Global minimum tax deal: What you need to know

PARIS - Some 130 nations have agreed to what would be the biggest international tax reform in a generation to clamp down on big companies that are gaming the rules.

The G20 nations are now expected to endorse a provisional deal reached under the auspices of the OECD, adding momentum to reach a final deal by October and convince hold-outs to join.

THE PILLARS

The proposed reform is comprised of two pillars to prevent companies from establishing bases in countries with low taxes to maximize profits earned elsewhere.

Pillar one would give countries a share of the taxes on profits earned there, though the tax would still be collected where the company has its fiscal base.

Multinationals operate in many countries -- oil giant BP is present in 85, for example -- but usually pay taxes on profits only in their tax home.

This provision would initially apply only to the top 100 or so companies, before expanding after seven years.

Pillar two is a global minimum corporate tax rate to stop competition between countries over who can offer companies the lowest rate -- what critics call a "race to the bottom".

The OECD deal set a minimum rate of 15 percent. 

While this is supposed to be an "effective tax rate" -- that is the companies actually pay that amount of tax -- the OECD deal envisages the possibility of countries retaining some investment incentives that would reduce payments.

NEXT STEPS

The next step towards a final deal is a meeting of G20 nations on July 9-10. 

While the OECD-brokered deal removes much of the drama, as all of the G20 nations were part of the 130 nations that backed it, the meeting can help maintain political momentum towards achieving a final deal.

There are many technical details to work out before the self-imposed October deadline (with a hoped-for 2023 start date), including the method used to calculate the amount of taxes to be redistributed.

Details of exemptions from the minimum tax rate also remain to be hammered out.

WHO ARE THE HOLD-OUTS?

Of the 139 nations that participated in the talks, nine didn't sign up to the deal: Barbados, Estonia, Ireland, Hungary, Kenya, Nigeria, Peru, Saint Vincent and the Grenadines, and Sri Lanka.

Except for Peru, which abstained because of a domestic political crisis, the other nations use low tax rates to attract multinationals.

Kenya and Nigeria believed the guarantees offered to developing countries were insufficient, according to a source involved in the negotiations.

Ireland said it supports the measure to redistribute taxes paid by multinationals among nations where they do business, but opposes the minimum 15 percent effective tax rate.

Hungary said the 15 percent rate is far too high and would weigh on economic activity.

The US signed up to the deal, but the administration of President Joe Biden faces headwinds as many Republicans oppose the deal and could block its passage in the Senate.

Agence France-Presse

G20 pledges more than $21 billion to fight coronavirus

CAIRO - The Group of 20 rich and emerging economies has pledged more than $21 billion to fight the coronavirus, the group said early on Saturday.

"The G20, with invited countries, has coordinated the global efforts to support the fight against the COVID-19 pandemic. To date, G20 members and invited countries have pledged over US$21 billion to support funding in global health," the group said in a statement.

The pledges will be directed towards diagnostics, vaccines, therapeutics, and research and development, the statement added.

In April, the group called on all countries, non-governmental organizations, philanthropies and the private sector to help close a financing gap estimated at over $8 billion to combat the COVID-19 pandemic.

Saudi Arabia, the current G20 chair has pledged $500 million to support global efforts to combat the pandemic. It said then it would allocate $150 million to the Coalition for Epidemic Preparedness and Innovation, $150 million to the Global Alliance for Vaccines and Immunizations, and $200 million to other health organizations and programs.

At least 391,108 people have died globally from COVID-19 and more than 6.68 million people have been infected by the novel coronavirus that causes it, following an outbreak that started in Wuhan, China, in early December. 

-reuters-

G20 vows to avoid 'unnecessary' trade barriers

RIYADH -- The G20 on Thursday pledged to avoid "unnecessary" trade barriers on essential goods including food during the coronavirus pandemic, after the WTO and IMF warned over the growing use of export restrictions.

The pandemic has pushed the global economy and international trade into turmoil as they face downturns not seen since the Great Depression.

Global trade is expected to register "double-digit declines" in volumes in nearly all regions this year, the World Trade Organization has said.

G20 trade and investment ministers said export restrictions on vital medical supplies and other essential goods, if necessary, must be "proportionate, transparent, temporary" and must not create "unnecessary barriers to trade or disruption to global supply chains".

Following a virtual meeting hosted by Saudi Arabia, the ministers also pledged to "refrain from introducing export restrictions on agricultural products" and avoid "unnecessary food-stockpiling".

Last month, the International Monetary Fund and WTO expressed concern over possible "supply disruptions" from the growing use of export restrictions that limit trade of key medical supplies and food.

They called on global leaders to refrain from imposing such restrictions.

Disruptions to supply chains could "prolong and exacerbate the health and economic crisis", the two institutions warned.

Agence France-Presse

G20 to ensure 'sufficient' food supply during pandemic

RIYADH -- G20 agriculture ministers on Tuesday pledged to ensure "sufficient" global food supplies amid the coronavirus pandemic as the UN warned the number of people facing acute hunger globally could nearly double.

"We will work together to help ensure that sufficient, safe, affordable, and nutritious food continues to be available and accessible to all people, including the poorest, the most vulnerable, and displaced people," said the ministers from the 20 most advanced economies.

"Under the current challenging circumstances, we stress the importance of avoiding food losses and waste caused by disruptions throughout food supply chains, which could exacerbate food insecurity and nutrition risks and economic loss," they said after a virtual meeting hosted by the group's current president Saudi Arabia.

As COVID-19 lockdowns disrupt the global economy, the G20 ministers also said they were working to prevent "excessive food price volatility" in international markets.

The ministers stressed it was important that coronavirus restrictions do not create "unnecessary barriers" to trade and food supply chains.

