipment, medical devices, chemicals, motor vehicles and parts, wines, Scotch, spirits and some fruits and vegetables – which could impact local industry players and/or boost the manufacturing ecosystem.
During a visit to a Scotch whisky distillery on Thursday, Kemi Badenoch, UK Trade Secretary and the Cabinet minister in charge of the FTA negotiations at the Department for International Trade (DIT) said the deal being lined up with India would bring great wins for the industry as the steep tariffs of up to 150 per cent are set to be slashed.
India, on its part, wants to increase exports of textiles, food and beverages, pharmaceuticals, tobacco, leather and footwear, and agricultural items like rice – to the UK.
Under the FTA, both sides are also aiming to expand digital cooperation and services.
Trade Irritants:
The two sides are yet to find common ground on many major economic issues. There has been a mini ‘tariff war’ underway between India and the UK even as the two sides have been trying to finalise a deal.
India, on September 28, 2022, proposed retaliatory additional duty of 15 per cent on 22 imported items from the UK, including blended whiskey, Scotch, cheese, etc. as a response to restrictions imposed by the UK on 15 Indian steel products, leading to a slump in Indian exports and loss of duty collection worth the US $247.70 million.
Russian President Vladimir Putin turned back to his bloody, destructive playbook from Syria with a barrage of rocket attacks against civilian targets across Ukraine on Monday, ramping up pressure on Western allies to supply Kyiv with the air defenses it has long sought.
Monday’s rush-hour bombardment on the streets of Kyiv, Lviv, Dnipro, Zaporizhzhia and other regions came as little surprise, given that Putin had already signaled his willingness to switch to ever more brutal tactics by appointing Sergey Surovikin, the general who oversaw Russian forces in Syria on-and-off from 2017 to 2020, as commander of his struggling war effort in Ukraine.
In a speech at an emergency meeting of his National Security Council on Monday, Putin claimed the strikes came in response to this weekend’s attack on the Kerch Bridge linking illegally occupied Crimea to Russia. Putin said Russia had deployed “high-precision, long-range weapons from the air, sea and land” to deliver “massive attacks on targets of Ukraine’s energy, military command and communications facilities.” He added that Russia would continue to dole out retribution if Ukraine continued to strike so-called “Russian” territory.
Ukraine’s defense ministry said 75 missiles were launched, 41 of which were shot down.
Moscow’s claims to precision attacks on strategic targets seemed to mask the fact that the aim was clearly to kill civilians, as the missiles struck the Shevchenkivskyi district in the heart of Kyiv during peak morning traffic. Pictures and footage taken by reporters and from security cameras show cars on fire; a crater beside a children’s playground in the Shevchenko Park and a pedestrian bridge destroyed.
Ukrainian President Volodymyr Zelenskyy said on Telegram that Russia appeared to have two targets in its assault: energy facilities throughout the country — and Ukrainians going about their daily lives.
“They want panic and chaos,” Zelenskyy said, in a video that appeared to have been shot on his cell phone on the streets of Kyiv. Monday’s attacks came at a time “especially chosen to cause as much damage as possible … Why such strikes exactly? The enemy wants us to be afraid, wants to make people run. But we can only run forward — and we demonstrate this on the battlefield. It will continue to be so.”
Zelenskyy also renewed his appeals to the West to provide Ukraine with additional air defenses. Kyiv has been seeking this additional firepower for weeks, arguing that Russia is likely to try to knock out Ukraine’s energy and industrial infrastructure over the winter, and it has been disappointed by the slow response.
In tweets, Zelenskyy said he had spoken with German Chancellor Olaf Scholz and his French counterpart Emmanuel Macron in the wake of the strikes on the capital and other cities. With Macron, Zelenskyy said: “We discussed the strengthening of our air defense, the need for a tough European and international reaction, as well as increased pressure on the Russian Federation.”
Those discussions on air defense batteries are now likely to loom large at the U.S.-led Ukraine Defense Contact Group — also known as the Ramstein format — where senior defense officials from across the globe will gather in Brussels later this week.
Ukraine’s Defense Minister Oleksii Reznikov said on Monday: “The best response to Russian missile terror is the supply of anti-aircraft and anti-missile systems to Ukraine — protect the sky over Ukraine! This will protect our cities and our people. This will protect the future of Europe. Evil must be punished.”
The butcher of Syria takes over
Surovikin was only announced as the new Russian commander for Ukraine on Saturday.
The 55-year-old general, who before his promotion had been charged with leading Russia’s Southern Military District and Russian troops in Syria, has long been an infamous figure with a reputation for being ruthless.
He was linked to the violent suppression of the anti-Soviet 1990 Dushanbe riots in Tajikistan, and was reportedly imprisoned (before being freed without charge) after soldiers under his command killed three protesters in Moscow during the failed coup against then Soviet President Mikhail Gorbachev in August 1991. In 1995, Surovikin received a suspended sentence (which was later overturned) for participating in the illegal arms trade. Surovikin also played a role in Russia’s second Chechen war, commanding the 42nd Guards Motorized Rifle Division.
But Surovikin is best known — and most feared — for his command of Russian forces in Syria, where Moscow intervened to prop up Bashar al-Assad’s regime. Human Rights Watch, a non-governmental organization, listed Surovikin as one of the commanders “who may bear command responsibility” for human rights violations during the 2019-2020 offensive in Syria’s Idlib province, when Syrian and Russian forces launched dozens of air and ground attacks on civilian targets and infrastructure, striking homes, schools, health care facilities and markets.
It was not the first time Russian forces were accused of war crimes in Syria. The Kremlin’s troops, working with Syrians, undertook a month-long bombing campaign of opposition-controlled territory in Aleppo in 2016, killing hundreds of civilians, including 90 children, with indiscriminate airstrikes, cluster munitions and incendiary weapons hitting civilian targets including medical facilities.
Now, with Russian forces on the back foot in Ukraine and Putin’s full-throated rhetoric out of step with the situation on the ground in his war, Surovikin appears to be turning to his old tactic of inflicting massive damage on civilians in an attempt to turn the tide of the war.
The numbers: The U.S. international trade deficit fell in August to a 15-month low of $67.4 billion, paving the way for a resumption of growth in gross domestic product in the third quarter.
The deficit narrowed 4.3% from $70.5 billion in July, the government said Wednesday. It was the fifth decline in a row.
Economists polled by The Wall Street Journal had forecast a deficit of $67.7 billion.
GDP contracted in the first two quarters, meeting an old rule-of-thumb for when an economy is in recession.
Big picture: The U.S. trade deficit has tumbled since peaking at a record $106.9 billion in March. Exports have risen and imports have declined, particularly because of falling oil prices.
Lower trade deficits add to GDP, the official scorecard of the economy. The shrinking trade gap is set to add a whopping 3 points to third-quarter GDP, according to estimates from S&P Global Market Intelligence.
That’s the mirror opposite of what happened in the first quarter, when the record trade gap caused GDP to turn negative for the first time since early in the pandemic.
The result: GDP is set to rise for the first time in three quarters, ending at least for now any talk that the U.S. is already in recession.
Which way the trade deficit trends in the months ahead is less clear. A strong dollar is hurting U.S. exporters while a slowing economy could force Americans to reduce spending on imports even though they are cheaper to buy.
Ditto for the economy. While it’s still growing, the pace of expansion is expected to slow as the Federal Reserve jacks up interest rates to try to tame high inflation.
Key details: Exports slipped 0.3% in August to a $258.9 billion, but it’s still the second highest level on record.
Imports dropped 1.1% to $326.3 billion, marking the lowest level since early 2021.
Looking ahead: “The further sharp decline in the trade deficit… means that net exports provided a big boost to third-quarter GDP growth,” said senior U.S. economist Andrew Hunter at Capital Economics. “But the twin drags from the surging dollar and the deteriorating global economy suggest that strength will fade soon.”
Market reaction: The Dow Jones Industrial Average DJIA, +0.27%
and S&P 500 SPX, +0.20%
sank in Wednesday trades following a two-day rally.
The EU is seeking to reset its often testy relationship with Israel next week, convening a summit on Monday of senior political figures for the first time in a decade.
The meeting format, known as the EU-Israel Association Council, has essentially been dormant since 2013, when Israel canceled a gathering in protest over the EU’s stance on Israeli settlements in the West Bank. Since then, the two sides have continued to clash over similar issues.
But the 2021 exit of hardline Israeli Prime Minister Benjamin Netanyahu opened the door for current rapprochement. His replacement, Yair Lapid, who also holds the foreign minister role, has embraced a two-state solution with Palestine — a position more in line with many EU countries’ approach, even if several countries are still expected to express disapproval of Israel’s Palestinian policies on Monday. Brussels is also eager to shore up energy supplies from Israel amid Russia’s war in Ukraine.
Lapid is expected to attend Monday’s council meeting.
“There’s a big hope that the upcoming association council between the EU and Israel will bring … a new wind into our relationship,” Czech Foreign Minister Jan Lipavský told POLITICO last week at the United Nations General Assembly, expressing optimism that the development will be one of the key achievements of the Czechs’ six-month rotating EU presidency.
Still, getting EU consensus on one of the world’s most notoriously contentious conflicts is not going to be easy.
Countries like Ireland and Sweden have traditionally taken a more pro-Palestinian stance — Palestinian President Mahmoud Abbas stopped off in Dublin for a meeting with the Irish prime minister earlier this month en route to the U.N. annual gathering. On the other end of the spectrum, Israel has strong supporters within the EU. Hungary, for example, is a staunch ally with economic and ideological bonds forged over the years between Prime Minister Viktor Orbán and Netanyahu.
Before the EU-Israel council went dark, it had served for more than a decade as a forum for officials to regularly meet and discuss these issues. Now, with the council set to be revived, member states are tinkering with an official communique that needs to satisfy the spectrum of views regarding EU-Israeli relations.
Finding common language can mean weeks of fighting over a single word while backroom deals are cut to appease the myriad interests at play. Palestinian officials are also watching closely, demanding not to be left out of a similar diplomatic engagement with Brussels.
The EU’s complicated role in the Israel-Palestine conflict has played out in numerous controversies this year alone.
This spring, the European Commission was forced to delay funding for the Palestinian Authority over the content of textbooks, which critics say included anti-Israeli incitements to violence.
The decision to block the funds was led by Hungarian EU Enlargement Commissioner Olivér Várhelyi. As POLITICO first reported, 15 countries sent a letter to the Commission in April blasting the move. Commission President Ursula von der Leyen finally announced the money would be disbursed during a visit to the Palestinian city Ramallah in July.
EU commissioner for neighbourhood and enlargement Olivér Várhelyi | Kenzo Tribouillard/AFP via Getty Images
Further tensions with Tel Aviv emerged following an Israeli raid in July on the offices of Palestinian NGOs.
Israel had accused the groups — some of which received funds from EU countries — of being terrorist organizations. But numerous EU countries weren’t convinced.
In a joint statement at the time, Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Spain and Sweden all blasted Israel, saying it had not supplied “substantial information” to justify the raids. The bloc reiterated those “deep concerns” in August after further Israeli raids on civil society groups.
Another dynamic affecting the EU’s relationship with Israel is the Continent’s energy woes. As Europe scrambles to find alternative sources of Russian gas, furthering energy ties with Israel is one possible answer.
In a June visit to Israel, von der Leyen signed a memorandum of understanding with Israel and Egypt to boost gas exports. The EU is also Israel’s largest trade market and accounts for about a third of Israel’s total trade.
But while economic imperatives explain part of the new push for engagement with Israel, long-term observers say the outreach also reflects a new willingness to engage with Tel Aviv after Lapid came to power this summer. Lapid entered office as part of a power-sharing arrangement with Naftali Bennett, who held the job for a year prior to him.
“I think it is a genuine shift,” said Maya Sion-Tzidkiyahu, who helms the Israel-Europe Program at Mitvim Institute, an Israeli think tank. “The change of tone was made by Lapid, who shares much of the EU’s normative stance on the liberal democratic world order. It’s now much more positive than during Netanyahu’s government, even if Bennett and now Lapid government is not advancing the peace process.”
Sion-Tzidkiyahu said mutually beneficial scenarios are helping to replace “megaphone diplomacy” with closer dialogue.
“Disagreements on contentious issues such as the Palestinian or Iranian one will not disappear, but perhaps there are now better understanding for the concerns of each side,” she said.
Lipavský, the Czech foreign minister, is aware of the concerns some EU countries have about the Israeli’s government actions in the West Bank and towards Palestinians.
“We need to discuss [these concerns] openly, but I don’t think that one issue should block the debate about the others,” he said.
European Commission President Ursula von der Leyen poses for pictures with Israel’s Yair Lapid | Pool photo by Maya Alleruzzo/AFP via Getty Images
Officially, the EU supports the two-state solution that sees a Palestinian state living side-by-side in peace and security with Israel — a vision also shared by the United States. But making that prospect a reality seems as far away as ever.
Sven Koopmans, the EU special representative for the Middle East peace process, wrote earlier this month that all parties needed to help identify ways to solve the man-made conflict.
“The current situation is increasingly seen as a structural human rights problem, in which Israel has the upper hand,” he wrote in the Israeli outlet Haaretz. “That negatively affects how the world perceives Israel, and holds risks for the long-term. It should not be that way.”
When it comes to resuming the peace process, Sion-Tzidkiyahu is not confident.
“Under the current political circumstances in the Palestinian Authority and Israel, such development is not foreseen,” she said. “At most, the EU can push for more practical steps by Israel to improve Palestinian’s condition.”
The staggering multi-trillion dollar global illicit economy is thriving from dirty money derived from an array of cross-border smuggling and trafficking crimes. Free trade zones, poorly regulated ports, ineffective enforcement of beneficial ownership laws and secretive financial hubs are threat multipliers that expand dark commerce, as criminals exploit cracks and seams in the global financial and trading systems to advance illicit trade and hide their profits. No one alone can fight illicit economies; public-private partnerships are critical.
Press Release –
Jun 13, 2022
WASHINGTON, June 13, 2022 (Newswire.com)
– Today, the International Coalition Against Illicit Economies (ICAIE), a national security non-governmental organization based in Washington, DC, released a new 2022 report entitled, “The Dark Side of Illicit Economies and TBML: Free Trade Zones, Ports, and Financial Safe Havens”. The ICAIE report and recommendations outline the importance of public-private partnerships to counter illicit trade and TBML. ICAIE highlights the importance of leveraging strategic intelligence, network analytics, and pattern-of-life forensics to disrupt the logistics, financial wherewithal, and corruptive influence of criminals and their complicit enablers across borders, trade hubs, illicit economies, free trade zones (FTZs), and vulnerable ports. While the report has a focus on the Americas, it also illuminates the convergence of transnational criminal activities and illicit financial threats across other regions and global supply chains.
In recent decades the confluence of transnational criminal structures and illicit economies has grown to create a clear and present danger to global security by siphoning trillions of dollars from legal economies. These funds fuel growing corruption, instability and violence while destabilizing markets in the Americas and around the world. Criminal actors and threat networks connected through global super fixers exploit advances in technology, transportation and other critical infrastructure for illicit enrichment. In these dangerous times, converging illicit vectors erode our collective governance, prosperity, and security.
“Illicit trade, the trafficking and smuggling of counterfeit goods, narcotics, humans, natural resources, WMD, illicit cigarettes, and other contraband impact the security of all societies. Kleptocrats, criminal organizations, terrorist groups, and their enablers exploit networked hubs of illicit trade centered on free trade zones, ports, and other logistical channels of transportation, communications, and trade,” said David M. Luna, ICAIE Executive Director. “This allows illicit networks – such as the Chinese triads, Mexican cartels, Primeiro Comando da Capital (PCC), and Hezbollah – to profit from an array of criminal activities and corrupt institutions, drain resources for economic development, and compromise the integrity of supply chains. No country is immune from these pernicious security threats in the globalized world.”
ICAIE brings together diverse champions across sectors and communities, including former members of the public sector, companies and prominent organizations from the private sector and civil society to mobilize energies to combat cross-border illicit threats that endanger U.S. national security. In the coming months, ICAIE is committed to raising awareness of the harms and impacts of illicit economies, TBML, and crime convergence in risky FTZs and criminalized ports. ICAIE’s engagement will include briefings in the U.S. Congress, the White House and federal government, and across the international community including at the 2022 Concordia Americas Summit in Miami in July. ICAIE will also continue to support the United to Safeguard America from Illegal Trade (USA-IT) alliance to fight illegal trade across the country.
With a specialized Innovation Department and a yearly agenda of activities and events among a wide range of sector trade sectors, Chile has positioned itself as the world’s largest supplier of 28 products such as copper, cherries, and salmon, which highlight an export portfolio of over 970 products worldwide. The leadership of ProChile, Chile’s export promotion agency, has placed importance on innovation prior to Covid-19, which helped ease the transition into a virtual business environment that was caused by the pandemic.
Press Release –
updated: Aug 20, 2021
MIAMI, August 20, 2021 (Newswire.com)
– ProChile’s innovative vision focuses on principles that include: business digitization, e-commerce B2B and B2C, food innovation, health technology, smart factories, and green hydrogen, with the United States being one of the most important trade destinations for Chilean companies in this sector.
The United States is the largest stakeholder in Chilean business developments, registering US$22 billion in investments in Chile over the last seven years. The U.S. is also the top destination for Chilean exports of medical devices. In light of such a mutually beneficial relationship, ProChile created Healthtech Beyond Borders, an event that explores the future and impact of new technologies in the healthcare sector, with a special focus on opportunities in Chicago, Houston and Philadelphia.
“Innovation is creating environments where ideas can connect.” – Steven Johnson
One of the most impactful activities in ProChile’s agenda for the United States is Go Global, a soft-landing program designed to support the globalization of innovative, scalable and high-impact Chilean ventures, by preparing and connecting them with key resources in order to approach and ease their transition to the U.S. business community. A notable Go Global success case is the Chilean brand Genosur, who opened a manufacturing facility in Miami-Dade County, after participating in the 2019 program, and they are now producing the first Covid-19 portable sampling collection kits in the world.
The acceleration of e-commerce worldwide was a key trend throughout 2020, as consumers shopped online often out of necessity, and brands were forced to rapidly change their strategies as a result. The E-commerce Acceleration Program was designed to help accelerate the online sales of Chilean brands already operating in the United States.
During this program, ProChile will support selected brands to create a marketplace strategy, penetrate new e-commerce channels and define a digital marketing focused budget. The program will also provide support on B2B e-commerce strategies.
Jewelry from Rapa Nui, mystic vineyards cultivated by members of the Lickanantay indigenous community, honey produced in the driest desert in the world, native Chilean gin, and water purification bacteria are just a few examples of Chilean products from women-owned companies that can currently be found in the U.S. market. Women´s Economic Empowerment is included in more than 25 trade agreements, and ProChile is an active host and participant in events and trainings focused on the commercial expansion of companies led by women in the United States.
If you would like to learn more about what Chile has to offer, we invite you to follow Chile Connected, the largest virtual trade event ever organized by ProChile.Chile Connectedis a virtual business meeting roundtable that seeks to consolidate the U.S. as a key destination for innovative and high value-added Chilean goods and services, such as creative industries, technology, healthy food, women-led businesses, and services.
If you are interested in a product or service from Chile, contact any of our seven offices in the U.S. or just use our One Click Import requests.
Media Trends Group PR Team usa@mediatrendsgroup.com
