06.06.2018

CLIPPING INTERNACIONAL NEGINT Brasília, 06 de junho de 2018

Índice I. OMC _______________________________________________ 2 EU initiates new WTO compliance proceedings over Airbus subsidies________ 2 II. NEGOCIAÇÕES REGIONAIS E BILATERAIS _________________ 2 Mexico Hits U.S. With Tariffs, Escalating Global Trade Tensions ____________ 2 Japan PM Abe: no countries benefit from trade protectionism _____________ 5 III. OUTROS ____________________________________________ 7 Exigirán mayor calidad en el acero para evitar desvíos de China y la UE _____ 7 How Brazil's Economic Recovery Got Run Off the Road: QuickTake _________ 8 Brazil Steps Up Intervention as the Real Crashes Toward Two-Year Low ____ 10

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I. OMC EU initiates new WTO compliance proceedings over Airbus subsidies Xinhua (China) The European Union (EU) has requested dispute consultations with the United States at the World Trade Organization (WTO), to address the EU's claim that the EU and its member states have complied with the WTO ruling on subsidies to Airbus.

II. NEGOCIAÇÕES REGIONAIS E BILATERAIS Mexico Hits U.S. With Tariffs, Escalating Global Trade Tensions The New York Times (Estados Unidos) Mexico hit back at the United States on Tuesday, imposing tariffs on around $3 billion worth of American pork, steel, cheese and other goods in response to the Trump administration’s steel and aluminum levies, further straining relations between the two countries as they struggle to rewrite the North American Free Trade Agreement. The tariffs, which were announced last week, came into effect as the Trump administration threw yet another complication into the fractious Nafta talks. Officials are now saying they want to splinter discussions with Canada and Mexico and work on separate agreements rather than continue three-country discussions to rewrite the 1994 trade deal. Larry Kudlow, President Trump’s chief economic adviser, said on Tuesday that Mr. Trump’s “preference now, and he asked me to convey this, is to actually negotiate with Mexico and Canada separately.”

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Mr. Kudlow, speaking on “Fox and Friends,” said pursuing separate deals might allow an agreement to be reached “more rapidly,” adding: “I think that’s the key point. You know, Nafta has kind of dragged on.” The Trump administration hit Mexico and Canada with 25 percent steel tariffs and 10 percent aluminum tariffs on June 1 as part of a campaign to pressure the countries to agree to America’s demands on a revised Nafta. The United States also imposed metals tariffs on the European Union, Japan and other countries as part of an effort to stop the flow of imported metals, which the administration has said threatens national security by degrading the American industrial base. The trade approach has only inflamed allies, including Canada and Mexico, which have threatened to strike back with their own targeted tariffs aimed at Republican states and areas that supported Mr. Trump. Mexico’s list was designed to hit at parts of the United States represented by high-profile Republicans, Mexican officials have said, including steel from Vice President Mike Pence’s home state of Indiana, motorboats from Senator Marco Rubio’s Florida, and agricultural products from the California district of Representative Kevin McCarthy, the House majority leader. Farmers, who are among those most vulnerable to the Mexican tariffs, said the tariffs would devastate American agriculture. “These tariffs will exact immediate and painful consequences on many American farmers,” Angela Hofmann, deputy director of Farmers for Free Trade, said in a statement. “Hog, apple, potato and dairy farmers are among those suddenly facing a 10 or 20 percent tax hike on the exports they depend of for their livelihoods. Farmers need certainty and open markets to make ends meet. Right now they are getting chaos and protectionism.” It is unclear which country will blink first, leaving the future of the trade deal, and the millions of jobs across the continent that are linked to it, so uncertain that many companies are withholding investments they might make to take advantage of the pact. Mr. Kudlow insisted that the president was not planning to withdraw from Nafta — which he has frequently threatened to do. However, splitting the current trilateral deal into two separate bilateral agreements would likely require nullifying the 25-year-old agreement. 3

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On Friday, Mr. Trump said he would be interested in pursuing separate deals. “These are two very different countries,” he said. “I like free trade, but I want fair trade,” Mr. Trump said, adding, “They cannot believe they’ve gotten away with this for so many decades.” People familiar with the deliberations say the idea of separate talks is aimed at pressuring Canada, which American negotiators see as obstructionist and an impediment to the progress of the Nafta negotiations. The preference for bilateral negotiations has also emerged as one of the sole areas of agreement among Mr. Trump’s warring trade advisers, who agree on little else but the ability to extract bigger concessions through one-on-one talks. Bilateral deals are also a longtime focus of the president. However, both Mexico and Canada insist that the idea is a non-starter. Mexican negotiators say they would not be willing to consider splitting the negotiations, a move they view as potentially damaging to North American supply chains and an unnecessary complication of a pact that many businesses rely on, according to people familiar with their thinking. They add that they do not view Canada as their biggest problem in the talks. The three countries

