Major International Business Headlines Brief::: 09 December 2019

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Major International Business Headlines Brief::: 09 December 2019

 


 

 


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*  South African Airways to restructure under 'business rescue'

*  IMF approves $247 mln reform loan to Angola

*  South Africa makes last-ditch move to save state airline

*  South Africa's net foreign reserves fall to $44.4 bln in Nov

*  Kenyan shilling extends gains, helped by offshore investor flows

*  Polluting firms 'will be hit by climate policies'

*  Tesco considers sale of Thai and Malaysian stores

*  China exports fall again as US trade war continues

*  General Election 2019: Johnson insists no NI-GB goods checks after Brexit

*  Saudi Arabia ends gender segregation in restaurants

*  Trade disputes settlement system facing crisis

*  Sweden's Ericsson to pay over $1bn to settle US corruption probe

*  US jobs growth jumps in November

 

 


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South African Airways to restructure under 'business rescue'

JOHANNESBURG (Reuters) - South African Airways (SAA) said on Friday it has
applied to enter ‘business rescue’, a form of bankruptcy protection it hopes
will save the cash-strapped state carrier from collapse.

 

SAA, which has been making losses since 2011, is deeply in debt and has
received more than 20 billion rand ($1.36 billion) in government bailouts
over the past three years — all of which has achieved little more than
keeping it barely afloat.

 

A government memo on Wednesday said President Cyril Ramaphosa had ordered
SAA to seek the business rescue — in which a specialist takes control of a
company with the aim of rehabilitating it, or at least securing a better
return for creditors than liquidation would bring.

 

After years of government dithering, the distressed state entity’s crisis
was increasingly seen as a test of Ramaphosa’s resolve to carry out
badly-needed economic reforms.

 

Years of corruption and mismanagement have put several state owned
enterprises in dire straits, including power utility Eskom, whose financial
problems have left it struggling to keep the lights on. [nL8N28G0KN]

 

South Africa’s credit rating is teetering on the brink of junk largely
because of these problems. All agencies but Moody’s have cut its rating to
below investment grade, risking billions of dollars of investment outflows
if Moody’s does follow suit.

 

How Ramaphosa handles SAA’s restructuring, in the face of fierce opposition
from unions, could be taken as a signal his resoluteness in a much bigger,
immanent battle with Eskom.

 

A strike last month left the airline without enough money to pay salaries,
then two major travel insurers stopped covering its tickets against the risk
of insolvency. It has been granted a 4 billion rand ($272 million) lifeline
from the government and banks to launch the rescue plan. [nL8N28F0D5]

 

On Thursday Les Matuson from Matuson Associates was appointed to restructure
the company. He is already reviewing payments to creditors and is scheduled
to come up with a plan for how to handle them within 25 days. [nL8N28F0D5]

 

His appointment spurred an outcry from two of the largest trade unions at
SAA, the National Union of Metalworkers of South Africa (NUMSA) and South
African Cabin Crew Association (SACCA), who argued that he should have been
independently chosen.

 

“We don’t trust a process where a shareholder and the board get to hand pick
a business rescue practitioner,” SACCA President Zazi Nsibanyoni-Mugambi
told Reuters on Friday.

 

“We can’t leave it to the same people that we’ve been complaining about for
many years,” she said.

 

 

 

 

The opposition Democratic Alliance (DA)’s shadow minister for public
enterprises, Ghaleb Cachalia, approved the plan, saying: “we hope that ANC
government will take a stand ... in the best interest of South Africa and
the economy.”

 

SAA flights appeared to be operating normally according to the existing
schedule, ahead of the publication of a new provisional flight schedule
soon.

 

($1 = 14.7075 rand)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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IMF approves $247 mln reform loan to Angola

LUANDA (Reuters) - The IMF has approved a second tranche of a $247 million
loan to be paid to Angola under its Extended Fund Facility following a
review of the southern African oil producer’s progress under the program.

 

The multi-lateral lender announced the move late on Thursday. The
International Monetary Fund originally approved the facility totalling $3.7
billion in December 2018 to help Angola manage twin budget and balance of
payments crises after tanking global crude prices ripped a hole in its
revenues.

