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China’s hopes of negotiating a free trade pact with Canada or Mexico were dealt a sharp setback by a provision deep in the new U.S.-Mexico-Canada trade agreement that aims to forbid such deals with “non-market” countries, trade experts said on Tuesday.

The provision specifies that if one of the current North American Free Trade Agreement partners enters a free trade deal with a “non-market” country such as China, the others can quit in six months and form their own bilateral trade pact.

The clause, which has stirred controversy in Canada, fits in with U.S. President Donald Trump’s efforts to isolate China economically and prevent Chinese companies from using Canada or Mexico as a “back door” to ship products tariff-free to the United States.

The United States and China are locked in a spiraling trade war that has seen them level increasingly severe rounds of tariffs on each other’s imports.

Under the clause, the countries in the updated NAFTA, renamed the U.S.-Mexico-Canada Agreement (USMCA), must notify the others three months before entering into such negotiations.

Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said the provision gave the Trump administration an effective veto over any China trade deal by Canada or Mexico.

If repeated in other U.S. negotiations with the European Union and Japan, it could help isolate Beijing in the global trading system.

“For both Canada and Mexico, we have a reason to think an FTA with China is a possibility. It’s not imminent, but this is a very elegant way of dealing with that,” Scissors said.

“There’s no China deal that’s worth losing a ratified USMCA,” Scissors added.

After months of bashing its Western allies on trade, the Trump administration is now trying to recruit them to join the United States in pressuring China to shift its trade, subsidy and intellectual property practices to a more-market driven focus.

Beijing has demanded that the World Trade Organization recognize it as a “market economy” since its WTO accession agreement expired in December 2016, a move that would severely limit Western trade defenses against cheap Chinese goods.

But the United States and European Union are challenging the declaration, arguing that Chinese state subsidies fueling excess industrial capacity, the exclusion of foreign competitors and other practices are signs it is still a non-market economy.

Canadian Sovereignty Questioned

Canadian Prime Minister Justin Trudeau’s Liberal government, seeking to diversify Canada’s export base, held exploratory talks with China on trade in 2016, but a launch of formal negotiations has failed to materialize.

Tracey Ramsey, a legislator for Canada’s left-leaning New Democrats, said in the House of Commons on Tuesday that the clause was “astonishing” and a “severe restriction on Canadian independence.”

“Part of Canada’s concessions in this deal was to include language that holds Canada hostage to the Americans if we decide to trade with another country,” Ramsey said. “Why did the Liberal (Party) give the go-ahead for the U.S. to pull us into their trade wars?”

Canadian Finance Minister Bill Morneau downplayed the provision, arguing it was not significantly different from NAFTA’s clause that allows any member to leave the pact in six months’ time for any reason.

“It is largely the same. It recognizes though that the non-market economy is of significant importance as we move forward. But I don’t think it’s going to make a material difference in our activities,” Morneau told a business audience.

Mexico’s business community sided with the Trump administration in endorsing the pact.

“We are associating ourselves with countries that promote market freedom and that promote free trade in the world, free trade under equal circumstances,” said Juan Pablo Castañon, head of the Consejo Coordinador Empresarial (CCE), which represented Mexico’s private sector during the NAFTA trade talks.
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China’s hopes of negotiating a free trade pact with Canada or Mexico were dealt a sharp setback by a provision deep in the new U.S.-Mexico-Canada trade agreement that aims to forbid such deals with “non-market” countries, trade experts said on Tuesday.

The provision specifies that if one of the current North American Free Trade Agreement partners enters a free trade deal with a “non-market” country such as China, the others can quit in six months and form their own bilateral trade pact.

The clause, which has stirred controversy in Canada, fits in with U.S. President Donald Trump’s efforts to isolate China economically and prevent Chinese companies from using Canada or Mexico as a “back door” to ship products tariff-free to the United States.

The United States and China are locked in a spiraling trade war that has seen them level increasingly severe rounds of tariffs on each other’s imports.

Under the clause, the countries in the updated NAFTA, renamed the U.S.-Mexico-Canada Agreement (USMCA), must notify the others three months before entering into such negotiations.