have

remained

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impasse

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significant

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manufacturing rules for autos and an American proposal for a five-year sunset clause that would cause the deal to automatically expire unless the countries voted to renew it. The clock has essentially run out for the administration to secure a Nafta deal this year. The Trump administration had been trying to conclude Nafta talks by the end of May in order to submit the deal for a vote in the current Republican-controlled Congress. Given the statutory deadlines the administration must meet to get a trade deal approved, it now appears likely that any vote would drag into next year, after midterm elections that could shift the political makeup of Congress. Mr. Trump’s strategy in the negotiations with Canada and Mexico has drawn criticism from the business community as well as Democrats and Republicans. A spokeswoman for Representative Kevin Brady of Texas, the chairman of the Ways and Means Committee, said Tuesday that Mr. Brady opposed splitting the negotiations in two.

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“A Nafta without both Canada and Mexico included is no longer a North American Free Trade Agreement,” the spokeswoman, Julia Slingsby, said. “Chairman Brady believes one free trade agreement with Canada and Mexico is best for America. It provides the most certainty for American companies and is the best way we can sell ‘Made in America’ products.” And a survey of chief executive officers released Tuesday morning by Business Roundtable showed that while executives have a positive view of the economy, they see the administration’s trade policy and the prospect of retaliation from other countries as an escalating risk to their businesses. Joshua Bolten, the president of Business Roundtable, said that uncertainties about trade policy were “a growing weight on economic progress — especially amid escalating trade tensions. America’s current and future economic vitality depends on productive talks with China and a successful modernization of Nafta.” Privately, some congressional Republicans expressed an openness to the administration negotiating some trade issues bilaterally with Mexico and with China. But they expressed little support for scrapping Nafta entirely and replacing it with separate deals. “Now is the time to stay the course and work with our trading partners to find a path forward on an updated Nafta that will meet the high-standards of bipartisan TPA and gain the support of Congress,” Senator Orrin G. Hatch of Utah, the chairman of the Finance Committee, said on Twitter.

Japan PM Abe: no countries benefit from trade protectionism Reuters (Reino Unido) Japanese Prime Minister Shinzo Abe said on Wednesday that he wants to send a message at a Group of Seven leaders’ summit that no countries benefit from trade protectionism. The G7 leaders summit to be held June 8-9 could turn into a tense encounter after frustration with U.S. tariffs on steel and aluminium spilled into the open at a G7 finance ministers’ meeting last week. 5

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“No country benefits from retaliatory trade restrictions,” Abe told reporters. “My message is G7 should play a role in free and fair global economic development,” he added. Abe also said the G7 should send a message that it supports U.S. President Donald Trump as he prepares for a summit meeting with North Korean leader Kim Jung Un in Singapore. G7 finance ministers met last week and rebuked Washington over the tariffs, setting up a fight at the G7 leaders’ summit. In a rare show of division among the normally harmonious club of wealthy nations, the six other G7 member countries issued a statement asking U.S. Treasury Secretary Steven Mnuchin to convey their “unanimous concern and disappointment” with the tariffs. All six of the other G7 countries - Britain, Canada, France, Germany, Italy and Japan are now paying the metals tariffs, which are largely aimed at curbing excess production in China. Canada and Mexico, which are embroiled in talks with the United States to update the North American Free Trade Agreement, responded to the move by announcing levies of their own on a variety of U.S. exports. The EU is also set to retaliate with tariffs on a range of U.S. goods, from Harley-Davidson motorcycles to jeans and bourbon. Trade protectionism poses risks to Japan’s economy partly because many of its companies in electronic parts, semiconductors and chemicals ship goods to China, where they are used to make final products destined for the United States and other markets. Declines in household spending and industrial output have raised concerns that Japan’s domestic demand has stalled after two consecutive years of brisk growth. If Japan’s exports also weakened due to trade protectionism that would be a double blow to the country’s outlook for growth.