 

Angola is Africa’s second biggest oil exporter and relies on sales of the
fossil fuel for about 65% of total tax revenue, but a combination slack
crude prices and years of mismanagement at state oil-producer Sonangol have
left it struggling for funds.

 

The IMF’s Extended Fund Facility (EFF) is a loan pegged on deep structural,
macroeconomic and governance reforms designed to help countries with weak
economic growth and problems paying bills.

 

In a statement, the fund said Angola had made progress in reducing state
spending and broadening economic activity outside of oil, but that the
economic outlook was still uncertain and it had to do more to fight
mismanagement and corruption.

 

“The authorities’ commitment to fiscal consolidation has been illustrated by
the outperformance of the end-June 2019 non-oil primary fiscal deficit
target by a wide margin,” said Tao Zhang, IMF deputy managing director and
acting chairman.

 

 

 

 

“To ... mitigate the elevated risks to debt sustainability, the authorities
need to persevere with measures to mobilize non-oil revenue ... and bolster
transparency ... of state-owned enterprises.”

 

A part of President João Lourenço’s sweeping reforms is an ambitious plan to
selloff key state assets, including stakes in Sonangol and more than 100
other enterprises.

 

 

 

South Africa makes last-ditch move to save state airline

JOHANNESBURG/CAPE TOWN (Reuters) - South Africa’s government will cede
control of the national airline to a restructuring specialist in a
last-ditch attempt to save the cash-strapped business from collapse.

 

As part of a rescue plan started on Thursday, the government will hand the
running of South African Airways (SAA) to business rescue practitioner Les
Matuson to make the sort of painful cuts that would be difficult for
politicians to push through.

 

SAA has been granted a 4 billion rand ($272 million) lifeline from the
government and banks to launch the rescue plan, but that cash could only
last for months, analysts say.

 

The airline has been on the brink of collapse since a crippling strike last
month left it without enough money to pay salaries on time. Then two major
travel insurers stopped covering its tickets against the risk of the company
becoming insolvent.

 

SAA employs around 5,000 people, while the wider SAA Group, including
maintenance and catering units, employs around 10,000.

 

The airline, which has not made a profit since 2011 and has received more
than 20 billion rand of government bailouts over the past three years, said
it would publish a new provisional flight schedule soon.

 

Airport staff at Johannesburg’s OR Tambo airport said there hadn’t been much
disruption to SAA’s timetable so far, but many travellers were pessimistic
about its prospects.

 

“I think SAA is doomed already ... We shouldn’t be paying out of our own
money. That money should be coming from somewhere else,” said Alicia
Knoetze, 34, travelling to Zimbabwe.

 

Others said having a national airline was a point of pride.

 

Public Enterprises Minister Pravin Gordhan said the business rescue process
was the best way to rebuild SAA into a stronger entity. He said the plan was
to attract an equity partner later.

 

The Communist Party, a key ally of the governing African National Congress
party, said it was disappointed with the decision and wanted a “state-led
turnaround process”.

 

Trade unions, also deeply suspicious of moves that could weaken the role of
the state in the economy, said they were consulting members before
commenting.

 

CEDING CONTROL

Under Thursday’s plan, it will be business rescue practitioner Matuson,
rather than the government as SAA’s shareholder, who will decide the future
of the airline.

 

SAA board member Martin Kingston told Reuters SAA had been days away from
being shut down before the board decided on Wednesday to place the airline
in a business rescue process, after a “massive erosion of confidence”
related to the strike.

 

The restructuring expert will aim to either return the airline to solvency
or maximise value for its creditors.

 

 

 

 

Interim Chief Financial Officer Deon Fredericks said in a televised
interview with news broadcaster eNCA that in an initial discussion with
Matuson, he already had a review of the first payments that SAA will make to
critical creditors.

 

“There is a view that within 25 days there could be a full draft plan and
discussions will then take place with creditors,” Fredericks said.

 

Matuson has almost 35-years of experience in the field and has worked on
some of the largest corporate restructures in South Africa, according to his
firm’s website.

 

Banks have promised to give SAA 2 billion rand of loans guaranteed by the
government to launch the process, with the government providing a further 2
billion rand in what Gordhan termed a “fiscally neutral manner”.