Derek Scissors, a China scholar at the American Enterprise Institute in Washington, said the provision gave the Trump administration an effective veto over any China trade deal by Canada or Mexico.

If repeated in other U.S. negotiations with the European Union and Japan, it could help isolate Beijing in the global trading system.

“For both Canada and Mexico, we have a reason to think an FTA with China is a possibility. It’s not imminent, but this is a very elegant way of dealing with that,” Scissors said.

“There’s no China deal that’s worth losing a ratified USMCA,” Scissors added.

After months of bashing its Western allies on trade, the Trump administration is now trying to recruit them to join the United States in pressuring China to shift its trade, subsidy and intellectual property practices to a more-market driven focus.

Beijing has demanded that the World Trade Organization recognize it as a “market economy” since its WTO accession agreement expired in December 2016, a move that would severely limit Western trade defenses against cheap Chinese goods.

But the United States and European Union are challenging the declaration, arguing that Chinese state subsidies fueling excess industrial capacity, the exclusion of foreign competitors and other practices are signs it is still a non-market economy.

Canadian Sovereignty Questioned

Canadian Prime Minister Justin Trudeau’s Liberal government, seeking to diversify Canada’s export base, held exploratory talks with China on trade in 2016, but a launch of formal negotiations has failed to materialize.

Tracey Ramsey, a legislator for Canada’s left-leaning New Democrats, said in the House of Commons on Tuesday that the clause was “astonishing” and a “severe restriction on Canadian independence.”

“Part of Canada’s concessions in this deal was to include language that holds Canada hostage to the Americans if we decide to trade with another country,” Ramsey said. “Why did the Liberal (Party) give the go-ahead for the U.S. to pull us into their trade wars?”

Canadian Finance Minister Bill Morneau downplayed the provision, arguing it was not significantly different from NAFTA’s clause that allows any member to leave the pact in six months’ time for any reason.

“It is largely the same. It recognizes though that the non-market economy is of significant importance as we move forward. But I don’t think it’s going to make a material difference in our activities,” Morneau told a business audience.

Mexico’s business community sided with the Trump administration in endorsing the pact.

“We are associating ourselves with countries that promote market freedom and that promote free trade in the world, free trade under equal circumstances,” said Juan Pablo Castañon, head of the Consejo Coordinador Empresarial (CCE), which represented Mexico’s private sector during the NAFTA trade talks.
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Mexico and Canada on Tuesday urged their governments to resolve a tariff dispute with the United States before signing a new trilateral trade deal that was unveiled this week.

In late May, the Trump administration announced tariffs of 25 percent on steel imports and 10 percent on aluminum imports, prompting quick retaliation from top trading partners including Canada and Mexico.

Late on Sunday, the United States and Canada reached a deal to overhaul the North American Free Trade Agreement (NAFTA), complementing an accord the Trump administration brokered with Mexico, the third member of NAFTA, in late August.

Mexican steel producers association Canacero welcomed the new trade pact, called the United States-Mexico-Canada Agreement (USMCA), but said it viewed “with concern” the ongoing steel dispute and the “serious situation” it created for the industry.

U.S. President Donald Trump said on Tuesday that U.S. steel and aluminum tariffs would remain in place for Canada and Mexico until they “can do something different like quotas, perhaps.”

In a statement, Canacero said it supported efforts to find a solution to the impasse before the leaders of Mexico, the United States and Canada signed USMCA, which officials say could happen at a G20 summit at the end of November.

If no solution can be found, Mexico should put tariffs on U.S. steel to level the playing field, Canacero said.

Mexico has already slapped tariffs on U.S. pork, bourbon, motor boats and other products. Canada has levied tariffs on a range of U.S. imports, including steel and aluminum.

Joseph Galimberti, president of the Canadian Steel Producers Association, said he expected Canada’s government to continue to support the industry after the USMCA breakthrough.

“There is clearly an opportunity to constructively engage the United States between the achievement of a deal in principle and the ratification or signature of that deal,” he said.

Canada is the top exporter of steel and aluminum to the United States. The United Steelworkers of Canada adopted a less conciliatory tone after the new trade deal was announced, calling it a “sell-out” for Canadian workers.

