News Archive


Russian tycoon Magomedov arrested on embezzlement charges

MOSCOW (Reuters) – Russian authorities on Saturday arrested billionaire Ziyavudin Magomedov on charges of embezzling more than $35 million, in one of the highest-profile prosecutions of a Russian tycoon in years.

Magomed Magomedov, a business partner and brother of co-owner of Russia’s Summa group Ziyavudin Magomedov, attends a hearing on his detention at the Tverskoy District Court in Moscow, Russia March 31, 2018. REUTERS/Tatyana Makeyeva

Magomedov denied the charges at a pre-trial hearing, where a judge ordered that he be held in custody until May 30.

One of Russia’s richest men, the 49-year-old Magomedov holds assets in construction and logistics through his sprawling Summa Group. He also has investments in U.S. tech ventures, including the Virgin One Hyperloop project.

He was detained along with his business partner and brother, Magomed Magomedov, and Artur Maksidov, the head of a company in the Summa Group that was involved in the construction of a soccer World Cup venue in the Russian exclave of Kaliningrad.

Both businessmen will also be held in custody until May 30, the court ruled.

At a hearing in Moscow’s Tverskoy District Court to decide whether Magomedov and his associates should be detained before their trial, Judge Maria Sizintseva said they had acted as part of an organized crime group and had tried to put pressure on witnesses. She rejected an offer from Magomedov to put up a $35 million bail bond, and ordered he be detained.

Slideshow (7 Images)

Citing the arguments against granting bail, the judge said Magomedov had access to his own aircraft, and assets abroad. The day before he was detained, he had booked a flight from Moscow to Miami, the judge said.

Summa said it planned to appeal the court decision and was ready to cooperate with the investigation.

MUSCULAR STATE

Invited to speak from a cage in the courtroom, Magomedov, dressed in a dark-blue jogging suit, said: “I categorically disagree with the charges presented … The prosecution case does not stand up to scrutiny.”

He said he needed treatment in the United States for a medical problem, and offered to put up the $35 million bail. “I’m willing to pull together this money, so no one has any thoughts that I might go on the run,” Magomedov said.

Magomedov is part of a group of Russian multi-millionaires who, while publicly loyal to the Kremlin, are not in President Vladimir Putin’s inner circle.

Some members of the group say they are being squeezed by a tough economy, Western sanctions on Russia, and powerful state-run companies that are muscling in on nearly all sectors of the economy.

In past cases when magnates have been prosecuted, some in the Russia business community have said the tycoons were victims of a plot by the Kremlin or by politically connected business rivals – though the authorities deny that.

People familiar with the Russian judicial system say high-profile corruption cases are rarely fabricated, but that the law is applied selectively, and that prosecutions can be influenced by outside factors.

Ziyavudin Magomedov ranked 63rd last year on the Forbes list of the richest business people in Russia with $1.4 billion. In January, he was listed by the U.S. Treasury Department as one of 96 “oligarchs” close to Putin.

His Caspian Venture Capital fund has investments in ride-hailing service Uber UBER.UL; Diamond Foundry, a company that produces man-made diamonds; and Peek, an online leisure activities company.

Magomedov is also co-executive chairman of Los Angeles-based tech firm Virgin Hyperloop One, which is chaired by Richard Branson. It is one of several firms developing a futuristic transport system that involves propelling people at high speed through sealed tubes.

He also co-owns the Novorossiysk Commercial Sea Port (NMTP.MM) with Russian oil pipeline monopoly Transneft (TRNF_p.MM) and transportation group Fesco (FESH.MM).

Additional reporting by Gleb Stolyarov; Writing by Gabrielle Tetrault-Farber and Christian Lowe; Editing by Larry King

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/J4TBDaDARoY/russian-tycoon-magomedov-arrested-on-embezzlement-charges-idUSKBN1H70A2

Trump attacks Amazon, again, over U.S. postal rates

(Reuters) – U.S. President Donald Trump launched his second attack in a week on Amazon.com Inc on Saturday, accusing the world’s biggest online retailer of getting unfairly cheap rates from the U.S. Postal Service and not paying enough tax.

