US courts allies with free trade offers at G20, France resists

IMF Managing Director Christine Lagarde sits alongside Jerome Powell, Chairman of the U.S. Federal Reserve, and Japan's Minister of Finance Taro Aso as they pose for the official photo at the G20 Meeting of Finance Ministers in Buenos Aires, July 21, 2018. (REUTERS/Marcos Brindicci)
Updated 22 July 2018
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US courts allies with free trade offers at G20, France resists

BUENOS AIRES: The US sought to woo Europe and Japan with free trade deals on Saturday to gain leverage in an escalating tariff war with China but its overtures faced stiff resistance from France at a G20 finance ministers meeting dominated by trade tensions.
US Treasury Secretary Steven Mnuchin told reporters at the gathering of the financial leaders of the world’s 20 largest economies in Buenos Aires that he was renewing President Donald Trump’s proposal that G7 allies drop trade barriers between them.
“If Europe believes in free trade, we’re ready to sign a free trade agreement,” Mnuchin said, adding that such a deal would require the elimination of tariffs, non-tariff barriers and subsidies. “It has to be all three issues.”
Trump has angered European allies by imposing import tariffs of 25 percent on steel and 10 percent on aluminum, causing the European Union to retaliate with similar amounts of tariffs on Harley-Davidson motorcycles, Kentucky bourbon and other products.
Trump, who frequently criticizes Europe’s 10 percent car tariffs, is also studying adding a 25 percent levy on automotive imports, which would hit both Europe and Japan hard.
French Finance Minister Bruno Le Maire said the European Union would not consider launching trade talks with the United States unless Trump first withdraws the steel and aluminum tariffs and stands down on a car tariff threat.
“We refuse to negotiate with a gun to our head,” Le Maire told reporters on the sidelines of the G20 meeting.
Trump has angered European allies by imposing import tariffs of 25 percent on steel and 10 percent on aluminum, causing the European Union to retaliate with similar amounts of tariffs on Harley-Davidson motorcycles, Kentucky bourbon and other products.
Trump, who frequently criticizes Europe’s 10 percent car tariffs, is also studying adding a 25 percent levy on automotive imports, which would hit both Europe and Japan hard.
French Finance Minister Bruno Le Maire said the European Union would not consider launching trade talks with the United States unless Trump first withdraws the steel and aluminum tariffs and stands down on a car tariff threat.
“We refuse to negotiate with a gun to our head,” Le Maire told reporters on the sidelines of the G20 meeting.
IMF Managing Director Christine Lagarde presented the G20 finance ministers and central bank governors meeting in Buenos Aires with a report warning that existing trade restrictions would reduce global output by 0.5 percent.
In the briefing note prepared for G20 ministers, the IMF said global economic growth may peak at 3.9 percent in 2018 and 2019, while downside risks have increased due to the growing trade conflict.
Lagarde’s presentation came shortly after Mnuchin said there was no “macro” effect yet on the US economy.
Mnuchin said that, while there were some “micro” effects such as retaliation against US-produced soybeans, lobsters and bourbon, he did not believe that tariffs would keep the United States from achieving sustained 3 percent growth this year.
The US dollar fell the most in three weeks on Friday against a basket of six major currencies .DXY after Trump complained again about the greenback’s strength and about Federal Reserve interest rate rises, halting a rally that had driven the dollar to its highest in a year.
The last G20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy except for a commitment to “further dialogue.”
Brazilian Finance Minister Eduardo Guardia said participants agreed the risks to the global economy had increased since their last meeting, citing rising trade tensions and higher interest rates by major central banks.
He said the final communique would reflect the need for members, particularly in emerging markets that have been roiled by currency weakness, to undertake reforms to protect themselves against volatility.
German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.
“I don’t expect tangible progress to be made at this meeting,” Scholz told reporters on the plane to Buenos Aires.
The US tariffs will cost Germany up to 20 billion euros ($23.44 billion) in income this year, according to the head of German think-tank IMK.
Bank of Japan Governor Haruhiko Kuroda said he hoped the debate at the G20 gathering would lead to an easing of retaliatory trade measures.
“Trade protectionism benefits no one involved,” he said. “I think restraint will eventually take hold.”


Russian big gun rolls out latest hardware for Gulf customers

Updated 18 February 2019
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Russian big gun rolls out latest hardware for Gulf customers