 

SAA’s government-guaranteed debt, mainly held by local banks, will not be
subject to writedowns in the business rescue process, but analysts expect
other creditors to suffer losses.

 

SAA said the process sought to provide the best prospects for selected
activities to continue operating successfully.

 

Guy Leitch, editor of SA Flyer magazine, said business rescues often failed
because they were left too late.

 

He added the rescue would probably require more than 4 billion rand and was
sceptical officials would continue to fund it since they would have limited
say in its outcome.

 

Hans Klopper of BDO Business Restructuring said the rescue process could
take months if not years and a relatively small amount of SAA’s assets could
be recoverable.

 

 

“If there aren’t willing patrons prepared to book flights then the bottom
falls out of the whole business,” Klopper said.

 

($1 = 14.7075 rand)

 

 

 

South Africa's net foreign reserves fall to $44.4 bln in Nov

JOHANNESBURG (Reuters) - South Africa’s net foreign reserves fell to $44.415
billion in November from $44.606 billion in October, Reserve Bank data on
Friday showed.

 

Gross reserves increased to $54.893 billion at the end of November from
$54.529 billion the previous month.

 

The forward position representing the central bank’s unsettled transactions,
or swap, showed a smaller positive balance of $31 million in November after
a positive balance of $643 million in October.

 

 

 

Kenyan shilling extends gains, helped by offshore investor flows

NAIROBI (Reuters) - The Kenyan shilling extended its recent gains on Friday,
supported by hard currency inflows from offshore investors buying government
debt amid tight local currency liquidity conditions.

 

At 0732 GMT, commercial banks quoted the shilling at 101.50/70 per dollar,
compared with 101.65/85 at Thursday’s close.

 

 

 

Polluting firms 'will be hit by climate policies'

Carbon-intensive firms are likely to lose 43% of their value thanks to
policies designed to combat climate change, a report says.

 

Meanwhile the most progressive companies will see an uplift of 33% in their
value.

 

The forecast was commissioned by the UN-backed Principles for Responsible
Investment (PRI).

 

Representatives of fossil fuel companies told the BBC they were already
adapting their businesses to take climate change into account.

 

But the PRI study suggests major winners and losers will emerge between, and
within, big sectors.

 

Car-makers with the swiftest transition to electric vehicles (EVs), for
instance, are projected to increase in value by 108%, according to the study
by Vivid Economics.

 

Manufacturers slow to move to EVs will see their value fall, as governments
realise that petrol and diesel models must be phased out faster for climate
targets to be met.

 

Warning on coal

 

Meanwhile, the study predicts that the world’s largest listed coal companies
could fall in value by 44%. And the 10 biggest firms in oil and gas could
lose 31% of current value.

 

Electric utilities with the strongest strategy for renewables could see
values increase by 104%, while laggards could see them fall by two-thirds.

 

Miners producing minerals critical for the transition may see a 54% upside,
while those with the smallest share of “green minerals” will witness
valuations almost halving.

 

Agricultural firms with high exposure to “sustainable” biofuels and non-beef
protein sources could gain at least 10% of current value.

 

Those exposed to under-pressure sectors such as cattle may lose between 15%
and 43% - depending on their links with deforestation.

 

The figures are inevitably speculative, and rely on an assumption that
politicians will be forced to respond strongly to the growing climate crisis
– which, given current political progress, remains debatable.

 

Firms already under pressure

 

But they do echo the warnings issued by the Bank of England governor Mark
Carney, who said firms ignoring the climate challenge would go bankrupt.

 

Already some insurance firms are refusing to offer cover to new coal-fired
power stations because the risk of policy change is so great.

 

The giant AXA, for instance, says it will stop insuring any new coal
construction projects, and totally phase out existing insurance and
investments in coal in the EU, by 2030.

 

Fiona Reynolds, CEO of the PRI, said: “This analysis underscores the extent
to which markets are under-pricing climate transition risk.

 

“One in five of the world’s most valuable companies are impacted by at least
10% in either direction.

 

“While the market-level effects of an abrupt policy response to climate
change may appear manageable, this masks a much more complex and significant
story, with some huge winners and losers emerging between sectors and within
them.

 

“We are calling on investors to get real on climate policy risk, and this
robust modelling exercise and analysis will enable them to do that.”

