News Archive

Mexico opens way for NAFTA talks to run into 2018

OTTAWA (Reuters) – Mexico on Wednesday opened the possibility that talks to revamp the NAFTA trade agreement were so complex that they could run into 2018, beyond an end-December deadline designed to avoid Mexico’s presidential election campaign which kicks off in March.

The United States, Canada and Mexico said at the end of a five-day session in Ottawa there had been progress made in the talks but acknowledged that much work remained to conclude the negotiations by the end of the year.

Mexico’s Economy Minister Ildefonso Guajardo said there would be “substantial challenges” in the next round in Washington on Oct. 11-15.

“We have the ambition, we have the strength to try to move forward with a view to closing a negotiation but no one can assure with total certainty that we will be able to do it,” Guajardo told reporters.

“That is our expectation and, therefore, it must also be considered that in this process dates will have to be considered, if necessary, for the start of the next year,” he added.

The three countries have rushed to finish talks to modernize the 23-year-old North American Free Trade Agreement even though trade experts dismissed the deadline as impossible.

The Trump administration has been criticized by Canadian and Mexican officials for not yet presenting some of the most contentious issues in NAFTA, including content rules of origin.

“Staff are working at a pace that is unheard of (in trade negotiations) … and any suggestion that we’re not operating beyond a normal pace is just flat wrong,” U.S. trade envoy Robert Lighthizer told reporters.

Strains between Ottawa and Washington also emerged on Wednesday, a day after a U.S. trade panel said it would impose preliminary subsides on Canadian jet manufacturer Bombardier Inc after rival Boeing Co accused Canada of unfairly subsidizing its CSeries jets.

Lighthizer said Canada had “mentioned” the U.S. ruling during talks on Wednesday.

Asked whether the dispute could affect NAFTA talks, Lighthizer told reporters: “I‘m not saying it doesn’t have an effect on relationships, it does, but not on this negotiation.”

Negotiators said they had wrapped up one chapter on small and medium-sized enterprises in Ottawa and expected to finish another on competition before the next round.

Lighthizer said the United States would “hopefully” present draft text by the next round on the thorny issue of rules of origin, which outlines how much of a product needs to originate in a NAFTA country, and on a dispute settlement mechanism.

Canada’s Foreign Minister, Chrystia Freeland, has said it was typical of trade talks to wrap up the “bread and butter” issues first before getting into more challenging topics.

“We never said this was going to be easy,” Freeland told reporters.

Trade among the three nations has quadrupled since NAFTA came into effect in 1994, surpassing $1 trillion in 2015.

But U.S. President Donald Trump regularly calls the treaty a disaster and has threatened to walk away from it unless major changes are made, claiming NAFTA has resulted in U.S. job losses and a trade deficit with Mexico.

The Bombardier decision is likely to further harden Canada’s stance on keeping a key dispute-settlement mechanism in NAFTA, which the Trump administration wants to eliminate.

Lighthizer said the U.S. decision on Bombardier still had several stages to go through before it was finalized.

“There are several more stages, we don’t even know whether it is going to be successful, and in addition there are off-ramps in the litigation,” he said. “It’s too early to tell.”

Freeland has suggested that Canada could walk away from the NAFTA talks over the so-called Chapter 19 dispute mechanism, under which binational panels make binding decisions on complaints about illegal subsidies and dumping. The United States has frequently lost such cases.

A lengthy fight over Chapter 19 could also drag out the negotiations.

The U.S. delegation presented draft text on NAFTA labor standards on Tuesday and put forward proposals on investment and intellectual property at the weekend.

Laxer labor standards and lower pay in Mexico have swelled corporate profits at the expense of Canadian and U.S. workers, the U.S. administration claims, making the issue one of the major battlegrounds of the NAFTA talks.

While the U.S. draft text on labor standards did not detail wage levels, Lighthizer said all sides were interested in getting into wage specifics to help Mexican workers

Article source:

NAFTA negotiators make some progress, say lots of work remains

OTTAWA (Reuters) – The United States, Canada, and Mexico said on Tuesday they had made some progress in talks to modernize the NAFTA trade pact while acknowledging much work remained if they are to wrap the process up by the end of the year, as planned.

