Aurelia Butler

A war of words has broken out between the OECD and the UN ahead of a meeting next month that will debate how the New-York based organisation could play a larger role in international tax affairs.The Paris-based OECD has led discussions for decades but it has increasingly faced criticism from developing countries, such as Nigeria and India, which argue its global tax policies favour the richer economies that make up its membership. A report published earlier this month by UN secretary-general António Guterres backed developing economies’ complaints, saying the OECD’s initiatives did not “adequately address the needs and priorities” of countries other than advanced economies. Guterres said the UN should have a greater say in global tax affairs to make co-operation between nations “fully inclusive and more effective”. A debate on developing a new global framework for tax policy will take place at the UN General Assembly, beginning on September 18. Manal Corwin, head of tax at the OECD, hit back at the report, saying it contained a “number of inaccuracies and misleading statements”. She also told the Financial Times it was “disappointing that the UN had chosen to ignore the positive impact of the most significant changes and concrete results that have been delivered over the last two decades”. Corwin listed the OECD’s facilitation of automatic exchange of information between countries, which had brought in nearly €126bn in additional tax since 2009 — including €41bn for developing countries — as one of these.The UN, however, believes many of the OECD’s policy prescriptions disregard developing economies, saying it was often “beyond” poorer countries’ tax administration capacities to implement such measures. Those prescriptions include the landmark OECD-brokered global deal to clamp down on corporate tax avoidance. The UN claimed the impact outside the rich world would be “minimal especially when compared to the cost of implementation”. More than 130 countries signed up to deal in the autumn of 2021, though it has yet to be fully ratified.Following the September debate, discussion will move to a UN committee from October. Recommendations will be subject to a vote at the general assembly by the end of the year. Experts said it would mark a significant shift were the UN to gain more influence on global tax, particularly given the OECD’s existing expertise. However, rapid changes in the international tax landscape — such as developing economies in Latin America and Africa combining forces more often — meant that it could occur. “The possibility of a larger role in international tax for the UN must be taken seriously,” said Will Morris, global tax policy leader at PwC.Corwin said she did not want to “fuel rhetoric” of a rivalry between the two organisations and that the OECD was concentrating on getting concrete results for countries, not “unnecessary competition between organisations”. She added: “We’re not saying everything’s perfect. But you have to acknowledge the really significant progress that has been made.” When asked for a response to Corwin’s comments, the UN said the secretary-general did not normally provide additional explanations on reports that had not yet been formally submitted to member states. But Stéphane Dujarric, Guterres’ spokesman, added the report was “not about criticism of any organisation or competition between them”.“It is about giving all governments, as they have explicitly requested, additional options for making international tax co-operation fully inclusive and more effective,” he said, adding that the report was “just an honest assessment, based on wide-ranging inputs and multi-stakeholder consultations”.The report was commissioned following a resolution adopted by the UN general assembly, at the request of African nations last year. This followed criticisms from several developing countries that the OECD’s global tax deal was biased in favour of developed countries’ interests. The Intergovernmental Group of Twenty-Four (G-24) developing countries has backed the UN’s call for a greater role in global tax. Its director, Iyabo Masha, told the Financial Times: “The G-24 supports a transparent, equitable global tax negotiation led by a universal body that will foster fairness for developing nations, enhance state accountability and elevate sustainable development in global tax discussions.”However, the public submissions to the UN report showed several business representatives and developed countries — including Australia, Japan and the UK — backed existing arrangements led by the OECD.PwC’s Morris said businesses were concerned at a potential “fracturing” of global tax affairs, he said, despite an awareness that the OECD’s 2021 global deal “clearly” advantaged larger, more developed countries. “What [businesses] would like to see is a process which achieves a true consensus between as many countries as possible,” he said, adding that while the OECD process had not achieved that, the UN may struggle to find a compromise between advanced and developing economies too. More

