Fed Chair Janet Yellen appeared on Capitol Hill Wednesday for what may be the last time she speaks before U.S. lawmakers. Yellen, whose term expires in February, will likely be succeeded by President Donald Trump’s pick, Federal Reserve governor Jerome Powell. This week, members of the U.S. Congress got a chance to speak to both. Mil Arcega has more.
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Mexican Economy Minister Ildefonso Guajardo said Wednesday that Trump administration demands for a U.S.-specific automotive content requirement in NAFTA were “not viable,” and he declined to specify when Mexico would formally respond.

At a news conference following a series of meetings with senior U.S. trade officials and lawmakers in Washington, Guajardo said that Mexico was still trying to understand the U.S. proposals that would require 50 percent of vehicles’ value content to be produced in the United States as part of updated North American Free Trade Agreement rules.

“I was clear that the domestic content [requirement] is something that is not viable at this point,” Guajardo said.

He added that Mexico would eventually make a counterproposal on automotive rules of origin, but declined to specify the timing of that response.

His visit was partly aimed at bolstering support in Congress for NAFTA at a time when tax legislation is consuming lawmakers’ attention and U.S. Trade Representative Robert Lighthizer is growing frustrated with the slow pace of NAFTA talks.

U.S. President Donald Trump has repeatedly threatened to scrap the trade agreement if it cannot be renegotiated to shrink U.S. trade deficits and return manufacturing jobs to the United States.

House Speaker Paul Ryan said after meeting with Guajardo earlier  Wednesday that congressional Republicans “are determined” to strengthen trade ties with Mexico.

“I expect the administration will continue to work with us to modernize NAFTA and bolster our robust relationship with such an important ally,” Ryan said in a statement.

US waiting on counterproposals

After the last NAFTA negotiating round ended last week, Lighthizer complained that Mexico and Canada had not offered counterproposals to its demands on autos and other major areas aimed at “rebalancing” the trade pact.

The United States also is seeking to lift the regional value content requirement for NAFTA-produced cars and trucks to 85 percent from 62.5 percent. Guajardo said that once Mexico has a firm understanding of the U.S. autos proposal, it can work with its own stakeholders to see what adjustments could be made to regional content for autos.

But he said that the U.S. demand to move to 85 percent regional content within three years was “entirely unrealistic.”

Guajardo said he discussed with Lighthizer on Tuesday how to move the talks toward consideration of potential “rebalancing” outcomes. But first, he said, Mexico needed to be clear with its American and Canadian counterparts about unacceptable proposals and its priorities for keeping the pact beneficial to all parties.

“We have to start a process of looking at what’s next after we complete the modernization effort,” he added.

On dispute settlement, Guajardo said that Mexico would be willing to consider some adjustments to the investor-state dispute settlement system, after the United States proposed making the use of such arbitration panels optional.

“We can explore the opt-in, as long as we can define our own opt-in,” Guajardo said of the dispute settlement proposal, adding that otherwise, Mexico is “not interested.”

At a more limited round of NAFTA talks in mid-December in Washington, Guajardo said it would be important to agree on key issues in order to close some NAFTA chapters, such as those on food safety, telecommunications, regulatory practices and digital commerce.
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Opposition has grown among Americans to a Republican tax plan before the U.S. Congress, with 49 percent of people who were aware of the measure saying they opposed it, up from 41 percent in October, according to a Reuters/Ipsos poll released on Wednesday.

Congressional Republicans are trying to rush their tax legislation to a vote on the Senate floor before the end of the week. President Donald Trump strongly backs the bill and wants to sign it into law before the end of the year.

In addition to the 49 percent who said they opposed the Republican tax bill, 29 percent said they supported it and 22 percent said they “don’t know,” according to the Reuters/Ipsos opinion poll of 1,257 adults conducted from Thursday to Monday.

When asked “who stands to benefit most” from the plan, more than half of all American adults surveyed selected either the wealthy or large U.S. corporations. Fourteen percent chose “all Americans,” 6 percent picked the middle class and 2 percent chose lower-income Americans.

The tax bill being crafted in the Senate would slash the corporate tax rate, eliminate some taxes paid only by rich Americans and offer a mixed bag or temporary tax cuts for other individuals and families.

As congressional discussion on the bill has unfolded, public opposition to it has risen, on average, following Trump’s unveiling of a nine-page “framework” on September 27 that started the debate in earnest, Reuters/Ipsos polling showed.

On October 24, for example, among adults who said they had heard of the “tax reform plan recently proposed by congressional Republicans,” 41 percent said they opposed it, while 31 percent said they “don’t know” and just 28 percent said they supported it.

Trump and his fellow Republicans are determined to make a tax code overhaul their first major legislative win since taking control of the White House and Congress in January.

The House of Representatives on November 16 approved its own tax bill. The Senate is expected to decide on Wednesday whether to begin debating its proposal, as the measure moves toward a decisive floor vote later this week.

