WCA July 2018

From the Americas

Trade As global finance chiefs strive to head off a trade war, China charges the USA with ‘thinking and acting like a bully’ “The overriding message of officials meeting in Washington [the week of 16 th April] has been that trade tensions between the USA and China risk eroding business and investor confidence, even as global growth enjoys its best upswing in years.” That was the takeaway of Bloomberg TV , which also reported that the USA, with its announcement of a 25 per cent tariff on steel, was the main preoccupation of the finance ministers and central banks from the Group of 20 who came together at the spring meetings of the International Monetary Fund (IMF) and World Bank. Beijing has threatened retaliation against USA exports if Washington pushes ahead with the tariffs. “We are free trade supporters,” UK Chancellor of the Exchequer Philip Hammond told reporters. “We do not believe the imposition of tariffs is the way ultimately to resolve problems in the global trade system and we always urge our partners to resist using the imposition of tariffs to resolve trade disagreements.” Weighing heavily on the officials was the damaging potential of a trade war between the USA and China, apparently more of a possibility all the time. “We need to pivot where we are,” IMF first deputy managing director David Lipton said in a Bloomberg interview. “The US needs to be letting go of unilateral pressures to achieve its goals.” (“US-China Trade Impasse Shows No Signs of Easing,” 20 th April) A smaller meeting of G-7 finance officials in Washington on 19 th April addressed the same concerns but also reported little progress, and tensions mounted. On the same day, an assistant secretary to the Treasury Department’s international affairs office said the USA was considering using an emergency law to curb Chinese investments in sensitive technologies. Beijing fired back forcefully. “The US is thinking and acting like a bully,” foreign ministry spokeswoman Hua Chunying said at a press briefing the following day.  While US Treasury Secretary Steven Mnuchin kept a low profile at the talks, in an apparently conciliatory gesture on closing day he announced that he may visit China. “I am not going to make any comment on timing, nor do I have anything confirmed,” said Mr Mnuchin on 21 st April. “But a trip is under consideration.” No doubt this will have been taken as a hopeful sign by those keenly alert to the risks of a spiralling trade war. But it should be taken in the context of President Donald Trump’s request to his trade team to identify another $100 billion in Chinese imports that could be hit with USA tariffs.

Automotive An update on the 300,000 Volkswagen TDI diesel buy-backs awaiting their fate in 37 huge parking lots across the USA “When a car is left to sit, things begin to deteriorate. Seals dry out and leaks develop. Tyres begin to rot. Bearings get flat spots. Critters move in. It’s not pretty.” This reflection, by Eric C Evarts, of Green Car Reports , was prompted by a visit, in Denver, to one of the 37 parking lots around the USA in which Volkswagen has stashed some 300,000 TDI diesels. The company agreed to buy back the cars after they were found not to comply with American emissions standards. Under its court-approved consent decree, VW agreed that it would try to resell as many of these cars as possible, after upgrading their emissions systems. If Volkswagen were serious about doing so, Mr Evarts realised, it could not afford to let the cars sit and rot. Accordingly, Green Car Reports put some questions to the company. What is the holdup that is keeping these cars stranded? What steps are being taken to ensure that they remain in saleable condition? And how many does VW realistically expect to be able to resell? (“300K Bought-Back VW Diesels Are Decaying in 37 Lots Waiting for ... What?” 18 th April) In a written response, the German company said that it is trickling the cars back into the market so as not to overwhelm demand and depress prices: “As Volkswagen releases the vehicles back into the market, we are consciously balancing meeting market demand and monitoring supply as to not create a surplus.” The company intends to resell the cars first to its own dealers, who will offer them with a two-year, unlimited certified pre-owned warranty from Volkswagen that other resellers cannot offer. All TDIs resold to the public will get a four-year, 48,000-mile extended emissions warranty. Green Car Reports surmised that the TDIs resold through Volkswagen dealers are likely to be “the cream of the crop” – newer cars with relatively few miles. Other cars will be resold through used-car auction houses and may end up at local used-car lots. Volkswagen acknowledged that some would be “responsibly recycled,” which Mr Evarts interpreted as meaning “sold to junk yards, dismantled, and parted out.”  In the meantime, Volkswagen disclosed, it has contracted with “professional port and logistics processors” to put the cars – all 300,000 of them – through a maintenance cycle in which each one is started, driven around the lot, and washed every 30 days.

BigStockPhoto.com Photographer: Aispl

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Wire & Cable ASIA – July/August 2018