Rising imports of readymades from Bangladesh has put the domestic manufacturing sector in a tight spot. After its recent appeal to brands and retailers to focus more on sourcing and engaging with domestic textile manufacturing clusters (to curb the import of readymade garments from Bangladesh), the Indian Texpreneurs Federation (ITF) has now appealed to the Textile Ministry to facilitate a meeting betweenbrands and domestic manufacturers for mutual benefit. Rising imports of readymades from Bangladesh has put the domestic manufacturing sector in a tight spot. Imports are up 53 per cent to $1.07 billion in 2018-19 fiscal. A look at the import data shows that cotton garments such as trousers, shorts and shirts (for men and boys) and cotton t-shirts are amongst the top four imported items. “And this surge is catching up with synthetic textile products too, at a much faster rate. When all such items are commonly manufactured in clusters such as Tirupur, Chennai, Surat and Ichalkaranji, Indian manufacturers seem to be losing out to Bangladesh,” said Prabhu Dhamodharan, Convenor, ITF. The Federation, in its appeal to Union Textile Minister Smriti Zubin Irani stated that the Indian clusters could better serve the sourcing needs of both western and Indian brands than products sourced from Bangladesh, Sri Lanka or Indonesia.
Source: The Hindu Business Line
If India’s growing so fast, why do most other indicators suggest the economy is stagnating or slowing?
India’s government has long claimed that the country is one of the fastest-growing large economies in the world. That boast was a crucial part of the ruling party’s message in India’s recent election campaign — that, under Prime Minister Narendra Modi, the economy was in safe hands. Competence and sincerity as an economic manager is central to the image Modi has sought to project. Unfortunately, that claim looks increasingly unsupportable. Earlier this month, official government figures revealed that the economy had been slowing for three quarters. After months of denial, the government also admitted that unemployment is higher than it has been for four decades. Now, Arvind Subramanian, a well-regarded economist who was till last year one of Modi’s most senior advisers, has argued in a Harvard working paper that India’s official figures overestimate growth by several percentage points. While the government claims that India is growing at 7%, Subramanian suggests it’s actually growing at closer to 4.5%.Subramanian’s methodology can certainly be questioned, and his estimate of actual GDP growth may be wrong. But, the fact remains that he has merely made explicit, through comparisons across time and with other middle-income economies, the central puzzle of Indian GDP data: If India’s growing so fast, why do most other indicators suggest the economy is stagnating or slowing? Whether looking at credit growth or vehicle purchases, exports or investment, there’s little support for the idea that India is enjoying breakneck growth at the moment. It’s past time that India’s government took this problem seriously — both the questions about India’s GDP data and the concerns about what the data reveals about the economy. So far, the government has denied that official data could be questioned, even though senior independent statisticians have quit after accusing politicians of concealing the unemployment figures. Absurdly, some officials have even tried to say that the unemployment data can’t be trusted because the economy is growing so fast. The government had better understand that this is a crisis of credibility. Its own senior officials don’t believe its numbers. Shortly, nobody else will either. This is an unprecedented humiliation for Indian officialdom, which has prided itself on the quality and independence of its statistics. It needs to be addressed quickly, whatever the political cost. Obviously, the first step has to be to set up an independent commission staffed with worldclass economists and statisticians to go into Subramanian’s critique. The prime minister’s economic advisory council has already responded in a press release that essentially promises a “point-by-point rebuttal” to Subramanian — an indication that a real investigation is not on the cards. Then there are the larger questions about India’s economy that must be answered. If it is growing at less than 5%, then it is under-performing massively given its size and demographic profile. Yet, over a fortnight since Modi was re-elected, we still have no clear idea what his economic agenda for the next few months might be. This is a remarkable degree of hubris. Every single economist worth his or her salt agrees that India’s economy needs fundamental structural reform and has for years. Markets for land and labor are not flexible. Institutions are not sufficiently independent, the judicial system is so sclerotic that contract enforcement is a joke, and the financial system is too dependent upon state-run banks. All of these bottlenecks need to be addressed and they need to be addressed together. When India’s economy began its liberalization process in the 1990s, they were all on the agenda. Successive governments have set them aside as being politically problematic. Now there’s less excuse than ever for putting them off: No government in that period has had Modi’s political capital. It used to be said that India only reforms in a crisis. Well, this is a crisis. If India is enduring rampant unemployment, if it is growing at only 4.5%, then not since the 1990s has the economy been so in need of drastic reform measures. The government won’t able to avoid the facts for long. Whatever it may claim about growth, investors will make up their own minds. Confidence in India’s economy continues to be shaky — and a few more quarters of bad indicators will erode it completely. At that point, even a government obsessed with its image will have to accept reality.
