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TradeInFocus   Our compilation of news to keep you in focus on key trade matters

EU Leaders to Debate Stance on Russia at Brussels Summit
Associated Press, October 18, 2016
BRUSSELS - Just as European Union leaders get ready to consider a tougher approach toward Russia, Vladimir Putin may have outfoxed them. On Tuesday, Russian warplanes halted their airstrikes on Syria's besieged city of Aleppo in preparation for a temporary truce that Moscow has announced. On Wednesday, Putin is due in Berlin to discuss efforts toward peace in eastern Ukraine.

The Russian president's latest moves almost certainly will widen divisions in the EU on whether to impose harsher penalties on Moscow. Putin has proven to be a master at dividing the Europeans, and no geopolitical challenge has proven more difficult for the EU than the increasingly unpredictable and threatening neighbor to its east. EU leaders are supposed to rethink their Russia policy at a Brussels summit beginning Thursday, but few are counting on a united stand. Not that relations are great: Less than three years ago there was talk of more trade and warmer ties; now, there is only a chill.

The low point may have come this month when French President Francois Hollande hinted Russia could face war crimes charges for bombarding Syria's second city, Aleppo. Putin canceled a scheduled visit to Paris. EU nations found a rare point to rally around, with all 28 saying Monday that the attacks "may amount to war crimes."

Meanwhile, a Dutch-led investigation naming Russia as the source of a mobile missile launcher that shot down a Malaysian jetliner over eastern Ukraine in 2014, killing 298 people, has strained ties further. "We are in the deepest crisis since the end of the Cold War in EU-Russia relations at the moment, and we don't see any breakthrough or fundamental change in this deep loss of trust," said Stefan Meister, head of the Russia and Eastern Europe program at the German Council on Foreign Relations.

Generally speaking, the closer EU nations are to Russia, the harder their approach. Lithuanian Foreign Minister Linas Linkevicius, whose country was under Moscow's control until 1991, tweeted on Monday that the bloc must demonstrate the "guts to speak up & act" toward the Russians. The EU already has economic sanctions imposed on Russia for its actions in Crimea and eastern Ukraine, but so far those have not caused a crack in Putin's stony demeanor. Where the Russian leader finds it easy to impose his will from the inception to the execution of ideas, the EU needs unanimity on just about all crucial decisions. That alone stacks the odds hugely in favor of the Kremlin. In a nation famed for its chess champions, Putin knows how to exploit an adversary's weaknesses on the diplomatic stage.

One of the fundamental reasons for the EU's internal divisions is economic. Unlike the United States, the EU depends on Russia for much of its energy, and as a major market for its exports. Due to EU sanctions and the retaliatory measures imposed by Russia, trade between Hungary and Russia dropped by nearly half in 2015, Hungarian Foreign Minister Peter Szijjarto has said. He said it is hard to imagine the EU being competitive on the world stage without "the pragmatic rebuilding of cooperation between the EU and Russia."

Italy and Slovakia, which now holds the revolving EU presidency, also have been reluctant to back harsher sanctions. "It's been a considerable balancing act to have a coherent European approach toward Russia," said Quentin Peel, an associate fellow at the Royal Institute of International Affairs in London. "Given the difficulty of keeping a united position, the Europeans are not going to be rushing in to tighten the screws."

German Chancellor Angela Merkel, key to forging the current EU position on Russia, would have to be involved in any changes as the bloc's single most influential politician. On Tuesday, she said sanctions against Russia over its actions in Syria should remain an option. But even Merkel must work within the limits of the kind of parliamentary democracy that Putin isn't hemmed in by, and the two junior parties in her governing coalition have shown little enthusiasm for turning up the pressure on Moscow. German companies are also pushing to finalize plans for a pipeline under the Baltic Sea that would let Russia ship natural gas to western European customers while bypassing Ukraine. Merkel appears to tacitly back the Nord Steam 2 project, despite angry protests from some other EU members.

The message being sent by Moscow is that European leaders must take the first step if they want an improvement in relations. "It is up to the EU to provide an answer, since it was the EU that embarked on the road toward so-called sanctions and cutoff of systemic cooperation," Russian EU Ambassador Vladimir Chizhov said this month.


Biden Hints at US Response to Russia for Cyberattacks
The New York Times - October 15, 2016
Since the Obama administration formally accused Russia about a week ago of trying to interfere in the election, there has been intense speculation about whether President Obama has ordered the National Security Agency to conduct a retaliatory cyber strike. The strongest hint so far has come from Vice President Joseph R. Biden Jr., who either revealed American plans for a strike or engaged in one of the better bits of psychological warfare in recent times. His warning seems to suggest that Mr. Obama is prepared to order - or has already ordered - some kind of covert action after the stolen emails were published online. That would require what is known in the intelligence agencies as a finding - a presidential determination authorizing covert action.


WTO Chief says Trade is Under Attack
American Shipper - October 21, 2016
Roberto Azevedo, the head of the World Trade Organization (WTO) warned that the benefits of international trade are increasingly getting lost among the incessant anti-trade rhetoric that's being espoused worldwide. "The risk of the negative rhetoric is that it will evolve into damaging policies down the road," said Roberto Azevedo, WTO director-general, in a speech Thursday before the Confederation of Norwegian Enterprise.

Attacks on free trade agreements, such as the wide-ranging Trans-Pacific Partnership between the United States and 11 other Pacific Rim countries, has come from both Republican and Democratic candidates during the run-up to the Nov. 8 US presidential election, and many European political leaders are also casting doubt on the benefits of entering the Transatlantic Trade and Investment Partnership with the United States.