The number of people facing acute food insecurity could increase to 265 million in 2020, from 135 million in 2019, as a result of the economic impact of COVID-19, the United Nation's World Food Program warned on Tuesday.

The warning came as a report by the WFP and its partners said food insecurity had already risen last year before the outbreak of the coronavirus crisis.

It found that 135 million people in 55 countries were living in acute food crises or outright humanitarian emergencies last year.

Agence France-Presse

Saudi says total oil curbs could reach 19.5 million barrels

RIYADH - Oil output cuts by OPEC and its allies, together with pledges from other G20 nations and purchases by strategic reserves, could remove 19.5 million barrels per day from the market, the Saudi energy minister said.

US President Donald Trump said Monday that the actual output cuts may be deeper than the headline figure of 9.7 million bpd -- with top producers considering slashing output by 20 million barrels a day under the deal.

"People are saying 10 million but we think the number they will actually hit is going to be closer to 20 million barrels a day," Trump said at a press briefing. 

He did not give details, but the figures chime with the Saudi breakdown.

The OPEC+ alliance, led by Riyadh and Moscow, agreed on Sunday to slash daily production by 9.7 million bpd over the next two months to arrest a slump triggered by the coronavirus shutdown and a price war between Saudi Arabia and Russia.

Saudi media on Tuesday quoted Energy Minister Prince Abdulaziz bin Salman as saying that G20 producers outside OPEC+ have pledged to cut 3.7 million bpd.

He also estimated purchases for countries' strategic petroleum reserves for use in emergencies at 200 million barrels over May and June, boosting the total impact to 19.5 million bpd.

Prince Abdulaziz said the kingdom could cut below its quota of 8.5 million bpd if necessary.

According to the deal, Saudi Arabia and Russia will cut 2.5 million bpd each from their production of 11 million bpd in October 2018.

But the minister was quoted by Energy Intelligence as saying that Riyadh will effectively be cutting 3.8 million bpd from current record-high output levels of 12.3 million bpd which were boosted during the price war.

Other Gulf states will be also cutting from recently increased output levels, he said.

"So, in reality, what OPEC+ will be doing effective May 1 will be a total of 12.5 million bpd," the minister said. 

The spread of the coronavirus has hit oil demand hard, with experts estimating that one-third of global demand -- which stood at 100 million bpd before the disease -- is being wiped out.

"We have to watch what is happening with demand destruction and demand improvement, depending on how things evolve," the minister said.

Agence France-Presse

G20 eyes taxing tech giants in bid for $100 billion boost

RIYADH - Leading world economies must show unity in dealing with aggressive "tax optimization" by global digital giants like Google, Amazon and Facebook, G20 officials said on Saturday.

The Organization for Economic Cooperation and Development (OECD) is developing global rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. The OECD says this could boost national tax revenues by a total of $100 billion a year.

The call for unity appeared directed mainly at the United States, home to the biggest tech companies, in an attempt to head off any stalling on the rules until after the US presidential election in November.

"There is no time to wait for elections," German Finance Minister Olaf Scholz told a tax seminar on the sidelines of a meeting of G20 finance ministers and central bankers.

"This needs leadership in certain countries," Scholz said, looking directly at U.S. Treasury Secretary Steven Mnuchin, sitting next to him at the seminar.

The taxing of digital firms and the effect of the coronavirus outbreak on the global economy are among the hot topics being debated by G20 financial leaders, from the world's 20 largest economies, during their talks in Riyadh this weekend.

The OECD wants to set a minimum effective level at which such companies would be taxed and seeks agreement by the start of July, with an endorsement by the G20 by the end of the year.

"A coordinated answer is not the better way forward, but, given the alternatives, the only way forward," OECD head Angel Gurria told the seminar.

A draft G20 communique, seen by Reuters, showed financial leaders will endorse the OECD approach to the issue in their final statement on Sunday, backing the need pay tax where business is conducted and the need for a minimum rate.

They will also "reaffirm commitment to reach a consensus-based solution by end of 2020".

The OECD efforts were stalled late last year by last-minute changes demanded by Washington, which many G20 officials view as reluctant to deal with a potentially politically tricky matter before the presidential election.

Mnuchin said OECD countries were close to an agreement on the minimum tax level, which he said would also go a long way to resolving the issue of where tax is paid, although he warned that some aspects of the tax proposal could require approval by the U.S. Congress.

"I think we all want to get this done by the end of the year, and that's the objective," Mnuchin told the seminar.

Mnuchin sought to reassure G20 delegates that a US proposal to add a "safe harbor" regime to the tax reform effort - which has drawn criticism from France and other countries - would not let companies simply opt-out of paying taxes.

"It's not an optional tax," he said. "You pay the safe harbor as opposed to paying something else. People may pay a little bit more in a safe harbor knowing they have tax certainty."

US officials say their proposal would help address lawmakers' concerns and smooth passage of legislation that might be required for US implementation of new global tax rules. In essence, they argue, it would allow a multinational enterprise to elect to pay more foreign tax in exchange for better terms in the event of disputes over taxes, and easier administrative procedures.

But many questions remain.

MORE CLARITY NEEDED

French Finance Minister Bruno Le Maire told reporters it remained unclear exactly what the U.S. proposal would entail.

"We're still in the process of assessing what it really means," he said, adding, "It's not a non-starter for the French government. It's fair and useful to give all the attention to this new proposal."

European Union Economy Commissioner Paolo Gentiloni told Reuters there was still hard work ahead.

"It’s good that there is a commitment to find a solution, but ... it’s not there," he said, adding that he would meet with Mnuchin for bilateral talks later Saturday.

Scholz told reporters Germany remained skeptical. "I think we shouldn't start with letting companies choose which taxes they want to pay. This is leading to nowhere," he said.

Several European countries, including France, Spain, Austria, Italy, Britain and Hungary either already have a plan for a digital tax or are working on one, creating the risk of a highly fragmented global system.