FILE PHOTO: The logo of Amazon.com Inc is seen in Sao Paulo, Brazil October 17, 2017. REUTERS/Paulo Whitaker/File Photo

Trump’s comments on Twitter reiterated criticisms he made on Thursday about the company. He may have been prompted by a report from news website Axios saying he was obsessed with Amazon and considering ways to rein in the company’s power, possibly with federal antitrust or competition laws.

Investor concerns about regulatory action sent Amazon shares down 3.3 percent over Wednesday and Thursday, knocking $24 billion off the company’s market value.

FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo

“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars,” Trump tweeted on Saturday.

U.S. President Donald Trump arrives at Palm Beach International Airport, Florida, U.S. for the Easter weekend at Mar-a-Lago in Palm Beach March 29, 2018. REUTERS/Yuri Gripas

A Citigroup analysis last year showed that if the U.S. Postal Service (USPS) reallocated costs to account for the growing volume of packages it delivers, it would cost $1.46 more to deliver each package. Federal regulators, which review contracts made by USPS, have not raised any issues with the terms of its contract with Amazon.

“If the P.O. ‘increased its parcel rates, Amazon’s shipping costs would rise by $2.6 Billion’,” Trump tweeted, although it was not clear what report he was citing. “This Post Office scam must stop. Amazon must pay real costs (and taxes) now!”

A White House spokeswoman said on Thursday the administration has no Amazon-related action at this time.

Trump also accused the Washington Post, owned privately by Amazon Chief Executive and founder Jeff Bezos, of being a “lobbyist” for Amazon.

The newspaper, a frequent target of Trump’s ire, won a Pulitzer Prize last year for its critical investigation of Trump’s donations to charities.

Amazon declined comment. The Washington Post did not immediately reply to a request for comment.

Reporting by Bill Rigby; Editing by Bill Trott

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/czSoembGKU4/trump-attacks-amazon-again-over-u-s-postal-rates-idUSKBN1H70MC

Fox’s Ingraham taking vacation as advertisers flee amid controversy

(Reuters) – Fox News show host Laura Ingraham announced on her show late Friday that she is taking next week off, after almost a dozen advertisers dropped her show after the conservative pundit mocked a teenage survivor of the Florida school massacre on Twitter.

Eleven companies so far have pulled their ads after a pushback by Parkland student David Hogg, 17, who called for a boycott of her advertisers.

A Fox News Channel spokeswoman said Ingraham was taking a pre-planned spring vacation with her children.

Hogg took aim at the host’s show, “The Ingraham Angle”, after she taunted him on Twitter on Wednesday, accusing him of whining about being rejected by four colleges to which he had applied.

Hogg is a survivor of the Feb. 14 mass shooting that killed 17 people at Marjory Stoneman Douglas High School in the Parkland suburb of Fort Lauderdale. He and other classmates have become the faces of a new youth-led movement calling for tighter restrictions on firearms.

Hogg tweeted a list of a dozen companies that advertise on “The Ingraham Angle” and urged his supporters to demand that they cancel their ads.

A combination of file photos show media personality Laura Ingraham in Washington October 14, 2017 and Marjory Stoneman Douglas High School student David Hogg, at a rally in Washington March 24, 2018. REUTERS/Mary F. Calvert, Jonathan Ernst/Files

On Thursday, Ingraham tweeted an apology “in the spirit of Holy Week,” saying she was sorry for any hurt or upset she had caused Hogg or any of the “brave victims” of Parkland.

But her apology did not stop companies from departing.

The companies announcing that they are cancelling their ads are: Nutrish, the pet food line created by celebrity chef Rachael Ray, travel website TripAdvisor Inc (TRIP.O), online home furnishings seller Wayfair Inc (W.N), the world’s largest packaged food company, Nestle SA (NESN.S), online streaming service Hulu, travel website Expedia Group Inc (EXPE.O) and online personal shopping service Stitch Fix (SFIX.O).