Negotiators ended the third of seven rounds in Ottawa by saying they had substantially concluded one chapter, on small and medium-sized enterprises. They also said they expected to wrap up work on competition issues before the next round in Washington from Oct 11-15.

But the three teams did not dive into the details of the most sensitive matters and Mexican Economy Minister Ildefonso Guajardo told a news conference that there would be “substantial challenges” in the next round.

Mexican and Canadian officials have already expressed concern that the United States has not yet presented details on some of the toughest issues, such as rules of origin which outlines how much of a product needs to originate in a NAFTA country.

  • NAFTA labor talks focused on rights, not salaries: Mexico

The talks are supposed to finish in December but trade experts say this is unlikely, given the complexity of some of the most contentious topics.

“We never said this was going to be easy,” Canadian Foreign Minister Chrystia Freeland told reporters at the end of the five-day session.

Trade among the three nations has quadrupled since NAFTA came into effect in 1994, surpassing $1 trillion in 2015. But U.S. President Donald Trump regularly calls the treaty a disaster and has threatened to walk away from it unless major changes are made, citing U.S. job losses and a trade deficit with Mexico.

The talks took place as Canada fumed over a U.S. decision to impose preliminary duties on Bombardier’s CSeries jets, which is likely to add to trade tensions.

The decision by the U.S. Commerce Department is likely to further harden Canada’s stance on keeping a key dispute-settlement mechanism in the North American Free Trade Agreement, which the Trump administration wants to eliminate.

Freeland raised the issue with U.S. Trade Representative Robert Lighthizer on Wednesday during NAFTA negotiations, Prime Minister Justin Trudeau told legislators.

Freeland has suggested that Canada could walk away from the NAFTA talks over the so-called Chapter 19 dispute mechanism, under which binational panels make binding decisions on complaints about illegal subsidies and dumping. The United States has frequently lost such cases.

A lengthy fight over Chapter 19 could drag out NAFTA negotiations beyond a planned end-December deadline to reach a deal ahead of Mexico’s presidential election campaign.

The U.S. delegation presented draft text on NAFTA labor standards on Tuesday and put forward proposals on investment and intellectual property at the weekend.

Laxer labor standards and lower pay in Mexico have swelled corporate profits at the expense of Canadian and U.S. workers, making the issue one of the major battlegrounds of the NAFTA talks.

Reporting by Lesley Wroughton, additional reporting by Adriana Barrera; Editing by Nick Zieminski

Article source:

Trump proposal slashes taxes on businesses, the rich amid deficit worries

WASHINGTON (Reuters) – President Donald Trump on Wednesday proposed the biggest U.S. tax overhaul in three decades, offering to cut taxes for most Americans but prompting criticism that the plan favors the rich and companies and could add trillions of dollars to the deficit.

The proposal, which the Republican president said was aimed at helping working people and creating jobs, faces an uphill battle in Congress with Trump’s own party divided and Democrats hostile.

Republicans plan to lower corporate income tax rates, cut taxes for small businesses, reduce the top income tax rate for individuals and scrap some widely used tax breaks including one that benefits people in high-tax states dominated by Democrats.

“It’s going to be something special,” Trump told reporters at the White House, touting it as “the largest tax cut essentially in the history of our country.”

The plan, forged during months of talks among Trump’s aides and top Republicans in Congress and embraced by big business, contained scant details about how to pay for the cuts without fueling deficits.

Trump, a real estate mogul-turned-politician, said when asked by reporters that he personally would not stand to gain financially from the proposal.

“I think there’s very little benefit for people of wealth,” said Trump, who has refused to make public his own tax returns unlike many of his White House predecessors.

Republicans have produced no major legislative successes since Trump took office in January even though they control the White House and both chambers of Congress.

The tax plan was outlined the day after the Republicans’ top legislative priority, an overhaul of the U.S. healthcare system, collapsed in the Senate, while another key item on Trump’s wish list, infrastructure spending, has yet to materialize.

