Trump considers re-joining Pacific trade pact he once spurned

“Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” US President Donald Trump wrote in a late night tweet. (AFP)
Updated 13 April 2018
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Trump considers re-joining Pacific trade pact he once spurned

WASHINGTON: President Donald Trump said Thursday the US could re-enter the Trans-Pacific Partnership if it could get a “better” deal, potentially marking an abrupt about-face for a president who campaigned against the deal and swiftly withdrew from it after taking office last year.
“Would only join TPP if the deal were substantially better than the deal offered to Pres. Obama,” he wrote in a late night tweet.
“We already have BILATERAL deals with six of the eleven nations in TPP, and are working to make a deal with the biggest of those nations, Japan, who has hit us hard on trade for years!“
The statement came after the White House announced that US Trade Representative Robert Lighthizer and top economic adviser Larry Kudlow were re-examining Washington’s position.
Trump has frequently disparaged multilateral trade deals, calling the 24-year-old North American Free Trade Agreement a “disaster.”
The news was welcomed by lawmakers from agricultural states.
But his most hawkish trade advisers, who now dominate his cabinet after high-level departures, have expressed a strong preference for negotiating bilateral agreements, which they say play to US advantages.
The White House was quick to stress that Trump’s decision was consistent with earlier statements not a flip-flop.
“Last year, the President kept his promise to end the TPP deal... because it was unfair to American workers and farmers,” Deputy White House Press Secretary Lindsay Walters said in a statement.
However, he “has consistently said he would be open to a substantially better deal, including in his speech in Davos earlier this year.”
To that end, he has asked Lighthizer and Kudlow “to take another look at whether or not a better deal could be negotiated,” she said.
At the World Economic Forum in January Trump said he was prepared to enter talks with the TPP countries “either individually or perhaps as a group.”
It remained unclear, however, how enthusiastically the other 11 TPP economies would welcome an American return to the bargaining table.
Japan’s top government spokesman Yoshihide Suga said Friday Tokyo would “welcome it if the president’s remark was a recognition of the TPP’s significance and effect.”
But he added that Japan was committed to proceeding with the TPP in its current form.
“The TPP is a high-standard, well-balanced framework developed after meticulously weighing various interests,” he said.
“It is an accord like a glass sculpture. It would be extremely difficult to take out part of it for renegotiation,” he said.
But he said that Japan hoped Washington would see that the deal would benefit the US economy and added that Tokyo was eager to hear the administration’s views.
Trump’s new comments on the trade pact, which was negotiated under former president Barack Obama, were a further sign his positions may not be as tough as his rhetoric.
After taking office, Trump decided not to withdraw from NAFTA and from a free trade pact with South Korea, despite his threats to do so, preferring to renegotiate those deals. He also has so far exempted the largest US trading partners from his harshest new tariffs on steel and aluminum.
The TPP members, including Canada, Mexico and Japan, proceeded without the United States after Trump pulled out, and signed the sweeping new agreement last month.
Some experts have said joining the trade pact could strengthen the US position in their current trade spat with China, which is not a party to the agreement.
Critics said exiting the agreement had been a strategic gift to Beijing, which stood to strengthen its regional trade dominance as the United States retreated.
Farm groups and political leaders from US agricultural states have been most outspoken in denouncing Trump’s trade confrontations with Europe and China, which until recently appeared ready to boil over into all-out trade war.
Senator Deb Fischer, a Republican from the corn-growing state of Nebraska, said in a statement Thursday she was “encouraged” by Trump’s move “to reengage with TPP nations.”
TPP opponents, however, were quick to warn Trump risked of backsliding on a central tenet of the economic nationalism which helped sweep him to power.
Lori Wallach of the left-leaning advocacy group Public Citizen said in a statement that the developments “signal that Trump does not give a crap about working people and cannot be trusted on anything.”
Richard Trumka, head of the AFL-CIO, the largest federation of US trade unions, said on Twitter that the TPP “should remain dead.”
“There is no conceivable way to revive it without totally betraying working people,” he said.