According to CBS News, four other companies joined the list Friday: the home office supply store Office Depot, the dieting company Jenny Craig, the Atlantis, Paradise Island resort and Johnson Johnson which produces pharmaceuticals as well as consumer products such as Band-Aids, Neutrogena beauty products and Tylenol.

Hogg wrote on Twitter that an apology just to mollify advertisers was insufficient.

Ingraham’s show runs on Fox News, part of Rupert Murdoch’s Twenty-First Century Fox Inc (FOXA.O).

Reporting by Rich McKay in Atlanta; additional reporting by Suzannah Gonzales in Chicago, Gina Cherelus in New York, Andrew Hay; Editing by Kim Coghill and Chizu Nomiyama

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/IWaEQ3_4cHo/foxs-ingraham-taking-vacation-as-advertisers-flee-amid-controversy-idUSKBN1H705A

India’s electronics ministry moots duties on key smartphone component: sources

MUMBAI/NEW DELHI (Reuters) – India is exploring new duties on the import of a key smartphone component, according to two government sources, the latest in a series of moves aimed at boosting domestic manufacturing in the world’s second-biggest smartphone market.

FILE PHOTO: Commuters watch videos on their mobile phones as they travel in a suburban train in Mumbai, India, April 2, 2016. REUTERS/Shailesh Andrade/File photo

India’s Ministry of Electronics and Information Technology has mooted a proposal to levy a 10 percent duty on the import of populated printed circuit boards (PCBs), two government officials told Reuters this week, declining to be named as the matter is not public.

A PCB is a bed for key components such as processors, memory and wireless chip sets that are the heart of an electronic device. Once populated with components, PCBs account for about half the cost of a smartphone. Currently, most manufacturers of smartphones import PCBs which are already loaded with components to India and then assemble them locally.

If India’s finance ministry clears the recommendation on new duties, these could be levied in a matter of days, say government and industry sources, thus making populated PCB imports more expensive and pushing players to locally mount components instead.

India’s finance, electronics and trade ministries did not respond to requests for comment.

In the near-term, such actions could spur players like Apple Inc to widen their limited manufacturing and assembly capabilities in India and give an edge to those like Korea’s Samsung Electronics and homegrown firm Lava, which already have machines to mount components onto PCBs.

Apple did not immediately respond to a request for comment.

China’s OPPO is also putting up surface mounting machines in a new facility it is building in north India, a company executive told Reuters in a recent interview. The local unit of Foxconn, one of the biggest global contract manufacturers of electronics, also has the capability, according to two industry sources.

Foxconn was not immediately reachable for comment.

“This will be a step in a good direction. This is how full-scale manufacturing happens,” said S.N. Rai, co-founder of Lava, adding the move will gradually also boost local production of components such as smartphone cameras and screens.

FILE PHOTO: A woman talks on her mobile phone on a pavement in Kolkata, India July 5, 2017. REUTERS/Rupak De Chowdhuri/File Photo

MANUFACTURING AMBITIONS

The move, if implemented, would be the latest step in Prime Minister Narendra Modi’s phased manufacturing program (PMP), a plan unveiled in 2016 to step up local value addition every year in the smartphone manufacturing space.

About 134 million smartphones were sold in India last year, the world’s second-biggest market after China.

Modi’s government has since raised duties on a range of low-value items such as batteries and chargers and on imported phones.

Any move to impose duties on populated PCBs, however, could risk a backlash from several countries and heighten trade war concerns. China, Canada and the United States among others last week raised concerns at the World Trade Organization around India’s imposition of duties on such devices.

In its annual budget last month, India’s government outlined higher duties on products including imported smartphones and a range of components.

Modi hopes to turn India into a global manufacturing hub in a bid to boost growth and create tens of millions of new jobs.