"You cannot have in a global economy different national tax systems that conflict with each other," Mnuchin said.

Facebook Chief Executive Mark Zuckerberg said on Feb. 14 he would be ready to pay more tax in Europe and would welcome a global OECD solution that would make the levies uniform. 

source: news.abs-cbn.com

G20 kicks off debate to regulate 'stablecoins' in hit to Facebook's Libra

WASHINGTON - Group of 20 finance leaders on Friday agreed to set strict regulations on cryptocurrencies such as Facebook's Libra, warning that issuance of such "stablecoins" should not be allowed until various global risks they pose have been addressed.

The agreement came after a G7 working group warned that when launched on a wide scale, stablecoins - digital currencies usually backed by traditional money and other assets - could threaten the world's monetary system and financial stability.

Finance chiefs of the G20 major economies agreed that while stablecoins could have potential benefits of financial innovation, they give rise to a set of "serious" public policy and regulatory risks.

"Such risks, including in particular those related to money laundering, illicit finance, and consumer and investor protection, need to be evaluated and appropriately addressed before these projects can commence operation," the G20 finance leaders said in a statement issued after their meeting.

Bank of Japan Governor Haruhiko Kuroda said the G20 will kick off debate on how to regulate stablecoins based on proposals it receives from standard-setting bodies like the Financial Stability Board (FSB) and the Financial Action Task Force (FATF).

The FSB and the FATF are expected to report their findings on stablecoins to the G20 next year. That reduces the chance Facebook will meet its goal of rolling out Libra in 2020.

"Policymakers have expressed concerns over various risks stablecoins pose. Until they are addressed, stablecoins should not be issued. That was something agreed by the G20 members," Kuroda told a news conference hosted by Japan, which chaired this year's G20 gatherings.

BROADER MONETARY IMPLICATIONS

The G20 has also asked the International Monetary Fund (IMF) to examine the economic implications, including monetary sovereignty issues, according to the group's press release.

"Some emerging countries have concerns on what could happen if stablecoins backed by a huge customer base become widely used globally," said Kuroda, who was among the global finance leaders gathered in Washington this week for the IMF and World Bank fall meetings.

"But this is not just a problem for emerging economies. It could have a broader impact on monetary policy and financial system stability," he said.

The G20 agreement underscored concerns among global policymakers about stablecoins such as Libra, which suffered a defection of a quarter of its original members that had initially backed the project.

German Finance Minister Olaf Scholz on Friday redoubled his criticism of Libra, saying creation of a new world currency should be prevented.

"We now know that both the G7 and G20 are quite cautious about stablecoins," a Japanese Ministry of Finance official who attended the G20 talks told reporters.

"Personally, I feel that such strong concerns held by policymakers may have been among reasons why some companies decided to pull out of the Libra project," the official said.

While setting regulations on stablecoins, policymakers will also debate ways to make existing cross-border settlement and payment systems more efficient, BOJ's Kuroda said.

But such efforts will be confined to private-sector settlements, he said, adding that the G20 did not discuss the idea of central banks issuing digital currencies.

"The BOJ, too, has no plans for now to issue digital currencies," Kuroda said.

source: news.abs-cbn.com

Japan's Abe offers Saudi crown prince help in reducing oil dependency

OSAKA - Japanese Prime Minister Shinzo Abe on Sunday praised Saudi Arabia's efforts to reduce its dependence on oil and promised Crown Prince Mohammed bin Salman that Japan will help the kingdom with a sweeping reform plan.

"Saudi Arabia's 'Vision 2030' is an unprecedented major reform aimed at shifting away from dependence on oil and at diversifying industry, under your majesty's initiative," Abe told the crown prince at the beginning of a bilateral meeting after a summit of Group of 20 leaders in the city of Osaka.

"Japan will continue its utmost efforts by government and the private sector to help achieve its success," Abe said.

Riyadh announced the reform plan in 2016, with goals ranging from overhauling its state-owned Public Investment Fund to increasing visits of Muslim pilgrims and encouraging more Saudis to play sports.

Despite last October's murder of Saudi journalist Jamal Khashoggi at the hands of Saudi agents, big investors are pushing ahead with deals and pouring money back into its stock market as well as Vision 2030 projects that aim to diversify the economy of the world’s top oil exporter and create jobs.

"Saudi wants to do the utmost to continue our old - but new - strong partnership with Japan," the crown prince told Abe through an interpreter. 

source: news.abs-cbn.com

Putin brings own mug to G20 summit

OSAKA, Japan—Russian President Vladimir Putin brought and drank from his own mug during an official dinner at the G20 summit in Japan, prompting social media jokes and speculation that the longtime leader suffered from paranoia. 

Videos showed Putin, in power for almost 20 years, drinking from a white thermos mug while other leaders drank from regular wine glasses. 

"This is because he is constantly drinking tea from that thermos," Putin's spokesman Dmitry Peskov explained to the RIA Novosti news agency. 

The Russian president was seen toasting US President Donald Trump with the mug. 

Trump drank a dark liquid that appeared to be cola from a wine glass. 


Putin bringing his own cup to the international event prompted speculation online that the 66-year-old did not trust anyone. 

"If you've seen what I've seen, you'd bring your own cup too," a parody account of the Russian leader, @DarthPutinKGB, wrote on Twitter. 

The mug resembled one that Putin has drunk from during his annual hours-long press conferences that has a double-headed eagle, Russia's national symbol, on it. 