Source: Economic Times
Drawing inference from a survey of investment promotion agencies globally, the report points out that India's equity outflows stood at $11.03 billion in 2018. The growing number of Indian companies eyeing international acquisitions is expected to make the country one of the top 20 global sources of foreign direct investment (FDI) soon, shows a report by a UN body. “India and the UAE — not traditionally in the top 20 outward investor countries — were also listed among the top 10 sources of FDI, for the 2019-2021 period, shows the report on international FDI flows by United Nations Conference on Trade and Development. Drawing inference from a survey of investment promotion agencies globally, the report points out that India’s equity outflows stood at $11.03 billion in 2018.
Firms on shopping spree
The current year has seen a string of announcements by Indian majors, according to the India Brand Equity Foundation (IBEF), a trust established by the commerce department. Infosys has announced the acquisition of 75 per cent stake in a subsidiary of Dutch bank ABN AMRO. In March, Sun Pharmaceuticals also raised its stake in Russia’s PJSC Biosintez to 97 per cent. Closer to home, Ashok Leyland has set up a new facility in Dhaka, in a joint venture with IFAD Autos. The sales, service, and spare parts facility is spread over 138,000 square feet, and will cater to the entire range of Ashok Leyland vehicles. In addition, auto components major JBM Group has purchased a majority stake in Linde-Wiemann, a German structural components producer. OYO is planning to invest $1.2 billion in expansion across key markets, including China.
Falling inbound FDI
However, inbound FDI remains a different story. While the report said that FDI inflows rose 6 per cent in 2018 to $42 billion, the government’s own data for the entire FY19 period has shown that inbound equity investments declined for the first time in six years in FY19. Latest figures released last month by the Department for Promotion of Industry and Internal Trade (DPIIT) revealed that equity inflows reduced to $44.36 billion, down 1 per cent from $44.85 billion last year. “Apart from a wait-and-watch policy adopted by global investors before the elections, volatility in the stock market as well as the overall weak health of the corporate sector may have scared off new inflows,” said Devendra Pant, chief economist at India Ratings. India’s economy officially grew 6.8 per cent in FY19 — lowest in the Modi government’s first tenure. Private investments remained subdued and demand — particularly in the rural sector — was muted. However, investors may now rally around the massive mandate given to the incumbent government and investments may rise accordingly, Pant added. In the subcontinent, FDI inflows to Bangladesh and Sri Lanka rose to a record $3.6 billion and $1.6 billion, respectively. However, Pakistan witnessed a 27 per cent decline in investment to $2.4 billion. In FY19, Singapore turned out to be the largest source of offshore funds, with FDI rising nearly 25 per cent to $16.22 billion. This was followed by Mauritius at $6.8 billion and Japan at $2.98 billion. India revised its tax treaty with Mauritius and Singapore, which has fully come into effect from the current financial year.