Mexican officials have said they hope the steel and aluminum dispute can be resolved before USMCA is signed.

Since the tariff row broke out, Mexican steel exports to the United States had fallen 30 percent on average, Canacero said.
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Mexico and Canada on Tuesday urged their governments to resolve a tariff dispute with the United States before signing a new trilateral trade deal that was unveiled this week.

In late May, the Trump administration announced tariffs of 25 percent on steel imports and 10 percent on aluminum imports, prompting quick retaliation from top trading partners including Canada and Mexico.

Late on Sunday, the United States and Canada reached a deal to overhaul the North American Free Trade Agreement (NAFTA), complementing an accord the Trump administration brokered with Mexico, the third member of NAFTA, in late August.

Mexican steel producers association Canacero welcomed the new trade pact, called the United States-Mexico-Canada Agreement (USMCA), but said it viewed “with concern” the ongoing steel dispute and the “serious situation” it created for the industry.

U.S. President Donald Trump said on Tuesday that U.S. steel and aluminum tariffs would remain in place for Canada and Mexico until they “can do something different like quotas, perhaps.”

In a statement, Canacero said it supported efforts to find a solution to the impasse before the leaders of Mexico, the United States and Canada signed USMCA, which officials say could happen at a G20 summit at the end of November.

If no solution can be found, Mexico should put tariffs on U.S. steel to level the playing field, Canacero said.

Mexico has already slapped tariffs on U.S. pork, bourbon, motor boats and other products. Canada has levied tariffs on a range of U.S. imports, including steel and aluminum.

Joseph Galimberti, president of the Canadian Steel Producers Association, said he expected Canada’s government to continue to support the industry after the USMCA breakthrough.

“There is clearly an opportunity to constructively engage the United States between the achievement of a deal in principle and the ratification or signature of that deal,” he said.

Canada is the top exporter of steel and aluminum to the United States. The United Steelworkers of Canada adopted a less conciliatory tone after the new trade deal was announced, calling it a “sell-out” for Canadian workers.

Mexican officials have said they hope the steel and aluminum dispute can be resolved before USMCA is signed.

Since the tariff row broke out, Mexican steel exports to the United States had fallen 30 percent on average, Canacero said.
…

Palu, the Indonesian city devastated by an earthquake, tsunamis and mudslides, has strived to transform itself into a major trading hub, but the city’s buildings and other infrastructure were no match for the triple whammy that has left more than 1,200 people dead. 

The disasters that struck late Friday left the city’s port in ruins, its lone gantry crane atilt in the water. Its airport terminal was a sea of shattered glass and broken ceiling panels. A seven-story, 4-year-old hotel lay flat on its side. Its biggest bridge disintegrated, its picturesque yellow arches mangled in the mud. 

Ringed by coconut, coffee and cocoa farms, over the past two decades Palu has acquired modern shopping malls, hotels and other amenities to suit its ambitions. Poverty has fallen from nearly a third of its 380,000 residents to under one in 10, local officials say. 

A national blueprint calls for developing Palu as part of the “Sulawesi Economic Corridors” — a plan to attract investment and build up trade and commerce in a region that has remained somewhat isolated since the days of the ancient spice trade.  

Given how seismically active the area is — the Palu-Koro fault runs right through the city — it’s been a race against the odds. Historical records show the area has been hit by tsunamis — triggered by powerfully destructive earthquakes — at least seven times in the past two centuries. 

It’s unclear what standards were required, or enforced, in the construction of Palu’s modern buildings.

It’s an issue for all of Indonesia, an archipelago that sits square on the Pacific Ring of Fire. 

Teddy Boen, an expert on earthquake-resistant engineering who has consulted with foreign governments and international organizations, has been researching the problem for a half-century.

“From 50 years ago until today, there is similar damage. Somebody is not doing their job,” he said in a phone interview. “The codes are complete. The manuals are complete. The political will is not there.” 

The collapse of a mezzanine floor inside the Jakarta Stock Exchange in January that injured dozens of people underscores the extent of the problem, even in Indonesia’s capital.