Putin held several 1-on-1 meetings, including with Trump and UK Prime Minister Theresa May, on the sidelines of the 2-day summit in Osaka that began Friday.

source: news.abs-cbn.com

G20 fist bump

U.S. President Donald Trump (left to right), Japan's Prime Minister Shinzo Abe and India's Prime Minister Narendra Modi pose for photos after holding a trilateral meeting during the G20 leaders’ summit in Osaka, Japan, Friday. The summit in Osaka, the first G20 meeting Japan hosted will focus on global economy, trade and investment, innovation, environment and energy, employment, women’s empowerment, development and health.

source: news.abs-cbn.com

FedEx offers cautious 2020 outlook as CEO slams US, China on trade

NEW YORK -- FedEx warned Tuesday that its fiscal 2020 earnings outlook remains clouded by trade war uncertainty as the company's chief executive criticized the Trump administration's lurch towards protectionism.

Overall the company is projecting 2020 diluted earnings-per-share to be down by a "mid-single-digit" percentage point compared with the 2019 level.

FedEx expects higher operating income in fiscal 2020 from its domestic package and freight shipping services as growing e-commerce activity fuels higher revenues.

But operating income is expected to be dented at FedEx Express, its international shipping division, in part because of trade uncertainty. 

"We've been very disappointed over the last few years with the assumptions that we made on the growth of international trade, particularly with the Trump administration," Chief Executive Fred Smith said on a conference call with financial analysts.

"The United States policy since 1934... was to expand international trade and now we have a huge dispute with China where the US has basically become protectionist, defined as 'I'll make everything I need in my own borders.'"

Smith, long an outspoken advocate of free trade, also took issue with China's policy on trade, which he described as "mercantilist."

US President Donald Trump and Chinese leader Xi Jinping are expected to meet at the G20 gathering in Japan later this week, an occasion that investors are hoping will bring the two countries closer to agreement after months of tariffs, countermeasures and threats.

Smith said the company remained committed to operating in China and "completely dedicated" to complying with Chinese laws. 

He said the company has experienced more audits "to some degree" at its Guangzhou hub in the wake of the US-China dispute.

FedEx again apologized over delivery problems involving Chinese telecommunications giant Huawei following a US crackdown on the company that Trump has linked to the US-China trade war.

Smith said the company's newly-filed lawsuit against the Commerce Department over export restrictions was not directly related to the Huawei case but was due to a broader set of government actions that are "opaque" and put too much onus on delivery companies.

On Monday, FedEx sued the US Commerce Department over export restrictions it said impose an "impossible burden" on delivery firms and asked a US District Court to block enforcement of the measures.

FedEx says the US rules makes shippers liable for packages that could violate the restrictions, even if the shipper has no prior knowledge of the problem.

FedEx reported a net loss of $2 billion for the quarter ending May 31, compared with $1.1 billion in profits in the year-ago period. 

The company cited lower international revenues and $316 million in costs associated with a voluntary employee buyouts as factors in the loss.

Revenues rose three percent overall to $17.8 billion.

Shares rose 0.7 percent to $157.05 in after-hours trading.

source: news.abs-cbn.com

World stocks mostly flat ahead of G20, dollar slips

NEW YORK -- Global equity markets traded mostly flat on Monday as investors awaited US-China trade talks the end of this week at the G20 summit, and the dollar fell to three-month lows on bets the Federal Reserve may cut interest rates more than once this year.

European stocks stumbled on fears of an escalation in Iran tensions, which also kept gold prices near a six-year high. US President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other Iranian senior officials with new sanctions on Monday.

Earlier in China, shares closed higher on hopes of a thaw in the US-China trade dispute, which has been blamed for slowing global growth. The blue-chip CSI300 index rose 0.2 percent, and the Shanghai Composite Index also gained 0.2 percent.

Chinese state media said on Sunday that President Xi Jinping will attend the G20 summit in Osaka, Japan, in the first official confirmation of his attendance at a gathering where he is expected to meet with Trump.

On Wall Street, the S&P 500 closed slightly lower as healthcare companies lost ground. The technology-rich Nasdaq also fell while the Dow industrials edged higher.

Stocks are unlikely to push much higher without progress on US-China trade or a Fed rate cut, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

"Until we get that G20 meeting and start to get some feedback from the (Trump) administration, it's going to be tough to go higher," he said.

MSCI's gauge of equity performance around the globe gained 0.05 percent. In Europe, the FTSEurofirst 300 index of leading regional shares closed down 0.25 percent on weak German economic data and a profit warning from Mercedes-Benz maker Daimler.

German business morale fell in June to its lowest level since November 2014, an Ifo institute survey showed, adding weight to expectations that Europe's largest economy contracted in the second quarter. Germany's DAX index fell 0.53 percent.

On Wall Street, the Dow Jones Industrial Average rose 8.41 points, or 0.03 percent, to 26,727.54. The S&P 500 lost 5.11 points, or 0.17 percent, to 2,945.35, and the Nasdaq Composite dropped 26.01 points, or 0.32 percent, to 8,005.70.

The dollar softened against a basket of currencies on bets the Fed may lower rates more than once this year, while US-Iranian tensions provided safe-haven support for the yen.

The dollar index fell 0.22 percent and the euro rose 0.25 percent to $1.1394. The Japanese yen rose 0.04 percent versus the greenback at 107.34 per dollar.

Interest rate futures implied traders have priced in a 100 percent chance the Fed will cut rates at its next policy meeting at the end of July, with a high probability for two additional rate cuts, according to CME Group's FedWatch program.

US Treasury yields fell, holding just above almost three-year lows. The benchmark 10-year US Treasury note rose 13/32 in price to push yields down to 2.0211 percent.

The glum German data pushed down bond yields across the euro zone and reinforced expectations for an ECB rate cut.

In developing markets, the Turkish lira strengthened as much as 2 percent after Turkey's main opposition won a re-run election in Istanbul for mayor on Sunday, a blow to President Tayyip Erdogan. The lira later pared gains.

