Vietnam, EU Eye Trade Alternative to US

Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States.

The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable.

For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. 

For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. 

“It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People’s Committee, said at a European Chamber of Commerce in Vietnam event.

Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. 

Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. 

​Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons.

Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya.

But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. 

So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm. 

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Huawei Founder Sees Little Effect From US Sanctions

Huawei Technologies’ founder and chief executive said Saturday that the growth of the Chinese tech giant “may slow, but only slightly,” because of recent U.S. restrictions.  

 

In remarks to the Japanese press and reported by Nikkei Asian Review, Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law. 

“It is expected that Huawei’s growth may slow, but only slightly,” Ren said in his first official comments after the U.S. restrictions, adding that the company’s annual revenue growth might undershoot 20%.  

 

On Thursday, Washington put Huawei, one of China’s biggest and most successful companies, on a trade blacklist that could make it extremely difficult for Huawei to do business with U.S. companies. China slammed the decision, saying it would take steps to protect its companies. 

Trade, security issues

 

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied. 

 

A similar U.S. ban on China’s ZTE Corp. had almost crippled business for the smaller Huawei rival early last year before the curb was lifted. 

 

The U.S. Commerce Department said Friday that it might soon scale back restrictions on Huawei. 

 

Ren said the company was prepared for such a step and that Huawei would be “fine” even if U.S. smartphone chipmaker Qualcomm Inc. and other American suppliers would not sell chips to the company. 

 

Huawei’s chip arm HiSilicon said Friday that it had long been prepared for the possibility of being denied U.S. chips and technology, and that it was able to ensure a steady supply of most products. 

 

The Huawei founder said that the company would not be taking instructions from the U.S. government. 

 

“We will not change our management at the request of the U.S. or accept monitoring, as ZTE has done,” he said.

In January, U.S. prosecutors unsealed an indictment accusing the Chinese company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system. 

 

Ren’s daughter, Huawei Chief Financial Officer Meng Wanzhou, was arrested in Canada in December in connection with the indictment. Meng, who was released on bail, remains in Vancouver and is fighting extradition. She has maintained her innocence.  

 

Ren has previously said his daughter’s arrest was politically motivated.

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China’s Top Diplomat Calls for US Restraint on Trade, Iran 

Senior Chinese diplomat Wang Yi told U.S. Secretary of State Mike Pompeo on Saturday that recent U.S. words and actions had harmed the interests of China and its enterprises, and that Washington should show restraint, China’s Foreign Ministry said. 

 

Speaking to Pompeo by telephone, Wang said the United States should not go “too far” in the current trade dispute between the two sides, adding that China was still willing to resolve differences through negotiations but that the nations should be on an equal footing. 

 

On Iran, Wang said China hoped all parties would exercise restraint and act with caution to avoid escalating tensions. U.S. State Department spokeswoman Morgan Ortagus said in a statement that Pompeo spoke with Wang and discussed bilateral issues and U.S. concerns about Iran, but she gave no other details. 

 

Tensions between Washington and Tehran have increased in recent days, raising concerns about a potential U.S.-Iran conflict. Earlier this week the United States pulled some diplomatic staff from its Baghdad embassy following attacks on oil tankers in the Persian Gulf. 

Harder line

 

China struck a more aggressive tone in its trade war with the United States on Friday, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course. 

 

The tough talk capped a week that saw Beijing unveil fresh retaliatory tariffs, U.S. officials accuse China of backtracking on promises made during months of talks, and the Trump administration level a potentially crippling blow against one of China’s biggest and most successful companies. The United States announced on Thursday it was putting Huawei Technologies Co. Ltd., the world’s largest telecom equipment maker, on a blacklist that could make it extremely hard to do business with U.S. companies.  

 

The U.S. Commerce Department then said on Friday that it might soon scale back restrictions on Huawei. It said it was considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment.” 

