Tag Archives: Trade

China says all welcome at Silk Road forum after U.S. complains over North Korea

Chinese Premier Li Keqiang meets Uzbek President Shavkat Mirziyoyev at the Great Hall of the People in Beijing, China, May 13, 2017. REUTERS/Thomas Peter

By Ben Blanchard

BEIJING (Reuters) – China welcomes all countries to a forum this weekend on China’s new Silk Road plan, the foreign ministry said on Saturday, after the United States warned China that North Korea’s attendance could affect other countries’ participation.

Two sources with knowledge of the situation said the U.S. embassy in Beijing had submitted a diplomatic note to China’s foreign ministry, saying inviting North Korea sent the wrong message at a time when the world was trying to pressure it over its repeated missile and nuclear tests.

The disagreement over North Korea threatens to overshadow China’s most important diplomatic event of the year for an initiative championed by President Xi Jinping.

Asked about the U.S. note, the foreign ministry said in a short statement sent to Reuters that it did “not understand the situation”.

“The Belt and Road initiative is an open and inclusive one. We welcome all countries delegations to attend the Belt and Road Forum for International Cooperation,” it said.

The ministry did not elaborate. It said on Tuesday North Korea would send a delegation to the summit but gave no other details.

The United States is sending a delegation led by White House adviser Matt Pottinger.

Despite Chinese anger at North Korea’s repeated nuclear and missile tests, China remains the isolated state’s most important economic and diplomatic backer, even as Beijing has signed up for tough U.N. sanctions against Pyongyang.

China has over the years tried to coax North Korea into cautious, export-oriented economic reforms, rather than sabre rattling and nuclear tests, but to little avail.

China has not announced who North Korea’s chief delegate will be, but South Korea’s Yonhap news agency said Kim Yong Jae, North Korea’s minister of external economic relations, would lead the delegation.

‘MISGIVINGS’

Leaders from 29 countries will attend the forum in Beijing on Sunday and Monday, an event orchestrated to promote Xi’s vision of expanding links between Asia, Africa and Europe underpinned by billions of dollars in infrastructure investment.

Delegates will hold a series of sessions on Sunday to discuss the plan in more detail, including trade and finance. China has given few details about attendees.

Some Western diplomats have expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally.

China has rejected criticism of the plan and the summit, saying the scheme is open to all, is a win-win and aimed only at promoting prosperity.

Zhang Junkuo, deputy director general of cabinet think-tank the State Council Development Research Centre told reporters there were “misgivings, misinterpretations and misunderstandings” about the initiative.

“We must increase communication and exchanges so as to broaden our areas of cooperation and consolidate the basis for cooperation,” Zhang said.

In an English-language commentary on Saturday, China’s state-run Xinhua news agency said the new Silk Road, officially called the Belt and Road initiative, would be a boon for developing countries that had been largely neglected by the West.

“As some Western countries move backwards by erecting ‘walls’, China is contriving to build bridges, both literal and metaphorical. These bridges are China’s important offering to the world, and a key route to improving global governance,” it said.

Some of China’s most reliable allies and partners will attend the forum, including Russian President Vladimir Putin, Pakistani Prime Minister Nawaz Sharif, Cambodian Prime Minister Hun Sen and Kazakh President Nursultan Nazarbayev.

There are also several European leaders coming, including the prime ministers of Spain, Italy, Greece and Hungary.

Xi offered Prime Minister Alexis Tsipras of deeply indebted Greece strong support on Saturday, saying the two countries should expand cooperation in infrastructure, energy and telecommunications.

(Additional reporting by Elias Glenn; Editing by Eric Meijer, Robert Birsel)

Mexico presses Trump to uphold NAFTA for good of both nations

U.S. President Donald Trump arrives aboard Air Force One at JFK International Airport in New York, U.S. May 4, 2017. REUTERS/Jonathan Ernst

MEXICO CITY (Reuters) – Mexico made a pitch to U.S. President Donald Trump on Wednesday to uphold the NAFTA trade deal, arguing that unwinding economic integration would hurt both nations, damaging U.S. exports, risking American jobs and hitting consumers north of the border.

Responding to a March 31 executive order by Trump for a review of the U.S. trade deficit, Mexico said its trade surplus with the United States was misunderstood and that the real hit to U.S. manufacturing jobs came with China’s accession to the World Trade Organization (WTO) in 2001.

Last year’s U.S. deficit with Mexico of $63.2 billion also reflected a weak peso after it was battered by uncertainty over the future of bilateral trade relations, according to a document published by the Mexican Embassy in Washington.

“The increasing integration of our economies makes Mexico critically important to the U.S. economy, not only as an export market, but also as a partner in production,” the director of the embassy’s trade and NAFTA office, Kenneth Smith, wrote.

Mexico was responding to the U.S. Commerce Department’s request for public input as it prepares a report for Trump on the United States’ $500 billion annual trade deficit. The report and public comments will be sent to Trump in June.