While his flagship ‘Make in India’ drive is still a long way from delivering on lofty job promises, Modi has had some success with the PMP. Over 100 local factories currently assemble mobile phones and accessories like chargers, batteries, powerbanks and earphones in India, says tech research firm Counterpoint.

The PMP currently envisions local assembly of camera modules and printed circuit boards in the fiscal year beginning April 1, according to a public electronics ministry document.

“India has a plan to raise duties for all components bit by bit,” said Tarun Pathak an associate director with Counterpoint, adding this will gradually force more domestic manufacturing.

Reporting by Sankalp Phartiyal; Editing by Euan Rocha and Raju Gopalakrishnan

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/YepSUio8E6g/indias-electronics-ministry-moots-duties-on-key-smartphone-component-sources-idUSKBN1H70EP

Come for your drugs, leave with more shopping: Walmart’s new growth strategy?

(Reuters) – Walmart Inc’s (WMT.N) efforts to develop closer ties with health insurer Humana Inc (HUM.N), which came to light on Thursday, point to a brave new world of retail where superstores become healthcare centers offering basic medical care.

FILE PHOTO: The logo of Walmart is seen on shopping trolleys at their store in Sao Paulo, Brazil February 14, 2018. REUTERS/Paulo Whitaker/File photo

They are also aimed at boosting Walmart’s slowing growth in brick-and-mortar store sales as it faces increasing pressure online from Amazon.com Inc (AMZN.O). Deepening its existing partnership with Humana, or even acquiring the company outright, could be a step toward turning its 4,700 or so U.S. stores into healthcare centers that aim to attract more shoppers over 65.

“The end goal here is to get more people in their stores, get them to buy drugs and make an additional purchase while they are in the store,” said Charles Sizemore, founder of Sizemore Capital Management LLC, who owns shares of Walmart.

If Walmart can offer “competitive rates” on primary care and other health services, he said, it “can grow traffic and push store visits.”

Walmart approached Humana this month, and the companies began to discuss closer ties focused on new partnerships, two people familiar with the matter told Reuters on Thursday. An acquisition of Humana by Walmart is also being discussed, the sources said.

Walmart declined comment Friday. Humana could not immediately be reached for comment.

Closer ties between the two could enable the retailer to tap into Humana’s patient roster and possibly put some of its physician clinics in stores to offer medical care to customers.

Slideshow (3 Images)

Walmart is the largest retailer to hit upon the combination of retail and health insurance, but it is not the first.

CVS Health Corp (CVS.N) has struck a $69 billion deal to acquire Aetna Inc (AET.N). Separately, insurer Cigna Corp (CI.N) has a $54 billion deal to buy pharmacy benefits company Express Scripts Holding Co (ESRX.O). The two deals, if approved, will put pressure on the entire health care supply chain.

AMAZON CHECKMATE?

Humana could provide Walmart with “one more way to checkmate Amazon and equal and eclipse the CVS/Target partnership and equal and eclipse the CVS/Aetna partnership,” said Burt Flickinger at marketing consulting firm Strategic Resource Group.

“It allows them to get ahead of everybody from warehouse club operators like Costco, Target and other retailers who run chain drugstores as well as food and drug combo operators like Kroger and Wegmans.”

Bentonville, Arkansas-based Walmart already has pharmacies at many store locations and has a co-branded drug plan with Humana that caters to patients using Medicare, the federal health insurance program for people over 65. That plan steers patients to Walmart stores for their pharmacy needs, offering customers an opportunity to save up to 20 percent on drug costs, analysts said.

Louisville, Kentucky-based Humana is one of the country’s largest providers of Medicare Advantage plans – a type of coverage offered by a private company that contracts with Medicare.

Humana has 5.1 million seniors on prescription drug benefits and another 3.5 million on full medical benefits, according to Ana Gupte, senior health care analyst with Leerink Partners in New York.