 

Industries "already changing"

 

Mike Tholen, from industry body Oil and Gas UK said: “The (oil and gas)
majors targeted in this report are actively reducing their carbon
footprints, pursuing technologies including Carbon Capture and Storage and
diversifying their businesses into a broader mix of renewable energy.

 

“Oil and gas remain an important part of the energy mix for decades to come,
and will be used in an increasingly low carbon manner to meet global energy
needs.”

 

This confident response will alarm scientists who were warning at the UN
climate conference last week that emissions from oil and gas were growing
strongly, as coal growth slows.

 

And a spokesperson for the Society of Motor Manufacturers and Traders said:
“Vehicle manufacturers and suppliers are investing vast sums in ultra-low
and zero emission vehicles to help meet the same environmental goals.

 

“[Now] we need the right conditions to encourage investment, innovation and
a competitive market.

 

“This must include giga-scale battery production and electrified supply
chains, massive skills and infrastructure investment and long-term
incentives to help companies and consumers make the shift sustainably.”--BBC

 

 

 

Tesco considers sale of Thai and Malaysian stores

The UK's biggest retailer, Tesco, is considering the sale of its stores in
Thailand and Malaysia.

 

Tesco has about 2,000 stores in the two countries under the Tesco Lotus
brand and employs some 60,000 people.

 

If a deal is agreed it would mean an almost complete retreat from
international markets for the supermarket giant.

 

The company's only other overseas stores, other than Ireland, are in its
loss-making European unit.

 

On its website the company said it had started a review of the Asian
businesses "following inbound interest" but did not name the potential buyer
or buyers.

 

The statement also said the review was at an early stage, and "no decisions
concerning the future of Tesco Thailand or Malaysia have been taken".

 

The announcement signals another potential pullback by Tesco from its
once-ambitious global expansion.

 

If a sale does go ahead it would mean the company would be left with stores
in the UK and Ireland, and an unprofitable division in central Europe. That
unit covers the Czech Republic, Hungary, Poland and Slovakia.

 

It comes as the company shifts its focus as part of a turnaround programme
launched five years ago.

 

The recovery plan was in response to an accounting scandal, and in the face
of competition from rival supermarket chains and online competitors.

 

Tesco has shed several businesses across the world in recent years.

 

In 2015 it sold its South Korean unit for $6.1bn, and a year later offloaded
its Kipa business in Turkey, the country's largest supermarket chain.

 

At the same time it sold the Giraffe restaurant chain just three years after
buying it for £49m.

 

Tesco had previously withdrawn from the US, Japan, and China.

 

This latest development comes after chief executive Dave Lewis shocked
investors in October by saying he would stand down "in the summer of 2020".

 

He took over the top job at the company in 2014, shortly before it was
revealed that the retailer had been overstating its profits.--BBC

 

 

 

China exports fall again as US trade war continues

China's exports fell in November as shipments to the US slowed sharply,
adding to concerns about the effects of the two nations' trade war.

 

November exports from the world's second largest economy fell 1.1% from a
year earlier, the fourth straight fall.

 

Exports to the US were down 23%, the worst such result since February and
the twelfth monthly decline in a row.

 

Another round of US tariffs on Chinese goods is due next Sunday, as part of
the ongoing trade dispute.

 

On Friday, White House economic adviser Larry Kudlow said the 15 December
deadline - to impose a new round of tariffs on some $156bn of Chinese
exports - remained in place.

 

Potential US-China trade deal could remove tariffs

 

New warning on global economic slowdown

 

A quick guide to the US-China trade war

 

Beijing and Washington are negotiating a potential deal aimed at
de-escalating their trade dispute but so far have failed to agree on
details.

 

Economists say that even if negotiations aimed at avoiding the new American
duties are successful, many US buyers will have already found alternative
suppliers.

 

US President Donald Trump said on Thursday that trade talks are "moving
right along".

 

But China says existing tariffs must be scrapped as part of any interim
deal.

 

The 17-month-long trade war has increased the risks of a global recession.
China's policymakers may seek more stimulus measures after growth in the
economy cooled to near 30-year lows.

 

Meanwhile, China's imports unexpectedly rose 0.3% in November from a year
earlier, marking the first year-on-year growth since April.