Mexico said that, without NAFTA, the average tariff on Mexican exports to the United States would be 3.5 percent, or about half the average tariff on U.S. exports to Mexico, because of the “most favored nation” clause that would apply under WTO rules.

U.S.-Mexican trade relations have been strained by Trump’s repeated vow to scrap the North American Free Trade Agreement if he cannot secure better terms for U.S. workers and industry.

Trump has cited the U.S. trade deficit with Mexico as proof that the United States was the loser in the relationship, saying the Americans would be better off if the two nations did not trade at all.

However, Mexico said 75 percent of its exports to the United States are inputs in U.S. production processes and that the United States has an $8 billion surplus in services.

“Workers on both sides of the border work together in the production of goods to successfully compete in global markets,” Smith said.

The U.S. energy industry also relies on exports to Mexico, which is now the biggest export market for U.S. refined oil products and natural gas, Smith said.

(Reporting By Frank Jack Daniel, Writing by Dave Graham and Mitra Taj)

Mexico, Canada seek U.S. soft spots to bolster NAFTA defense

FILE PHOTO: Canada's Prime Minister Justin Trudeau (R) and Mexico's President Enrique Pena Nieto arrive at a news conference on Parliament Hill in Ottawa, Ontario, Canada on June 28, 2016. REUTERS/Chris Wattie/File Photo

By Dave Graham and David Ljunggren

MEXICO CITY/OTTAWA (Reuters) – From launching a data-mining drive aiming to find supply-chain pressure points to sending officials to mobilize allies in key U.S. states, Mexico and Canada are bolstering their defenses of a regional trade pact President Donald Trump vows to rewrite.

Trump has blamed the North American Free Trade Agreement (NAFTA) for the loss of millions of manufacturing jobs and has threatened to tear it up if he fails to get a better deal.

Fearing the massive disruptions a U.S. pullout could cause, the United States’ neighbors and two biggest export markets have focused on sectors most exposed to a breakdown in free trade and with the political clout to influence Washington.

That encompasses many of the states that swept Trump to power in November and senior politicians such as Vice President Mike Pence, a former Indiana governor or Wisconsin representative and House Speaker Paul Ryan.

Prominent CEOs on Trump’s business councils are also key targets, according to people familiar with the lobbying push.

Mexico, for example, has picked out the governors of Texas, Arizona and Indiana as potential allies.

Decision makers in Michigan, North Carolina, Minnesota, Illinois, Tennessee, Wisconsin, Ohio, Florida, Pennsylvania, Nebraska, California and New Mexico are also on Mexico’s priority list, according to people involved in talks.

Mexican and U.S. officials and executives have had “hundreds” of meetings since Trump took office, said Moises Kalach, foreign trade chief of the Mexican private sector team leading the defense of NAFTA. (Graphic:http://tmsnrt.rs/2oYClp2)

Canada has drawn up a list of 11 U.S. states, largely overlapping with Mexico’s targets, that stand to lose the most if the trade pact enacted in 1994 unravels.

To identify potential allies among U.S. companies and industries, Mexican business lobby Consejo Coordinador Empresarial (CCE) recruited IQOM, a consultancy led by former NAFTA negotiators Herminio Blanco and Jaime Zabludovsky.

In one case, the analysis found that in Indiana, one type of engine made up about a fifth of the state’s $5 billion exports to Mexico. Kalach’s team identified one local supplier of the product and put it touch with its main Mexican client.

“We said: talk to the governor, talk to the members of congress, talk to your ex-governor, Vice President Pence, and explain that if this goes wrong, the company is done,” Kalach said. He declined to reveal the name of the company and Reuters could not immediately verify its identity.

Trump rattled the two nations last week when his administration said he was considering an executive order to withdraw from the trade pact, which has been in force since 1994. He later said he would try to renegotiate the deal first and Kalach said the lobbying effort deserved much credit for Trump’s u-turn.

“There was huge mobilization,” he said. “I can tell you the phone did not stop ringing in (Commerce Secretary Wilbur) Ross’s office. It did not stop ringing in (National Economic Council Director) Gary Cohn’s office, in the office of (White House Chief of Staff Reince) Priebus. The visits to the White House from pro-NAFTA allies did not stop all afternoon.”

Among those calling the White House and other senior administration officials were U.S. Chamber of Commerce chief Tom Donohue, officials from the Business Roundtable and CEOs from both lobbies, according to people familiar with the discussions.

PRIME TARGET

Mexico has been the prime target of NAFTA critics, who blame it for lost manufacturing jobs and widening U.S. trade deficits. Canada had managed to keep a lower profile, concentrating on seeking U.S. allies in case of an open conflict.

That changed in late April when the Trump administration attacked Ottawa over support for dairy farmers and slapped preliminary duties on softwood lumber imports.

Despite an apparently weaker position – Canada and Mexico jointly absorb about a third of U.S. exports, but rely on U.S. demand for three quarters of their own – the two have managed to even up the odds in the past by exploiting certain weak spots.

When Washington clashed with Ottawa in 2013 over meat-labeling rules, Canada retaliated by targeting exports from the states of key U.S. legislators. A similar policy is again under consideration.