The two chambers would need to reconcile differences between their plans before legislation could be sent to the White House for Trump’s signature.

In the November 23-27 poll, 59 percent of Republicans supported the tax bill, 26 percent said they did not know and 15 percent opposed it. Among Democrats, 82 percent opposed it, 11 percent said they did not know and 8 percent supported it.

 
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The world’s largest economy shook off the impact of several hurricanes and grew a bit faster than first thought in July, August, and September.

On Wednesday, U.S. government experts said the economy expanded at a 3.3 percent annual rate in the third quarter, which is three-tenths of a percent faster than their first estimate. Officials routinely update economic statistics as more complete data become available.

The improved performance of the gross domestic product or GDP was partly the result of a healthy U.S. job market, which supports the consumer spending that drives most economic activity. Growth was also helped by a fall in the value of the U.S. dollar and a pick up in global growth both of which boost U.S. exports.

The outgoing head of the U.S. central bank, Janet Yellen, told a key congressional committee Wednesday that the outlook is for continued growth and a strengthening job market.

She also made it clear that the Federal Reserve is likely to raise its key interest rate slightly in mid-December.

The Fed slashed interest rates to record lows near zero during the recession in a bid to boost economic growth by making it cheaper to borrow money to build factories and make other investments that could boost employment. As the economy recovered, officials have gradually boosted rates, but they remain below historic averages.

Keeping rates too low for too long risks sparking a high rate of inflation that could harm the economy. But inflation remains stubbornly below the two percent rate that many economists say is best for U.S. economic growth.

Coping with inflation, growth, unemployment, and congress will probably soon be the job of Jerome Powell, the person President Donald Trump picked to replace Yellen when her term ends early next year. In Tuesday’s confirmation hearing, Powell expressed views on interest rates very similar to Yellen’s.
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U.S. President Donald Trump is heading Wednesday to Missouri to tout his tax overhaul, trying to convince working class Americans that their taxes would go down and more jobs would be created if Congress adopts the plan.

Trump is set to speak to about 1,000 people in St. Charles, a suburb of the big midwestern city of St. Louis. His remarks come a day after the Senate Finance Committee advanced the tax legislation, sending it to the full Senate for consideration later this week.

“Our focus is on helping the folks who work in the mail room, in the machine shops of America, the plumbers and the police officers, the store clerks and secretaries,” Trump says, according to advance excerpts of his speech. “All of the people who give their best each and every day to take care of their families and the people that they love. It is not enough for the middle class to keep getting by, we want them to start getting ahead.”

In a Twitter remark before heading to Missouri, Trump boasted, “Economy growing!”

According to the newest government estimate, the U.S. economy, the world’s largest, advanced at a brisk 3.3 percent pace in the July-to-September period. Trump noted that the Council of Economic Advisers said that absent the effect of several devastating hurricanes in the U.S. the growth would have been 3.9 percent.

“Stock market at a new high, unemployment at a low,” Trump said. “We are winning and tax cuts will shift our economy into high gear!”

The Senate Finance panel cleared the legislation on a party line 12-11 vote, with all Republicans supporting it and all Democrats opposed. But its fate in the full Senate is still uncertain, with a half dozen Republicans voicing sometimes conflicting objections to various provisions that could derail the legislation if their concerns cannot be resolved and they ultimately vote against the measure.

Republicans, with a narrow 52-48 edge in the Senate, can only afford to lose two dissenting votes, with Vice President Mike Pence poised to break a 50-50 tie in favor of what would be the country’s biggest set of tax changes in three decades. No Democratic lawmaker has announced support for the legislation.

The House of Representatives has already approved its version of the tax overhaul, but both chambers would have to pass the same tax provisions before Trump could sign them into law.

Both the Senate and House versions would cut the country’s corporate tax rate from 35 to 20 percent, but differ in rates for individual taxpayers.

Over the next decade, the proposals would add at least $1.4 trillion to the U.S. national debt of $20 trillion, a fact that worries some conservative Republican lawmakers, while Democrats have attacked the legislation as heavily favoring corporations and the wealthiest taxpayers at the expense of individuals who earn far less.

Senior administration officials who briefed reporters ahead of the Missouri speech said Trump once again would single out Democratic Senator Claire McCaskill, a top Republican target in her re-election contest a year from now, for her lack of support for the tax legislation.

In August, in another visit to Missouri, Trump said, “We must lower our taxes, and your senator, Claire McCaskill, she must do this for you. And if she doesn’t do it for you, you have got to vote her out of office.”

 
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The price of bitcoin, the most widely used virtual currency, rose above $10,000 on Wednesday for the first time, breaking a symbolic threshold in what has been a vertiginous ascent this year.

The cost of buying one bitcoin as measured by the website coindesk.com was at $10,673 by morning trading in Europe – up from about $1,000 at the start of the year.