A comprehensive rewrite of the U.S. tax code has eluded lawmakers for decades. The last one was passed in 1986.

  • Trump says he will not negotiate on 20 percent corporate tax rate

The White House said that under the proposal typical middle-class families would have less of their income subject to federal income tax.

The plan would lower the top individual rate from to 35 percent from 39.6 percent, but also roughly double the standard deduction, a set amount of income exempt from taxation, for all taxpayers.

The plan foresees a 20 percent corporate income tax rate, down from the current 35 percent but not as low as Trump’s initial demand for 15 percent.

Trump on Wednesday said that his 15 percent proposal was a bargaining position so he could get a 20 percent rate. “I‘m not negotiating that number,” Trump said. “Twenty (percent) is a perfect number.”

Companies in the United States pay high taxes by global standards but many of them pay much less than the headline rate due to loopholes and tax breaks.

The proposal now faces a long legislative process that could take months. Trump has appealed to Democrats to support the plan, although they were not consulted in drafting it.

“Under this plan, the wealthiest Americans and wealthiest corporations make out like bandits while middle-class Americans are left holding the bag,” said Chuck Schumer, the top Senate Democrat.

Republicans hold a thin 52-48 majority in the Senate and may need some Democrats on board to win passage. But Democrats said the plan would expand the federal deficit in order to deliver tax cuts to wealthy Americans rather than the middle-class families that Trump and Republicans say they are trying to help.

“If this framework is all about the middle class, then Trump Tower is middle-class housing,” said Senator Ron Wyden, the top Democrat on the tax-writing Senate Finance Committee.

The proposal was a broad outline that will need to be turned into detailed legislation. Orrin Hatch, the Republican Senate Finance Committee chairman, said it will be nearly impossible to pass without some Democratic votes.

Kevin Brady, chairman of the tax-writing House of Representatives Ways and Means Committee, said his plan was to turn the framework into legislation to be passed by the end of this year.


House Speaker Paul Ryan, a Republican, said there is an urgent need for Congress to approve the plan, adding, “This is a now-or-never moment.”

Analysts have warned that huge tax cuts would balloon the federal deficit and debt if the economic growth projected by Republicans fails to materialize amid rising interest rates.

The White House and congressional Republicans did not give an estimate on the plan’s cost. The nonprofit Tax Foundation policy group previously estimated it would reduce federal revenue by up to $5.9 trillion in the next decade.

Republicans argue that the tax cuts would be offset by new revenues raised from eliminating tax loopholes and would drive more robust U.S. economic growth, predictions that critics question.

The proposal was embraced by the U.S. Chamber of Commerce business lobbying group and an organization called the RATE Coalition representing large American companies including ATT Inc (T.N), FedEx Corp (FDX.N), Home Depot Inc (HD.N), General Dynamics Corp (GD.N) and Walmart Stores Inc (WMT.N).

The coalition, which said it represents firms employing over 30 million workers in all 50 states, said America’s corporate tax rate is the highest in the industrialized world and “out of step with global reality.”

The tax framework would establish a 25-percent rate for business income from businesses called “pass-throughs.” These usually small, private enterprises represent an estimated that 95 percent of all U.S. businesses.

Under current tax law, business profits are “passed through” to owners as personal income, which is often taxed at the top 39.6 percent individual income tax rate.

Republicans proposed eliminating some existing tax deductions, though they retain deductions for mortgage interest payments and charitable deductions. They proposed scrapping the deduction for the amount a taxpayer pays in state and local taxes, which could hurt people in high-tax states including California and New York that tend to vote Democratic.

The proposal aims to consolidate the current seven tax brackets into three brackets of 12 percent, 25 percent and 35 percent.

Reporting by David Morgan and Richard Cowan; Additional reporting by Susan Heavey, Doinca Chiacu and Amanda Becker; Writing by Will Dunham; Editing by Alistair Bell

Article source:

Wall St. climbs on financials boost, tax plan hopes

NEW YORK (Reuters) – U.S. stocks rose on Wednesday, powered by gains in financial shares as expectations for a December rate hike grew and hopes President Donald Trump’s administration may be making progress on a new tax plan.