Mexico is taking a leaf out of a 2011 trucking dispute to identify U.S. interests that are most exposed, such as $2.3 billion of yellow corn exports.

Mexico is also targeting members of Trump advisory bodies, the Strategic and Policy Forum and the Manufacturing Council, led by Blackstone Group LP’s Stephen Schwarzman and Dow Chemical Co boss Andrew Liveris respectively.

Senior Trump administration officials and Republican lawmakers in charge of trade, agriculture and finance committees also feature among top lobbying targets.

Canada has spread the task of lobbying the United States among ministries, official say, and is particularly keen to avoid disruption to the highly-integrated auto industry.

A core component of Mexico’s strategy is to argue the three nations have a common interest in fending off Asian competition and exploring scope to source more content regionally.

The defenders of NAFTA also say that it supports millions of jobs in the United States, and point out that U.S. trade shortfalls with Canada and Mexico have declined over the past decade even as the deficit with China continued to climb.

Part of IQOM’s mission is to identify sectors where NAFTA rules of origin could be modified to increase regional content.

For example, U.S., Canadian and Mexican officials are debating how the NAFTA region can reduce auto parts imports from China, Japan, South Korea or Germany, Mexican officials say.

“The key thing is to see how we can get a win-win on the products most used in our countries, and to develop common manufacturing platforms that allow us just to buy between ourselves the biggest amount of inputs we need,” said Luis Aguirre, vice-president of Mexican industry group Concamin.

Graphic: Trade battles – http://tmsnrt.rs/2pAdPcp

(Additional reporting by Michael O’Boyle Alexandra Alper, Ana Isabel Martinez, Ginger Gibson and Adriana Barrera; Editing by Tomasz Janowski)

U.S. coaxes Mexico into Trump plan to overhaul Central America

A member of the military police keeps watch during a routine foot patrol at El Pedregal neighbourhood Tegucigalpa, Honduras, May 3, 2017. REUTERS/Jorge Cabrera

By Gabriel Stargardter

MEXICO CITY (Reuters) – The United States is plotting an ambitious attempt to shore up Central America, with the administration of President Donald Trump pressing Mexico to do more to stem the flow of migrants fleeing violence and poverty in the region, U.S. and Mexican officials say.

The U.S. vision is being shaped by Department of Homeland Security (DHS) Secretary John Kelly, who is due to give a speech about his goals for Central America in Washington on Thursday.

Kelly, who knows Honduras, Guatemala and El Salvador well from his time as chief of the U.S. Southern Command, helped the administration of former President Barack Obama design his Alliance for Prosperity. That $750-million initiative sought to curtail Central American migration through development projects as well as law-and-order funding to crack down on the region’s dominant gangs.

Kelly aims to re-tool the Obama-era alliance without a large increase in American funding by pressing Mexico to shoulder more responsibility for governance and security in Central America, and by drumming up fresh private investment for the region, U.S. and Mexican diplomats say.

“What we’re going to see is … greater engagement directly between the Central Americans and Mexican government … (and) a more intense effort to integrate the economic side of this effort with the security side,” William Brownfield, the U.S. assistant secretary for International Narcotics and Law Enforcement Affairs, told Reuters.

“We’re going to see a strategy that has already been developed, but it is going to be pushed harder and more aggressively in the coming year, and the year after.”

The reshaped alliance stands in contrast to some of the isolationist views jostling for power in the White House. Still it’s consistent with Trump’s foreign policy efforts to pressure China to do more to tackle the North Korea nuclear threat and to get European allies to pick up more of the tab for NATO.

The plan also puts Mexico in a delicate spot. President Enrique Pena Nieto has repeatedly expressed his desire to preserve the North American Free Trade Agreement (NAFTA), which has become a pillar of Mexico’s economy.

But he must avoid the appearance of capitulating to Trump, who has enraged the Mexican public with his threats to withdraw from NAFTA and force Mexico to pay for his proposed border wall.

“We want to be on good terms with them, because we’re dealing with a much more important issue,” said a senior Mexican diplomat who was not authorized to speak publicly. “In return, we want a beneficial NAFTA renegotiation.”

Neither Kelly nor the DHS responded to requests for comment.

“The prosperity and security of Central America … represent a priority of Mexico’s foreign policy,” the country’s foreign ministry said in a statement.

“The Alliance for Prosperity … is a valuable tool that can be strengthened with the participation of other governments.”

A MAN WITH A PLAN

The new-look Alliance will be firmed up in Miami next month, when U.S., Mexican and Central American officials will meet to negotiate various issues, including Mexico’s role, according to a draft U.S. schedule obtained by Reuters.

Mexico’s Foreign Minister Luis Videgaray has said publicly Mexico is willing to work with the United States in stabilizing Central America, without giving much detail.

In private, though, local officials say cash-strapped Mexico lacks the money to invest significantly in the region – a fact that hasn’t eluded the United States.

“We do not have significant expectations of major … financial contributions by the government of Mexico at this time,” Brownfield said.