LONDON: As the region’s biggest military exhibition gets underway in Abu Dhabi, Sergey Chemezov, CEO of Russian defense conglomerate Rostec, spoke exclusively to Arab News about the company’s regional ambitions.
What is the expected value of your exports this year? 
The order portfolio of Rosoboronexport, Rostec’s subsidiary, currently exceeds $50 billion. Russia is the second-largest arms supplier in the world.
In 2018, arms and military machinery were supplied to over 40 countries worldwide. In addition, we signed more than 1,100 contractual documents to an amount of over $20 billion, which is nearly one-quarter more than in 2017. 
The Middle East and North Africa accounted for almost half of Rosoboronexport’s supplies of military products, more than 40 percent. Only two years before, that share had been significantly smaller, about 20 percent. That trend says it all; military and technical cooperation with the countries of that region have been strengthening. The Middle East is currently the leading region in the world by the volume of arms purchased, accounting for nearly one-third of the total market. Middle Eastern states (Saudi Arabia, Israel, Egypt, the UAE and Qatar) make half of the list of 10 major importers of military products, and Saudi Arabia remains the top importer. 
Which country will most likely become your largest client in the Middle East in 2019? Which systems is Rostec planning to sell in the region this year?
We’re implementing a range of projects in the UAE, both in civil and military areas. Russia is also interested in developing military and technical cooperation with all countries of the region. In recent years, we’ve resumed close contacts with a whole range of states, including Iraq.
I’d like to particularly focus on the Yak-130 combat trainer aircraft. The countries of the region are showing a continuously increasing interest in combat trainers. The Yak-300 has all the necessary characteristics required for aircraft of that type, and I firmly believe that it has great potential for supplies to the countries of the region.
What are the potential consequences of the suspension of the New START Treaty with the US? Is it affecting Rostec’s production plans? 
As a person who cares about what’s happening in the world, I can say that I’m worried by the position of the US. It is leading to a new arms race and aggravating international tension. The Russian Army is well equipped, and is capable of efficiently responding to attacks. Our corporation has done its best for this purpose. Yet there will be no winners in a third world war if it happens. 
Is there up-to-date information on supplies of S-400 systems to Turkey?
The contract for the S-400 was signed in 2017. We’ve agreed to reduce the terms already twice, and in autumn 2019 the obligations will be fulfilled. Of course, Turkey does have ambitions to develop its national defense industry, and in this regard, it has already achieved significant progress in a range of areas. Therefore, our partners are interested in such topics as joint development of machinery, including such advanced equipment as air defense systems.
As to joint production, the contract for the S-400 provides for an option. This is about cooperation in technology. We’re ready to agree to localization of manufacture of certain elements of that system. I’ve said it earlier and will repeat it again: The S-400 is a defense system, not an offensive one. We can sell it to the Americans if they want it. Thus, strategically there are no problems in this regard. And I can see no problems for Russia in terms of security.
Is Rostec discussing any potential sales with Saudi Arabia, and if yes, in which area?
The military sector prefers silence, therefore I wouldn’t go into detail. I’d only say that we’re actively working in a range of areas. We can confirm information about signing a number of contracts with Saudi Arabia, as well as about both parties’ readiness to fulfill them, including on the S-400. Talking of the civil area, Rostec possesses a whole range of innovative technologies that can be demanded within implementation of the ambitious NEOM city project. These are water treatment systems, electronic services, various solutions in the area of composite materials, glazing with special features, as well as advanced technologies and innovations for manufacturing biodegradable polymers and products based on natural renewable raw materials. 
Do you have up-to-date information on progress in the privatization of Rostec’s holdings?
The sale of shares isn’t an end in itself for Rostec, but rather a tool for developing its assets in compliance with the corporation’s development strategy until 2025. We’re interested not only in attracting additional investments, but also in gaining new competences, technologies and markets. Private-public partnerships help our enterprises, and holdings become more efficient and take new positions quicker. 
What are your expectations of the corporation’s profit for the year?
We’re finishing assessment of the results, and will officially announce them in the near future. Now I can say that the company continues to show good financial results, and we expect an increase in both revenue and net profit compared to 2017.
Do you expect that long-standing low oil prices will affect regional sales this year?
The example of Russia shows that oil prices do not determine everything. Even when they are low, the economy can develop. 
We sense that the countries of the region have already adapted to the new price realities that dramatically appeared in 2014. At the same time, interest in our products, both military and civilian, in the region is growing from year to year.
What products will Rostec holding companies present at IDEX 2019?
The IDEX exhibition is one of the world’s largest venues where Russia demonstrates its latest developments in the field of weapons and military equipment. This is an opportunity for us to negotiate and discuss cooperation with our traditional partners, primarily from the Middle East, which is of particular interest to Russian industry. After all, the Middle East and North Africa account for almost half of the sales of Russian military products abroad. The joint exposition of Russian enterprises at IDEX, which occupies more than 1,100 square meters of exhibition area, will feature about 1,000 samples of military products.
In particular, the unparalleled Pantsir-ME, an air defense missile and artillery system, will make its international debut at the exhibition, presented by the High-Precision Complexes Holding. The system is able to protect ships from all types of aerial kill assets.
A large-caliber automatic assault rifle complex, the SHAK-12, designed for close combat, will also be shown there. Units of Russian special services are armed with these complexes.
Kalashnikov Concern will showcase a wide range of small arms and hunting weapons. The AK-15 and 200 series Kalashnikov certified for export will be shown abroad for the first time. The 200 series assault rifles will be one of the key Russian novelties at IDEX 2019. 
Tecmash Concern will exhibit a number of its latest ammunition products. These include a 122-mm unmanned rocket missile with a detachable blast fragmentation warhead for the Tornado-G multiple-launching rocket system. This ammunition has much greater kill effectiveness than issued shells of the Grad system. At the same stand, visitors will for the first time see a unique video showing how the Tornado-G works. In addition, at the show the world community will for the first time see Tecmash’s AZ-TSR-47, an increased-efficiency jet-stabilized projectile designed to protect surface ships from weapons equipped with radar guidance systems.
TSNIITOCHMASH will present at IDEX its already well-known second-generation Ratnik combat equipment, which is exactly what is now supplied to the Russian Army. Ratnik in the color of sand, presented at IDEX, has been successfully tested in Syria. Its components include a body armor backed with a special armor panel. This panel can withstand 10 hits of SVD sniper rifle armor-piercing incendiary bullets, fired from a distance of 10 meters, and the plate is not deformed on the back, providing protection against contusion damage. The Russian bulletproof vest also wins in terms of weight: It is 2.5-3 kg less compared to the US general military bulletproof vest.
Each exhibition held in the Middle East demonstrates that the corporation has immense potential to cooperate with the countries of the region.