After a tsunami in 2004 killed 230,000 people in Indonesia and elsewhere across Asia, it became apparent that in many communities, sturdy mosques and other strong buildings dating back to colonial times were the only structures still standing while newer structures often crumbled. 

In Palu, the Arkam Babu Rahman “floating mosque” on the city’s waterfront was pushed off-kilter by Friday’s tsunamis, while its worship halls remained intact. But a bigger, 20-year-old structure topped by a heavy dome was gutted as the debris-laden water swept through. 

Few of the buildings in Palu’s suburbs of Petobo, Biromaru and Bala Roa could withstand the sideways mudslide that engulfed those communities in expanses of oozing quicksand.  

Indonesia’s disaster agency spokesman Sutopo Purwo Nugroho said the soil there had liquefied and that authorities believed hundreds of people may have been buried in the mud. In Bala Roa, the ground violently heaved up and then sank in places, trapping many people under their wrecked homes. 

Traditional homes with thatched or tin roofs cannot withstand tsunamis or storm surges from typhoons but pose much less of a risk of severe damage even if they do collapse in an earthquake. Many homes built recently are hybrids, combining traditional styles with unreinforced masonry and tile roofs too heavy for the structures when they are shaken by quakes. 

The rush to rebuild after a disaster involves cutting corners, rather than fortifying buildings to prevent future calamities.

“Now, they say, build back better, build back better, but they do the same thing again,” Boen said. “The earthquake comes, they made the same mistakes and people get killed again.”
…

Palu, the Indonesian city devastated by an earthquake, tsunamis and mudslides, has strived to transform itself into a major trading hub, but the city’s buildings and other infrastructure were no match for the triple whammy that has left more than 1,200 people dead. 

The disasters that struck late Friday left the city’s port in ruins, its lone gantry crane atilt in the water. Its airport terminal was a sea of shattered glass and broken ceiling panels. A seven-story, 4-year-old hotel lay flat on its side. Its biggest bridge disintegrated, its picturesque yellow arches mangled in the mud. 

Ringed by coconut, coffee and cocoa farms, over the past two decades Palu has acquired modern shopping malls, hotels and other amenities to suit its ambitions. Poverty has fallen from nearly a third of its 380,000 residents to under one in 10, local officials say. 

A national blueprint calls for developing Palu as part of the “Sulawesi Economic Corridors” — a plan to attract investment and build up trade and commerce in a region that has remained somewhat isolated since the days of the ancient spice trade.  

Given how seismically active the area is — the Palu-Koro fault runs right through the city — it’s been a race against the odds. Historical records show the area has been hit by tsunamis — triggered by powerfully destructive earthquakes — at least seven times in the past two centuries. 

It’s unclear what standards were required, or enforced, in the construction of Palu’s modern buildings.

It’s an issue for all of Indonesia, an archipelago that sits square on the Pacific Ring of Fire. 

Teddy Boen, an expert on earthquake-resistant engineering who has consulted with foreign governments and international organizations, has been researching the problem for a half-century.

“From 50 years ago until today, there is similar damage. Somebody is not doing their job,” he said in a phone interview. “The codes are complete. The manuals are complete. The political will is not there.” 

The collapse of a mezzanine floor inside the Jakarta Stock Exchange in January that injured dozens of people underscores the extent of the problem, even in Indonesia’s capital.

After a tsunami in 2004 killed 230,000 people in Indonesia and elsewhere across Asia, it became apparent that in many communities, sturdy mosques and other strong buildings dating back to colonial times were the only structures still standing while newer structures often crumbled. 

In Palu, the Arkam Babu Rahman “floating mosque” on the city’s waterfront was pushed off-kilter by Friday’s tsunamis, while its worship halls remained intact. But a bigger, 20-year-old structure topped by a heavy dome was gutted as the debris-laden water swept through. 

Few of the buildings in Palu’s suburbs of Petobo, Biromaru and Bala Roa could withstand the sideways mudslide that engulfed those communities in expanses of oozing quicksand.  

Indonesia’s disaster agency spokesman Sutopo Purwo Nugroho said the soil there had liquefied and that authorities believed hundreds of people may have been buried in the mud. In Bala Roa, the ground violently heaved up and then sank in places, trapping many people under their wrecked homes. 