However, he said it was reasonable to expect Mexico to help train Central American officials, and deepen coordination along its southern border. Mexican government agencies could also work more closely with their southern counterparts, he added, citing the example of Colombia, which is training Central America’s police forces at the United States’ behest.

Brownfield said the re-designed plan would be executed by the State Department and development agency U.S. AID, working closely with the DHS. The Inter-American Development Bank (IADB) is working with U.S. AID to design mechanisms for luring fresh investment, he added.

IADB President Luis Alberto Moreno told Reuters the Miami meeting, coordinated with DHS officials, aimed to deliver “an investment shock” to create jobs and prevent migration.

However, the Mexican diplomat who requested anonymity expressed concern the new plan could presage a deeper militarization of Central America. The region’s armies have launched violent attacks on the powerful “Mara Salvatrucha” and “Calle 18” gangs, sparking accusations of rights abuses.

Mexico, which is also grappling with widespread violence, is open to training Central American security forces, the diplomat said, but won’t send troops to fight the gangs given its long-standing policy not to intervene in foreign conflicts.

The “Alliance for Prosperity” was cooked up by the Obama administration after a 2014 surge in child migrants from Central America. It aimed to stabilize Central America with funding for security and development. But critics say the focus skewed heavily toward funding for tackling drug smuggling and gangs.

Brownfield pointed to falling homicides in Honduras, where the murder rate has dropped to 59 killings per 100,000 people last year from 90.4 in 2012, as evidence it is starting to yield results. Still, Central America remains one of the most violent regions on earth.

Mexican diplomats say U.S. and Central American officials for years quietly pressed Mexico to join the alliance – pressure they ignored until Trump was elected, threatening to scrap NAFTA.

“Now we’re facing a different scenario because we have an American government pressuring us on lots of issues,” said the Mexican diplomat. “We want to be on good terms with the United States.”

(Additional reporting by Patricia Zengerle in Washington; Editing by Frank Jack Daniel and Marla Dickerson)

Trump to order a study on abuses of U.S. trade agreements

FILE PHOTO: The headquarters of the World Trade Organization (WTO) are pictured in Geneva, Switzerland, April 12, 2017. REUTERS/Denis Balibouse/File Photo

By Ayesha Rascoe

WASHINGTON (Reuters) – President Donald Trump will sign an executive order on Saturday seeking to identify any problems caused by the nation’s existing trade agreements, including an examination of U.S. involvement in the World Trade Organization, a top trade official said.

Commerce Secretary Wilbur Ross said his department would work to issue a report in 180 days outlining challenges with these trade deals and possible solutions.

Ross singled out the World Trade Organization as an entity that may need to make some changes, although he cautioned that the administration had not made any decisions yet.

“There’s always the potential for amending organization’s charters like the WTO, particularly when you’re in the position we are,” he said. “We’re the number one importer in the whole world.”

Ross raised concerns that the WTO is too bureaucratic and does not hold meetings often enough. He also argued that the WTO has an “institutional bias” in favor of exporters and against countries that are being “beleaguered by inappropriate imports.”

Remaking U.S. trade relations has been a top priority for Trump, who has argued that the United States has been treated unfairly in international trade.

Trump said on Thursday that he had been prepared to terminate the North American Free Trade Agreement (NAFTA) with Canada and Mexico, but backed off after calls from the leaders of those two countries.

The effects of NAFTA on the U.S. economy will also be examined in the new study.

Last month, Trump also issued an order calling for a major review of the causes of all U.S. trade deficits.

(Reporting by Ayesha Rascoe; Editing by Jonathan Oatis)

World stocks pause near record highs ahead of Trump landmark

People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett/File photo

By Vikram Subhedar

LONDON (Reuters) – Concern about global trade and U.S. President Donald Trump’s “America First” policies kept appetite for risky assets in check on Friday, setting world stocks on the path to a sluggish end to what will be their sixth straight month of gains.

In an interview with Reuters, Trump called the U.S. trade pact with South Korea “unacceptable” and said it would be targeted for renegotiation after his administration completed a revamp of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.

Trump’s comments sent Seoul stocks <.KS11> and the won <KRW=> into reverse.

Global stocks <.MIWO00000PUS> were steady, however, little changed on the day and holding near all-time highs and on track for a sixth straight month of gains.

Stock futures on Wall Street <ESc1> were up 0.1 percent, also near their highest ever levels.

Saturday marks Trump’s 100th day in office and his attacks on free trade and scepticism about his administration’s ability to see through a tax and spending campaign promises has dented some of the enthusiasm in markets that followed his election win.

“Trump is reaching the 100-day mark with nothing to show for it and these recent comments just coincide with that. They (the U.S. administration) are finding it hard to push through fiscal plans and all this rhetoric is probably related,” Kiran Kowshik, strategist at Unicredit.

EUROPE POWERING AHEAD

The mood on Europe, however, remains upbeat.

Euro zone bond yields rose across the board on Friday and the euro strengthened, rising 0.6 percent against the dollar <EUR=> to $1.0944, as output data from several countries reaffirmed a picture of economic strength in the bloc.