 

Potential beneficiaries of this license could, for example, include telecom providers in thinly populated parts of U.S. states such as Wyoming and Oregon that purchased network equipment from Huawei in recent years. 

 

On Friday, Chinese Foreign Ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more trade negotiations, said China always encouraged resolving disputes with the United States through dialogue and consultations.

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US Warns Airliners Flying in Persian Gulf Amid Iran Tensions

U.S. diplomats warned Saturday that commercial airliners flying over the wider Persian Gulf faced a risk of being “misidentified” amid heightened tensions between the U.S. and Iran.

The warning relayed by U.S. diplomatic posts from the Federal Aviation Administration underlined the risks the current tensions pose to a region crucial to global air travel. It also came as Lloyd’s of London warned of increasing risks to maritime shipping in the region.

 

Concerns about a possible conflict have flared since the White House ordered warships and bombers to the region to counter an alleged, unexplained threat from Iran that has seen America order nonessential diplomatic staff out of Iraq. President Donald Trump since has sought to soften his tone.

 

Meanwhile, authorities allege that a sabotage operation targeted four oil tankers off the coast of the United Arab Emirates, and Iran-aligned rebels in Yemen claimed responsibility for a drone attack on a crucial Saudi oil pipeline. Saudi Arabia directly blamed Iran for the drone assault, and a local newspaper linked to the al-Saud royal family called on Thursday for America to launch “surgical strikes” on Tehran.

 

This all takes root in Trump’s decision last year to withdraw the U.S. from the 2015 nuclear accord between Iran and world powers and impose wide-reaching sanctions. Iran just announced it would begin backing away from terms of the deal, setting a 60-day deadline for Europe to come up with new terms or it would begin enriching uranium closer to weapons-grade levels. Tehran long has insisted it does not seek nuclear weapons, though the West fears its program could allow it to build atomic bombs.

 

The order relayed Saturday by U.S. diplomats in Kuwait and the UAE came from an FAA Notice to Airmen published late Thursday in the U.S. It said that all commercial aircraft flying over the waters of Persian Gulf and the Gulf of Oman needed to be aware of “heightened military activities and increased political tension.”

 

This presents “an increasing inadvertent risk to U.S. civil aviation operations due to the potential for miscalculation or misidentification,” the warning said. It also said aircraft could experience interference with its navigation instruments and communications jamming “with little to no warning.”

 

The Persian Gulf has become a major gateway for East-West travel in the aviation industry. Dubai International Airport in the United Arab Emirates, home to Emirates, is the world’s busiest for international travel, while long-haul carriers Etihad and Qatar Airways also operate here.

 

In a statement, Emirates said it was aware of the notice and in touch with authorities worldwide, but “at this time there are no changes to our flight operations.”

 

Qatar Airways similarly said it was aware of the notice and its operations were unaffected.

 

Etihad, as well as Oman Air, did not respond to a request for comment Saturday about the warning.

 

The warning appeared rooted in what happened 30 years ago after Operation Praying Mantis, a daylong naval battle in the Persian Gulf between American forces and Iran during the country’s long 1980s war with Iraq. On July 3, 1988, the USS Vincennes chased Iranian speedboats that allegedly opened fire on a helicopter into Iranian territorial waters, then mistook an Iran Air heading to Dubai for an Iranian F-14. The Vincennes fired two missiles at the airplane, killing all aboard the flight.

 

Meanwhile, Lloyd’s Market Association Joint War Committee added the Persian Gulf, the Gulf of Oman and the United Arab Emirates on Friday to its list of areas posing higher risk to insurers. It also expanded its list to include the Saudi coast as a risk area.

 

The USS Abraham Lincoln and its carrier strike group have yet to reach the Strait of Hormuz, the narrow mouth of the Persian Gulf through which a third of all oil traded at sea passes. A Revolutionary Guard deputy has warned that any armed conflict would affect the global energy market. Iran long has threatened to be able to shut off the strait.