 

China's trade surplus with the rest of the world fell, but was still more
than $38bn for the month.--BBC

 

 

 

General Election 2019: Johnson insists no NI-GB goods checks after Brexit

Boris Johnson has insisted there will not be any checks for goods travelling
from Northern Ireland to Great Britain under his Brexit deal.

 

He told Sky News that a leaked Treasury analysis document was "wrong" to
suggest this would be the case.

 

His Brexit deal means there will be goods checks from GB to NI, but there
has been confusion on whether there will be checks in the other direction.

 

Labour said the PM's claims about his deal with the EU were "fraudulent".

 

And DUP leader Arlene Foster said she still had concerns over the withdrawal
agreement Mr Johnson reached with other European leaders in October.

 

The comments come as the main political party leaders continue to push their
pledges ahead of Thursday's general election.

 

Under the PM's agreement, Northern Ireland would continue to follow many EU
rules on food and manufactured goods, while the rest of the UK would not.

 

Northern Ireland would also continue to follow EU customs rules but would
remain part of the UK's customs territory.

 

 

A government risk assessment published in October said it would lead to new
administration and checks on goods from west to east.

 

But Mr Johnson has insisted Northern Irish businesses will not be hit with
additional paperwork or fees, telling a BBC phone-in during the election
campaign: "We will make sure that businesses face no extra costs and no
checks for stuff being exported from NI to GB."

 

No checks on goods between NI and GB, says PM

NI firms to declare GB-bound goods under new deal

He has said the only checks would be on British exports to the Republic of
Ireland going via Northern Ireland.

 

But the BBC's Northern Ireland business and economics editor John Campbell
said these comments "do not accurately reflect what is in the deal" and,
because of EU law, products would have to be checked even if they were not
going on to the Republic of Ireland.

 

Boris Johnson is right to say that under his Brexit deal goods travelling
east - from Northern Ireland into Great Britain - would be treated
differently from goods travelling west - from Great Britain into Northern
Ireland.

 

But he's wrong to say there will no checks in either direction.

 

That assertion runs counter to what is written in his own withdrawal
agreement.

 

Businesses sending goods from Northern Ireland into Great Britain will have
to fill out export declaration forms - only a small piece of online
bureaucracy, but still different from goods travelling elsewhere within the
UK.

 

>From Great Britain to Northern Ireland, though, tariffs will have to be paid
on goods if their final destination is - or could be - the Republic of
Ireland, inside the EU.

 

This will necessitate some form of checks. It's also important to remember
that checks aren't just about customs.

 

Under the prime minister's deal, Northern Ireland will continue to follow
many of the rules of the EU single market for goods. And that means EU law
requires checks on, for example, all food and animal products - at their
point of entry.

 

The more the UK diverges from EU rules, as Mr Johnson says he wants to be
able to do, the more checks there will be.

 

The internal Treasury document leaked on Friday laid all this out in more
detail. The prime minister says it is all nonsense, but his own deal says
something rather different.

 

'No checks'

When asked on Sky News's Sophy Ridge on Sunday whether there would be
checks, in light of the leaked Treasury document, Mr Johnson replied: "No,
absolutely not.

 

"The deal we've done with the EU is a brilliant deal and it allows us to do
all the things that Brexit was about, so it's about taking back control of
our borders, money, laws.

 

"But unlike the previous arrangements, it allows the whole of the UK to come
out of the EU, including Northern Ireland, and the only checks that there
would be would be if something was coming from GB via Northern Ireland and
was going on to the Republic, then there might be checks at the border into
Northern Ireland."

 

 

Asked if the government's document was therefore wrong and if his Brexit
secretary - who in October said goods going from Northern Ireland to Great
Britain would be subject to exit declarations - was also wrong, Mr Johnson
replied: "Yes.

 

"Because there's no question of there being checks on goods going from NI to
GB or GB to NI, because they are part of - if you look at what the deal is,
we're part of the same customs territory and it's very clear that there
should be unfettered access between Northern Ireland and the rest of GB.

 

"The only reason - this is another of these things that has been produced by
the Labour Party as a kind of distraction."

 

Giving evidence to the House of Lords Exiting the EU committee in October,
Brexit Secretary Stephen Barclay initially said he did not believe exit
forms would be necessary for trade between Northern Ireland and the rest of
the UK.