Bitcoin pulled back from 15-month highs after jumping more than 10% over the weekend. Analysts said the gains came amid growing optimism over the adoption of cryptocurrencies after Facebook announced its Libra digital coin.

Brent crude, the international benchmark, fell on concerns about the possibility of weakening demand after large gains last week caused tensions between the United States and Iran.

Benchmark Brent crude fell 34 cents to settle at $64.86 a barrel, while US crude futures rose 47 cents to settle at $57.90 a barrel.

Gold prices rose more than 1 percent to a near six-year peak as the dollar fell, with safe-haven bullion also boosted by Trump's announcement of fresh sanctions on Iran. U.S. gold futures settled up 1.3% at $1,418.20 an ounce.

source: news.abs-cbn.com

Global stocks rally on G20 hopes, dovish ECB

NEW YORK -- Global stocks scored strong gains Tuesday on twin investor-friendly developments: upbeat comments from the US and China on trade ahead of the G20 Summit and an ECB statement hinting at an interest rate cut.

Hopes were raised that long-running trade talks between Washington and Beijing may yet yield an agreement after US President Donald Trump said he had a "good" conversation with China's Xi Jinping and would hold an "extended meeting" at the Group of 20 summit in Japan later this month.

Xi said the countries "will both gain by cooperating, and lose by fighting," according to a readout by Chinese state broadcaster CCTV. 

US stocks opened the session higher amid enthusiasm over dovish central bank statements, but Trump's comments on the G20 further lifted the market. All three major US indices climbed one percent or more.

Paris and Frankfurt each gained around 2 percent, boosted especially by ECB chief Mario Draghi, who promised further action if the economy fails to gain traction.

"Further cuts in policy interest rates and mitigating measures to contain any side effects remain part of our tools," Draghi told the ECB's annual economics gathering in Sintra, Portugal.

"Super Mario is back!" said IG analyst Chris Beauchamp in summary at the market action.

"Despite only having a few months left to his tenure, the head of the ECB has handed his successor a firmly dovish bias, as he leaves the door open to more QE (quantitative easing stimulus) and renewed negative rates at the ECB in order to try once again to kick-start the eurozone economy."

AWAITING THE FED

Draghi's comments came as the US Federal Reserve kicked off a two-day policy meeting. 

Although the Fed is not expected to cut interest rates on Wednesday, investors have been heartened by more dovish comments lately from central bankers and will be analyzing Fed Chair Jerome Powell's statements for clues on future steps, which they hope will signal a clear willingness to boost the economy.

Trump has repeatedly criticized the Fed and pressured Powell to cut rates, and on Tuesday lashed out at Draghi's statements, saying an ECB cut would "unfairly" harm US goods competing with a cheaper euro.

The dollar rose against the euro following the Draghi remarks, but retreated against the pound and yen. 

BK Asset Management's Kathy Lien said the dollar could fall if Powell's adopts a more dovish tone than at the May press conference, when he dismissed talk of easing. 

But if "Powell puts on a brave face, emphasizes the areas of strength in the US economy ... we could see a significant recovery in the greenback," she said. 

Among individual companies, embattled aerospace giant Boeing shot up 5.4 percent after it announced the sale of 200 of the 737 MAX planes to International Airlines Group.

The announcement at the Paris Air Show comes as Boeing's global fleet of 737 MAX planes remains grounded following two crashes that killed 346 people. Boeing has said it is making progress with regulators on having an upgraded plane recertified.

KEY FIGURES AROUND 2040 GMT (4:40 a.m. Wednesday in Manila)

New York - Dow: UP 1.4 percent at 26,465.54 (close)

New York - S&P 500: UP 1.0 percent at 2,917.75 (close)

New York - Nasdaq: UP 1.4 percent at 7,953.88 (close)

London - FTSE 100: UP 1.2 percent at 7,443.04 (close) 

Frankfurt - DAX 30: UP 2.0 percent at 12,331.75 (close)

Paris - CAC 40: UP 2.2 percent at 5,509.73 (close)

EURO STOXX 50: UP 2.1 percent at 3,452.89 (close)

Tokyo - Nikkei 225: DOWN 0.7 percent at 20,972.71 (close)

Hong Kong - Hang Seng: UP 1.0 percent at 27,498.77 (close)

Shanghai - Composite: UP 0.1 percent at 2,890.16 (close)

Euro/dollar: DOWN at $1.1202 from $1.1218 at 2100 GMT

Pound/dollar: UP at $1.2558 from $1.2534

Dollar/yen: DOWN at 108.43 yen from 108.54 yen

Brent North Sea: UP $1.20 at $62.14 per barrel

Oil - West Texas Intermediate: UP $1.97 at $53.90 per barrel

source: news.abs-cbn.com

Worsening trade wars pose risk to world economy, says G20

FUKUOKA, Japan -- The world's top financial policymakers admitted Sunday that "intensifying" trade tensions pose a risk for the global economy, after a G20 meeting that laid bare differences between the United States and other nations.

Following 30 hours of wrangling in what one official described as a "tense" atmosphere, the G20 finance minister and central bank chiefs produced a final statement acknowledging that "growth remains low and risks remain tilted to the downside".

"Most importantly, trade and geopolitical tensions have intensified," the G20 said in a statement seen by AFP, adding they "stood ready to take further action" if required.

As a compromise pushed by Washington, the statement omitted language from a previous draft that mentioned a "pressing need to resolve trade tensions".

The statement capped 2 days of talks in the western Japanese city of Fukuoka that also tackled the thorny issue of taxing internet giants and, for the first time, the economic challenges posed by aging.

But trade battles were front and center of policymakers' minds as the US and China continue to threaten each other with tariffs that economists fear could slam the brakes on global growth.

The IMF has said US-China tariffs could shave global GDP by 0.5 percent in 2020 or about US$455 billion, stressing the need to resolve the differences to avoid plunging the world economy into another crisis.