 

Benchmark Brent crude now stands around $72 a barrel.

 

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US Says It May Scale Back Some Huawei Trade Restrictions

The U.S. Commerce Department may soon scale back restrictions on Huawei Technologies after this week’s blacklisting made it nearly impossible for the Chinese company to purchase goods made in the United States, a 

department spokeswoman said Friday. 

The Commerce Department may issue a temporary general license to allow time for companies and people who have Huawei equipment to maintain reliability of their communications networks and equipment, the spokeswoman said. 

The possible general license would not apply to new transactions, according to the spokeswoman, and would last for 90 days. 

A spokesman for Huawei did not immediately respond to a request for comment. 

The Commerce Department on Thursday added Huawei to a list of entities that are banned from doing business with U.S. companies without licenses. 

The entities list identifies companies believed to be involved in activities contrary to the national security or foreign policy interests of the United States. 

Potential beneficiaries of the temporary license could include internet access and mobile phone service providers in thinly populated places such as Wyoming and eastern Oregon that purchased network equipment from Huawei in recent years. 

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Trump Lifts Tariffs on Mexico, Canada, Delays Auto Tariffs 

Bogged down in a sprawling trade dispute with U.S. rival China, President Donald Trump took steps Friday to ease tensions with America’s allies: lifting import taxes on Canadian and Mexican steel and aluminum and delaying auto tariffs that would have hurt Japan and Europe. 

 

By removing the metals tariffs on Canada and Mexico, Trump cleared a key roadblock to a North American trade pact his team negotiated last year. As part of Friday’s arrangement, the Canadians and Mexicans agreed to scrap retaliatory tariffs they had imposed on U.S. goods, according to four sources in the U.S. and Canada who spoke on condition of anonymity ahead of an announcement. 

 

In a joint statement, the U.S. and Canada said they would work to prevent cheap imports of steel and aluminum from entering North America. China has long been accused of flooding world markets with subsidized metal, driving down world prices and hurting U.S. producers. 

Some in Washington were urging Trump to take advantage of the truce with U.S. allies to get even tougher with China.

China is our adversary,'' said Sen. Ben Sasse, R-Neb.Canada and Mexico are our friends. The president is right to increase pressure on China for their espionage, their theft of intellectual property and their hostility toward the rule of law. The president is also right to be deescalating tension with our North American allies.”

 

Earlier Friday, the White House said Trump was delaying for six months any decision to slap tariffs on foreign cars, a move that would have hit Japan and Europe especially hard.

Trump still is hoping to use the threat of auto tariffs to pressure Japan and the European Union into making concessions in trade talks. “If agreements are not reached within 180 days, the president will determine whether and what further action needs to be taken,” White House press secretary Sarah Sanders said in a statement. 

Trade weapon

 

In imposing the metals tariffs and threatening the ones on autos, the president was relying on a rarely used weapon in the U.S. trade war arsenal — Section 232 of the Trade Expansion Act of 1962 — which lets the president impose tariffs on imports if the Commerce Department deems them a threat to national security. 

 

But the steel and aluminum tariffs were also designed to coerce Canada and Mexico into agreeing to a rewrite of North American free trade pact. In fact, the Canadians and Mexicans did go along last year with a revamped regional trade deal that was to Trump’s liking. But the administration had refused to lift the taxes on their metals to the United States until Friday. 

 

The new trade deal — the U.S.-Mexico-Canada Agreement — needs approval of the legislatures in the U.S., Canada and Mexico. Several key U.S. lawmakers were threatening to reject the pact unless the tariffs were removed. And Canada had suggested it wouldn’t ratify any deal while the tariffs were still in place. 

Trump had faced a Saturday deadline to decide what to do about the auto tariffs. 

 

Taxing auto tariffs would mark a major escalation in Trump’s aggressive trade policies and likely would meet resistance in Congress. The United States last year imported $192 billion worth of passenger vehicles and $159 billion in auto parts. 