Source: Business Standard
A Rs 200 crore zero-waste textile processing park, which would be a boon to the textile industry in the state to get rid of effluent, is to come up at Kariapatti in Virudhunagar district on the border with Madurai. This was revealed at a press meet organized to announce the textile expo to be held from June 18 to 21 at Madurai District Tiny and Small-Scale Industries Association (Maditssia). Project director of the textile processing park K R Gnanasambandan said that they were in the process of seeking permission for the foundation stone laying ceremony of the park which is to be spread over 100 acres. He said the park would be established in a year. As in other districts, textiles had been flourishing in Madurai and the southern districts too with about 75 units functioning well till recently in Madurai alone. However, about 35 of them had closed down thanks to the issue of pollution. The remaining ones were suspended because power supply was stopped over the issue. Gnanasambandan said that the textile processing park project was signed by late chief minister J Jayalalithaa at the 2015 Global Investors Meet and Maditssia was the first to take up the offer. ``The central government will contribute Rs 100 crore and the state government and Maditssia Rs 50 crore each for this park,’’ he said. It had taken them five years to get clearances at different levels, including the most important one on pollution from the Tamil Nadu Pollution Control Board, and other environmental clearances. The park would house 40 textile units which would be relocated into the park from in and around Madurai. The units would bleach and dye textiles, but there would be zero discharge. He said that 96% of the water from the park would be recycled while the remaining 4 %, which was sludge, would be sent to the evaporator. The water in the sludge would evaporate and the remaining solid, which was predominantly lime, would be sent to the cement industry. He said that the park could help rejuvenate the textile industry throughout the state as it would help them with the crucial functions of bleaching and dyeing. All types of yarn could be processed here. Once functional, the park would provide direct employment to 2,000 people and indirect employment to over 5,000 people, he added.
Source: Times of India
Traders body CAIT on Thursday urged the government to lower GST rates on various products, including auto parts and aluminium utensils. It also suggested a review of items placed under different tax slabs under Goods and Services Tax (GST) as many of them are overlapping. "Various items like auto parts, aluminium utensils etc. are not of luxurious nature (and) should be taken out from 28 per cent tax slab...," CAIT said in a statement. The trade body submitted a White Paper on GST to Finance Minister Nirmala Sitharaman, in which it emphasized the need to streamline the GST slabs and ensure that as a matter of policy, the tax rate on a raw material is not more than the tax rate for the finished goods. Presenting the paper, CAIT Secretary General Praveen Khandelwal urged the Minister to simplify Form GSTR 9 and 9C as it demands various information which were not prescribed earlier and hence traders are unable to comply with the same. He also said that as per original announcement, the non-banking finance companies and micro finance institutions should be roped into the Mudra scheme to lend to the ultimate beneficiary and banks should be asked to lend finance to NBFCs and MFIs. While welcoming waiving-off of bank charges, Khandelwal suggested that in order to encourage adoption and acceptance of digital payments, the bank charges levied on card payments should be subsidised by the government directly to banks and neither the traders and nor the consumers should be charged any bank charges on card transactions. The traders' body has also urged the Finance Minister to form GST Lokpal in each state and at the Centre so that a forum is provided to all traders to redress their concerns. Welcoming the suggestion, Sitharaman assured the delegation that she will look into the issues raised by CAIT. The intention of the Government is certainly to simplify the tax procedure so that more and more people can easily comply with it, she said while urging traders to streamline their existing business format and comply with the law. In its White Paper on GST, the CAIT has raised many issues including advance ruling, reverse charge mechanism, rectification of GST returns, that the liability of paying GST should be devolved on the seller only and no action should be taken against the buyer, clarification of jurisdiction of CGST & SGST, HSN code issues, abolition of Form ITC-04, and so on. The CAIT has also urged a reduction in the tax rate from the current slab to the appropriate lower slab for items like hardware, mobile covers, food items, dry fruit, ice cream, food grains, malt/cereal-based health food drinks, paints, marble, used vehicles, two-wheelers, agricultural equipment, roasted chana, etc
Source: Business Standard
U.S. Secretary of State Michael Pompeo hinted that it was possible to reinstate the Generalised System of Preferences, a scheme for preferential access to certain goods markets in the U.S., for India. The administration official is expected to discuss this and other issues during his New Delhi visit later this month.