The G20 ministers heaved a sigh of relief just hours before the meeting when the US and Mexico clinched a deal over immigration that stopped Washington imposing five percent tariffs on Mexican goods.

But US Treasury Secretary Steven Mnuchin told reporters that Washington stood ready to impose more tariffs on China if President Donald Trump and China's Xi Jinping fail to strike a deal at the G20 summit later this month in Osaka.

"If China wants to come back to the table and negotiate on the basis that we were negotiating, we can get a great historic deal. If they don't, we'll proceed with our tariffs," Mnuchin told reporters on Saturday.

Taking a different line from the other policymakers, Mnuchin said the slowdown in some parts of the world was not due to trade difficulties and even said the friction could benefit some countries if companies relocated from China to avoid tariffs.

"There will be winners and losers," said the treasury secretary.

'I DON'T LIKE THEM'

The quandary of reforming the global tax system to take into account the rise of internet giants such as Google and Facebook was another issue exercising the minds of policymakers in the coastal city.

In the final statement, the G20 agreed to "redouble our efforts for a consensus-based solution with a final report by 2020".

However, here again, the Fukuoka meeting exposed a difference of opinion over what form this reform should take.

Frustrated by a lack of global action on the issue, some countries such as Britain and France have already introduced a so-called digital tax, but Mnuchin was blunt in his assessment of these policies.

"I would say the US has significant concerns with the two current taxes that are being proposed by France and the UK but let me give them some good credit for proposing them in the sense (that) they have created an urgency to deal with this issue," Mnuchin said at a public meeting before the formal G20 started.

"Although I don't like them, I do appreciate the impetus for these issues," added the top US finance official.

Appropriately for a meeting held in Japan -- which is on track to become the world's first "super-aged" society in which more than 28 percent of the population is over 65 -- the G20 ministers discussed for the first time the "challenges and opportunities" posed by aging.

They suggested getting more women and elderly people into the workforce and "promoting elderly-friendly industries", as well as reforming the fiscal and banking systems to take into account aging populations.

"You basically have a very large portion of mankind that is aging and then the workforce is shrinking," OECD Secretary-General Angel Gurria told AFP in an interview.

Solving the issue will require wholesale changes to the way society is organized, added Gurria.

source: news.abs-cbn.com

G20 frets over global economy amid US-China trade war

FUKUOKA, Japan -- The world's top finance policymakers Sunday weighed the impact of ballooning trade tensions on the global economy amid differences over the extent to which they are dragging on growth.

Finance ministers and central bank chiefs from the G20 group of the world's top economies are expected to note the "downside risks" to the global economy from trade battles, notably between the top economic superpowers China and the US.

Japanese Finance Minister Taro Aso, who is hosting the talks, told reporters as the first day of talks wrapped up on Saturday that the world economy should "firm" in the second half of the year but "downside risks still remain."

Aso said "market confidence could be eroded" if there were no rapid resolution to the ongoing trade war between Beijing and Washington, which has seen the world's top 2 economies impose billions of dollars of tit-for-tat tariffs and threaten even tougher action.

IMF chief Christine Lagarde singled out trade tensions as the "major" headwind facing the global economy, adding that it was a "significant risk on the horizon," in an interview with Japan's Nikkei daily on Sunday.

Lagarde has previously described the trade wars as a "self-inflicted wound" and warned that US-China tariffs so far imposed and threatened could trim 0.5 percentage points off global GDP growth next year -- an amount $455 billion larger than the entire South African economy.

Meanwhile, French Finance Minister Bruno Le Maire said there was a "real risk" that "this global economic slowdown could turn into a global economic crisis due to trade tensions."

"A worsening of the international climate and a real trade war would lead to an even more marked slowdown in global growth, with a direct impact on our jobs, companies, factories and sectors," Le Maire told AFP in an interview on the sidelines of the meeting.

A Japanese official who declined to be named briefed reporters that "very many countries voiced concerns that escalation of the trade friction is a very significant downside risk to the world economy. That is a fact."

'BIG ECONOMIC OPPORTUNITY' 

However, the treasury secretary from the US, which continues to threaten more tariffs on China if there is no trade deal, played down the risk of a global economic conflagration.

"Clearly there is a slowdown in Europe, there's a slowdown in China, there's a slowdown in other parts. I don't believe that's as a result of trade tensions. That slowdown has gone on for the last year," Steven Mnuchin told reporters on Saturday.

He acknowledged that other policymakers had voiced concerns over the economic impact of a prolonged trade war but pointed to a potential boon for other countries.

As companies move out of China in order to avoid US tariffs, "there's going to be a big economic opportunity for a lot of other countries," he said.

"There will be winners and losers," he predicted.

Nevertheless, Mnuchin also pointed to the positive boost to the world economy that could result from a breakthrough in trade talks, likely to be the main focus of a meeting between the US and Chinese leaders at a G20 summit later this month.

"I think if we get a deal, it's a very positive thing for economic growth, for us, for China, for Europe, for the rest of the world. The opening of these economies tends to lead, in my mind, to more growth on both sides," said Mnuchin.

source: news.abs-cbn.com

Soaring trade restrictions spark 'serious concern': WTO

GENEVA -- The world's biggest economies slapped import restrictions on nearly half a trillion dollars' worth of trade over the past six months, the World Trade Organization said Thursday, voicing "serious concern".

Forty new import barriers were erected by G20 states between mid-May and mid-October this year -- 6 times more than during the preceding 6 months -- impacting $481 billion in trade, a fresh WTO report showed.

That was the highest figure recorded since the WTO started calculating the measure in 2012.

"The report's findings should be of serious concern for G20 governments and the whole international community," WTO chief Roberto Azevedo said in a statement.