This year’s El Niño weather event is expected to compound the effects on global food prices of India’s rice export ban and Russia’s withdrawal from the Black Sea grain deal, potentially stoking inflation across emerging markets.Starting in September, the natural temperature fluctuation in the Pacific Ocean known as El Niño is forecast to bring months of extreme heat to parts of South Asia and Central America, as well as heavy rainfall over the Andes. The phenomenon typically disrupts crop cycles and is likely to add further strain to global food output and prices after heavy rainfall forced India to ban exports of non-basmati white rice and Russia bombarded Ukrainian grain terminals.Combined, the three shocks could boost household inflation expectations in poorer countries where food typically comprises around 30 per cent of typical spending on consumer goods and services — double the figure for developed economies. That spillover could increase pressure on emerging market central banks to keep interest rates higher for longer, sparking volatility in local equity and sovereign bond markets priced for rate cuts later this year.However, “complacent” investors have yet to price in how the spell of extreme weather will influence commodity and financial markets, said Zanna Aleksahhina, grains analyst at commodities research group Mintec. “We’re looking at weather forecasts two-to-six weeks ahead like mad, they’re going to be crucial. But the market doesn’t want to factor in any sort of risk premium just yet,” she said.The moves by India and Russia are already beginning to be seen in global food prices. The United Nations’ FAO food price index fell 26 per cent between March 2022 and June but rose 1.3 per cent in July, as vegetable oil prices jumped 12.1 per cent. International wheat prices rose 1.6 per cent, their first month-on-month increase since December, while the FAO All Rice Price Index increased 2.8 per cent to its highest level since September 2011.Global benchmark cocoa futures have risen to around $3,500 per tonne, up from $2,400 a year ago to the highest level since 2011. “El Niño increases the risk for the crop in the year ahead,” said Jonathan Haines, senior research analyst at Gro-Intelligence. “El Niño tends to peak in November to February, but implications for food inflation, fiscal budgets, monetary policy, [gross domestic product], and trade, particularly in emerging markets, last longer,” said Laura Sanchez, head of sustainability equity research for the Americas at Morgan Stanley. Faced with a strong El Niño, “emerging market central banks would need to keep policy rates higher for longer to combat more persistent inflation,” said Diana Iovanel, markets economist at Capital Economics. That would raise government borrowing costs at a time when investors are discounting multiple rate cuts, she added.In June, Shaktikanta Das, governor of the Reserve Bank of India, said there were “concerns” around drier weather caused by El Niño later this year. Two days later, Thailand’s monetary policy committee flagged a potential hit to raw food prices.“Uncertainty about the impact of the El Niño phenomenon stands out” as a key headwind for falling domestic food prices, according to the Banco Central do Brasil, which earlier this month followed Chile in lowering rates for the first time since the pandemic.Expect higher demand for fertiliser, pesticides and genetically modified seeds, said Ehiwario Efeyini, senior market strategy analyst at BofA. “Equities along the agribusiness supply chain, including machinery, chemicals and processing, also stand to be beneficiaries,” he added. However, the impact on global inflation from “a large El Niño could spread beyond just food”, according to JPMorgan. The bank’s analysis of a World Bank data set of commodity prices stretching back to the 1960s found that El Niño events — which typically occur twice a decade — correlate with higher global prices for rubber, timber and zinc.In Australia, El Niño tends to bring heavy rainfall to the western Pilbara region, home to vast reserves of iron ore. Australia accounts for roughly 60 per cent of the seaborne iron ore market, meaning higher prices in the event of weather-induced disruptions.Developed markets are unlikely to escape scot-free. Parts of Central America where El Niño is expected to bring extreme heat are already contending with a drought so severe that authorities at the Panama Canal — whose system of locks and reservoirs relies on the availability of freshwater — have been forced to cut the number of daily crossings. Demand for the liquefied natural gas being carried on tankers waiting on either side of the trade route would inevitably increase if El Niño causes a colder winter in Europe, as it has in the past. “We are now in a world fraught with risks, and higher prices”, said Joe DeLaura, senior energy strategist at Rabobank. “We are facing a world where the Rhine depth at Kaub, Panama Canal transit numbers and reservoir stockpiles will be monitored as closely as the [US Energy Information Administration’s] petroleum reports every week.” More