Traditional homes with thatched or tin roofs cannot withstand tsunamis or storm surges from typhoons but pose much less of a risk of severe damage even if they do collapse in an earthquake. Many homes built recently are hybrids, combining traditional styles with unreinforced masonry and tile roofs too heavy for the structures when they are shaken by quakes. 

The rush to rebuild after a disaster involves cutting corners, rather than fortifying buildings to prevent future calamities.

“Now, they say, build back better, build back better, but they do the same thing again,” Boen said. “The earthquake comes, they made the same mistakes and people get killed again.”
…

General Electric ousted its CEO, took a $23 billion charge and said it would fall short of profit forecasts this year, further signs that the century-old industrial conglomerate is struggling to turn around its vastly shrunken business.

H. Lawrence Culp Jr. will take over immediately as chairman and CEO from John Flannery, who had been on the job for just over a year. Flannery began a restructuring of GE in August 2017, when he replaced Jeffrey Immelt, whose efforts to create a higher-tech version of GE proved unsuccessful.

However, in Flannery’s short time, GE’s value has dipped below $100 billion and shares are down more than 35 percent this year, following a 45 percent decline in 2017.

The company was booted from the Dow Jones Industrial Average this summer and, last month, shares tumbled to a nine-year low after revealing a flaw in its marquee gas turbines, which caused the metal blades to weaken and forced the shutdown of a pair of power plants where they were in use.

GE warned Monday that it will miss its profit forecasts this year and it’s taking a $23 billion charge related to its power business.

The 55-year-old Culp was CEO and president of Danaher Corp. from 2000 to 2014. During that time, Danaher’s market capitalization and revenues grew five-fold. He’s already a member of GE’s board.

It’s a track record that GE appears to need after a series of notable changes under Flannery failed to gain momentum immediately, although some analysts wonder whether Culp’s history of accomplishments will be enough to reverse the direction of the company.

The challenges GE faces — including the power sector’s cyclical, structural and operational challenges — are not easily or quickly fixable, but “GE should be commended for selecting a credible, seasoned GE outsider as chairman/CEO who is likely to more candidly and quickly identify how bad things may be and what needs to be done about it,” said Gautam Khanna, an analyst at Cowen Inc., in a note to investors.

Investors will want Culp to “clean house, and fast,” said Scott Davis, founding partner of Melius Research, in a research note where he compared GE’s recent history to a slow but fatal train wreck.

“If I’m a GE employee today, I’m happy for the turnaround, but expectations are about to get a whole lot higher…GE employees will either step up or will be replaced,” Davis said.

Flannery faced a titanic task in redirecting General Electric, which was founded in 1892 in Schenectady, New York.

Just six months after taking over as CEO, Flannery said the company would be forced to pay $15 billion to make up for the miscalculations of an insurance subsidiary. While Wall Street was aware of the issues at GE’s North American Life & Health, the size of the hit caught many off guard.

Flannery on the same day said that GE might take the radical step of splitting up the main company’s three main components — aviation, health care and power — into separate businesses.

In June GE said it would spin off its health-care business and sell its interest in Baker Hughes, a massive oil services company. It’s been selling off assets and trying to sharpen its focus since the recession, when it’s finance division was hammered.

“GE still has too much debt and plenty to fix, but at least we have an outsider with an accelerated mandate to fix it,” Davis said.

Flannery vowed to give GE more of a high-tech and industrial focus by honing in on aviation, power and renewable energy — businesses with big growth potential. The shift is historic for a company that defined the phrase “household name.”

GE traces its roots to Thomas Edison and the invention of the light bulb, and the company grew with the American economy. At the start of the global financial crisis in 2008, it was one of the nation’s biggest lenders, its appliances were sold by the millions to homeowners around the world and it oversaw a multinational media powerhouse including NBC television.

But the economic crises revealed how unwieldy General Electric had become, with broad exposure damage during economic downturns.

Shares of General Electric Co., based in Boston, surged 11 percent in midday trading.