"Further escalation remains a real threat," he warned, calling for an immediate reversal of the trend.

"If we continue along the current course, the economic risks will increase, with potential effects for growth, jobs and consumer prices around the world," Azevedo said.

An average of eight new restrictions on international trade, including tariff increases, import bans and export duties, were imposed by the big economies each month, the report showed. 

The report appears to show the impact of US President Donald Trump's relentlessly confrontational trade policy, including launching a trade war with China and slapping stiff tariffs on steel and aluminum imports from many countries.

On Wednesday, the WTO's Dispute Settlement Body agreed to review complaints from a range of countries over the US tariffs, as well as Washington's complaints over retaliatory duties.

"The WTO is doing all it can to support efforts to de-escalate the situation, but finding solutions will require political will and it will require leadership from the G20," Azevedo said. 

source: news.abs-cbn.com

Europeans press for digital tax at G20 meeting

BUENOS AIRES - European finance leaders called for progress on global rules to tax the digital economy at a meeting of G20 finance ministers and central bankers in Argentina on Sunday, putting them at odds with US counterparts.

The final communique reaffirmed a commitment to address the impacts of the shift to a digital economy on the international tax system by 2020, without giving more details.

The European Commission, the executive arm of the European Union, proposed rules earlier this year to make digital companies pay more tax, with US tech giants such as Alphabet's Google, Facebook and Amazon set to foot a large chunk of any bill.

Some 200 companies would fall within the scope of the new tax, European officials said at the time, estimating additional annual revenues of about 5 billion euros ($6 billion).

Major digital companies had "to pay their fair share of tax, because basically what we are talking about here is fairness," European Commissioner for Economic and Financial Affairs Pierre Moscovici told reporters at the G20 meeting.

He said he was calling for a turnover tax to be adopted before the end of the year as an interim solution.

However, some EU members have voiced concerns their companies could be affected by such a tax and international partners may respond with retaliatory measures.

"One of the big challenges is that taxation of the digital economy is mostly of course a taxation of American companies - because they are the key players in the world - so the United States feel that this is an attack concerning their digital economy, which it isn't really," European Council representative to the G20 Hubert Fuchs said on the sidelines of the meeting.

The US delegation was not immediately available for comment. U. Treasury Secretary Steven Mnuchin said in a statement earlier this year that he "firmly opposes proposals by any country to single out digital companies," noting that those companies were key contributors to the US economy.

POT OF GOLD

Australia Treasurer Scott Morrison said the G20 discussions were useful because they established the root of the problem: that "no one knows" how to measure for tax purposes the value of the data users of social media services like Facebook create outside of the countries where those companies are based.

He said if those technical issues were not resolved, more countries would start taking "interim measures."

"We're not convinced at this point about the efficacy of those interim measures - which is basically a sales tax on digital advertising," Morrison said. "It is more important to focus on those technical issues rather than the pot-of-gold approach, which is how much revenue can be raised."

The European Commission wants a long-term, global solution based on a new method of calculating tax rates but has pushed in the meantime for the revenue tax to recoup revenues lost by EU states to large digital firms, officials said.

Implementing "fair taxation of digital giants" would also be a way of "proving that Europe is united and strong" at a time when the region's leaders feel pressured by the administration of US President Donald Trump, a senior European official said on the sidelines of the G20 meeting.

"We cannot accept that our SMEs (small and medium enterprises) have a level of taxation 40 points higher than the level of taxation of internet giants," said the official, who requested anonymity to speak candidly about the talks.

The EU's proposed levy on corporate turnover would be a major shift from existing rules, whereby companies are charged on their profits and pay no tax if they report losses.

"Taxation should be where the moneymaking is and if the digital economy is making the money all over the world it doesn't really make sense if they only will declare their income in the United States," said Fuchs, who is also Austria's state secretary for finance. 

source: news.abs-cbn.com

US-China trade tension dominates IMF gathering

Trade tensions between the United States and China, which threaten to spill over into the global economy, are dominating a gathering of world finance officials even as the Group of 20 avoided the topic on Saturday.

Official after official has called for disputes to be resolved through dialogue rather than unilateral tariffs, and warned about the threat to the economic recovery.

French Economy Minister Bruno Le Maire criticized what he called a "vain and pointless" spat with China. 

"We run the risk of trade war. We run the risk of multilateral order breaking down that is good for no one, and most definitely not for the world economy and growth," Le Maire told reporters during the spring meetings of the International Monetary Fund.

But US President Donald Trump's top finance official said the fault lies with countries that employ unfair trade policies.

"We strongly believe that unfair global trade practices impede stronger US and global growth, acting as a persistent drag on the global economy," US Treasury Secretary Steven Mnuchin said in a statement to the IMF.

While IMF chief Christine Lagarde has offered the fund as a forum to resolve differences, Mnuchin instead said the IMF "should be a strong voice" in urging members "to dismantle trade and non-tariff barriers and to protect intellectual property rights."

Le Maire agreed China must respect the rules, but said the country is a key part of the world trading system.

"We must redefine international trade with China, not against China."

- Serious consequences -

Theft of American intellectual property and technology has been a key irritant in the dispute with Beijing, which prompted President Donald Trump to announce steep tariffs on tens of billions of dollars' worth of Chinese goods, on top of last month's punitive duties on steel that were primarily targeted at China as well.

Washington and Beijing have traded tariff threats and also filed complaints against each other at the World Trade Organization.

WTO Director Roberto Azevedo warned that the effects of a major escalation "could be serious," and poor countries would be the collateral damage.

"A breakdown in trade relations among major players could derail the recovery that we have seen in recent years, threatening the ongoing economic expansion and putting many jobs at risk," he said in a statement to the meetings.