New orders for U.S.-made capital goods increased more than expected in August and shipments maintained their upward trend, pointing to underlying strength in the economy.

The data, coupled with comments from Fed Chair Janet Yellen on Tuesday boosted anticipation the Federal Reserve would raise U.S. interest rates in December, lifting yields on U.S. Treasuries, which in turn pushed financials .SPSY up 1.57 percent.

“The takeaway is they are going to continue raising rates gradually,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“That means December is still on the table and that is trying to be priced in, that means you have a yield on the 10-year (benchmark U.S. Treasury note) that is probably going to be closer to 2.5 percent than it is to 2.25 percent and that is good for financials.”

Trump proposed the biggest tax overhaul in three decades, but offered scant details about how to pay for the cuts without dramatically driving up federal deficits.

If passed, the plan would be Trump’s first significant legislative win since taking office in January.

“It is better than the one-page document we got but it is clearly not an omnibus tax plan,” said Hogan.

The Russell 2000 index of smallcap stocks rose 1.96 percent and was on track for its best day since early March. Smallcap names are likely to be the biggest beneficiaries of a tax cut.

Traders now see about a 78 percent chance of a December rate hike, compared with roughly 73 percent a week ago, according to CME Group’s FedWatch tool.

Bank of America (BAC.N) rose 3.02 percent and Goldman Sachs (GS.N) gained 2.18 percent as the biggest boost to the Dow.

The Dow Jones Industrial Average .DJI rose 64.12 points, or 0.29 percent, to 22,348.44, the SP 500 .SPX gained 11.18 points, or 0.45 percent, to 2,508.02 and the Nasdaq Composite .IXIC added 79.06 points, or 1.24 percent, to 6,459.23.

Interest-rate-sensitive and dividend-paying sectors declined. The consumer staples index .SPLRCS fell 0.9 percent while utilities .SPLRCU dropped 1.2 percent and real estate .SPLRCR lost 0.9 percent.

Also serving to cap gains on the Dow and SP were Nike (NKE.N) shares, which declined 3.4 percent after the company posted its slowest quarterly sales growth in nearly seven years and said it expected a further drop in revenue from North America.

Advancing issues outnumbered declining ones on the NYSE by a 1.28-to-1 ratio; on Nasdaq, a 2.93-to-1 ratio favored advancers.

Reporting by Chuck Mikolajczak; Editing by James Dalgleish

Article source:

Quebec, Britain threaten retaliation after Bombardier tariffs

MONTREAL (Reuters) – The Canadian province of Quebec and Britain threatened retaliation on Wednesday over stiff U.S. tariffs imposed on Bombardier Inc’s (BBDb.TO) CSeries jet that could affect thousands of jobs in the two countries.

The U.S. Commerce Department on Tuesday slapped preliminary anti-subsidy duties of 220 percent on the jets, which could effectively shut Bombardier out of the U.S. market if upheld, after rival Boeing Co (BA.N) launched a trade challenge accusing Canada of unfairly subsidizing the aircraft.

The tariffs create “a level playing field in the aerospace market,” said another rival, Brazil’s Embraer (EMBR3.SA), which welcomed the move.

The duties, which came on the same day Bombardier was left out of a rail tie-up, sent its shares and bond prices lower. The shares initially fell 14 percent before regaining ground to trade down 8.4 percent in mid-afternoon. Many of its junk-rated bonds were lower, according to MarketAxess data.

“This puts a cloud over the company with regard to the CSeries,” said Bryden Teich, portfolio manager at Avenue Investment Management. “As long as there’s this uncertainty, it will affect the share price.”

Bombardier is a major employer in Quebec, where Prime Minister Justin Trudeau’s Liberals say they need to win extra seats in an election set for October 2019.

Quebec Premier Philippe Couillard called on Ottawa to ensure that “not a bolt, not a part, not a plane from Boeing” be allowed into Canada until the dispute had been resolved.