However, Azevedo acknowledged that trade may cause economic disruption to certain industries and communities through the outsourcing of work and jobs overseas. "On top of that, there is also a perception that trade serves only rich countries and big companies - and that poorer countries and smaller companies are left behind," he said.

"While I would dispute much of this, it is certainly the case that the benefits of trade still don't reach as many people as they should," he added. "That's one reason that today's slowdown in global economic performance has given rise to the anti-trade rhetoric that we are beginning to hear more and more."

Azevedo, as he has noted in recent statements and speeches defending trade, said the impacts of trade on sending manufacturing jobs overseas is "overstated," citing that trade is a "relatively minor cause of job losses." Instead, he said the fault has more to do with technological innovation. "Almost 50 percent of existing jobs in some developed countries are at high risk of automation today. And the number is higher in many developing countries," he explained. "This is the real economic revolution that is happening today.

"Many will find it unsettling. And that is completely understandable. But, like trade, technological progress is indispensable for sustained growth and development. So, the answer is not to reject these forces. Quite the opposite: we must embrace them and learn to adapt," he said. To deal with trade and technological changes, Azevedo said countries have a responsibility to ensure their workers have the right skills to take on these economic shifts.

For the WTO's part, it must promote an open global trade system that "is truly available to all, and that it continues to deliver those benefits that we want more people to enjoy," he said. "This means maintaining and strengthening initiatives to increase trading capacity in developing and least developed countries," Azevedo said. "And it also means delivering new trade reforms through the WTO that can help everyone to compete and benefit, especially smaller enterprises and those in rural areas."

He highlighted the benefits to this effort from the WTO's recently announced Trade Facilitation Agreement, which promises to cut cross-border red tape and boost global exports by up to 1 trillion dollars annually, and the Information Technology Agreement, which is expected to eliminate tariffs on a range of IT products which is valued at $1.3 trillion a year.


Federal Maritime Commission Approves OCEAN Alliance
Federal Maritime Commission, October 21, 2016
The Federal Maritime Commission (FMC) said it has concluded its review of the proposed OCEAN Alliance, FMC Agreement No. 012426, allowing it to take effect Monday, although it is not expected to become operational until around April of next year.

The OCEAN Alliance members include COSCO Shipping, CMA CGM, Evergreen Marine and Orient Overseas Container Line Limited (OOCL). The FMC said the members of the alliance are now permitted to share vessels; charter and exchange space on one other's ships; and enter into cooperative working arrangements in international trade lanes between the United States and ports in Asia, Northern Europe, the Mediterranean, the Middle East, Canada, Central America and the Caribbean.

TraPac to Nearly Double the Size of its Oakland Terminal
American Shipper - October 14, 2016
Wilmington, Calif.-based Trapac disclosed its plans to lease an additional 57 acres and two vessel berths at the port during a meeting of Oakland's Board of Port Commissioners last night. TraPac plans to lease an additional 57 acres and two vessel berths on the Port's Outer Harbor. Currently the terminal operator handles 20 percent of the containerized cargo moving through the Port of Oakland with it two existing berths and 66 acres of land.

The land TraPac is expanding into was formerly occupied by Outer Harbor Terminal LLC, which was a joint venture between Ports America and Terminal Investment Ltd., the stevedoring affiliate of Mediterranean Shipping Co. Outer Harbor Terminal ceased operations earlier this year and filed for protection under Chapter 11 of U.S. bankruptcy law. The Port of Oakland said if the deal is approved, it would greatly strengthen TraPac's position as the second-largest terminal operator in Oakland. The largest is SSA Marine. The proposed 14-year lease agreement with the port becomes final if the Board approves it at a meeting Oct. 27.

"This is a significant step forward for TraPac and the port," Port of Oakland Maritime Director John Driscoll said. "TraPac gets room to expand its thriving business and the port gets to revitalize valuable property with a highly respected tenant." The port said that with more acreage, the terminal can implement new procedures to improve efficiency and get containers in-and-out of Oakland faster.

"Our business is growing and placing new demands on our operations," TraPac Oakland General Manager Mike Porte said. "With this new agreement, we can meet the demands and the service expectations of our customers." The Port of Oakland said current TraPac customers include APL, CMA CGM, COSCO, Evergreen, Hapag-Lloyd, Hyundai, "K" Line, MOL, NYK, OOCL and Yang Ming. The terminal operator has been operating in Oakland since 1991.

According to the port, TraPac will invest in upgrading and modernizing the new terminal acreage under its control in Oakland. Among other things, TraPac plans to construct a new gate to give harbor truckers better access to the terminal. TraPac is automating it terminal in Los Angeles, making it one of the most sophisticated in the United States, featuring automated stacking cranes, automated straddle carriers, and other sophisticated technology.

"With this expansion, we're demonstrating our long-term commitment to Oakland," said Mr. Porte. "TraPac and the port share a common value - good customer service - so we see this partnership growing even stronger over time." Founded in 1987 in Los Angeles, TraPac is a subsidiary of the Japanese shipping company Mitsui OSK Lines. In 2014, Toronto-based Brookfield Asset Management Inc. acquired a 49 percent stake in TraPac's operations in Los Angeles and Oakland (The investment does not include other TraPac assets, such as the terminal operations in Jacksonville).


tradeinfocus is a summary of news and events on the trade policy front for clients, trade & legislative colleagues, and professional friends of W.J. Byrnes & Co.