Walmart superstores “could be a one-stop shop for seniors,” said Gupte, adding that Humana already has about 50 pharmacies sharing locations with doctors’ clinics, and could expand that model using Walmart’s real estate and pharmacies.

DATA ANALYSIS

There is also a potential for Walmart and Humana to benefit from their mass of customer data, said Neil Saunders, managing director of GlobalData Retail.

“One thing retailers have is a very good understanding of customers. They know their eating habits and other consumption patterns and that is quite useful in forming insurance decisions,” he said. “That is certainly something that Walmart would be able to leverage.”

Humana patients are most likely already heavy shoppers at Walmart, according to David Friend at the BDO Center for Healthcare Excellence and Innovation.

“If you know that somebody is on a certain medicine you can sell them other products and services and that will help keep customer loyalty,” he said.

Reporting by Nandita Bose and Chris Prentice; Additional reporting by Carl O’Donnell and Emma Thomasson; Writing by Vanessa O’Connell; Editing by Susan Thomas and Bill Rigby

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/fHwFHcZQTU8/come-for-your-drugs-leave-with-more-shopping-walmarts-new-growth-strategy-idUSKBN1H70BF

U.S. judge certifies Goldman Sachs gender bias class action

NEW YORK (Reuters) – A federal judge ruled that women accusing Goldman Sachs Group Inc of discriminating against them in pay, promotions and performance reviews may pursue their claims as a group in a class-action lawsuit.

FILE PHOTO: The logo of Goldman Sachs is displayed in their office located in Sydney, Australia, May 18, 2016. REUTERS/David Gray/File Photo

The decision late Friday afternoon by U.S. District Judge Analisa Torres in Manhattan covers female associates and vice presidents who have worked in Goldman’s investment banking, investment management and securities divisions since September 2004, and employees in New York City since July 2002.

Goldman was accused of systematically paying women less than men, and giving them weaker performance reviews that impeded their career growth.

Class certification can help plaintiffs achieve greater awards at lower costs than if they sued individually. Kelly Dermody, a lawyer for the plaintiffs, estimated that more than 2,000 people are in the certified class.

Goldman had no immediate comment.

The lawsuit is one of the highest-profile cases targeting Wall Street’s alleged unequal treatment of women, a claim raised in a variety of litigation against many banks for decades.

In her 49-page decision, Torres said the plaintiffs provided “significant proof of discriminatory disparate treatment” at Goldman.

She cited as an example an expert’s report that female vice presidents and associates were on average paid a respective 21 percent and 8 percent less than their male counterparts.

The judge also said the plaintiffs provided proof that Goldman was “aware of gender disparities and gender bias,” but did not adjust its policies.

“We obviously are very, very pleased,” Dermody said in a phone interview. “This case is eight years old, and sometimes it’s worth the wait.”

The plaintiffs were led by Cristina Chen-Oster, Mary De Luis and Allison Gamba, who were all vice presidents, and Shanna Orlich, who was an associate.

Torres said the class action will not include the claim that Goldman maintained a “boys’ club atmosphere” where women were allegedly subjected to unwanted stereotyping, harassment and retaliation.

She said this was because “individual” rather than “common” issues would predominate.

The lawsuit began in September 2010, and according to Torres was delayed largely by a dispute over the kind of relief that former employees could obtain.

The case is Chen-Oster et al v. Goldman Sachs Co et al, U.S. District Court, Southern District of New York, No. 10-06950.

Reporting by Jonathan Stempel in New York; Editing by Susan Thomas

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/MR1a_Odysjk/u-s-judge-certifies-goldman-sachs-gender-bias-class-action-idUSKBN1H61SN

Snapchat parent cuts 7 percent of its global workforce in March

(Reuters) – Snap Inc (SNAP.N) on Friday said it cut 7 percent of its global workforce in March, as disclosed by it in a regulatory filing here.

A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO, in New York City, NY, U.S. March 2, 2017. REUTERS/Lucas Jackson

The social media company said it would incur about $10 million of cash expenditure due to severance costs to be reflected in the current quarter ending March 31.