Legitimate use?

 

“I have serious questions about the legitimacy of using national security as a basis to impose tariffs on cars and car parts,” Iowa Republican Sen. Chuck Grassley, chair of the Senate Finance Committee, said in a statement Friday. He’s working on legislation to scale back the president’s authority to impose national security tariffs under Section 232.

In a statement, the White House said that Commerce Secretary Wilbur Ross has determined that imported vehicles and parts are a threat to national security. Trump deferred action on tariffs for 180 days to give negotiators time to work out deals but threatened them if talks break down. 

 

In justifying tariffs for national security reasons, Commerce found that the U.S. industrial base depends on technology developed by American-owned auto companies to maintain U.S. military superiority. Because of rising imports of autos and parts over the past 30 years, the market share of U.S.-owned automakers has fallen. That has caused a lag in research and development spending that is “weakening innovation and, accordingly, threatening to impair our national security,” the statement said. 

 

The market share of vehicles produced and sold in the U.S. by American-owned automakers, the statement said, has declined from 67% in 1985 to 22% in 2017.

But the statistics don’t match market share figures from the industry. A message was left Friday seeking an explanation of how Commerce calculated the 22%.  

In 2017, General Motors, Ford, Fiat Chrysler and Tesla combined had a 44.5% share of U.S. auto sales, according to Autodata Corp. Those figures include vehicles produced in other countries. 

 

It’s possible that the Commerce Department didn’t include Fiat Chrysler, which is now legally headquartered in the Netherlands but has a huge research and development operation near Detroit. It had 12% of U.S. auto sales in 2017. 

 

The Commerce figures also do not account for research by foreign automakers. Toyota, Hyundai-Kia, Subaru, Honda and others have significant research centers in the U.S. 

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After Huawei Blow, China Says US Must Show Sincerity for Talks

The United States must show sincerity if it is to hold meaningful trade talks, China said on Friday, after U.S. President Donald Trump dramatically raised

the stakes with a potentially devastating blow to Chinese tech giant Huawei.

China has yet to say whether or how it will retaliate against the latest escalation in trade tension, although state media has taken an increasingly strident tone, with the ruling Communist Party’s People’s Daily publishing a front-page commentary that evoked the patriotic spirit of past wars.

China’s currency slid to its weakest in almost five months, although losses were capped after sources told Reuters that the central bank would ensure the yuan did not weaken past the key 7-per-dollar level in the immediate term.

The world’s two largest economies are locked in an increasingly acrimonious trade dispute that has seen them level escalating tariffs on each other’s imports in the midst of negotiations, adding to fears about risks to global growth and knocking financial markets.

Foreign ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more U.S.-China trade talks, said China always encouraged resolving disputes between the two countries with dialog and consultations.

“But because of certain things the U.S. side has done during the previous China-U.S. trade consultations, we believe if there is meaning for these talks, there must be a show of sincerity,” he told a daily news briefing.

The United States should observe the principles of mutual respect, equality and mutual benefit, and they must also keep their word, Lu said, without elaborating.

On Thursday, Washington put telecoms equipment maker Huawei Technologies Co Ltd, one of China’s biggest and most successful companies, on a blacklist that could make it extremely difficult for the telecom giant to do business with U.S. companies.

That followed Trump’s decision on May 5 to increase tariffs on $200 billion worth of Chinese imports, a major escalation after the two sides appeared to have been close to reaching a deal in negotiations to end their trade battle.

‘Wheel of destiny’

China can be expected to make preparations for a longer-term trade war with the United States, said a Chinese government official with knowledge of the situation.

“Indeed, this is an important moment, but not an existential, live-or-die moment,” the official said.

“In the short term, the trade situation between China and the United States will be severe, and there will be challenges. Neither will it be smooth in the long run. This will spur China to make adequate preparations in the long term.”

