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Trade ministers of 14 countries in the U.S.-led Indo-Pacific Economic Framework talks “substantially completed” negotiations on an agreement to make supply chains more resilient and secure, U.S. Commerce Secretary Gina Raimondo said on Saturday.

The “first of its kind” agreement calls for countries to form a council to coordinate supply chain activities and a “Crisis Response Network” to give early warnings to IPEF countries of potential supply disruptions, Raimondo told a news conference following a ministerial meeting in Detroit.

The deal provides an emergency communications channel for IPEF countries to seek support during supply chain disruptions, coordinate more closely during a crisis and recover more quickly.

Raimondo cited shortages of semiconductors during the COVID-19 pandemic that shut down American auto production, idling thousands of workers.

“I can tell you I would have loved to have had that Crisis Response Network during COVID. It absolutely would have helped us secure American jobs and keep supply chains moving,” she said.

The supply chains agreement, led by Commerce, marks the first tangible outcome of a year’s worth of IPEF discussions. But it is just one the four “pillars” of the IPEF talks.

The other pillars — trade, climate transition, and labor and inclusiveness — are more complex and expected to take longer to negotiate.

The supply chains agreement also includes a new labor rights advisory board aimed at raising labor standards in supply chains, consisting of government, worker, and employer representatives, the Commerce Department said.
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Living in New York City, working full time and without a car, Jessica Ray and her husband have come to rely on deliveries of food and just about everything else for their home. It has meant more free time on weekends with their young son, rather than standing in line for toilet paper or dragging heavy bags of dog food back to their apartment.

“I don’t even know where to buy dog food,” said Jessica Ray of the specialty food she buys for the family’s aging dog.

There are millions of families like the Rays who have swapped store visits for doorstep deliveries in recent years, meaning that contentious labor negotiations now underway at UPS could become vastly more disruptive than the last time it happened in 1997, when a scrappy upstart called Amazon.com became a public company.

UPS delivers millions more packages every day than it did just five years ago and its 350,000 unionized workers, represented by the Teamsters, still seethe about a contract they feel was forced on them in 2018.

In an environment of energized labor movements and lingering resentment among UPS workers, the Teamsters are expected to dig in, with the potential to cow a major logistical force in the U.S.

‘Something’s got to give’

The 24 million packages UPS ships on an average day amounts to about a quarter of all U.S. parcel volume, according to the global shipping and logistics firm Pitney Bowes, or as UPS puts it, the equivalent of about 6% of nation’s gross domestic product.

Higher prices and long wait times are all but certain if there is an impasse.

“Something’s got to give,” said Thomas Goldsby, logistics chairman in the Supply Chain Management Department at the University of Tennessee. “The python can’t swallow the alligator, and that’s going to be felt by all of us.”

In other words, brace yourself for Supply Chain Breakdown: The Sequel.

In the second half of 2021, the phrase “global supply chain” began to enter casual conversations as the world emerged from the COVID-19 pandemic. Businesses struggled to get what they needed, raising prices and wait times. Automakers held vehicles just off the assembly line because they didn’t have all the parts.

Some of those problems still linger and a strike at UPS threatens to extend the suffering.

Household routines at risk

Those who have come to rely on doorstep deliveries for the basics might have to rethink weekly schedules.

“We finally reached a point where we finally feel pretty good about it,” Ray said. “We can take a Saturday afternoon and do a fun family activity and not feel the burden of making everything work for the day-to-day functioning of our household.”

UPS workers feel they have played a part in the transformation of how Americans shop since the last contract was ratified in 2018, while helping to make UPS a much more valuable company.

Annual profits at UPS in the past two years are close to three times what they were before the pandemic. The Atlanta company returned about $8.6 billion to shareholders in the form of dividends and stock buybacks in 2022, and forecasts another $8.4 billion for shareholders this year.

The Teamsters say frontline UPS workers deserve some of that windfall.

“Our members worked really hard over the pandemic,” said Teamsters spokesperson Kara Denize. “They need to see their fair share.”

Union members rejected the contract they were offered in 2018, but it was pushed through by union leadership based on a technicality. The acrimony over the current contract was so fierce that last year workers rejected a candidate to lead the Teamsters favored by longtime union head James Hoffa, instead choosing the more combative Sean O’Brien.