“Boeing may have won a battle but, let me tell you, the war is far from over. And we will win,” Couillard told reporters, describing the duties as an attack.

In Ottawa, Trudeau said the government was “disappointed and I will continue to fight for good Canadian jobs.”

He has previously said Canada will not go ahead with plans to buy 18 Boeing F-18 Super Hornet fighter jets unless the challenge is dropped.

Canadian Trade Minister Francois-Philippe Champagne described it as a deplorable decision and one which shows that Boeing is not a “trustworthy partner.”

“Our message to the Americans is to tell them that this decision will also have an impact on American suppliers and jobs in the United States,” he added.


The Boeing-Bombardier spat has snowballed into a bigger trade battle. Bombardier is a major employer in Northern Ireland, where a handful of legislators is keeping British Prime Minister Theresa May’s minority Conservative government in power.

Britain told Boeing on Wednesday that it could lose out on British defense contracts because of the dispute. May said in a tweet that she was “bitterly disappointed” by the ruling.

Boeing said it was committed to Britain.

The dispute could spill into talks between Canada, the United States and Mexico to update the North American Free Trade Agreement. Negotiators are meeting in Ottawa.

The duties on Bombardier mark the second U.S. trade action against Canadian companies since President Donald Trump took office. Earlier this year, the United States imposed preliminary anti-subsidy duties on Canadian softwood lumber.

Canadian Foreign Minister Chrystia Freeland, who denounced the duties on Tuesday, met with U.S. Trade Representative Robert Lighthizer on Wednesday.

Boeing launched its challenge in April, alleging Bombardier had dumped airliners on the U.S. market when it struck a deal for 75 CSeries planes with Delta Air Lines Inc (DAL.N).

Delta’s CEO on Wednesday said Boeing’s challenge was “absurd” and predicted the duties would not be made permanent when Commerce reaches a final decision next year.

Trudeau is also under pressure from Canada’s powerful labor movement. Jerry Dias, head of the Unifor private-sector union, told the Canadian Broadcasting Corp that Ottawa had to tell the United States “enough is enough”.

“Ultimately, we have to retaliate and retaliate in a meaningful way,” he said.

Bombardier, which considered bankruptcy in 2015 and is undertaking a five-year plan to improve performance and margins, is still grappling with nearly $9 billion in debt.

The company also got snubbed by Siemens AG (SIEGn.DE) on Tuesday, which opted to merge with France’s Alstom instead.

Bombardier may need to raise more equity to support a capital-intensive business, according to Lorne Steinberg, president of Lorne Steinberg Wealth Management Inc in Montreal.

Writing by David Ljunggren; Additional reporting by Anna Mehler Paperny and Nichola Saminather in Toronto; Editing by Meredith Mazzilli and Matthew Lewis

Article source:

Detroit Three’s to lose dominance of North American auto output in 2017: IHS

DETROIT (Reuters) – North American vehicle production by the unionized Detroit Three automakers will fall behind the combined North American output of Tesla Inc and automakers from Europe and Asia for the first time this year, IHS Markit forecast on Wednesday.

In 2017, the Detroit Three could build 8.6 million vehicles in North America, while Tesla and foreign automakers build 8.7 million, IHS Markit analyst Joe Langley said on Wednesday.

By 2024, the gap will widen, with Asian and European automakers and Tesla combining to build about 9.8 million vehicles in North America. General Motors Co, Ford Motor Co and the North American operations of Fiat Chrysler Automobiles NV will combine to build 8.1 million vehicles, down 6 percent from this year.

Mexico is on track to increase its share of North American vehicle production, Langley said, moving to 4.5 million vehicles a year by 2024 from about 4 million vehicles currently.

The milestone for the growth of Tesla and foreign automakers in North America comes as the Trump administration is pushing to limit imports of vehicles from Mexico in negotiations to overhaul the North American Free Trade Agreement.

The declining share of North American vehicle production for the Detroit automakers also challenges U.S. and Canadian unions that represent their workers.

Canadian workers are on strike at a GM factory in Ontario to protest the automaker’s decision to cut jobs and move to Mexico some production of sport utility models built there.