Source: Financial Express
In the last four weeks, crude oil market collapsed by 12-15 per cent; and last week, Brent briefly traded below the psychological $60 a barrel, a five-month low. This is notwithstanding the current supply tightness following US sanctions on Iran oil and involuntary outage in Venezuela. In the US, oil output has reached a record high which is weighing on the price of WTI trading close to $50 a barrel. Why did oil fall steeply? There are concerns on two counts. While economic data coming in from major economies are weak, the trade conflict between the world’s two largest economies, the US and China, continues to escalate. This is making demand outlook rather gloomy. Speculative investors holding long positions on the exchanges have been steadily exiting the market as evidenced by fall in net long positions. In the current scenario, punters see no significant opportunity for an upside price movement anytime soon. Members of the oil cartel OPEC under the leadership of Saudi Arabia are, of course, not at all happy with the current price situation. Many of them actually need higher prices to fund their public spending. OPEC+ output cut decision has now run its six-month course and will come to an end this month. OPEC members are likely to do everything under their control to prop the market up. So, the big question is whether the output cut agreement will be extended beyond June till the end of the year. In the next meeting scheduled for early July, there is likely to be talk of a deeper output cut; but it is an extremely unlikely chance that such a decision will be unanimous. As of now, there are no clear answers. Russia could be a dark horse. The country is already losing market share because of suspension of supplies through one of its pipelines because of contamination. They are not at all happy with losing market share, especially as the US output is ramped up. So, there is risk Russia may pull out of the OPEC+ production cut deal. The country is said to be comfortable with crude (Brent) at say $65 a barrel. In the event, it may not agree to an extension of the agreement, much less a deeper cut. More significant than the current market fundamentals is the demand outlook for the second half of the year. There is already enough pessimism about growth. Europe and Japan continue to show tepid growth. China is slowing decisively although recent trade data in terms of oil import seems resilient. The US is widely expected to slow down in the second half of this year as the positive effects of stimulus fade. In other words, the global picture is far from rosy. According to the World Bank, global growth will weaken to 2.6 per cent in 2019 as risks remain, before inching up to 2.7 per cent in 2020. Growth in emerging market and developing economies is expected to stabilise next year as some countries move past periods of financial strain, but economic momentum remains weak, the Bank said. The positive correlation between economic growth and energy consumption is, of course, well recognised. In commodity markets it is axiomatic that the market will move, not on the basis of current fundamentals, but on the basis of expected changes in fundamentals in the future. From that perspective, market participants foresee limited demand growth for energy products. Brent crude could possibly trade in the $60-$65 a barrel range in the last quarter of the year. While the price level may be seen as a small relief for India, global headwinds are going to pose huge challenge for the country’s growth.
Source: The Hindu Business Line
Snapping its two-session gaining streak, the rupee dived 16 paise to close at 69.50 against the US dollar on Thursday amid a sharp rise in crude oil prices.Brent crude futures, the global oil benchmark, soared 3.84 per cent to $ 62.27 per barrel after attacks on two oil tankers in the Gulf of Oman triggered fears of supply disruptions. The rupee opened at 69.33 per dollar and fell further to touch a low of 69.56 at the interbank foreign exchange market. The local unit finally settled at 69.50, down by 16 paise over its previous close. The rupee on Wednesday closed at 69.34 against the US dollar.