Massachusetts Gov. Charlie Baker, who helped lure GE to Boston from Connecticut in 2016 with incentives like state grants and property tax relief, said he’s not too concerned about GE’s latest travails. He noted that the company is still worth about $100 billion and has what he called a “huge footprint” in Massachusetts in health care, green technology, and renewable energy.

He said the state “did not write a big check to GE based on job projections or anything like that.”
…

General Electric ousted its CEO, took a $23 billion charge and said it would fall short of profit forecasts this year, further signs that the century-old industrial conglomerate is struggling to turn around its vastly shrunken business.

H. Lawrence Culp Jr. will take over immediately as chairman and CEO from John Flannery, who had been on the job for just over a year. Flannery began a restructuring of GE in August 2017, when he replaced Jeffrey Immelt, whose efforts to create a higher-tech version of GE proved unsuccessful.

However, in Flannery’s short time, GE’s value has dipped below $100 billion and shares are down more than 35 percent this year, following a 45 percent decline in 2017.

The company was booted from the Dow Jones Industrial Average this summer and, last month, shares tumbled to a nine-year low after revealing a flaw in its marquee gas turbines, which caused the metal blades to weaken and forced the shutdown of a pair of power plants where they were in use.

GE warned Monday that it will miss its profit forecasts this year and it’s taking a $23 billion charge related to its power business.

The 55-year-old Culp was CEO and president of Danaher Corp. from 2000 to 2014. During that time, Danaher’s market capitalization and revenues grew five-fold. He’s already a member of GE’s board.

It’s a track record that GE appears to need after a series of notable changes under Flannery failed to gain momentum immediately, although some analysts wonder whether Culp’s history of accomplishments will be enough to reverse the direction of the company.

The challenges GE faces — including the power sector’s cyclical, structural and operational challenges — are not easily or quickly fixable, but “GE should be commended for selecting a credible, seasoned GE outsider as chairman/CEO who is likely to more candidly and quickly identify how bad things may be and what needs to be done about it,” said Gautam Khanna, an analyst at Cowen Inc., in a note to investors.

Investors will want Culp to “clean house, and fast,” said Scott Davis, founding partner of Melius Research, in a research note where he compared GE’s recent history to a slow but fatal train wreck.

“If I’m a GE employee today, I’m happy for the turnaround, but expectations are about to get a whole lot higher…GE employees will either step up or will be replaced,” Davis said.

Flannery faced a titanic task in redirecting General Electric, which was founded in 1892 in Schenectady, New York.

Just six months after taking over as CEO, Flannery said the company would be forced to pay $15 billion to make up for the miscalculations of an insurance subsidiary. While Wall Street was aware of the issues at GE’s North American Life & Health, the size of the hit caught many off guard.

Flannery on the same day said that GE might take the radical step of splitting up the main company’s three main components — aviation, health care and power — into separate businesses.

In June GE said it would spin off its health-care business and sell its interest in Baker Hughes, a massive oil services company. It’s been selling off assets and trying to sharpen its focus since the recession, when it’s finance division was hammered.

“GE still has too much debt and plenty to fix, but at least we have an outsider with an accelerated mandate to fix it,” Davis said.

Flannery vowed to give GE more of a high-tech and industrial focus by honing in on aviation, power and renewable energy — businesses with big growth potential. The shift is historic for a company that defined the phrase “household name.”

GE traces its roots to Thomas Edison and the invention of the light bulb, and the company grew with the American economy. At the start of the global financial crisis in 2008, it was one of the nation’s biggest lenders, its appliances were sold by the millions to homeowners around the world and it oversaw a multinational media powerhouse including NBC television.

But the economic crises revealed how unwieldy General Electric had become, with broad exposure damage during economic downturns.

Shares of General Electric Co., based in Boston, surged 11 percent in midday trading.

Massachusetts Gov. Charlie Baker, who helped lure GE to Boston from Connecticut in 2016 with incentives like state grants and property tax relief, said he’s not too concerned about GE’s latest travails. He noted that the company is still worth about $100 billion and has what he called a “huge footprint” in Massachusetts in health care, green technology, and renewable energy.

He said the state “did not write a big check to GE based on job projections or anything like that.”
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