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III. OUTROS Exigirán mayor calidad en el acero para evitar desvíos de China y la UE BAE Negocios (Argentina) Frente a los posibles desvíos de comercio derivados de los aranceles impuestos por el presidente de los Estados Unidos, Donald Trump, el Ejecutivo lanzará en el corto plazo una norma técnica en el caso del acero para la construcción que elevará las exigencias a las importaciones, aunque existen diversos pedidos de control por parte de otros sectores industriales que no están en estudio. Fuentes gubernamentales señalaron a BAE Negocios que "está próxima a salir una norma técnica que regirá tanto para los fabricantes nacionales de acero como para las importaciones". Aunque el tratamiento de esta normativa era previo al anuncio de los Estados Unidos respecto de los aranceles para el acero y aluminio, del 25% y 10%, respectivamente, las fuentes expresaron que "en un escenario como el que se viene, la norma buscará igualar las exigencias de calidad y podría combatir los desvíos de comercio desde China y otros países productores". Al menos en la medida sobre la que trabajan funcionarios y empresas, el tipo de acero que quedará regulado con pautas más duras será el destinado a la construcción. Actualmente las empresas socias de la Cámara Argentina del Acero son Acindar (Grupo Arcelor Mittal); Tenaris-Siderca y Ternium-Siderar (Organización Techint); Acerbrag (Grupo Votorantim); Sipar-Gerdau (Grupo Gerdau); y Aceros Zapla. La industria siderúrgica emplea aproximadamente unas 15.000 personas directamente y alrededor de 100.000 indirectamente. Según los cálculos sectoriales, la Argentina exporta acero a los Estados Unidos por 200 millones de dólares; y aluminio, por 430 millones de dólares. En el sector del acero consideran que hay incertidumbre sobre las medidas adoptadas por los Estados Unidos, por las implicancias que podría tener en las exportaciones de la Unión Europea, China y países asiáticos. Mientras la Organización Mundial del Comercio (OMC) dio a conocer un informe recientemente en el cual la Argentina figura como una de las economías más abiertas del mundo, el Gobierno intenta suplir las licencias no automáticas por la imposición de normas técnicas. Sin embargo, fuentes de distintos sectores, como el textil, calzado, 7

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marroquinería y juguetes, protestan por lo bajo por el crecimiento exponencial de las compras externas y la falta de normas entre otros mecanismos. De acuerdo con un documento del organismo internacional, la Argentina posee solamente 705 barreras no arancelarias hasta diciembre del 2017, muy lejos de las 5.256 de los Estados Unidos; las 2.596 de China; las 2.392 de Brasil, el mayor socio comercial del país y con el cual se debaten estos ejes; y las 2.075 de la Unión Europea, un punto que debería ser abordado en forma urgente en la negociación con el Mercosur. Las licencias no automáticas no van a desaparecer por completo, pero la idea es ir bajando su cantidad y reemplazándolas por un sistema de normas técnicas. Sin embargo, a la luz de los hechos, el Gobierno ha presentado un número muy escaso de reglamentos técnicos desde que asumió en diciembre de 2015. En verdad, era muy fuerte el rumor sobre la eliminación de las licencias no automáticas, en los ámbitos industriales y comerciales, y en algunos casos, eran más que trascendidos y habían ocurrido comunicaciones directas con sectores. Fuentes de la UIA dijeron a este diario "si bien es cierto que un mayor comercio internacional es deseable (Argentina comercia un 20% de su PIB, en niveles similares a EE.UU. y Brasil, pero muy por detrás del 48% de Chile, por ejemplo) y de que hay pocos acuerdos económicos del Mercosur, hay que tener en cuenta que la protección a nivel global sigue estando presente en buena medida". En ausencia de tratados de libre comercio, existen barreras para-arancelarias que dificultan el comercio bilateral, ante la imposibilidad de fijar aranceles muy altos luego de la Ronda de Uruguay.

How Brazil's Economic Recovery Got Run Off the Road: QuickTake Bloomberg (Estados Unidos) Just as Brazil’s recovery appeared to be taking hold, the country got bogged down. A 10day strike by truckers over fuel pricing caused a crippling nationwide shutdown and was resolved only when President Michel Temer’s administration gave in to numerous demands, from cheaper fuel to a change in the leadership of the state-run oil company 8