Source: Business Line
The Government of India has taken a historic decision to reduce the rate of contribution under the ESI Act from 6.5% to 4% (employers’ contribution being reduced from 4.75% to 3.25% and employees’ contribution being reduced from 1.75% to 0.75%). Reduced rates will be effective from 01.07.2019. This would benefit 3.6 crore employees and 12.85 lakh employers. The reduced rate of contribution will bring about a substantial relief to workers and it will facilitate further enrollment of workers under the ESI scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. This shall also lead to enhanced Ease of Doing Business. It is also expected that reduction in rate of ESI contribution shall lead to improved compliance of law. The Employees’ State Insurance Act 1948 (the ESI Act) provides for medical, cash, maternity, disability and dependent benefits to the Insured Persons under the Act. The ESI Act is administered by Employees’ State Insurance Corporation (ESIC). Benefits provided under the ESI Act are funded by the contributions made by the employers and the employees. Under the ESI Act, employers and employees both contribute their shares respectively. The Government of India through Ministry of Labour and Employment decides the rate of contribution under the ESI Act. Presently, the rate of contribution is fixed at 6.5% of the wages with employers’ share being 4.75% and employees’ share being 1.75%. This rate is in vogue since01.01.1997. The Government of India in its pursuit of expanding the Social Security Coverage to more and more people started a programme of special registration of employers and employees from December, 2016 to June, 2017 and also decided to extend the coverage of the scheme to all the districts in the country in a phased manner. The wage ceiling of coverage was also enhanced from Rs. 15,000/- per month to Rs. 21,000/- from01.01.2017. These efforts resulted insubstantial increase in the number of registered employees i.e. Insured Persons and employers and also a quantum jump in the revenue income of the ESIC. The figures are as under: - Year No. of Employers No. of Insured Persons (in crores) Total contribution received (in Rs. crores) 2015-16 7,83,786 2.1 11,455 2016-17 8,98,138 3.1 13,662 2017-18 10,33,730 3.4 20,077 2018-19 12,85,392 3.6 22,279The Government of India is committed to the cause of welfare of employees as well as employers. It is also committed to improve the quality of medical services & other benefits being provided under the ESI scheme.
Source: PIB
Sintex Industries fell 9.94% to Rs 4.26 at 9:36 IST on BSE after the company said it has defaulted in payment of interest/ principal amount on secured Non-Convertible Debentures. The announcement was made after market hours yesterday, 12 June 2019. Meanwhile, S&P BSE Sensex was down 116.70 points or 0.29 % at 39,640.11. On BSE, 1.31 lakh shares were traded in Sintex Industries counter, compared to a 2-week average of 3.74 lakh shares. The share price hit an intraday high of Rs 4.27. The stock hit a 52-week low of Rs 4.26 in intraday trade today, 13 June 2019. It hit a 52-week high of Rs 17.40 on 15 June 2018. Sintex Industries has defaulted on the payment of interest/ principal amount on secured Non-Convertible Debentures (NCDs). On 11 June 2019, the current default amount on interest stood at Rs 3.03 crore and principal amount at Rs 85.84 crore on 10.70% secured NCDs for a tenure of 7 years. Sintex Industries' net loss has increased to Rs 91.27 crore from a net profit of Rs 57.42 crore on a 4.2 % decrease in net sales to Rs 591.54 crore in Q4 March 2019 over Q4 March 2018. Sintex Industries is primarily engaged in the business of manufacture and sale of yarn and structured fabrics.
Source: Business Standard
Describing India as a “high-tariff market”, US Commerce Secretary Wilbur Ross on Thursday urged the Modi government to carry out reforms that will open up the Indian economy and market. In an unusually blunt remarks, Ross asked India to remove the overly restrictive market access barriers for American companies. “As President (Donald) Trump has said, we look forward to working with the (Indian) Prime Minister and his administration to address a mutual trading opportunities and the mutual investment potentials,” the commerce secretary said in his key note address to the India Ideas Summit of US Indian Business Council (USIBC) here.
Trade ties
Ross said he is planning a trip to India in the near future to discuss and address some of the key issues challenging the India and US trade ties. The US official was in India just before the Lok Sabha elections during which he met Prime Minister Narendra Modi and top Indian government officials. The US, he said, is a good place to invest and the country is open for business. The Trump administration has been addressing a more balanced and reciprocal trade relationship, not only with India but also with its other trading partners across the world. US is the “least protectionist” major country, but India has “one of the highest levels of tariffs in the world”, Ross said, adding that protectionist practices also hurt the countries themselves.
Open economy
Ross expressed hope that since Modi has been voted back to power with a stronger mandate, he would be able to carry out necessary reforms and take India towards “a more open economy”. “The mindset of moving towards a more open economy” is very important, he said, adding that both the US and India would benefit from this change. American companies based in the Indian market are confronted with both tariffs and non-tariff barriers, particularly including e-commerce rules, data localisation, restrictions, price controls on medical devices and pharmaceuticals other products. Some of these barriers are relatively new.