 

But he later conceded: "The exit summary declarations will be required in
terms of NI to GB."

 

When security minister Brandon Lewis was challenged on the subject of
post-Brexit goods checks on the BBC's Andrew Marr Show, he said: "We have
some checks now, with customs and live animals, things like that.

 

"It's right that we continue that. But we've been very clear - there will be
no border down the Irish Sea.

 

"The UK as a whole will leave the European Union together and, of course,
Northern Ireland itself will have that self-determination around things as
we go forward."

 

DUP leader Ms Foster told BBC 5 live's Pienaar's Politics her party had a
"large concern" about how it would be determined which goods travelling
through Northern Ireland had the Irish Republic as the final destination.

 

"By definition you would need checks to see that that happens," she said.
"There have been differing views even within the Conservative Party as to
what it meant."

 

Ms Foster said there had to be "clarity in relation to that for those of us
living in Northern Ireland, because, of course, Great Britain is our largest
market by far, and we need to be able to, from an economic point of view,
know what it's going to mean for us in the future".

 

At a press conference in London on Friday, Labour leader Jeremy Corbyn said
the 15-page Treasury document - entitled Northern Ireland Protocol:
Unfettered Access to the UK Internal Market - disproved Mr Johnson's claims
there would be no checks, and showed his claims about his own deal were
"fraudulent".

 

He said it was "hard evidence" NI would be "symbolically separated" from the
rest of the UK after Brexit.

 

"What we have here is a confidential report by Johnson's own government,
marked 'official', 'sensitive', that exposes the falsehoods that Boris
Johnson has been putting forward," he said.

 

"This is cold, hard evidence that categorically shows the impact a damaging
Brexit deal would have on large parts of our country, 15 pages that paint a
damning picture of Johnson's deal on the issue of Northern Ireland in
particular."--BBC

 

 

 

Saudi Arabia ends gender segregation in restaurants

Saudi Arabia will no longer require restaurants to have separate entrances
segregated by sex, the government says.

 

Previously, it was mandatory to have one entrance for families and women,
and another for men on their own.

 

The restrictions had already been quietly eased in practice, with many
restaurants, cafes and other meeting places no longer enforcing segregation.

 

A series of sweeping social reforms in Saudi Arabia has been accompanied by
an intensified crackdown on dissent.

 

Saudi Arabia allows women to travel independently

Saudi Arabia: My experience as a female driver, one year on

How Saudi's 'new direction' is changing life for women like me

Earlier this year, a royal decree allowed Saudi women to travel abroad
without a male guardian's permission, and in 2018 the Gulf kingdom ended a
decades-long ban on female drivers.

 

But activists complain that many laws discriminatory against women remain in
place. And several prominent women's rights advocates have been arrested
even as the government has made reforms.

 

 

On Sunday, the Saudi ministry of municipalities said that restaurants would
no longer need to maintain sex-segregated entrances. Instead it would be
left up to businesses to decide.

 

Until now, inside restaurants, families and women were usually cut off and
separated from men on their own by screens.

 

Who is Saudi Crown Prince Mohammed?

Jamal Khashoggi murder trial opens in Saudi Arabia

Since Mohammed bin Salman was elevated to crown prince in 2017, he has made
moves to open up Saudi Arabia's extremely conservative society.

 

His reforms have won praise in the international community but have been
accompanied by a wave of repression.

 

The murder of prominent Saudi journalist Jamal Khashoggi in 2018 in the
kingdom's consulate in Istanbul drew intense international condemnation but
key world leaders, including US President Donald Trump, have continued to
stand by Saudi Arabia.

 

Saudi officials have said Khashoggi, a high-profile critic of the government
in Riyadh, was killed in a "rogue operation" by a team of agents. But many
critics believe otherwise and a UN expert concluded that the death was an
"extrajudicial execution".--BBC

 

 

 

Trade disputes settlement system facing crisis

The World Trade Organization is facing a crisis in its system for resolving
disputes between its members.

 

It has an appeal "court" that is the final arbiter on such disputes and
which is about to become unable to function.

 

WTO rules say three judges have to hear each case. On 10 December the number
goes below that level. Only one will be left. The terms of the other two
come to an end, and no replacements have been chosen.