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Petrobras. The cost: billions of reais in taxpayer money and a weakened government with a tarnished reputation for fiscal rigor. 1. Why was the strike so damaging? It underscored how weak and unpopular the government is. Before Temer, the Brazilian government would intervene to cap the cost of fuel, hurting profits at Petrobras. Under Temer’s watch, Petrobras let the market dictate fuel prices, which helped the company but hurt Brazilian motorists when they filled their tanks. That’s what prompted truckers to block Brazil’s highways in protest. Temer’s responses -- slashing the cost of diesel and forcing out the widely respected Pedro Parente from Petrobras -- revealed a willingness to jettison fiscal discipline in return for political survival. A significant and vocal minority exploited the turmoil to call for military rule. 2. What does this mean for the economy? Even before the strike, and its disruption to supply chains, economists had been steadily lowering their growth forecasts for 2018. (In the survey published on June 4, growth was expected to be 2.18 percent, more than a half-point lower than the outlook a month earlier.) Unemployment remains stubbornly high, around 13 percent, and investment has started to tail off as investors fret about this year’s wildly unpredictable elections. Now that the truckers have achieved virtually all their aims, the risk is that the government could face further strikes in other parts of the economy and further protests over fuel prices. 3. How might this affect the election? The turmoil of recent weeks is likely to help extremist candidates and hobble centrist ones in national elections slated for October, which were already looking wildly unpredictable. Temer, who took office in 2016 after the impeachment of Dilma Rousseff, isn’t running; the leader in many polls is former President Luiz Inacio Lula da Silva, who is in jail and will likely be barred from running due to his corruption conviction. Jair Bolsonaro, the far-right ex-army captain currently polling second to Lula, offered strong supporter for the protesters and appears to be the main beneficiary. But leftists like Ciro Gomes may also gain from criticizing the government’s market-driven fuel-price policies. Reformist candidates associated with the Temer administration appear unlikely to make much headway with an angry electorate.

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4. Could the Temer administration fall before the elections? It’s unlikely, but possible. Ninety-six percent of Brazilians criticized Temer’s handling of the strike, and his approval ratings have long languished in single figures. For the third time in the past year, he’s under investigation for corruption, this time into allegations he received bribes in exchange for favoring contractors at maritime ports. New discoveries could lead the prosecutor to press charges once again. As his power ebbs away, his support in Congress is drying up, though he still appears to have the votes to avoid impeachment. Brazil’s political and economic elite want to reach the elections without further turmoil. 5. Could the military intervene? That’s very unlikely. The growing calls for military intervention are mostly an expression of Brazilians’ frustration with their country’s democratic institutions after years of rising crime, recession and corruption scandals. The armed forces are also increasingly visible in public life. An army general was appointed in February to the defense ministry for the first time since the military dictatorship, and the Temer administration has deployed the armed forces frequently to help enforce public security in Rio de Janeiro. The military was also used to help break up blockades during the truckers’ strike. But senior military commanders have ruled out the possibility of an intervention.

Brazil Steps Up Intervention as the Real Crashes Toward Two-Year Low Bloomberg (Estados Unidos) The real’s depreciation has thrust Brazil’s central bank into one of its toughest tests in months after an attempt to placate the market failed to buoy the currency. The real pared losses briefly Tuesday after policy makers offered to sell an additional $1.5 billion of swaps contracts, beyond the $750 million they had been auctioning daily. But the recovery faded by late afternoon, with the currency closing at 3.8094 per dollar, the weakest level in more than two years. It begins trading at 8 a.m. in New York.

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"While the BCB’s intervention signals a willingness to support the currency after its 22 percent drop since the beginning of the year, the timing may have much to do with breaking the fall before it breaches a possible sentiment-busting 4-per-dollar level,” said Humberto Garcia, a strategist at Leumi Investment Services in New York. The real has weakened 13 percent since the end of March, the worst performance among 16 major currencies tracked by Bloomberg, amid growing concern that elections in October could usher in a president less attuned to investors and business. Investors’ fear that fixes to fiscal problems would be derailed have exacerbated what’s already been a lackluster year in emerging markets. “Any central bank that tries to intervene in their FX market is only inviting speculators to test the bank’s will,” said James Gulbrandsen, a Rio de Janeiro-based money manager who helps oversee $3.5 billion of assets at NHC Capital. “For the bank, it typically ends in feeling like you’re drinking water from a fire hose.” Still, Gulbrandsen said the real is beginning to look attractive at current levels, and if it were to weaken to 4 per dollar he’d “load the boat” buying the currency. Extra Auctions The central bank sold about 22,000 of the 30,000 contracts it offered at two extra auctions. It placed all 15,000 contracts in the day’s regularly scheduled sale. The amount that remained unsold isn’t enough to worry traders. Hideaki Iha, a trader at Fair Corretora, said policy makers weren’t willing to give the investors as high a rate as they were pushing for. While the swaps don’t change the supply of physical dollars in Brazil, they support the real by meeting demand from investors who want to hedge against the risk of the decline in the Brazilian currency. They also boost onshore dollar loan rates, encouraging commercial banks to bring greenbacks into Brazil to profit from the higher rates onshore. “The central bank got the timing right, coming in to try to curb a speculative move,” said Italo Abucater, the head of foreign-exchange trading at Tullett Prebon Brasil in Sao Paulo.

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