Commercial relationship
For the development of a viable commercial relationships, US companies need more predictability, more transparency or more consistency of regulations, Ross said, as he justified the Trump administration’s decision to withdraw the Generalised System of Preferences (GSP) for India. GSP is a programme for preferential access to certain goods markets in the US. At the same time, Ross acknowledged that India has been making significant improvement in ease of doing business ranking of the World Bank. The US, he said, is encouraged by India’s efforts to improve the business climate and to attract investment at the sub-national level. Many US companies find it advantageous to take the approach of working through their states to establish partnerships and identify customers in Indian, he said.
Source: The Hindu
Chinese President Xi Jinping on Thursday told Indian Prime Minister Narendra Modi that the two countries should not pose a threat to each other and step up cooperation in various fields, including the construction of the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor. After Xi met Modi for the first time, after the Indian leader was re-elected Prime Minister, on the sidelines of the Shanghai Cooperation at Bishkek in Kyrgyzstan, the Chinese Foreign Ministry issued a statement late Thursday evening, giving details about the meet between the two leaders, who also discussed the US' protectionist trade policy. Xi, who congratulated Modi on his re-election, said both countries needed to accept their differences and expand their cooperation in various spheres. He pointed out that China and India are the only two emerging market countries with a population of one billion in the world, and they are at an important stage of rapid development. "The cooperation between China and India will not only help each other's development, but will also contribute to peace, stability, and prosperity in Asia and the world," he said. Xi also emphasised that "the two sides should adhere to the basic judgment that China and India... do not pose a threat to each other. They must persist in deepening mutual trust, focusing on cooperation, and accepting differences so that China-India relations become a more positive asset and positive energy for promoting the development of the two countries".He stressed the need to step up cooperation in investment, production capacity, tourism, and among others, expand benefits of common interests to jointly promote regional interconnectivity - including the construction of the BCIM, and better realise cooperative development and common development. BCIM is also one of the major six corridors of China's Belt and Road connectivity project. It aims to connect China's eastern city of Kunming with India's Kolkata through Bangladesh's Dhaka and Myanmar's Mandalay. India had not opposed the BCIM but its response to the project was tepid as it said to have concerns about China expanding its influence in its eastern neighbours. India also fears the project would expose its northeastern region. Xi also told Modi "that it was necessary to make good use of mechanisms such as the meeting of special representatives on the border issue, strengthen the building of confidence measures, and maintain stability in the border areas of the two countries".The two countries have a dispute over their 3,448 km long border, which is also the ninth largest boundary in the world. Xi also said that "as important representatives of developing countries and emerging market economies, China and India must jointly safeguard free trade and multilateralism and safeguard the legitimate development rights of developing countries".The US has turned up the heat on Indian and China as it in May took its trade spat with China to the next level by slapping tariffs on its goods worth $200 billion and ended the preferential status for Indian goods earlier this month. Modi told Xi that the Indian side was willing to maintain close high-level exchanges with China, strengthen strategic communication, promote bilateral relations in a wide range of fields, expand new areas of cooperation, and properly handle their differences. "India and China should jointly plan the commemoration of the 70th anniversary of the establishment of diplomatic relations between the two countries next year and enhance cultural exchanges between the two countries," Modi was quoted as saying by the statement.