 

In fact there isn't even a process under way to find any. The reason is that
the US has refused to allow the recruitment of new judges.

 

Other WTO member countries have repeatedly proposed to start a selection
procedure. At the end of November more than 100 members called for that but
the US alone said no. It's the only country that has objected at any stage
during this stand-off.

 

In the quarter of a century since the WTO was established, its system for
settling disputes has been one of its main functions. A former director
general Pascal Lamy has called the system the WTO's crown jewel.

 

It has also been described as "probably the busiest international dispute
settlement system in the world". But it is now in danger of seizing up. Not
quite completely - there may some options for countries to work around the
absence of an appeal court, or the Appellate Body to give its official
title, but they are second-best and may not be accepted by some countries.

 

What is the US's objection? Perhaps the biggest issue is that the US accuses
the WTO dispute system of "judicial overreach" - essentially that it
interprets the WTO rules in a way that creates new obligations for WTO
members.

 

One area that particularly grates in Washington is dumping, when a foreign
supplier sells goods abroad more cheaply than at home. The US and others
have used a disputed method for assessing whether goods have been dumped and
how much the price is below what it should be.

 

It is known as "zeroing". It's not explicitly prohibited by the WTO rules,
but the Appellate Body took the view that it was in effect against the
spirit.

 

The WTO's Appellate Body's been called "probably the busiest international
dispute settlement system in the world"

Yet it is not just about specific cases; it is a general concern that the US
has about the rulings going too far, that they in effect create new WTO law.

 

The US also has some concerns about procedural issues, such as the Appellate
Body not issuing its rulings as quickly as it is supposed to, and judges
continuing to hear cases they have already started even after their terms
have ended.

 

And it is not just the current US administration led by President Trump that
has had this concern.

 

A recent statement by the US delegation at a WTO meeting stated: "For more
than 16 years and across multiple US administrations, the United States has
been raising serious concerns with the Appellate Body's overreaching and
disregard for the rules set by WTO members."

 

It is not even the first time that a US administration has been
uncooperative on Appellate Body appointments. Under President Obama, the US
opposed a second term for a South Korean judge and even for an American
chosen by a previous administration.

 

But on those earlier occasions, the US did not block the appointment of new
judges. Critics thought the US then was damaging the credibility of the
WTO's dispute system, but it did not stop it functioning.

 

It is also true that some of the US concerns are shared by other WTO
members. But none of them appear to believe that disabling the appeal system
is the right way forward.

 

This time the US is raising the stakes.

 

President Trump is far less accepting of the WTO than his predecessors were.
He has threatened to pull the US out of the organisation and has claimed on
Fox News that the WTO was set up "to benefit everybody but us", adding, "we
lose the lawsuits, almost all of the lawsuits in the WTO."

 

That is not actually true but the remark is an indicator of how much he
evidently dislikes the WTO. And President Trump's approach to the WTO has
been described as part of an "assault on the global trading system".

 

Other elements in this approach include action against China without having
first got a ruling from the WTO's dispute system, and tariffs on steel and
aluminium imports imposed ostensibly on the grounds of national security,
but seen by many commentators as motivated by a desire to protect US
producers from competition.

 

The prospective incapacitation of the Appellate body is certainly a problem
for the WTO and its dispute settlement system. The first stage ruling is not
binding on the countries involved if one of them appeals. So if there is an
appeal, the dispute is in effect on hold indefinitely and countries can't
get authorisation to retaliate.

 

But that doesn't mean it can't function at all. Countries can choose not to
appeal. They can agree alternative steps for conducting appeals by
arbitration. There is also the fact that WTO members are still subject to
the rules, even if the enforcement mechanism is impaired. The risk of
harming their reputation may act as some sort of partial restraint on
violations of the rules.

 

There is also other work done by the WTO which will continue, such as help
for developing countries in building up their capacity to benefit from
trade, monitoring of members' policies and negotiation.

 

So the impending loss of the appeal function does not mean the WTO will run
off the road altogether. But it does mean it won't be firing on all
cylinders.--BBC

 

 

 

 

Sweden's Ericsson to pay over $1bn to settle US corruption probe

Sweden's telecoms giant Ericsson has agreed to pay more than $1bn (£760m) to
resolve allegations of bribery, the US Department of Justice has announced.

