Japan exports fall for first time since 2016 as trade war fears mount

US President Donald Trump has made clear he is unhappy with Japan’s $69 billion trade surplus, mostly auto exports, with the US and wants a two-way agreement to address it. (Reuters)
Updated 18 October 2018
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Japan exports fall for first time since 2016 as trade war fears mount

  • Japanese policymakers remain wary about the overall economic impact of the international trade frictions
  • The US-Sino tariff row has yet to materially hurt trade activity

TOKYO: Japan’s exports fell in September for the first time since 2016 as shipments to the US and China declined, likely impeding third quarter economic growth and adding to concerns about the broadening impact of an escalating Sino-US trade war.
The data comes days after a Reuters poll showed a third of Japanese companies — not just exporters — have been affected by the trade conflict between the world’s two biggest economies, and more than half worried about its fallout on their business.
Japanese policymakers also remain wary about the overall economic impact of the international trade frictions. A string of natural disasters that struck Japan has added to the strain on factories, disrupting output and physical distribution.
The US-Sino tariff row has yet to materially hurt trade activity, but a slowdown in external demand has bolstered views that Japan’s economy, the world’s third largest, likely slowed sharply in the July-September quarter.
“The economy probably grew only slightly in the third quarter, led by firm consumption and brisk capex. External demand likely made no contribution,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Assuming the US-China trade frictions have widespread effects on global trade, Japan’s exports will struggle to grow.”
Minami said declines in shipments to the US and China — the two key export destinations for Japan — are a source of concern as each of them accounts for about 20 percent of Japanese exports, respectively.
Ministry of Finance (MOF) data out on Thursday showed Japanese exports fell 1.2 percent in September from a year earlier, against a 1.9 percent increase expected by economists in a Reuters poll, and followed a 6.6 percent gain in August.
It was the first decline since November 2016.
In volume terms, exports fell 4.8 percent in the year to September, the first drop in seven months.
Japan’s exports to the US declined 0.2 percent in the year to September, dragged down by falling shipments of construction and mining machinery, auto parts and medicines.
US-bound auto exports amounted to some 143,000 cars, down 7.0 percent year-on-year in a snapback from the previous year’s brisk shipments, a sign that car sales have levelled off.
Imports from the US rose 3.1 percent in September, led by crude oil, liquefied petroleum gas, helping reduce Japan’s trade surplus with the US by 4.0 percent year-on-year to ¥590 billion ($5.24 billion).
The US Trade Representative’s office told Congress on Tuesday it would open trade talks with Japan, describing the country as an important yet underperforming market for US exports.
Tokyo and Washington last month agreed to start trade talks in an arrangement that, for now, avoids the worst-case scenario of an imminent 25 percent tariff on cars.
Trump has made clear he is unhappy with Japan’s $69 billion trade surplus with the US — nearly two-thirds of it from auto exports — and wants a two-way agreement to address it.
Tokyo pushed back on a straight bilateral Free Trade Agreement that Washington had sought, fearing it could put Japan under pressure to open politically sensitive sectors such as agriculture.
Thursday’s trade data showed exports to China, Japan’s biggest trading partner, fell 1.7 percent in the year to September, the first decline in seven months, dragged down by semiconductor production equipment.
Shipments to Asia, which account for more than half of Japan’s overall exports, rose 0.9 percent.
Overall imports rose 7.0 percent in the year to September, versus the median estimate for a 13.7 percent annual increase.
The trade balance was surplus of ¥139.6 billion, compared with the median estimate for a shortfall of ¥50 billion.
“External demand has likely put a drag on Japan’s economy,” said Koya Miyamae, senior economist at SMBC Nikko Securities.
“Going forward, exports may recover from supply constraints, but effects from slowdown in emerging markets, and the US-China trade war remain a source of concern.”


Unaoil’s former Iraq partner pleads guilty to bribery

Updated 19 July 2019
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Unaoil’s former Iraq partner pleads guilty to bribery

  • It is the first guilty plea to result from a three-year investigation by the Serious Fraud Office into suspected bribery and money laundering
  • Unaoil is a Monaco-based oil and gas firm

LONDON: The former partner in Iraq for Unaoil, a Monaco-based oil and gas consultancy, has pleaded guilty to five counts of bribery in the first conviction in a three-year criminal investigation by Britain’s Serious Fraud Office (SFO).
Basil Al Jarah, 70, pleaded guilty on July 15 to conspiring to give corrupt payments in connection with the award of contracts to supply and install single point moorings and oil pipelines in southern Iraq, the SFO said.
Al Jarah’s conviction, which comes six months before three other defendants in the case face a criminal trial in London, was announced after a judge lifted reporting restrictions in a pre-trial hearing on Friday, the SFO said.
Ziad Akle, Unaoil’s former territory manager for Iraq and Stephen Whiteley and Paul Bond, who worked for Dutch-based oil and gas services company SBM (Offshore), have pleaded not guilty.
Akle, 44, has been charged with three offenses of conspiracy to make corrupt payments. Bond, a 67-year-old former senior sales manager with SBM (Offshore), and Whiteley, a 64-year-old former vice president of SBM (Offshore) and one-time Unaoil general territories manager for Iraq, Kazakhstan and Angola, each face two counts.
Sam Healey, a lawyer at JMW Solicitors who is representing Whiteley, said his client “strenuously denied” all alleged offenses.
“Mr Whiteley co-operated fully with the SFO as they opened their enquiries and will rigorously defend the charges,” he said.
Lawyers for Al Jarah and Bond declined to comment. A lawyer for Akle was not immediately available for comment.
A spokeswoman for Unaoil declined to comment, while SBM Offshore has said it is company policy to not comment on past or current employees.