The impact of trade friction on China’s economy is “controllable,” the state planner said on Friday, pledging to take countermeasures as needed, Meng Wei, a spokeswoman for the National Development and Reform Committee (NDRC), told a media briefing.

The South China Morning Post, citing an unidentified source, reported that a senior member of China’s ruling Communist Party said the trade war with the United States could reduce China’s 2019 growth by 1 percentage point in the worst-case scenario.

Wang Yang, the fourth-most senior member of the Communist Party’s seven-member Standing Committee, the top decision-making body, told a delegation of Taiwan businessmen on Thursday that the trade war would have an impact but would not lead to any structural changes, the paper said, citing an unidentified source who was at the meeting.

One company that says it has been making preparations is Huawei’s Hisilicon unit, which purchases U.S. semiconductors for its parent.

Its president told staff in a letter on Friday that the company had been secretly developing back-up products for years in case Huawei was one day unable to obtain the advanced chips and technology it buys from the United States.

“Today, the wheel of destiny has turned and we have arrived at this extreme and dark moment, as a super-nation ruthlessly disrupts the world’s technology and industry system,” the company president said in the letter.

The letter was widely shared on Chinese social media, gaining 180 million impressions in the few hours after it was published on the Weibo microblogging site.

“Go Huawei! Our country’s people will always support you,” wrote one Weibo user after reading the letter.

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Tech Startups Move Forward in Africa 

The Afrobytes and Viva Tech conferences in Paris this week have provided an opportunity to look at the progress that high-tech startups have made in Africa, where fundraising is booming.

According to Partech Africa, a venture capital firm, 146 startups in 19 African countries raised $1.16 billion for African digital entrepreneurs in 2018. Kenya, Nigeria and South Africa received 78% of the total funding, with Egypt close behind. 

In French-speaking Africa, Senegal is the leading hub with $22 million raised in four deals. Compared with their Anglophone peers, Africa’s Francophone countries operate in smaller markets, and lack capital and mentors.  

A key: Seeking advice

 

Marieme Diop, a venture capital investor at Orange Digital Ventures, said that “unfortunately in Francophone Africa, it is not in our DNA. People who succeed in business or in electing positions do not necessarily reach back to help their peers to show them how to be successful. In the Anglophone world, it is a must for anyone who wants to start something: seeking advice. So the gap is not only financial” between the regions. 

 

Africa is seen by many as the next frontier for venture capital, with its booming population and mobile-first economy. That’s why Google, Facebook and PayPal participated in Paris in Afrobytes 2019.  

 

“We do not want people globally to see African high-tech as an exotic stuff,” said Afrobytes CEO Ammin Youssouf. “We want to be heard and talk about AI, blockchain, what is happening in Silicon Valley, because it has an impact on us. We already have brilliant minds in Africa, especially in tech, to have those conversations.”

Unlike the global trend, where men dominate the high-tech industry, women are leading the movement in Africa.

“Actually, what we see in the statistics is that women’s involvement and participation on in the African continent is much higher than what you would find in New York, for example, or San Francisco,” said Ben White, chief executive officer of venture capital platform VC4Africa, who has been supporting startups on the continent for more than 10 years. “I think it is an advantage. It also means having women investors who are very sensitive to gender-related questions and can also ensure that the system we are building is inclusive.”

Governments’ role

 

Governments in Africa are trying to regulate the activity and even support the sector. Forty Senegalese startups last November secured a total of $2 million in government funding. But some experts say governments lack the skills needed to pick good investments.

Kenza Lahlou, co-founder and managing partner at Outlierz Ventures, said the public sector “should not invest [in startups]. States should build funds of funds. We have that in Morocco in partnership with the World Bank. The government started Innov Invest, to invest in local venture capitalist funds, to lower the risk for local funds.”

 

With a population expected to reach 1.4 billion people by 2021, and a continent that will put about 1 billion smartphones into use within two years, Africa is a promising area for the world’s leading high-tech and telecom companies.

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