 

It said the company had "admitted to a years-long campaign of corruption in
five countries to solidify its grip on telecommunications business".

 

It added that Ericsson had entered into a deferred prosecution agreement in
connection with criminal charges filed in a New York court.

 

Ericsson has so far made no comment.

 

The firm is one of world's biggest makers of mobile network equipment. In
September, it said it had put aside $1.2bn to cover possible penalties
stemming from the US investigation.

 

The settlement is believed to be one of the highest ever under the Foreign
Corrupt Practices Act (FCPA).

 

It involves a $520m criminal penalty to the justice department and a payment
of $540m to the Securities and Exchange Commission (SEC).

 

The US justice department named the five countries involved as Djibouti,
China, Vietnam, Indonesia and Kuwait.

 

What did the US justice department say?

Its statement said that Ericsson had agreed to pay the penalty to "resolve
the government's investigation into violations of the Foreign Corrupt
Practices Act (FCPA) arising out of the Company's scheme to make and
improperly record tens of millions of dollars in improper payments around
the world".

 

"Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom
business with the guiding principle that 'money talks'," said US Attorney
Georffrey S Berman of the Southern District of New York.

 

"Today's [Friday's] guilty plea and surrender of over a billion dollars in
combined penalties should communicate clearly to all corporate actors that
doing business this way will not be tolerated," he added.

 

The department said that Ericsson had operated its corrupt scheme "beginning
in 2000 and continuing until 2016".--BBC

 

 

 

 

US jobs growth jumps in November

The US economy added the largest number of jobs for 10 months in November,
confounding economists' expectations of a slowdown.

 

Official data showed employers added 266,000 jobs last month, while the
jobless rate dipped to 3.5% from 3.6%.

 

The growth was helped by striking GM workers returning to work and a big
rise in healthcare posts.

 

The US economy has continued to expand, despite concerns that trade wars had
hit business confidence and investment.

 

Wide-ranging gains

Richard Flynn, UK managing director at Charles Schwab, said the latest jobs
data had "surpassed expectations".

 

"The upbeat data reinforces the strength of both the labour market and
consumer confidence, despite slowing global growth and continued trade
uncertainty."

 

What Trump wants from global trade

Trump speaks to 'his people' on Wall Street

Friday's report from the US Labor Department showed wide-ranging gains, even
in indicators that were slow to revive after the financial crisis.

 

For example, the number of people working part-time, despite wanting
full-time positions, dropped to 4.32 million - well below the 30-year
average.

 

Wage growth, while still modest, also ticked up, rising 3.1% year-on-year.

 

The White House welcomed the gains, which officials said proved President
Donald Trump's economic policies were working.

 

"Great jobs report!" Mr Trump tweeted.

 

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the jobs
numbers were "astonishing", but could be revised down at some point.

 

The 266,000 rise was "well above" the analyst consensus of 180,000, and
considering returning GM workers were part of a net gain of 41,000 in the
motor industry, the numbers were "hugely strong", he said.

 

"This is wild," he said. "That [jump is] hard to square with leading
indicators, all of which tanked in the late summer and early fall, so it
seems like a candidate for a big downward revision."

 

Rate cuts

The US economy, which is powered largely by consumer spending, grew at an
annualised rate of 2.1% in the three months to 30 September, according to
the latest government estimate.

 

But business investment and confidence have slumped, amid concerns about
trade fights and global growth. The rate of hiring has also retreated,
dipping from an average of 223,000 per month in 2018 to 180,000 per month
this year.

 

To address fears of a slowdown, the US central bank has lowered interest
rates three times since July.

 

The strength of the latest hiring report suggests the Federal Reserve will
leave rates untouched for now, analysts said.--BBC

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


Companies under Cautionary

 

 

 


 

 

 

 


Bindura Nickel Corporation

 

 

 


Padenga Holdings

 

 

 


Delta Corporation

 

 

 


Meikles Limited

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of
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been compiled from sources believed to be reliable, but no representation or
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opinions expressed and recommendations made are subject to change without
notice. Securities or financial instruments mentioned herein may not be
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for guideline purposes only and sourced from third parties.

 


 

 


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