The IMF has highlighted the trade tensions as a major downside risk to the otherwise solid global recovery, and Lagarde said the dispute undermines confidence and creates uncertainty that could choke off investment which has been a prime engine of the global recovery.

The WTO projects global merchandise trade will expand by 4.4 percent this year, after increasing by 4.7 percent in 2017.

- G20 avoids trade issue -

Despite the intense focus on the US-China dispute, the Group of 20 finance ministers, from the world's major economies, avoided discussion of the issue Friday, even while acknowledging the potential danger it posed to the global economy.

"We didn't have a discussion on specific measures on trade," Argentine Treasury Minister Nicolas Dujovne told reporters after the meeting. "The G20 is not the place to discuss specific measures. That's the WTO."

It was a surprising omission for the group that was key to shepherding the global economy through the 2008 financial crisis and preventing another depression.

But Dujovne said, "We have to also recognize the limitations that we as a group have... and try to find a consensus even if the consensus is more limited than we want."

The ministers did express concern over the growth of "inward looking policies," he said, using a frequent euphemism for trade protectionism.

But German central bank chief Jens Weidmann said the G20 officials all agreed trade must benefit all countries.

"Protectionism, not to mention a trade war, is certainly not the solution."

Le Maire repeated his criticism of the US tariffs on steel and aluminum which were aimed at China but only spared the EU and other key trading partners under a temporary exemption that is due to expire May 1.

As close allies in the EU "we expect not only temporary exemption but a full and permanent exemption," he said.

"We cannot live with a kind of sword of Damocles hanging over our heads."

source: news.abs-cbn.com

From Melania to Merkel's eye-roll: Five G20 moments

From US First Lady Melania Trump's travails to German Chancellor Angela Merkel's facial twitches, here are some of the moments that livened up this year's G20 summit in Hamburg.

Mixed day for Melania

US First Lady Melania Trump was due to go on a cruise tour with other spouses of G20 leaders, but was instead trapped at her residence as anti-globalization demonstrators went on the rampage, smashing shop windows and burning cars.

When she finally emerged, her husband Donald was in talks with Russian President Vladimir Putin.

"There are so many issues on the table... Just about everything got touched upon... Neither one of them wanted to stop" talking, said US Secretary of State Rex Tillerson.

"I believe they even sent in the First Lady at one point to see if she could get us out of there, but that didn't work either... We did another hour. Clearly she failed," he added.

Later that evening, Melania found herself sitting next to Putin who, having already kept her husband for two hours and 15 minutes in talks, appeared equally chatty with her.

Ivanka steps in

For a moment at the G20 summit Saturday the United States was represented by another Trump, when the president's daughter Ivanka took a seat at the table of world leaders.

The 35-year-old former fashion model sat around the table with Chinese leader Xi Jinping, Turkish President Recep Tayyip Erdogan, German Chancellor Angela Merkel and British Prime Minister Theresa May, diplomats and the White House confirmed.

Ivanka had been at the back of the room but "briefly joined the main table when the president had to step out," a White House official told AFP.

That quickly sparked a storm, with historian Anne Applebaum slamming what she called "an unelected, unqualified, unprepared New York socialite" being seen as "the best person to represent American national interests."

Macron warms to Trump

If a video of France's President Emmanuel Macron swerving away from Trump to greet other leaders was a key image from a NATO summit earlier this year, at the G20, there appeared to have been a clear rapprochement between the young leader and the US property tycoon.

Macron was at Trump's side at "family photo" sessions of the leaders. He even inserted himself to the far right of the entire group at one photography session, saving the US leader from being at the edge of the picture.

At a concert of Beethoven's Symphony Number 9, the former investment banker was seated next to the US billionaire.

And on Saturday morning, Macron was seen greeting Trump, leaning toward the US leader at one point, sparking questions on whether he offered him a peck on the cheek.

But journalists at the scene say it was more of a hug.

Who were they clapping for?

Trump, among the last to arrive at Hamburg's Elbphilharmonie concert hall for a cultural evening, appeared to be greeted by a round of applause as he stepped out of his armored vehicle.

The US leader returned a big smile.

It turned out that the applause was for Macron, who pulled up just behind Trump, German media reported.

Merkel rolls eyes at Putin

An animated encounter between Merkel and Putin has been making the rounds on social media, with much buzz and speculation about what the two leaders discussed.

Walking into the conference room, Merkel lifted a hand and traced what appeared to be movement of a projectile.

But Putin held up a finger, then offered his version of the same gesture, prompting the usually poker-faced German chancellor to roll her eyes.

source: news.abs-cbn.com

Trump believes in 'reciprocal' free trade: Treasury chief

The United States, which is considering new protectionist policies, believes in "free and fair" trade, US Treasury Secretary Steven Mnuchin said Saturday.

"President Trump's agenda is to make sure that we have free and fair trade and I think, as you know, the United States is probably the most open trading market there is for both goods, services and investment," Mnuchin said.

But he said the United States expected to be treated as it treats others.

"The president believes in reciprocal trade deals and reciprocal free trade."

Mnuchin's comments came during a public conversation with Christine Lagarde, head of the International Monetary Fund, during the spring meetings of the IMF and World Bank, which are to wind down on Sunday.

With a nationalist economic agenda, the Trump administration has vowed to upend decades of prevailing trade policy by renegotiating or scrapping trade agreements, imposing tariffs and moving to bilateral trade agreements.

US pressure last month forced a Group of 20 finance ministers meeting in Germany to strike the routine commitment against protectionist policies from a closing statement.

The word "protectionism" also did not appear in the final statement of this week's meetings at the IMF.

"If our markets are open, there should be a reciprocal nature to other people's markets," Mnuchin said Saturday.

"What's not free and fair is if our market is open and other people either have high tariffs or have high import barriers."

dg/acb

source: news.abs-cbn.com