O’Brien went on a nationwide tour of local Teamsters shops preparing frontline workers ahead of negotiations.

In addition to addressing part-time pay, and what workers say is excessive overtime, the union wants to eliminate a contract provision that created two separate hierarchies of workers with different pay scales, hours and benefits. Driver safety, particularly the lack of air conditioning in delivery trucks, is also in the mix.

Possible ripple effect

A win at UPS could have implications for the organized labor outside the company.

Teamsters are attempting to organize Amazon workers and dozens of company delivery drivers and dispatchers in California joined the union last month. There are also prominent labor organization campaigns at Apple, Starbucks, Trader Joe’s, Apple, even strippers at a dance club in Los Angeles.

“This has just huge implications for the entire labor movement in the United States,” said John Logan, the director of labor and employment studies at San Francisco State University, referring to labor talks at UPS. “There’s greater assertiveness and militancy on the part of a lot of young labor activists and some sectors of the labor establishment. Sean O’Brien is representative of that.”

When dozens of UPS locals met with Teamsters leadership early this year, O’Brien delivered a message of urgency.

“We’re going into these negotiations with a clear message to UPS that we’re not going past August 1,” O’Brien told the gathering.

It would be the first work stoppage since a walkout by 185,000 workers crippled the company a quarter century ago.

UPS CEO Carol Tome has remained optimistic publicly, telling investors recently that the company and the Teamsters were not far apart on major issues.

“While we expect to hear a great deal of noise during the negotiation, I remain confident that a win-win-win contract is very achievable and that UPS and the Teamsters will reach agreement by the end of July,” Tome said.

If Tome is wrong, Americans might need to put aside more time to shop like they used to do.

“It has the potential to be significantly impactful,” said Ray, the New York City resident. “My husband and I have invested a lot in figuring out how to remove the burden of just making sure we always have toilet paper.”
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U.S. Trade Representative Katherine Tai raised complaints about China’s state-led economic policies during a meeting on Friday with Chinese Commerce Minister Wang Wentao, who objected to U.S. tariffs and trade policies, their offices said.

But statements from the U.S. Trade Representative’s office and China’s Commerce Ministry both emphasized the need for Washington and Beijing to maintain communication on trade.

“Ambassador Tai highlighted the need to address the critical imbalances caused by China’s state-led, nonmarket approach to the economy and trade policy,” USTR said in a statement released after the meeting on the sidelines of an Asia Pacific Economic Cooperation (APEC) conference in Detroit.

“She also raised concerns about PRC [People’s Republic of China] actions taken against U.S. companies operating there,” the statement said.

China’s Commerce Ministry said in a statement that Wang raised complaints about U.S. economic and trade policies toward China, including U.S. tariffs on Chinese goods, economic and trade issues related to Taiwan, and on the U.S.-led Indo-Pacific Economic Framework (IPEF) that excludes China.

Tai on Saturday will hold a ministerial meeting of countries in the IPEF talks, which exclude China and aim to provide a U.S.-centered alternative to its influence. Last week, she announced initial trade agreements with Taiwan. China claims the self-governed island as its own territory.

USTR is conducting a four-year review of U.S. tariffs on hundreds of billions of dollars’ worth of Chinese imports, imposed in 2018 and 2019 by then-President Donald Trump.

Tai has long raised objections to China’s attempts to dominate certain industries using massive state subsidies and said such issues continue to come up in the relationship.

Asked during a press conference whether the U.S. would resort to using further trade tools to address China’s practices, such as a new “Section 301” investigation that could lead to more U.S. tariffs, Tai said that “aspects” of the Biden administration’s response were already evident in U.S economic policies.

“The benefit of sitting down and having a conversation with interlocutors from Beijing is so that we can understand each other better and understand how we are experiencing the impacts that we have on each other’s economies,” Tai said.

Cabinet-level discussion

Wang’s meetings with Tai in Detroit and with U.S. Commerce Secretary Gina Raimondo in Washington on Thursday marked the first Cabinet-level exchanges in months between U.S. and Chinese officials, following a series of setbacks that raised tensions between the world’s two largest economies.

Tai stressed the importance of maintaining open lines of communication between Washington and Beijing as they spoke on the sidelines of APEC, the U.S. statement said.

The Chinese statement was similar in tone to concerns raised with Raimondo about U.S. trade, investment and export policies.