Source: Business Standard
Despite Japan’s apparent warm relationship with Trump, he still wants to show voters that he is aggressively renegotiating all trade agreements. In the frenzied exchanges of international commerce that have played for almost a year, news of Japan has been relatively quiet. But, with premier Shinzo Abe marking the first visit by a prime minster to Iran since the Islamic Revolution — and as America's fourth-largest trading partner — global economists are wondering how long it could be before President Donald Trump takes aim at Japan, as he has done with China, Mexico, and the European Union. Like many other countries, Japan has a trade imbalance with the U.S., buying $75 billion worth of goods in 2018 and selling $143 billion. "I don't see how the U.S. doesn't turn its guns to Japan" after NAFTA and China, said Robert Uriu, professor of political science at the University of California, Irvine. "Japan is in this terrible dilemma. They don't trust what the U.S. is doing, but in terms of their current options, especially with a rising China, I think they're seeing they don't have much of a choice, so they have to somehow placate the United States." The hot-and-cold history of trade between the U.S. and Japan reaches back to the 1850s, when American whaling ships needed supplies, according to Ethan Segal, associate professor of history at Michigan State University. Things went into an understandable retreat during the Second World War, but later, the two countries agreed to a low exchange rate that allowed Japan to sell manufactured goods to the U.S. "As the Cold War was beginning to manifest itself, we were very interested in having a stable ally in the South Pacific," Segal said. However, tensions between the two countries hit a peak in the mid 1980s, after the Japanese radically improved the quality of their manufactured goods and were making heavy inroads into such U.S. sectors as cars and steel. Most Americans found the Japanese economic threat to be greater than the possibility of war from the Soviets, Segal said. By 1990, Japan had strengthened into the world's second-largest economy, exporting high-end electronics, autos, and other products. Since then, Japan's economy has been in a long downward slide, fueled by falling land prices that backed loans and an aging society where a decreasing base of working-age adults has to support older generations. "For the last 30 years, Japan's growth has been nil," said Jeffrey Bergstrand, professor of finance at Notre Dame's Mondoza College of Business. "Japan used to be 67 percent of the U.S. economy — and now it's about 40 percent because of its low growth relative to ours since about 1990." But the country remains an important trading as well as investing partner. "If you drive a Toyota, there's a good chance it was built in Kentucky," Segal said. "If Honda, it was probably Ohio." And the chance that it stays clear of trade war mania is diminishing. Trump has planned a 25 percent duty on imported cars from both Japan and the European Union, although in mid-May, Trump said that he would delay implementation for six months. Prime Minister Abe has developed an apparently good personal relationship with Trump, but the statement at the end of the president's recent trip to Japan was revealing, in that there was confusion as to whether the U.S. agreed not to raise tariffs so long as the two countries were in discussion. "That's how the Japanese understand it, and it's clearly implied in the agreement," said Paul Sracic, professor and chair of politics and international relations at Youngstown State University, who was in Japan during the meeting. Additionally, Japan is part of the Comprehensive and Progressive Trans-Pacific Partnership, formerly the Trans-Pacific Partnership before Trump pulled the U.S. out of the agreement. That agreement constrains how far Japan can drop tariffs on things like agricultural goods, a big area of import from the U.S., before it is forced to offer the same to other members. "Trump immediately countered and basically discounted, saying we're not involved in TPP, so what other countries agreed to doesn't apply to the U.S.," Sracic said. "Politically, it's important for Trump to send a message to his voters in the Midwest that he is aggressively renegotiating these trade agreements, whether we're talking about NAFTA or a TPP-like trade deal with Japan. It's all pointing toward 2020." But, also like China, Japan considers long-term strategy and interests, Bergstrand says. That is why, during the talks, Abe mentioned direct investment in Ohio, Pennsylvania, and Michigan — three states that Trump would need to gain reelection. "What I think Japan's going to try to give is a deal increasing their direct investment, particularly in manufacturing in the swing states," Sracic said. "That's going to be their way out. Then Trump can say, 'I got something.'" Then, if Trump wins in 2020, Abe can consider that he gained a foothold to possibly hold off another change in mind on the part of the administration. And if Trump loses, there's always someone else to work with going forward.