As a result of the layoffs, primarily in its engineering and sales teams, the company said it sees savings of about $25 million in 2018.

The company had said it had 3,069 employees as of Dec. 31, 2017, according to its annual filing bit.ly/2pScNbz.

The Snapchat parent has been under pressure from investors to reduce costs after revenue fell short of analyst expectations during Snap’s first year as a publicly traded company.

Earlier this month, a company memo had shown that the company would cut just over 120 engineers and reorganize its engineering team, Reuters reported.

The Southern California-based company said the workforce reduction “is to align resources around our top strategic priorities and to reflect structural changes in our business.”

Reporting by Nivedita Balu in Bengaluru; Editing by Sandra Maler

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/dDeA0Hg5Lyg/snapchat-parent-cuts-7-percent-of-its-global-workforce-in-march-idUSKBN1H61RJ

Exclusive: Google employees organize to fight cyber bullying at work

SAN FRANCISCO (Reuters) – About 100 Google U.S. employees concerned about cyber bullying inside the company have organized into a group proposing new policies for conduct at the unit of Alphabet Inc, five people involved in the effort said in recent interviews.

Silhouettes of laptop and mobile device users are seen next to a screen projection of Google logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

Three current employees and two others helping to organize the group said it formed last fall. They said that among its proposals, which have not previously been reported in detail, are that Google should tighten rules of conduct for internal forums and hire staff to enforce them.

They said they want to stop inflammatory conversations and personal attacks on the forums and see punishment for individuals who regularly derail discussions or leak conversations. The group also wants Google to list rights and responsibilities for accusers, defendants, managers and investigators in human resources cases.

The group also desires greater protection for employees targeted by what it views as insincere complaints to human resources used as a bullying tactic and goading.

The organizers said Google should be more attuned to when people seeking to stir animosity or expressing views opposite the company’s stated values try to take over discussions about race, gender and other sensitive subjects.

The group is speaking informally to mid-level executives, hoping they will take up the cause with senior management, organizers said. Self-described conservatives at Google have also raised their own concerns.

The split among Google employees reflects growing polarization across the United States since President Donald Trump was elected. Other companies and industries have also been hit by corporate scandals involving diversity and harassment.

Google counts on open dialogue to strengthen products and morale, and prides itself on fostering an environment in which subordinates can challenge managers. Debates about politics and science flow freely on its private, online discussion boards.

But discussions have become more hostile and abusive since an engineer on internal forums last summer wrote that women are biologically unsuited for technology jobs. Google fired the engineer, James Damore, for perpetuating stereotypes, sparking more heated conversations.

Organizers of the campaign said at least 100 employees have taken part in private and online discussions of potential fixes. But they also said Google may wait to change policies until recent lawsuits filed by Damore and others are resolved.

“My coworkers and I are having our right to a safe workplace being endangered,” said staff site reliability engineer Liz Fong-Jones, one of the lead organizers. She said employees experience stress and fear of physical reprisal when internal conversations are leaked to media, sometimes with writers’ names.

Google spokeswoman Gina Scigliano declined to comment on the proposals but said the company already limits what employees can say in the workplace.

“We enforce strong policies and work with affected employees to ensure everyone can do their work free of harassment, discrimination and bullying,” she said.

Matt Stone, a software engineer at Google who was on disability leave last year, said he returned in January to an “alien environment” in which protections for disabled and transgender individuals were up for debate.

“We’ve been taken under siege in a war we didn’t even know we’re in, a war we didn’t even want,” he said. “We want it to stop.”

Two other employees said they have reduced posting on company forums out of fear of becoming bigger targets. It is not clear if the internal harassment debate has affected recruitment and retention of employees.

Fong-Jones said Google organizers nationwide have received leadership training and advice on media strategy and labor rights from online petition service Coworker.org, which has helped employees at Starbucks Corp and other companies lobby around workplace issues.

