EU sets out plans for ‘limited’ US trade deal

EU governments were shell-shocked last year when US President Donald Trump imposed tariffs on metals imports as part of his ‘America First’ protectionist vision. (AFP)
Updated 18 January 2019
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EU sets out plans for ‘limited’ US trade deal

  • Negotiating a trade deal was included in a transatlantic truce secured last year
  • EU governments were shell-shocked last year when Trump imposed tariffs on metals imports as part of his ‘America First’ vision

BUSSELS: The EU on Friday published its negotiating plans for a free trade deal with the US, part of an effort to avert a trade war with US President Donald Trump.
Negotiating a trade deal was included in a transatlantic truce secured last year after the US slapped tariffs on steel and aluminum imports from the EU, alarming the world.
The effort is also part of an effort to stop Trump from slapping tariffs on European car imports, a danger that has especially unnerved export powerhouse Germany.
“It is not a traditional (trade deal)... it is a limited but important proposal engaged on industrial goods tariffs only,” EU trade commissioner Cecilia Malmstrom told reporters.
The process however has got off to a rocky start, with the US side last week including agricultural products in their plans, which is an absolute no-go for the Europeans.
“In this mandate, we are not proposing any reduction of tariffs on agriculture. That area was left outside,” Malmstrom insisted.
The 17-page mandate submitted by the US also included other demands and charges that are unacceptable for the EU, including that Europe stop manipulating foreign exchange rates.
Given the split, the EU is entering the negotiations with trepidation, especially since the threat of auto duties is still very much alive in Washington.
The commission handles trade negotiations for the EU’s 28 member states and the plans must now be approved by the national governments before negotiations actually start with Washington.
Brussels and member states are wary after the failure of the so-called TTIP talks, a far more ambitious transatlantic trade plan which stalled amid fears a deal with Washington would undermine EU food and health standards.
Opposition by activists has already resurfaced with Friends of the Earth Europe warning that “there can be no trade-offs on food standards” in the deal.
EU governments were shell-shocked last year when Trump imposed tariffs on metals imports as part of his “America First” protectionist vision.
Brussels responded by slapping counter-tariffs on more than $3 billion in US exports like bourbon, blue jeans and Harley-Davidson motorcycles.
But Trump and European Commission President Jean-Claude Juncker in July called a truce, agreeing that as both sides pursued a trade deal, neither would impose additional tariffs.


Microsoft tops $1 trillion as it predicts more cloud growth

Updated 52 min 5 sec ago
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Microsoft tops $1 trillion as it predicts more cloud growth

BENGALURU/SAN FRANCISCO: Microsoft Corp. on Wednesday briefly topped $1 trillion in value for the first time after executives predicted continued growth for its cloud computing business.
The Redmond, Washington-based company beat Wall Street estimates for quarterly profit and revenue, powered by an unexpected boost in Windows revenue and brisk growth in its cloud business which has reached tens of billions of dollars in sales.
Microsoft shares rose 4.4% to $130.54 in late trading after the forecast issued on a conference call with investors, pushing the company ahead of Apple Inc’s $980 billion market capitalization. The companies and Amazon.com Inc. have taken turns in recent months to rank as the world’s most valuable US-listed company.
Microsoft’s stock has gained about 23% gain so far this year, after hitting a record high of $125.85 during regular trading hours.
Under Chief Executive Satya Nadella, the company has spent the past five years shifting from reliance on its once-dominant Windows operating system to selling cloud-based services.
Azure, Microsoft’s flagship cloud product, competes with market leader Amazon Web Services (AWS) to provide computing power to businesses.
Growth in that unit slowed to 73% in the third quarter ended March 31 from 76% in the second quarter. Mike Spencer, Microsoft’s head of investor relations, said the decline was roughly in line with the company’s estimate.
Christopher Eberle, a senior equity analyst with Nomura, said that with Azure, “one should assume a slower rate of growth as we move forward, simply due to the law of large numbers.” Still, Azure will bring in $13.5 billion in sales in fiscal 2019 with an overall growth rate of 75%, he estimated. “I can’t name another company of that scale growing at these rates.”
Microsoft tops tech rivals such as Amazon in market capitalization on some days despite having less revenue, partly because most of its sales is to businesses, which tend to be steadier customers than consumers. A growing proportion of Microsoft’s software sales are billed as recurring subscription purchases, which are more reliable than one-time purchases.
Microsoft’s earnings per share of $1.14 beat expectations of $1 according to IBES data from Refinitiv.
Windows licensing revenue from computer makers grew 9% year over year, beating expectations after a 5% decline in the previous quarter. Spencer said a shortage of Intel Corp. processor chips for PCs that many analysts expected to last into this summer had been resolved earlier than expected, allowing PC makers to ship more machines.
Microsoft’s “commercial cloud” revenue — which includes business use of Azure, Office 365 and LinkedIn — was $9.6 billion this quarter, up 41% from the previous year but down slightly from the 48% growth rate the previous quarter.
Microsoft’s so-called “intelligent cloud” unit, which contains its Azure services, posted revenue of $9.65 billion, above Wall Street estimates of $9.28 billion, according to IBES data from Refinitiv. Chief Financial Officer Amy Hood said that unit could reach $11.05 billion in revenue in the fiscal fourth quarter.
The “productivity and business process” unit that includes both Office as well as social network LinkedIn had $10.2 billion revenue versus expectations of $10.05 billion.
Microsoft’s latest results contained two weak spots.
Its gaming revenue was up only 5% versus 8% the quarter before, which Spencer attributed to less revenue from third-party game developers and the fact that many gamers are delaying purchases of Microsoft’s Xbox console because a new model is expected soon.
Sales of the company’s Surface hardware grew 21% versus 39% the quarter before, also because customers waited for updated hardware they expected to be released soon.
Total revenue rose 14% to $30.57 billion, beating analysts’ average estimate of $29.84 billion according to IBES data from Refinitiv.
Net income rose to $8.81 billion, or $1.15 per share, from $7.42 billion, or 96 cents per share, a year earlier.