Source: NBC News
Foreign Minister Shah Mehmood Qureshi said on Thursday that the government seeks market access for Pakistani commodities to the Central Asian countries, a private media outlet reported. Addressing the Pakistani community and students in Bishkek, FM Qureshi said Pakistan has always given great importance to its ties with all the Central Asian states, adding that they (government) would focus more on trade with the Central Asian countries after the restoration of peace in war-torn Afghanistan. “Unfortunately, trade cooperation with Central Asian states could not be materialised owing to lack of deliberations and connectivity,” he maintained. FM Qureshi urged the Pakistani community to play its due role in highlighting the soft image of the country. He termed Pakistani students in Kyrgyzstan as the “roaming ambassadors” of the country, adding that they (students) should play a proactive role in promoting Pakistan’s strength areas. The foreign minister remarked, “A community can play a cardinal role in creating goodwill and an enabling environment for trade, investment, tourism, and people-to-people contacts.” Meanwhile, Prime Minister Imran Khan on Thursday reached Bishkek, Kyrgyzstan, to represent Pakistan at the 19th Meeting of the Council of the Heads of State of the Shanghai Cooperation Organisation. Kyrgyzstan Prime Minister Mukhammedkalyi Abylgaziev and health minister Kosmosbek Sarievich Cholponbaev received the premier, the Pakistan Tehreek-e-Insaf (PTI) shared on social media. According to Radio Pakistan, Kyrgyz President Sooronbay Jeenbekov had extended the invitation to Prime Minister Imran Khan to attend the two-day summit. Foreign Minister Shah Mehmood Qureshi and Special Assistant to PM on Youth Affairs Mohammad Usman Dar are accompanying the premier. Earlier on April 10, President Dr Arif Alvi had urged Kazakhstan to facilitate access of Pakistani commodities to its markets. Talking to Kazakhstan Ambassador Barlybay Sadykov, who had called on him in Islamabad, Dr Arif Alvi had called for exploring possibilities to enhance trade and economic cooperation between Pakistan and Kazakhstan. The president had highlighted the need to explore possibilities of cooperation and joint ventures in sectors like food processing, textile, machinery and equipment, construction and infrastructure.
Source: Profit by Pakistan
Japan’s exports likely fell at a faster pace in May, down for the sixth straight month, as the U.S.-China trade war takes a toll on the economy, a Reuters poll showed on Friday. The Bank of Japan is expected to keep its targets for short-term interest rates and its long-term government bond yield unchanged next week, according to the poll. Consumer prices, another key gauge for market watchers on policy, likely edged down in May, putting pressure on the BOJ as it remains far from achieving its elusive 2% inflation target. “Exports likely dropped as factories halted during the 10-day national holidays and external demand is weakening,” said Koya Miyamae, senior economist at SMBC Nikko Securities, referring to the Golden Week holiday that was extended this year to mark the enthronement of a new emperor. “We need to see how exports data for June fared to examine its trend but the intensified U.S.-China trade war will have more of an effect on trade in June.” Exports in May are forecast to have dropped 7.7% from a year earlier, according to the poll of 16 economists, compared with a 2.4% contraction in April and the biggest drop since January. May imports are seen up 0.2% from a year earlier after a revised 6.5% gain in April, resulting in a trade deficit of 979.2 billion yen ($9.04 billion), the poll showed. The Finance Ministry will release trade data at 8:50 a.m. Japan time on June 19 (2350 GMT, June 18). The BOJ is seen keeping its short-term interest rate target at minus 0.1 percent and its pledge to guide 10-year government bond yields around zero percent at its June 19-20 meeting. Group of 20 finance leaders over the weekend said that trade and geopolitical tensions have “intensified”, raising risks to improving global growth, but they stopped short of calling for a resolution of a deepening U.S.-China trade conflict. The BOJ is among major central banks that could come under pressure to ramp up its already massive stimulus programme, as the trade dispute raises concerns about a global recession. The poll also projected Japan’s core consumer price index, which includes oil products but excludes volatile fresh food costs, would rise 0.8% in May from year earlier, down from a 0.9% gain in April. “Prices of electricity and gas, which reflected falls in oil prices, likely contributed to lower prices,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute. The Internal Affairs Ministry will publish data on consumer prices at 8:30 a.m. on June 21.
Source: Financial Express