Gulf companies challenged by debt and rising interest rates

Updated 22 April 2018
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Gulf companies challenged by debt and rising interest rates

  • Debt restructurings on the rise, but below crisis levels
  • Central Bank of the UAE has raised interest rates four times since last March

There has been an uptick in recent months in heavily-borrowed companies in the Gulf seeking to restructure their debts with lenders. Although the pressure on companies is not comparable to levels witnessed in the region following the 2008 global financial crisis, rising interest rates will eventually begin to have a greater impact, say experts.
Speaking exclusively to Arab news, Matthew Wilde, a partner at consultancy PwC in Dubai, said: “We do expect that interest rate increases will gradually start to impact companies over the next 12 months, but to date the impact of hedging and the runoff of older fixed rate deals has meant the impact is fairly muted so far.”
The Central Bank of the UAE has raised interest rates four times since the start of last year, in line with action taken by the US Federal Reserve. The Fed has signalled that it will raise interest rates at least twice more before the end of the year.
Wilde added that there had been a little more pressure on company balance sheets of late, although “this shouldn’t be overplayed”.
Nevertheless, just last week, Stanford Marine Group — majority owned by a fund managed by private equity firm Abraaj Group — was reported by the New York Times to be in talks with banks to restructure a $325 million Islamic loan. The newspaper cited a Reuters report that relied on “banking sources”.
The Dubai-based oil and gas services firm, which has struggled as a result of the downturn in the hydrocarbons market since 2014, has reportedly asked banks to consider extending the maturity of its debt and restructuring repayments, after it breached certain loan covenants.
A fund managed by Abraaj owns 51 percent of Stanford Marine, with the remaining stake held by Abu Dhabi-based investment firm Waha Capital. Abraaj declined to comment.

 

Dubai-based theme parks operator DXB Entertainments struck a deal last month with creditors to restructure 4.2 billion dirhams ($1.1 billion) of borrowings, with visitor numbers to attractions such as Legoland Dubai and Bollywood Parks Dubai struggling to meet visitor targets.
Earlier this month, Reuters reported that Sharjah-based Gulf General Investment Company was in talks with banks to restructure loan and credit facilities after defaulting on a payment linked to 2.1 billion dirhams of debt at the end of last year.
Dubai International Capital, according to a Bloomberg report from December, has restructured its debt for the second time, reaching an agreement with banks to roll over a loan of about $1 billion. At the height of the emirate’s boom years, DIC amassed assets worth about $13 billion, including the owner of London’s Madame Tussauds waxworks museum, as well as stakes in Sony and Daimler. The firm was later forced to sell most of these assets and reschedule $2.5 billion of debt after the global financial crisis.
Wilde told Arab News: “We have seen an increasing number of listed companies restructuring or planning to restructure their capital recently — including using tools such as capital reductions and raising capital by using quasi equity instruments such as perpetual bonds.”
This has happened across the region and PwC expected this to accelerate a little as companies “respond to legislative pressures and become more familiar with the options available to fix their problems,” said Wilde.
He added that the trend was being driven by oil prices remaining below historical highs, soft economic conditions, and continued caution in the UAE’s banking sector.
On the debt restructuring side, Wilde said there had been a “reasonably steady flow of cases of debts being restructured”.
However, the volume of firms seeking to renegotiate debt remains small compared to the level of restructurings witnessed in the aftermath of Dubai’s debt crisis.
Several big name firms in the emirate were caught out by the onset of the global financial crisis, which saw the emirate’s booming economy and real estate market go into reverse.
State-owned conglomerate Dubai World, whose companies included real-estate firm Nakheel and ports operator DP World, stunned global markets in November 2009 when it asked creditors for a six-month standstill on its obligations. Dubai World restructured around $25 billion of debt in 2011, followed by a $15 billion restructuring deal in 2015.
“We would not expect it to become (comparable to 2008-9) so barring some form of sharp external impetus such as global political instability or a protectionist trade war,” said Wilde.
Nor did he see the introduction of VAT as particularly driving this trend, but rather as just one more factor impacting some already strained sectors (e.g. some sub sectors of retail) “which were already pressured by other macro factors.”

FACTOID

Four

The number of interest rate rises in the UAE since March 2017.