Virtual currencies have been the subject of much debate this year, with the CEO of JPMorgan Chase calling bitcoin a “fraud” but other executives saying it should not be dismissed.

Bitcoin was created about a decade ago as an alternative to government-issued currencies. It and other virtual currencies were initially used primarily as a method of payment, particularly to buy illegal goods and services online. In recent months, they have become a hot investment among speculators.

In a move that gave further credibility to bitcoin, the U.S. exchange operator CME Group said in October that it plans to open a futures market for the currency before the end of the year, if it can get approval from regulators.

Daniele Bianchi, an assistant professor of finance at the Warwick Business School in England, said that the price increases are due to rising demand as trading becomes more professional and open to the general public. He believes so-called cryptocurrencies are “here to stay” and that that awareness among investors is making it more than just a method of payment online, but an investment in itself.

“The increasing demand pressure from investors and speculators makes the case for an even further increase in bitcoin prices in the near future,” he said.
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The fashion industry urgently needs to reform its wasteful, polluting ways, British designer Stella McCartney and record-breaking sailor Ellen MacArthur said Tuesday.

With global clothing sales doubling since 2000, people now wear each item far fewer times, the Ellen MacArthur Foundation said, calling for items ranging from T-shirts to jeans to be designed differently and reused more.

The charity, established in 2010, has pioneered the shift toward a “circular economy” in which raw materials and products are repeatedly reused to reduce waste and pollution.

“In a new textiles economy, clothes would be designed to last longer, be worn more and be easily rented or resold and recycled, and would not release toxins or pollution,” it said.

The fashion industry is worth about $2.4 trillion a year, according to the global consultancy McKinsey.

The equivalent of one garbage truck of textiles is wasted every second, and less than 1 percent of clothing is recycled into new clothes, MacArthur’s foundation said in a report.

If nothing changes, the fashion industry will consume a quarter of the world’s annual carbon budget by 2050, it said, referring to the emissions the world can make while keeping the global temperature rise at no more than 1.5 degrees Celsius.

‘Take-make-dispose’

Fashion must abandon its “take-make-dispose” model, where unwanted clothes are sent to landfill sites or incinerated, and start using nonpolluting materials that are designed to last and could save the industry $500 billion, it said.

“The report presents a road map for us to create better businesses and a better environment,” McCartney, a longtime vegetarian who does not use leather or fur, and daughter of the Beatle musician Paul McCartney, said in a statement.

“It provides solutions to an industry that is incredibly wasteful and harmful to the environment.”

Textile production emits 1.2 billion tons of greenhouse gases annually, more than all international flights and maritime shipping combined, the report said.

Clothes also release half a million tons of plastic microfibers into the ocean every year, equivalent to more than 50 billion plastic bottles, it said.

Several major brands said they support the initiative, including Swedish fashion retailer H&M and sports giant Nike.

“[It] is aligned with our efforts in making sure that economic and social development can happen in a way that the planet can afford,” H&M Chief Executive Karl-Johan Persson said in a statement.
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Serbia began work on a China-funded railway line on Tuesday to try to improve the Balkan country’s infrastructure, an effort also expected to strengthen Beijing’s influence in Europe.

In May Serbia borrowed $297.6 million from China’s Exim Bank to modernize a stretch of the railway line between Belgrade and the Hungarian capital of Budapest.

Beijing sees Serbia, an EU membership candidate and Hungary, an EU member, as part of its One Belt, One Road initiative, intended to open new foreign trade links for Chinese firms.

The high-speed rail link between Belgrade and Budapest is expected to cost 3.2 billion euros ($3.80 billion) and is slated to become the main transport route for Chinese goods that arrive by sea at the Greek port of Piraeus to other parts of Europe.

At the construction site in Belgrade’s Zemun neighborhood, Prime Minister Ana Brnabic said that the 30km-long (18.6 miles) stretch of the railway line from Belgrade to the northern town of Stara Pazova is a key step forward.

“This project … is the first cross-border project within the 16+1 framework, … it is the first project between China and EU, involving Serbia,” she said.

Earlier on Tuesday, at the 16+1 summit of Central and Eastern European countries and China, Brnabic met her Chinese and Hungarian counterparts Li Keqiang and Viktor Orban and discussed further cooperation.

Serbia has enjoyed good relations with China since the 1990s, when Belgrade was economically isolated for its role in the Yugoslav wars.

On Monday, Hungary also invited a procurement tender for a modernized railway link with Belgrade. The construction of the Hungarian stretch, worth around 550 billion forints ($2.1 billion), is expected to start in 2020, with China’s Exim Bank providing 85 percent credit coverage.

($1 = 261.4100 forints)

($1 = 0.8413 euros)

Reporting by Aleksandar Vasovic; Editing by William Maclean.
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