At the same, inflation blew past expectations to hit a three-year high, keeping pressure on the European Central Bank to start dialing back its stimulus measures.

Regional banking shares <.SX7P> added to recent gains.

Barclays <BARC.L> shares were an outlier, however, sliding 5 percent after disappointing investment banking results and weighing on the broader STOXX 600 <.STOXX> index which fell 0.2 percent.

European stocks are still up more than 2 percent on the week. Bank of America Merrill Lynch (BAML) noted that the $2.4 billion of inflows into European equity funds over the past week were the highest since December 2015.

“The hard data for equities is earnings — and they are powering ahead. Q1 earnings season is very strong and revisions trends are positive and broad-based,” said analysts at BAML, who forecast 15 percent earnings growth for European companies and a further 8 percent rally for the STOXX 600.

Healthy earnings, particularly from companies closely geared to economic growth, have underpinned the rally in global stocks, which have added nearly $5 trillion to their market value so far this year, according to Thomson Reuters data.

In commodities, oil prices rose but were still on track for a second straight weekly loss on concerns that an OPEC-led production cut had failed to significantly tighten an oversupplied market.

U.S. West Texas Intermediate (WTI) crude <CLc1> was at $49.43 per barrel at 0649 GMT, up 46 cents, or 0.94 percent, from its last close. WTI is still set for a small weekly loss and is around 8 percent below its April peak.

Brent crude <LCOc1> was at $51.91 per barrel, up 47 cents, or 0.91 percent. Brent is around 8.5 percent down from its April peak and is also on track for a second, albeit small, weekly decline.

(Additional reporting by Sujata Rao, Editing by Jeremy Gaunt and John Stonestreet)

Trump vows to back U.S. dairy farmers in Canada trade spat

FILE PHOTO: An old tractor sporting a Canadian national flag is seen parked in the rural township of Oro-Medonte, Ontario July 26, 2015. REUTERS/Chris Helgren/File Photo

By Rod Nickel

(Reuters) – U.S. President Donald Trump promised on Tuesday to defend American dairy farmers who have been hurt by Canada’s protectionist trade practices, during a visit to the cheese-making state of Wisconsin.

Canada’s dairy sector is protected by high tariffs on imported products and controls on domestic production as a means of supporting prices that farmers receive. It is frequently criticized by other dairy-producing countries.

“We’re also going to stand up for our dairy farmers,” Trump said in Kenosha, Wisconsin. “Because in Canada some very unfair things have happened to our dairy farmers and others.”

Trump did not detail his concerns, but promised his administration would call the government of Prime Minister Justin Trudeau and demand an explanation.

“It’s another typical one-sided deal against the United States and it’s not going to be happening for long,” Trump said.

Trump also reiterated his threat to eliminate the North American Free Trade Agreement (NAFTA) with Canada and Mexico if it cannot be changed.

U.S. dairy industry groups want Trump to urge Trudeau to halt a pricing policy that has disrupted some U.S. dairy exports and prioritize dairy market access in NAFTA renegotiation talks.

“A WTO complaint would be a last resort because it would take five or six years to come to any resolution,” said Jaime Castaneda, senior vice president for the U.S. Dairy Export Council.

Canada’s dairy farmers agreed last year to sell milk ingredients used for cheese-making to Canadian processors, which include Saputo Inc and Parmalat Canada Inc [PLTPRC.UL] at prices competitive with international rates. The pricing agreement was a response to growing U.S. exports of milk proteins that were not subject to Canada’s high tariffs.

Canada’s envoy to Washington on Tuesday sent a letter to the governors of New York and Wisconsin – both major dairy states – saying U.S. producers’ problems stemmed from overproduction rather than Canadian policy.

In the letter, released by Ottawa, ambassador David MacNaughton said Canada’s dairy industry was less protectionist than its U.S. counterpart.

Industry groups in New Zealand, Australia, the European Union, Mexico and the United States complained the new prices for Canadian milk ingredients under-cut exports to Canada.

“President Trump’s reaction is not surprising. He is defending his domestic dairy industry,” said Jacques Lefebvre, CEO of Dairy Processors Association of Canada. “Further communications with the Canadian government will broaden his perspective.”

The Dairy Farmers of Canada said it was confident Ottawa would “continue to protect and defend” the dairy industry.

(Reporting by Rod Nickel in Winnipeg, Manitoba; additional reporting by Steve Holland in Kenosha, Wisconsin, Karl Plume in Chicago,; Ayesha Rascoe in Washington; and David Ljunggren in Ottawa; Editing by Lisa Shumaker)

China’s Xi urges trade cooperation in first meeting with Trump

U.S. President Donald Trump and First Lady Melania Trump welcome Chinese President Xi Jinping and first lady Peng Liyuan at Mar-a-Lago estate in Palm Beach, Florida, U.S., April 6, 2017. REUTERS/Carlos Barria

By Steve Holland

PALM BEACH, Fla. (Reuters) – Chinese President Xi Jinping urged cooperation with the United States on trade and investment on Thursday, inviting President Donald Trump to visit China in a cordial start to their first meeting likely to broach sensitive security and commercial issues.

Trump has said he wants to raise concerns about China’s trade practices and press Xi to do more to rein in North Korea’s nuclear ambitions during his two-day visit to the Spanish-style Mar-a-Lago resort in Palm Beach, Florida, though no major deals on either issue are expected.

The two sides should promote the “healthy development of bilateral trade and investment” and advance talks on a bilateral investment agreement, Xi said, according to a statement on China’s Foreign Ministry website.

“We have a thousand reasons to get China-U.S. relations right, and not one reason to spoil the China-U.S. relationship,” Xi told Trump.

Trump accepted Xi’s invitation to China later this year, state news agency Xinhua news agency cited officials as saying on Friday.

Xi and his wife, Peng Liyuan, joined Trump and his wife, Melania, at a long table in an ornate candle-lit private dining room festooned with red and yellow floral centerpieces, where they dined on pan-seared Dover sole and New York strip steak.

Trump, a New York real estate magnate before he ran for office, joked before dinner: “We’ve had a long discussion already, and so far I have gotten nothing, absolutely nothing. But we have developed a friendship – I can see that – and I think long term we are going to have a very, very great relationship and I look very much forward to it.”

The fanfare over the summit on Thursday was overshadowed by another pressing foreign policy issue: the U.S. response to a deadly poison gas attack in Syria. As Trump and Xi were wrapping up dinner, U.S. forces fired dozens of cruise missiles at a Syrian airbase from which it said the chemical weapons attack was launched this week, an escalation of the U.S. military role in Syria that swiftly drew sharp criticism from Russia.

In Beijing, China’s Foreign Ministry urged all parties in Syria to find a political settlement.

Trump and Xi were expected to get into more detailed discussions about trade and foreign policy issues on Friday, concluding their summit with a working lunch.

Trump promised during the 2016 presidential campaign to stop what he called the theft of American jobs by China and rebuild the country’s manufacturing base. Many blue-collar workers helped propel him to his unexpected election victory in November and Trump wants to deliver for them.

“We have been treated unfairly and have made terrible trade deals with China for many, many years. That’s one of the things we are going to be talking about,” Trump told reporters ahead of the meeting.

The bilateral investment treaty mentioned by Xi, talks on which began during former president George W. Bush’s administration and resumed under Barack Obama, has received little attention since Trump took office.

Trump is still finding his footing in the White House and has yet to spell out a strategy for what his advisers called a trade relationship based on “the principle of reciprocity.”

He brought his top economic and national advisers to Florida for the meeting, including Defense Secretary Jim Mattis, Treasury Secretary Steven Mnuchin, and Commerce Secretary Wilbur Ross.

“Even as we share a desire to work together, the United States does recognize the challenges China can present to American interests,” said Secretary of State Rex Tillerson, also in Florida for the meeting.

Trump’s daughter, Ivanka, and her husband, Jared Kushner, who both work at the White House, also were among the dinner guests.

DIFFERING PERSONALITIES

The summit brings together two leaders who could not seem more different: the often stormy Trump, prone to angry tweets, and Xi, outwardly calm, measured and tightly scripted, with no known social media presence.

What worries the protocol-conscious Chinese more than policy clashes is the risk that the unpredictable Trump could publicly embarrass Xi, after several foreign leaders experienced awkward moments with the new U.S. president.

“Ensuring President Xi does not lose face is a top priority for China,” a Chinese official said.

The most urgent problem facing Trump and Xi is how to persuade nuclear-armed North Korea to halt unpredictable behavior like missile test launches that have heightened tensions in South Korea and Japan.

North Korea is working to develop an intercontinental ballistic missile capable of hitting the United States.

Trump has threatened to use trade to try to force China to exert influence over Pyongyang.

“I think China will be stepping up,” Trump told reporters on Thursday. Beijing says its influence is limited and that it is doing all it can.

The White House is reviewing options to pressure Pyongyang economically and militarily, including “secondary sanctions” against Chinese banks and firms that do the most business with Pyongyang.

A long-standing option of pre-emptive strikes remains on the table, but despite the tougher recent U.S. talk, the internal review “de-emphasizes direct military action,” the U.S. official said, speaking on condition of anonymity.

Analysts believe any military action would likely provoke severe North Korean retaliation and massive casualties in South Korea and Japan and among U.S. troops stationed there.

NO GRAND BARGAIN ON TRADE

On trade, U.S. labor leaders say Trump needs to take a direct, unambiguous tone in his talks with Xi.

“President Trump needs to come away from the meeting with concrete deliverables that will restore production and employment here in the U.S. in those sectors that have been ravaged by China’s predatory and protectionist practices,” said Holly Hart, legislative director for the United Steelworkers union.

A U.S. administration official told Reuters that Washington expects to have to use legal tools to fight for U.S. companies, such as pursuing World Trade Organization lawsuits.

“I don’t expect a grand bargain on trade. I think what you are going to see is that the president makes very clear to Xi and publicly what we expect on trade,” a U.S. official told Reuters, speaking on condition of anonymity.

Trump has often complained Beijing undervalues its currency to boost trade, but his administration looks unlikely to formally label China a currency manipulator in the near term – a designation that could come with penalties.

(Additional reporting by David Brunnstrom, Matt Spetalnick, Roberta Rampton, Ayesha Rascoe and Mohammad Zargham in Washington, Gui Qing Koh in New York, Michael Martina in Beijing and William Mallard in Tokyo; Editing by Lisa Shumaker, James Dalgleish and Nick Macfie)

Trade, North Korea pose challenges as Trump prepares to meet China’s Xi

Donald Trump and Chinese President Xi Jinping. REUTERS/Jonathan Ernst/Aly Song

By Steve Holland and Matt Spetalnick

WASHINGTON (Reuters) – U.S. President Donald Trump holds his first meeting with Chinese President Xi Jinping on Thursday facing pressure to deliver trade concessions for some of his most fervent supporters and prevent a crisis with North Korea from spiraling out of control.

The leaders of the world’s two biggest economies are to greet each other at the president’s Mar-a-Lago retreat in Palm Beach, Florida, late in the afternoon and dine together with their wives, kicking off a summit that will conclude with a working lunch on Friday.

Trump promised during the 2016 campaign to stop what he called the theft of American jobs by China and rebuild the country’s manufacturing base. Many blue-collar workers helped propel him to his unexpected election victory on Nov. 8 and Trump wants to deliver for them.

The Republican president tweeted last week that the United States could no longer tolerate massive trade deficits and job losses and that his meeting with Xi “will be a very difficult one.”

Trump, a former real estate magnate is still finding his footing in the White House and has yet to spell out a strategy for what his advisers called a trade relationship based on “the principal of reciprocity.”

White House officials have set low expectations for the meeting, saying it will set the foundation for future dealings.

U.S. labor leaders say Trump needs to take a direct, unambiguous tone in his talks with Xi.

“President Trump needs to come away from the meeting with concrete deliverables that will restore production and employment here in the U.S. in those sectors that have been ravaged by China’s predatory and protectionist practices,” said Holly Hart, legislative director for the United Steelworkers union.

International Association of Machinists President Robert Martinez said the United States continued to lose manufacturing jobs to the Chinese, saying: “It’s time to bring our jobs home now.”

Some Democratic lawmakers were eager to pounce on Trump on trade.

“We are eager to understand your plans to correct our current China trade policies and steer a new course,” said Democratic U.S. Representative Jim McGovern of Massachusetts.

DIFFERING PERSONALITIES

The summit will bring together two leaders who could not seem more different: the often stormy Trump, prone to angry tweets, and Xi, outwardly calm, measured and tightly scripted, with no known social media presence.

What worries the protocol-conscious Chinese more than policy clashes is the risk that the unpredictable Trump could publicly embarrass Xi, after several foreign leaders experienced awkward moments with the new U.S. president.

“Ensuring President Xi does not lose face is a top priority for China,” a Chinese official said.

The most urgent problem facing Trump and Xi is how to persuade nuclear-armed North Korea to halt unpredictable behavior like missile test launches that have heightened tensions in South Korea and Japan.

North Korea is working to develop an intercontinental ballistic missile capable of hitting the United States.

Trump has threatened to use trade to try to force China to exert influence over Pyongyang. Beijing says its influence is limited and that it is doing all it can but that it is up to the United States to find a way back to talks with North Korea.

A senior White House official said North Korea was a test for the U.S.-Chinese relationship.

“The clock is very, very quickly running out,” the official said. “All options are on the table for us.”

Trump consulted on Wednesday with Japanese Prime Minister Shinzo Abe, who said he and the president agreed by phone that North Korea’s latest ballistic missile launch was “a dangerous provocation and a serious threat.”

A White House strategy review is focusing on options for pressuring Pyongyang economically and militarily. Among measures under consideration are “secondary sanctions” against Chinese banks and firms that do the most business with Pyongyang.

A long-standing option of pre-emptive strikes remains on the table, but despite the tougher recent U.S. talk, the internal review “de-emphasizes direct military action,” the U.S. official said, speaking on condition of anonymity.

Analysts believe any military action would likely provoke severe North Korean retaliation and massive casualties in South Korea and Japan and among U.S. troops stationed there.

(Additional reporting by David Brunnstrom in Washington, Gui Qing Koh in New York, Ben Blanchard in Beijing and William Mallard in Tokyo; Editing by Caren Bohan and Peter Cooney)

Exclusive: Venezuela increased fuel exports to allies even as supply crunch loomed

Venezuelan motorists line up for fuel at a gas station of Venezuelan state oil company PDVSA in Maturin, Venezuela March 23, 2017. REUTERS/Marco Bello

By Marianna Parraga and Alexandra Ulmer

HOUSTON/CARACAS (Reuters) – A gasoline shortage in OPEC member Venezuela was exacerbated by an increase in government-sanctioned fuel exports to foreign allies and an exodus of crucial personnel from state-run energy company PDVSA, according to internal PDVSA documents and sources familiar with its operations.

Leftist-run Venezuela sells its citizens the world’s cheapest gasoline. Fuel supplies have continued flowing despite a domestic oil industry in turmoil and a deepening economic crisis under President Nicolas Maduro that has left the South American country with scant supplies of many basic necessities.

That changed on Wednesday, when Venezuelans faced their first nationwide shortage of motor fuel since an explosion ripped through one of the world’s largest refineries five years ago. At the time, the government of then-President Hugo Chavez curbed exports to guarantee there was enough fuel at home.

This week’s shortage was also mainly due to problems at refineries, as a mix of plant glitches and maintenance cut fuel production in half.

Unlike five years ago, Caracas has continued exporting fuel to political allies and even raised the volume of shipments last month despite warnings within the government-run company that doing so could trigger a domestic supply crunch.

Shipments from refineries to the domestic market needed to be redirected to meet those export commitments, the internal documents showed.

“Should this additional volume … be exported, it would impact a cargo scheduled for the local market,” read one email sent from an official in the company’s domestic marketing department to its international trade unit.

Venezuela last month exported 88,000 barrels per day (bpd) of fuels – equivalent to a fifth of its domestic consumption – to Cuba, Nicaragua and other countries, according to internal PDVSA documents seen by Reuters.

That was up 22,000 bpd on the volumes Venezuela had been shipping to those two countries under accords struck by Chavez to expand his diplomatic clout by lowering their fuel costs through cheap supplies of crude and fuel.

The order to increase exports came from PDVSA’s top executives, according to the internal emails seen by Reuters.

Venezuela’s oil ministry and state-run PDVSA, formally known as Petroleos de Venezuela SA, did not reply to requests for comment for this story.

FUEL STRAIN, BRAIN DRAIN

The strain on the country’s fuel system has been worsened by the departure of staff in PDVSA’s trade and supply unit who are key to ensuring fuel gets to where it’s needed and making payments for imports, three sources close to the company said.

The unit has seen around a dozen key staffers depart since Maduro shook up PDVSA’s top management in January. Among those who left was the head of budget and payments, two sources said.

“Every week someone leaves for one reason or another,” said a PDVSA source familiar with the unit’s operations.

Some have been fired, while others have left since the shake-up inserted political and military officials into top positions and bolstered Maduro’s grip on the company that powers the nation’s economy.

The imposition of leaders with little or no experience in the industry has further disillusioned some of the company’s experienced professionals and accelerated an exodus that had already taken hold as economic and social conditions in Venezuela worsened.

A recent internal PDVSA report seen by Reuters mentioned “a low capacity to retain key personnel,” amid salaries of a few dozen dollars a month at the black market rate.

UNPAID BILLS

The departure of staff responsible for paying suppliers, as well as a cash crunch in the company and the country, have led to an accumulation of unpaid bills for fuel imports into Venezuela.

Had those bills been paid, the supply crunch would have been less acute, the company sources said.

About 10 tankers are waiting near PDVSA ports in Venezuela and the Caribbean to discharge fuel for domestic consumption and for oil blending.

Only one vessel bringing fuel imports has been discharged since the beginning of the week, shipping data showed.

PDVSA ordered some of the cargoes as it prepared alternative supplies while refineries undergo maintenance.

The tankers sitting offshore will not unload until PDVSA pays for their cargoes, said shippers and the company sources.

Should PDVSA pay – up to $20 million per cargo – shortages could blow over relatively soon.

The cash-strapped company has struggled since the global oil price crash that began in 2014 cut revenue for its crude exports. PDVSA is tight on cash as it prepares for some $2.5 billion in bond payments due next month.

While the vessels sit offshore, lines of dozens of cars waited at gas stations in central Venezuela on Wednesday and Thursday. The shortages angered Venezuelans who already face long lines for scarce food and drugs.

PDVSA blamed the supply crunch on unspecified problems for shipping fuel from domestic refineries to distribution centers. The company said it was working hard to solve the gasoline situation by boosting deliveries to the worst-hit regions.

A shortage of trucks to move refined products has also caused bottlenecks, oil workers told PDVSA President Eulogio Del Pino during a visit to a fuel facility this week, asking for help. Trucks are in short supply because the country does not have enough funds to pay for imports of spare parts.

It was unclear when fuel supplies would return to normal, although by late Thursday PDVSA appeared to have distributed some fuel from storage to Caracas and the eastern city of Puerto Ordaz. Lines to fill up at gasoline stations shortened in both cities, according to Reuters witnesses.

Workers at the 335,000-barrel-per-day Isla refinery on the nearby island of Curacao operated by PDVSA said on Friday that the refinery had begun restarting its catalytic cracking unit, which could boost fuel supplies in the coming days.

(Additional reporting by Mircely Guanipa in Punto Fijo and Maria Ramirez in Puerto Ordaz; Editing by Simon Webb and Jonathan Oatis)