MUTUAL CONCERNS

Self-described conservatives at Google, who often clash with the organizing group, have made their own proposals, including asking the company to clarify forum rules and protect employees from retaliation, according to a wrongful termination lawsuit Damore filed in January.

Damore’s attorney, Harmeet Dhillon, said she spoke with current Google employees and believed an internal “witch hunt” targeting workers expressing unpopular viewpoints grew aggressive following Trump’s election in 2016.

“The reaction to Damore’s memo was not for its opponents to engage in dialogue or reason with him, but rather to leak his memo, attack him personally, and work to get him threatened and fired- casually, unhesitatingly, maliciously,” Dhillon said by email.

Reporting by Paresh Dave; Editing by Peter Henderson, Jonathan Weber and David Gregorio

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/ga3ebbCgsSo/exclusive-google-employees-organize-to-fight-cyber-bullying-at-work-idUSKBN1H61QR

U.S. explores including wage factor in NAFTA auto rules: sources

MEXICO CITY (Reuters) – U.S. trade negotiators have floated a plan to introduce rules under a reworked NAFTA that stipulate a certain amount of automotive production must be carried out in areas paying higher salaries, two sources familiar with the matter said.

Flags of Canada, Mexico and the U.S. are seen before a joint news conference on the closing of the seventh round of NAFTA talks in Mexico City, Mexico March 5, 2018. REUTERS/Edgard Garrido

Setting such wage requirements for the auto industry under the North American Free Trade Agreement could benefit the United States and Canada, whose trade unions say that lower Mexican pay has caused a drift in manufacturing capacity to Mexico.

The U.S. plan aims to explore what percentage of output could be in areas paying higher salaries, and at what levels of remuneration the scheme could be targeted, said one of the two sources, who spoke on condition of anonymity.

Mexico’s government and its NAFTA partners were all analyzing the U.S. idea, the source said.

The news follows a week in which hopes have risen that the United States, Mexico and Canada could be closer to brokering agreement on one of the thorniest issues surrounding renegotiation of NAFTA – content levels for the auto industry.

Last week, industry sources said that the United States had withdrawn a divisive demand that at least 50 percent of NAFTA auto content should come from the United States.

The wage idea was floated after that, the sources said.

The United States, which also wants to raise the minimum auto content threshold for the NAFTA region to 85 percent from 62.5 percent, is exploring setting a wage floor at $15 per hour for the salary component, the second of the sources said.

However, if a deal is reachable, it would likely end up at a lower level than that, the source added.

Mexico’s economy ministry had no comment on the matter, a ministry spokesman said.

Alex Lawrence, a spokesman for Canadian Foreign Minister Chrystia Freeland, said it was a question for the office of U.S. Trade Representative (USTR) Robert Lighthizer “as to whether they are going to present something along those lines.”

A USTR spokeswoman could not immediately be reached for comment.

Freeland’s office said she would be meeting her NAFTA counterpart Mexican Economy Minister Ildefonso Guajardo on Friday in Toronto to discuss the ongoing renegotiation.

U.S. President Donald Trump has railed against jobs migrating from the United States to Mexico, and threatened to dump the trade deal if it cannot be reworked to his liking.

Making tariff-free access for the industry under NAFTA dependent on using higher-cost labor could reduce the allure of Mexico either by making the target unreachable, or by obliging auto makers to pay higher salaries to Mexican workers.

That could send more work to U.S. or Canadian plants.

Progress on auto rules have spurred optimism that the three sides, which have been locked in sluggish talks for months, could reach a deal “in principle” in the coming weeks.

No date has yet been agreed for another formal round of talks, one of the sources said. Mexico said earlier this month the talks had been tentatively set for April 8 in Washington.

Reporting by Dave Graham; Additional reporting by David Ljunggren and David Lawder; Editing by Andrea Ricci

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/kMV5iWlcQe0/u-s-explores-including-wage-factor-in-nafta-auto-rules-sources-idUSKBN1H61KF