Foreign automakers over the past year have announced plans for a wave of new or expanded plants in North America, while Tesla is ramping up to build as many as 500,000 cars a year at its plant in Fremont, Calif. Often referred to as “transplants,” the foreign-owned factories are poised to become the mainstream of the North American auto industry.

Automakers are increasingly using factories in China or Mexico to build vehicles that used to be assembled solely in the United States, Langley said. He cited as an example Ford’s decision to shift production of the Focus small car for North America to a Chinese assembly plant.

Reporting By Joseph White; Editing by Cynthia Osterman

Article source:

Uber to shutter its U.S. auto-leasing business

(Reuters) – Ride-hailing firm Uber Technologies Inc [UBER.UL] on Wednesday said it is shutting down its U.S. auto-leasing business.

“We have decided to stop operating Xchange Leasing and move toward a less capital-intensive approach,” an Uber spokesperson told Reuters.

The Xchange Leasing business, which has about 40,000 vehicles and 14 showrooms in the United States, had attracted interest from buyers who were considering buying it outright, according to a Reuters report in August.

Reporting by Gayathree Ganesan in Bengaluru; Editing by Martina D’Couto

Article source:

Exclusive: N.Y. regulator subpoenas Equifax over massive breach

NEW YORK (Reuters) – New York state’s financial services regulator has issued a subpoena to Equifax Inc (EFX.N) demanding it provide more information about the massive data breach the credit-reporting firm disclosed this month, a person familiar with the matter said on Wednesday.

New York’s Department of Financial Services (DFS) sent the subpoena to Equifax on Sept. 14, said the person, who declined to be named because the matter has not been made public.

The subpoena seeks documents related to the hack that compromised the personal data of up to 143 million Americans, details on when Equifax learned of the breach and what actions it took after it was discovered, as well as other information, the person said.

The DFS put out guidance to financial institutions on Sept. 18 about steps they should take to protect consumer information following the breach, but the issuing of the subpoena has not been previously reported.

A spokesman for DFS declined to comment. An Equifax spokesman was not immediately available.

The state also proposed on Sept. 18 credit reporting agencies be subject to its cybersecurity rule that went into effect on March 1 and requires banks and other financial institutions regulated by DFS to establish a program to protect consumer data and alert the regulator to material breaches.

Had Equifax already been subject to the regulation, it would have had to report the breach within 72 hours of its discovery, rather than the 41 days the company took after finding out that consumers’ social security numbers, birth dates, addresses and other sensitive information were compromised.

Equifax has lost around $4.5 billion in market value since it disclosed the hack on Sept. 7, which the Atlanta-based company said it detected on July 29 and occurred between mid-May and July.

Multiple federal and state agencies are investigating the issue, including the U.S. Department of Justice, which has launched a criminal probe.

The fallout continued on Tuesday, with Equifax announcing its Chief Executive Richard Smith, would leave the company and forgo his 2017 bonus.

Smith, whose departure followed the exit of Equifax’s chief information officer and chief security officer earlier this month, is still expected to testify at congressional hearings over the hack next week.

Three Equifax executives, including the chief financial officer, are also under fire for selling $1.8 million in stock three days after the company said it detected the breach. Equifax said the executives were unaware of the breach at the time.

Reporting by John McCrank and Karen Freifeld; Editing by Nick Zieminski

Article source:

Exclusive: Republican U.S. tax framework sets 20 percent corporate rate

WASHINGTON (Reuters) – Republicans in the U.S. Congress and the White House called for slashing tax rates on businesses and the wealthy on Wednesday, as part of a new tax plan that offers few details about how to pay for tax cuts without expanding the federal deficit.

Hammered out over months of high-level talks among Trump aides and top Republicans in Congress, the plan proposes: a 20 percent corporate income tax rate; a new 25 percent tax rate for pass-through businesses including partnerships; and a reduced 35 percent top income tax rate for individual Americans, according to a framework seen by Reuters.

Reporting by Richard Cowan; Editing by Chizu Nomiyama

Article source: