Nation at a Glance — (12/13/19)
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
BSP stays policy as 2019 draws to a close
THE BANGKO SENTRAL ng Pilipinas (BSP) kept monetary policy settings steady, as earlier signaled, in its eighth and last policy review for the year on Thursday, citing “a benign inflation environment.”
BSP Governor Benjamin E. Diokno said in remarks to reporters at the central bank headquarters in the City of Manila that “the Monetary Board decided to maintain the interest rate on the BSP’s overnight reverse repurchase facility at four percent… the interest rates on the overnight deposit and lending facilities… unchanged at 3.5% and 4.5%, respectively.”
Headline inflation hit successive multi-year highs last year, averaging a near-decade-high 5.2% in 2018 and forcing monetary authorities to increase benchmark interest rates by a total of 175 basis points (bps) in a bid to tame price pressures.
Inflation has since been on a decline, averaging 2.5% in the 11 months to November, well within the central bank’s 2-4% target range for this year.
With last year’s interest rate increases partly unwound by a cumulative 75 bps reduction this year, Mr. Diokno had told reporters on Dec. 3 that monetary policy easing could resume early next year. The central bank will hold its next policy review on Feb. 6.
On Thursday, monetary authorities also maintained the lowered 2.4% inflation forecast they had adopted in their Nov. 14 policy review, down from 2.5% previously. They also maintained their forecast for 2020 and 2021 at 2.9%.
“… [T]he balance of risks to the inflation outlook continue to lean slightly toward the upside in 2020 and toward the downside in 2021,” Mr. Diokno said on Thursday, citing as sources of near-term risk “potential volatility in international oil prices amid geopolitical tensions in the Middle East as well as from the potential impact of the African Swine Fever outbreak and recent weather disturbances on domestic food prices.”
At the same time, subdued global economic activity and demand amid the nagging Sino-US trade war “could… mitigate upward pressures on commodity prices.”
Monetary authorities also slashed banks reserve requirement ratio (RRR) by a total of 200 bps last year and by 400 bps more this year — bringing them to 14% for universal and commercial lenders, four percent for thrift banks and three percent for rural banks — as the BSP moved to bring this ratio closer to single-digit level by 2023, when Mr. Diokno ends his term in July that year.
The central bank chief — who had said last week that gross domestic product (GDP) growth could clock in this quarter at 6.4-6.5%, compared to the muted 5.6%, 5.5% and 6.2% in the first to third quarters — said on Thursday that economic growth stands a chance of hitting the lower end of the state’s target for 2019.
“Sustained policy support from increased fiscal spending, as well as improved liquidity conditions owing to recent monetary adjustments, is… expected to support growth in the coming months,” Mr. Diokno said.
Wednesday had seen the Development Budget Coordination Committee trim this year’s GDP target to 6-6.5% from 6-7% previously, as well as the goal for 2021 and 2022 to 6.5-7.5% from 7-8% originally, thus giving up on the eight percent aspiration by the end of the six-year term of President Rodrigo R. Duterte. However, they maintained the 2020 target at 6.5-7.5%.
For Euben Paracuelles, chief ASEAN economist at Nomura Holdings, Inc., the country could bank on continued implementation of infrastructure projects to sustain above-six percent GDP growth over the medium term.
In a conference call on Thursday on Nomura’s 2020 Asia Outlook, Mr. Paracuelles said: “I would point out that sustainability of this 6%-plus growth has been primarily due to the fact that there has been a bit of prioritization on infrastructure implementation.”
“This obviously has a direct impact on growth and, over the long term, it provides a boost to potential growth.”
In Nomura’s latest report, Asia in 2020: Glass half full and half empty, the country was seen to be an “exception” in the region as it expected to sustain GDP growth at six percent this year, picking up to 6.7% next year and then edge up to 6.8% in 2021.
“(Philippines) is the lone exception in Asia in terms of growth trajectory. We’re seeing a V-shape pick-up in growth rather that the U that we see elsewhere, primarily driven by infrastructure implementation of the government, we think that is a very strong priority,” Mr. Paracuelles said.
ANALYSTS LOOK AHEAD
ING Bank-N.V.-Manila Senior Economist Nicholas Antonio T. Mapa said that the decision to maintain policy rates could prop up the peso in the short term.
“Given the central bank decision to pause, we maintain our call for further peso appreciation bias to end the year on seasonal flows from overseas Filipino migrants, although the recent sell-down in the local equity market could limit the peso’s gain,” he said in a note sent to reporters.
Security Bank Corp. Chief Economist Robert Dan J. Roces said that the pause lets BSP observe the “appropriateness of the reduction it has so far imposed relative to the inflation path as it unwinds rate hikes from last year.”
“Better credit growth and possible resumption of monetary easing in 2020 should positively affect domestic economic growth,” he said in a note sent to reporters.
For UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, the central bank may resume easing moves as early as the first half of 2020 “at 50 bps more.”
“Major factors would be inflation expectations, global oil price movements, and the impact so far of 2019’s easing on market liquidity and credit growth,” he said in a mobile phone message. — Luz Wendy T. Noble and Beatrice M. Laforga
Electronics exporters conservative for 2020
“For next year 2020, it’s gonna be very challenging. If anything, it could be a single-digit growth at the range of what we said — 0-3%,” Semiconductor and Electronics Industries of the Philippines, Inc. President Danilo C. Lachica told reporters on the sidelines of a forum on Tuesday last week.
He said that there are “a lot of global and local forces in play.”
While the US-China trade war has so far not made significant impact on Philippine electronics exports, he said, even as the Philippines has not been able to catch up with Vietnam in attracting many of the China-based companies moving operations due to the trade war.
A new set of US tariffs targeting Chinese consumer goods — including phones and laptops — may take effect on Sunday.
Philippine electronics products — which made up more than half of total merchandise exports worth $58.958 billion — grew 2.669% year on year to $33.202 billion in the 10 months to October. Semiconductors — which made up 73% of electronics exports and 41% of total exported goods — grew 1.833% to $24.317 billion.
“[Of] Our Philippine electronics industry, the biggest component is semiconductors which go to different products… office equipment or automotive,” Mr. Lachica said.
“But consumer products is also big. If we see escalating trade war, we might see an impact on consumer products.”
He continued to express concerns about losing foreign investment due to the planned overhaul of tax incentives, noting that employment will be cut over several years as products are “obsoleted.” The Philippine electronics industry continues to run a certain product until demand runs out, with factories shutting down if multinationals forgo expansion plans and locate elsewhere.
“Consumer products will be consummated faster than automotive products. The lifecycle of cellphones is very short. We have several sectors kasi. Ang pinaka-quickest siguro na maapektuhan ’yung (The quickest to be affected will be) consumer products. But automotive products — it takes years for them to run a particular model,” Mr. Lachica said.
In October, he said that the industry is confident of reaching its tempered 0-3% growth target for 2019. — JPI
Water firms press for retention of current dam allocation
MANILA WATER Company, Inc. and Maynilad Water Services, Inc. called on the National Water Resources Board (NWRB) to maintain the minimum allocation to the concessionaires at 40 cubic meters per second (CMS) until the summer months to allow them to maintain their level of service to their customers.
Antonino T. Aquino, former president and current board director of Metro Manila east zone concessionaire Manila Water, said the initial allocation to the companies were 46 CMS from Angat Dam, but this had been cut to 40 CMS.
“As a minimum, dapat po sana ma-retain itong 40 CMS all the way until summer para po ang level of service po natin — alam po natin na kulang pa compared with kung nasa 46 CMS tayo — ay mapagpatuloy (As a minimum, we must retain this 40 CMS all the way until summer so that the level of service — which we know is still deficient compared with if we are at 46 CMS — will continue),” he said.
The United Nations’ World Meteorological Organization now projects a 30% chance for El Niño recurring in December 2019-February 2020 and 25% for March-May 2020.
Angat Dam is Metro Manila’s main water source, but this year its ideal elevation is not being met, prompting a reduction in release to water concessionaires.
NWRB is the government entity that decides the release to both companies, which is balanced with what is allocated for hydroelectric power and agricultural irrigation.
“We can distribute only what we have,” said Ramoncito S. Fernandez, president and chief executive officer of west zone concessionaire Maynilad.
He said both concessionaires are dependent on water released to them by NWRB and the Metropolitan Waterworks and Sewerage System (MWSS).
Mr. Fernandez said Maynilad has used its permission from the MWSS as early as 2009 to build two water treatment plants in Putatan, Muntinlupa ahead of a third plant in Poblacion of the same town in January.
Mr. Aquino said it would also be important for stakeholders to come up with long-term water supply sources as it might take three more years before a new source comes online.
He was referring to the P12.2-billion Kaliwa Dam in Quezon province, which has been issued an environmental compliance certificate by the Department of Environment and Natural Resources, and a notice to proceed by the MWSS. The project will be built by China Energy Engineering Co. Ltd.
“Talagang kulang po tayo [We are really deficient in supply],” he said.
“Kung wala tayong water source, magkakaroon tayo ng problema. Unfortunately, it’s our customers who will suffer, pero wala po kaming magawa dahil sa depende lang po kami sa magkano ang inire-release sa amin ng NWRB. (If we don’t have water source, we will have a problem. Unfortunately, it’s our customers who will suffer, but we can’t do anything because we are dependent on how much the NWRB gives us).”
Sought for comment, NWRB Executive Director Sevillo D. David, Jr. said in a text message: “Based on the current elevation and climate projections from PAGASA (Philippine Atmospheric, Geophysical and Astronomical Services Administration), allocation of 40 CMS can be maintained up to summer of next year. We just have to closely monitor actual rainfall if it is consistent with climate projections.” — Victor V. Saulon
FDCP can’t use taxes as incentives — SC
THE Supreme Court (SC) has affirmed with finality its 2015 decision to disallow the Film Development Council of the Philippines (FDCP) from collecting and giving film amusement taxes as incentives to select films.
“While this is truly sad news for FDCP and for the Filipino filmmakers and the industry that the agency has served and supported through monetary incentives from the amusement tax collections, FDCP respects the Court’s final decision and will abide by it. FDCP will work swiftly to ensure all the remaining remittances due to the producers who applied prior to the finality of the decision will be awarded accordingly,” the FDCP said in a statement published on its Facebook page on Dec. 11.
The council noted they received a copy of the Court’s resolution on Dec. 10.
The 2015 dispute stemmed from Cebu City along with Colon Heritage Realty Corp. and SM Prime Holdings contesting FDCP’s collection of amusement taxes saying that it would reduce their revenues.
In the original ruling, the high court en banc nullified Sections 13 and 14 of Republic Act No. 9167 which allowed the FDCP to collect 100% and 65% of local amusement taxes and reward these to films graded A and B by the Cinema Evaluation Board.
The collected amusement tax was meant to incentivize local filmmakers and, in turn, promote better quality local films.
The high court deemed the amusement tax collection a “violation of the principle of local fiscal autonomy since it authorized FDCP to earmark, and hence, effectively confiscate the amusement taxes which should have otherwise inured to the benefit of the local government units,” according to the FDCP statement.
Because of the decision, the FDCP announced that it will no longer award amusement tax privileges to films graded after Dec. 10, 2019, but that it will continue transacting with the concerned theater branches for the collection of amusement taxes for films graded prior to the date of the resolution.
Despite the setback, the FDCP said it will be “working closely with lawmakers in the country for its proposed film fund and incentive programs that will replace and sustain its support to our local filmmakers.” — ZBC
Apple lands first Golden Globe nominations; Netflix leads field
APPLE INC.’s television news drama The Morning Show scored three Golden Globe nominations on Monday, putting the iPhone maker in the running for its first major Hollywood awards as a new player in the crowded streaming entertainment market.
Digital video pioneer Netflix Inc. dominated the field, landing 17 nominations in TV categories plus 17 more for movies, including leading contenders Marriage Story and The Irishman.
TV networks, movie studios and streaming services campaign heavily to win Golden Globes and other awards to bring publicity to their shows and help attract new audiences.
The Golden Globe winners, determined by the Hollywood Foreign Press Association, will be announced at a red-carpet ceremony in Beverly Hills, California, on Jan. 5.
The Morning Show, which streams on the Apple TV+ subscription service that debuted in November, was nominated for best television drama. Stars Jennifer Aniston and Reese Witherspoon were named in the best dramatic actress category.
The series tells the story of a morning news program roiled by sexual misconduct allegations against a popular anchor.
“Feeling grateful to be able to bring this story to light,” said director and executive producer Mimi Leder. Cast and crew “worked passionately from their hearts and souls to continue the conversation of power, greed, and toxicity in the workplace,” she added.
Netflix’s TV nominations came for series including British royal drama The Crown and Unbelievable, a show about a woman who says she was raped and later recants her story.
AT&T Inc.’s HBO received 15 nominations for programs including nuclear disaster drama Chernobyl and Barry, a comedy about a hired assassin.
While Netflix has won many TV accolades since it made a major push into original series in 2013, the company is relatively new to the movie business.
Netflix took three of the five nominations for best movie drama. They were for Marriage Story starring Adam Driver and Scarlett Johansson, Martin Scorsese mob drama The Irishman, and biographical film The Two Popes.
Another Netflix movie, Dolemite Is My Name featuring Eddie Murphy as floundering comedian in the 1970s, was nominated for best movie musical or comedy.
Amazon.com Inc.’s Prime Video received five TV nominations and three for movies. Hulu, owned by Walt Disney Co., was nominated for five TV awards.
Sony Corp.’s movie studio took the most nominations of any traditional film distributor, including five for Quentin Tarantino’s Once Upon a Time in Hollywood. — Reuters
ABS-CBN sues seller of pirated set-top boxes
ABS-CBN Corp. sued a US-based individual and tech company for allegedly pirating the media giant’s content and infringing on its trademark.
In a statement on Thursday, the Lopez-led company said it filed a complaint at a US federal court in the southern district of Texas against a certain Anthony Brown and 1700 Cuts Technology.
ABS-CBN said it is seeking damages over $4 million for alleged content piracy and trademark infringement.
In the lawsuit, ABS-CBN alleged Mr. Brown, a resident of Texas, sold illegal set-top boxes through Facebook pages that he and 1700 Cuts Technology operated.
It noted that buyers of these pirated set-top boxes were able to watch ABS-CBN’s live programs without paying any fees.
One of the Facebook pages used to promote these illegal set-top boxes was a business page for “lifeforgreatness.” Based on its website, “lifeforgreatness” promotes products and services of 1700 Cuts Technology.
BusinessWorld e-mailed 1700 Cuts Technology for comment but did not receive a reply.
“Beware of these operations that are not licensed or affiliated in any way with ABS-CBN. We will continue to protect customers by shutting these operations down. The only genuine ABS-CBN internet subscription services are TFC on cable and satellite, IPTV and TFC.tv,” ABS-CBN Assistant Vice-President and Head of Global Anti-Piracy Elisha Lawrence was quoted as saying.
TFC.tv makes ABS-CBN shows and movies available for overseas markets such as the United States and Canada.
ABS-CBN has been going after companies and individuals selling set-top boxes that provide access to its copyrighted movies and TV shows.
An ABS-CBN official earlier estimated it lost around P300-400 million in potential movie revenues in 2018 due to piracy.
ABS-CBN Head of Infosec and Data Protection Officer Jay C. Gomez said in November that the company’s film revenues have continued to grow, racking up more than a billion pesos annually.
For the first nine months of 2019, ABS-CBN’s attributable net income rose 45% to P2.36 billion, on the back of an 8.6% rise in revenues to P32 billion.
The bulk of revenues came from advertising revenues, which went up 15% to P17.11 billion.
Shares in ABS-CBN increased by 0.24% to P16.40 each at the Philippine Stock Exchange on Thursday. — ALB
Bombshell leads movie contenders for Hollywood’s SAG awards
LOS ANGELES — Bombshell, a drama about sexual harassment allegations at Fox News, led the movie nominees for the Screen Actors Guild (SAG) Awards on Wednesday and will compete for the top prize of best cast.
The film from Lions Gate Entertainment earned four nominations overall, including nods for lead actress Charlize Theron and supporting actresses Nicole Kidman and Margot Robbie.
Other contenders for the best cast award are Mafia epic The Irishman, Quentin Tarantino’s 1960s period drama Once Upon a Time in Hollywood, Nazi-era satire Jojo Rabbit, and Parasite, a social satire from South Korea.
The SAG awards are closely watched as an indicator of likely Oscar success because actors form the largest voting group in the Academy of Motion Picture Arts and Sciences.
Winners will be announced in a televised ceremony in Los Angeles on Jan. 19.
Bombshell, which debuts in US movie theaters on Friday, depicts the story of the women at Fox News whose sexual misconduct allegations in 2016 led to the ouster of network founder Roger Ailes. Ailes, who died a year later, denied the accusations.
Theron plays former Fox News anchor Megyn Kelly while Kidman portrays former Fox News host Gretchen Carlson. Robbie plays a fictional but composite Fox News staffer.
“When this story broke it was only the tip of the iceberg, and then two years later we find ourselves with all these allegations against so many men in powerful positions,” Theron, also a producer of the film, told Reuters at the red-carpet premiere for Bombshell in Los Angeles on Tuesday.
Fox News on Wednesday had no comment on the film other than saying that no one from the movie contacted the network to fact-check their account.
Netflix Inc.’s The Irishman scored SAG nominations for supporting actors Al Pacino and Joe Pesci but not for star Robert De Niro, who is scheduled to receive a lifetime achievement honor at the awards ceremony.
Other nominees included Brad Pitt and Leonardo DiCaprio for Sony Corp’s Once Upon a Time in Hollywood and Scarlett Johansson for divorce drama Marriage Story and for Jojo Rabbit.
In television categories, Apple Inc. received nominations for The Morning Show stars Jennifer Aniston, Steve Carell and Billy Crudup. The drama about a fictional news network roiled by sexual misconduct allegations streams on Apple’s new subscription service, Apple TV+.
TV series competing in top categories include Game of Thrones, The Crown, Fleabag, and The Marvelous Mrs. Maisel. — Reuters
PHL builds P300-M Dubai Expo pavilion
By Jenina P. Ibañez
DUBAI — The Philippines is allocating P300 million to build a pavilion at the Dubai World Expo, which is scheduled to open in 2020.
Department of Trade and Industry (DTI) Secretary Ramon M. Lopez told reporters prior to the media launch here on Thursday that this is a “modest” budget compared to the US and Canada which are spending around P2 billion each on their respective pavilions.
“’Yung experts sa private sector — sina Royal Pineda — the architecture treatment, it’s very creative but not costly,” he said, referring to architect Royal L. Pineda whose firm Budji + Royal Architecture + Design won the bid to design the project.
The three-year budget up to 2021 — including forward estimates — for pavilion design, construction, installations, and management is P520 million.
The estimated cost of the pavilion structure represents 63% of the overall budget for the Philippine participation at the Dubai World Expo.
The 3,000-square meter Philippine pavilion is part of the six-month event that is expected to attract 25 million visitors. There will be 192 country pavilions.
Unlike international trade expos, the World Expo is an “image-promotion” event instead of a direct product-selling event.
“It’s an image promotion… the show of technology, heritage, may (there is) modern Philippines and the culture, the art. It’s a combination,” Mr. Lopez said.
The Philippines will showcase its goods in designated food and product areas.
“We can imagine all the interesting products the Philippines would sell to the world. So you have of course the food, chocolates, a lot of agri[cultural products such as], coconut-based, for example mangoes — those that we’re known for,” Mr. Lopez added.
The pavilion, featuring the “Bangkota” or coral reef theme, will use wire mesh instead of hard structure.
Mr. Pineda, the architect behind the pavilion’s design, said in an interview prior to the groundbreaking event that the Philippines will also make use of the resources and technologies of Dubai, collaborating with local steel contractors.
While using less costly materials, Mr. Pineda described it as “practical luxury.”
“Filipinos can be living in luxury by design… we are not here to compete, we are here to present ourselves truthfully,” he added.
He said that the pavilion will feature the natural resources and marine biodiversity of the Philippines, its pre-colonial origins, and its peoples’ migration. Following Thursday’s groundbreaking ceremony, the pavilion is expected to be completed in August 2020.
The Dubai World Expo, which is designed to showcase “the achievements of nations,” is being held in the Middle East for the first time. It will open in October 2020.
Mr. Lopez said that the Philippines’ participation recognizes the more than 700,000 Filipinos working in the United Arab Emirates (UAE).
“At first we wanted lower cost, smaller space. But we were prodded upon by the organizer to use a bigger space considering the bigger contribution of Filipinos among all overseas workers in the UAE economy,” Mr. Lopez said in a mix of English and Filipino.
The project contractor had hired Filipino workers, Mr. Lopez said, more than half of whom earn bigger salaries and do more technical work than other workers.
The Philippine organizing committee is chaired by the DTI, in collaboration with the Department of Tourism and other government agencies.
The pavilion will be permanently mounted in Clark after the expo.
ING Bank N.V.-Manila to venture into payments, lending services
ING BANK N.V.-Manila will venture into payments and lending in hopes to boost its all-digital banking print in the country.
In the first half of 2020, the Dutch lender will tap into the payments sector and will then enter the lending landscape for their retail clients in the second half of next year, according to ING Bank N.V.-Manila Country Head and Managing Director Hans B. Sicat.
“We also know that with the payment proposition, the deposit numbers as well as those who hesitated to put maybe huge amounts will actually put more amounts because they will be dealing with daily banking on the platform,” Mr. Sicat said in a press briefing in Taguig before the launch of ING’s Christmas installation in Bonifacio Global City.
In February, the bank rolled out its all-digital savings bank in the country. Since then, ING has been downloaded over a million times and a six-digit figure from those have actually poured savings into their accounts, Mr. Sicat said.
He added that there has been a pickup in the number of users that have started to put money into their ING account since they launched.
“[It] is indicative of Filipinos wanting to save more, the interest rate helps… We started out the proportion with 2.5% per annum earlier this year right, which is either infinitely larger or 10 times more than what you would get from a brick and mortar bank,” he said, noting that their current 4% annual interest rate is equivalent to the wholesale rate that banks get from the overnight reverse repurchase facility of the Bangko Sentral ng Pilipinas.
ING joins its virtual-only peers that allow bank clients to register onboard without having to go through the traditional process of filling out papers in brick-and-mortar branches of banks. Aside from their relatively higher interest rates, they also do not charge transaction fees from their customers.
Mr. Sicat said that 25-35-year-old users make up the bulk of their signups. There are also a number from the 35-45-year-old segment while the 50-year-old and above market make up a small chunk of their users.
He also shared the trend of catchup in countries where ING first set up as a wholesale lender before offering retail through an all-online savings account.
“A good example is between five to seven years, digital revenues kind of catch up to wholesale revenues in that period and then usually exceeded,” he explained.
For their payment proposition eyed to take off by the first half of 2020, Mr. Sicat said that they will offer ease of use and no charging fees for their clients.
“We hope that the ease of using it will also be hopefully your primary stop to not just your savings but also your payments, an integrated platform. It’ll be a very wide range of billers,” he said.
Without going into details, Mr. Sicat said they will forge partnerships with “typical names of billers” involved in utilities, water, as well as financial institutions.
As for the loan offers, he hinted that they are also looking to have it onboard the app as well as the credit granting process.
“Hopefully, that will be done in a very short period of literally minutes. We’re still calibrating on the appropriate levels and we’ll give you the details in time,” he added. — Luz Wendy T. Noble
Mexican firms focus on trade deal’s labor provisions
MEXICO CITY/WASHINGTON — Mexican business leaders on Wednesday began poring over texts of a new stricter trade deal with the United States and Canada, looking for details of how more intrusive enforcement of labor rules in Mexico would affect their operations.
Moises Kalach, a leader of the CCE business lobby, which represented Mexico’s private sector in the negotiation of the US-Mexico-Canada Agreement (USMCA) that will replace the 1994 North American Free Trade Agreement (NAFTA), said that businesses felt sidelined.
“We would have liked to have been (in the negotiations) more … to give our opinion more. This is the reality, we participated but not as much as we would have liked,” said Kalach.
USMCA was signed more than a year ago to replace NAFTA, but Democrats controlling the US House of Representatives insisted on major changes to labor and environmental enforcement before bringing it to a vote.
In an unusual display of bipartisan and cross-border cooperation in the Trump era of global trade conflicts, top officials from Canada, Mexico and the United States on Tuesday signed a fresh overhaul of the quarter-century-old trade pact.
Some Mexican business groups bemoaned a lack of clarity and conflicting information on how the rules would actually be enforced under the deal, the first text of which only became public on Wednesday. An official at the truck and bus manufacturing association said he was studying the accord. CCE said it was still waiting for the documents to be translated into Spanish by lawyers.
Before seeing the fine print, Gustavo Hoyos, president of employers federation Coparmex and a vocal critic of President Andres Manuel Lopez Obrador, called the government “a bad negotiator.”
Others were more positive.
“There were many things we would have liked to have seen but in general we can say this deal is very beneficial for Mexico, it will bring investment to the country and I have no doubt will make the North American region more competitive,” said Antonio del Valle, head of the Mexican Business Council.
Mexico’s Economy Minister Graciela Marquez predicted the deal would boost Mexico’s flagging growth once it becomes law. US and Canadian lawmakers signaled the deal may not reach a vote until early next year.
Mexico’s peso was up more than 0.5% on Wednesday at 19.47 pesos to the dollar, after strengthening for five straight days ahead of the deal on reports of successful talks. The Mexican benchmark stock index .MXX rose more than 0.7%, after gaining 1.63% on Tuesday, its biggest daily rise in more than two months. Mexican 10-year bonds were steady, after rising four basis points on Tuesday, trading with a yield of 6.85%.
ENFORCEMENT MECHANISM
The deal included new bilateral mechanisms under which the United States and Canada can create panels of labor experts to investigate union complaints at Mexican factories.
Mexico’s Foreign Minister Marcelo Ebrard said that under changes to the United States-Mexico-Canada Agreement (USMCA), Mexico will be able to bring labor complaints against companies and workplaces in the United States. A Canadian source said the mechanism established with Canada was also reciprocal.
The experts, who would include foreigners and be chosen from a list provided by each of the affected countries, will be able to penalize goods and services exported from that plant if violations of the freedom to organize or collectively bargain are detected, according to the amended agreement posted on the United States Trade Representative’s website.
Mexico’s chief negotiator Jesus Seade sought to play down the impact of such “rapid panels,” saying he had fended off US union demands to place foreign labor inspectors in Mexican factories.
The rapid panels would be formed after three months and only in response to repeated complaints, Seade said.
Canada said that, under the new deal, the burden of proof has been reversed, in that failure to comply with an obligation in the chapter is now presumed to be “in a manner affecting trade or investment between the parties,” unless the defending party can demonstrate otherwise.
“If I’m reading this correctly, now the country defending itself is guilty until proven otherwise,” said a former senior Mexican USMCA negotiator.
“This can become an incentive to block trade … you just gave the US an instrument to impose tariffs and close markets, because it is going to be accusing you of not complying with your labor standards.”
Duncan Wood, director of the Wilson Center’s Mexico Institute in Washington, said “that while the word ‘inspections’ has been avoided, ‘facility-based enforcement’ and in-country ‘labor attaches’ will raise the specter of foreign interference for some in Mexico.” — Reuters
Netflix to create series on the rise of Spotify
THE STREAMING singularity has arrived, as the largest video service is making a show about the largest audio service.
Netflix Inc. will run a limited series about the rise of Spotify Technology SA. The yet-untitled show is inspired by the book Spotify Untold, written by two Swedish business reporters.
“The founding tale of Spotify is a great example of how a local story can have a global impact,” Tesha Crawford, Netflix’s director of international originals for northern Europe, said in a statement.
Los Gatos, California-based Netflix said the series will depict how Daniel Ek, now Spotify’s chief executive officer, and his partner Martin Lorentzon started the Stockholm-based audio service and thrived by offering legal streamed music in the face of then-rampant song piracy.
Spotify, founded in 2006, now has more than 113 million paying subscribers worldwide. Netflix, which got its start in 1997 as a DVD-by-mail service, has more than 158 million subscribers.
The Spotify series will be in both Swedish and English and will be produced by Yellow Bird UK, the company behind another forthcoming Netflix series, Young Wallander. Netflix didn’t provide a premiere date. — Bloomberg