U.S. President Joe Biden and Chinese President Xi Jinping pledged more frequent communications at a Group of 20 summit in Indonesia last November to avoid U.S.-China tensions from turning into a new cold war. 

But those plans suffered several setbacks, starting with the downing of a suspected Chinese spy balloon in U.S. coastal waters.

These irritants continued through last Sunday, when Group of Seven leaders pledged to resist China’s “economic coercion” and Beijing responded by declaring U.S. memory chip maker Micron Technology a national security risk, banning its sales to major domestic industries.
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For a second year, the war in Ukraine is adding to worries for American farmers already pinched by higher interest rates. VOA’s Kane Farabaugh speaks with farmers in the Midwest state of Illinois about the impact of world events as they launch another planting season. Camera: Kane Farabaugh.
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Japan and the United States will issue a joint statement on technology cooperation on Friday that will commit them to closer cooperation in research and development of advanced chips and other technologies, a Japanese government source said.

Japan’s Minister of Economy, Trade and Industry Yasutoshi Nishimura and U.S. Secretary of Commerce Gina Raimondo will meet in Detroit in the U.S. on the sidelines of the 2023 APEC Ministers Responsible for Trade Meeting, Yomiuri reported earlier. In addition to semiconductors, they will discuss artificial intelligence and quantum technology, the newspaper added.

They want to deepen ties between research and development hubs in Japan and the U.S., the Japanese official told Reuters, asking not to be identified because he is not authorised to talk to the media. It will be another incremental step as they map out their future technology cooperation, he added.

As Washington and Tokyo reduce their exposure to Chinese supply chains amid growing tension, they are working together to expand chip manufacturing to ensure access to advanced components that they see as essential for economic growth.

Japan has established a new chip maker, Rapidus, that is working with International Business Machines Corp (IBM)(IBM.N) to develop advanced logic semiconductors, and is offering subsidies to U.S. memory maker Micron Technology Inc (MU.O) so it can expand production there.

Japan, along with the Netherlands, has also agreed to match U.S. export controls that will limit the sale of some chipmaking tools in China.

The meeting between Nishimura and Raimondo comes after the leaders of the Group of Seven advanced democracies agreed at a meeting in Hiroshima, Japan, to reduce their exposure to China because of its “economic coercion.”

Raimondo on Thursday met China’s Minister of Commerce Wang Wentao in Washington where the pair exchanged views on trade, investment and export policies.
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The U.S. economy grew at a lackluster 1.3% annual rate from January through March as businesses wary of an economic slowdown trimmed their inventories, the government said Thursday in a slight upgrade from its initial estimate.

The government had previously estimated that the economy grew at a 1.1% annual rate last quarter.

The Commerce Department’s revised measure of growth in the nation’s gross domestic product — the economy’s total output of goods and services — marked a deceleration from 3.2% annual growth from July through September and 2.6% from October through December.

Despite the first-quarter slowdown, consumer spending, which accounts for around 70% of America’s economic output, rose at a 3.8% annual pace, the most in nearly two years and an encouraging sign of household confidence. Specifically, spending on physical goods, like appliances and cars, rose 6.3%, also the fastest growth rate since April-June of last year.

A cutback in business inventories shaved 2.1 percentage points off January-March growth.

The steady slowdown in economic growth is a consequence of the Federal Reserve’s aggressive drive to tame inflation, with 10 interest rate hikes over the past 14 months. Across the economy, the Fed’s rate increase have elevated the costs of auto loans, credit card borrowing and business loans.

With mortgage rates having doubled over the past year, the real estate market has already taken a beating: Investment in housing fell at a 0.2% annual rate from January through March. In April, sales of existing homes were 23% below their level a year earlier.

As the Fed’s rate hikes have gradually slowed growth, inflation has eased from the four-decade high it reached last year. Still, consumer prices were still up 4.9% in April from a year earlier — well above the Fed’s 2% target.

The economy’s slowdown is widely expected to lead to a recession later this year. For now, though, most sectors of the economy other than housing are showing surprising resilience. Retail sales have continued to rise. So have orders for manufactured goods.

Most significantly, the nation’s job market remains fundamentally solid. In April, employers added 253,000 jobs, and the unemployment rate matched a 54-year low. The pace of layoffs remains comparatively low. And job openings, though declining, are still well above pre-pandemic levels.
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