TOKYO (Reuters) – Japan may be at an inflection point in its 25-year battle with deflation as price and wage rises show signs of broadening, the government said on Tuesday, signalling its conviction the economy was nearing an end to prolonged stagnation.The optimistic view echoes that of the Bank of Japan (BOJ), which has said corporate price- and wage-setting behaviour was changing, and could pave the way for phasing out the country’s massive fiscal and monetary support.”Japan has seen price and wage rises broaden since the spring of 2022. Such changes suggest the economy is reaching a turning point in its 25-year battle with deflation,” the government said in its annual economic white paper.”We shouldn’t dismiss the fact a window of opportunity may be opening to exit deflation,” as inflation perks up and public perceptions about persistent price declines abate, it said.The report stopped short of saying Japan has fully eradicated the risk of deflation returning, pointing to a “still moderate pace” of increase in services prices.”In determining the trend of inflation, it’s important to look at services prices” as they reflect domestic demand and wages more vividly than goods prices, the report said.In last year’s report, the government said inflation was modest except for a handful of food and energy-related goods.The change in tone on deflation risks underscore the government’s shifting priorities, as rising commodity costs and a tightening job market push up inflation and heighten public worries over higher living expenses.Japan’s core inflation hit a four-decade high of 4.2% in January and remained above the BOJ’s 2% target for 16 straight months in July, as more firms pass on higher raw material costs.Companies this year offered their highest pay in three decades, heightening the case for a retreat from decades of ultra-loose monetary policy.But the government has refrained from officially declaring an end to deflation, arguing that doing so requires not just underlying price rises but clear signs that Japan won’t return to periods of price falls.”We need to eradicate the sticky deflationary mindset besetting households and companies,” the report said, adding the government must work closely with the BOJ to achieve sustained wage growth.Since declaring Japan in a state of deflation in 2001, the government has made ending price falls among its top policy priorities. The focus has led to years of big fiscal spending to prop up the economy, and kept pressure on the central bank to maintain ultra-loose monetary policy. More

SAO PAULO (Reuters) -Brazilian meatpacker Marfrig has agreed to sell 16 slaughtering plants to rival Minerva for 7.5 billion reais ($1.54 billion) in a deal that will significantly change its profile in South America, according to a securities filing.With the sale, Marfrig, which also controls U.S.-based National Beef and BRF SA (NYSE:BRFS) in Brazil, will retain only its larger-scale industrial facilities in the region in a bid to focus on production of processed meat products.The move marks a shift away from a commoditized business model for Marfrig while competitor Minerva, one of South America’s largest beef exporters, goes in the opposite direction. A spokeswoman for Marfrig told Reuters the plan is to focus on sale of higher-value branded processed meat products and premium fresh cuts in South America. She said the plants being sold represent some 40% of Marfrig’s sales in South America. The units being divested, including three currently idled, are located in Chile, Brazil, Argentina and Uruguay, Marfrig said in the securities filing. Most process cattle while one in Chile processes lamb.Marfrig said it had received a down payment of 1.5 billion reais, with the remainder to be paid at the deal’s closing date, which is still unconfirmed pending shareholder and regulatory approvals.Minerva said in a separate filing it had received a firm financing commitment from J.P. Morgan.($1 = 4.8731 reais) More

What is included in my trial?
During your trial you will have complete digital access to FT.com with everything in both of our Standard Digital and Premium Digital packages.
Standard Digital includes access to a wealth of global news, analysis and expert opinion. Premium Digital includes access to our premier business column, Lex, as well as 15 curated newsletters covering key business themes with original, in-depth reporting. For a full comparison of Standard and Premium Digital, click here.
Change the plan you will roll onto at any time during your trial by visiting the “Settings & Account” section.
What happens at the end of my trial?
If you do nothing, you will be auto-enrolled in our premium digital monthly subscription plan and retain complete access for $69 per month.
For cost savings, you can change your plan at any time online in the “Settings & Account” section. If you’d like to retain your premium access and save 20%, you can opt to pay annually at the end of the trial.
You may also opt to downgrade to Standard Digital, a robust journalistic offering that fulfils many user’s needs. Compare Standard and Premium Digital here.
Any changes made can be done at any time and will become effective at the end of the trial period, allowing you to retain full access for 4 weeks, even if you downgrade or cancel.

When can I cancel?
You may change or cancel your subscription or trial at any time online. Simply log into Settings & Account and select “Cancel” on the right-hand side.
You can still enjoy your subscription until the end of your current billing period.
What forms of payment can I use?
We support credit card, debit card and PayPal payments. More