Aurelia Butler

WASHINGTON/WELLINGTON (Reuters) – Pacific Rim trade and foreign ministers on Tuesday pledged to sustain the recovery from the coronavirus pandemic while pursuing talks to curb subsidies for fisheries and agriculture at a forthcoming World Trade Organization meeting. The ministers from the 21 Asia Pacific Economic Cooperation (APEC) countries said in a communique https://www.apec.org/meeting-papers/annual-ministerial-meetings/2021/2021-apec-ministerial-meeting issued after a virtual meeting there was wide divergence in recovery across and within economies, with downside risks remaining.”We need to sustain our economic recovery through continued policy support measures, while preserving financial stability and long-term fiscal sustainability,” the ministers said.They also said they would facilitate trade in a broader range of medical supplies to fight COVID-19 and voluntarily work to reduce the cost of vaccines and related goods. They pledged to support WTO negotiations on a temporary waiver of intellectual property protections on COVID-19 vaccines. The ministers’ meeting is part of a week-long series of APEC conferences culminating in a summit on Friday into Saturday, hosted entirely online by New Zealand, a country with hardline pandemic control measures that has kept its borders closed to almost all travellers for 18 months. While New Zealand has emphasized APEC support for boosting supply chains for critical medical supplies and efforts to decarbonize economies, tensions are expected over self-ruled Taiwan’s bid to join a regional trade pact in which China also seeks membership, and a U.S. bid to host the 2023 round of APEC meetings.New Zealand’s Foreign Minister Nanaia Mahuta told reporters at a news conference in Wellington there was no agreement yet on which country would host APEC in 2023, despite an offer from the United States.China and Taiwan’s bid to join the Comprehensive and Progressive (NYSE:PGR) Agreement for Trans-Pacific Partnership (CPTPP) was not a core part of the discussions, New Zealand’s Trade and Export Growth Minister Damien O’Connor said at the conference.Taiwan’s has said it aims to use the APEC gathering to garner support for its bid to join CPTPP, while China, which has also applied to join the pact, opposes Taiwan’s membership.”As a trade and economic forum all economies welcomed greater movement and reduction of trade barriers. CPTPP provides that but accession requests do mean that those applicants will have to look at standards required to ultimately become members and be accepted,” O’Connor said.OPENING TRAVEL With many economies in the region dependent on tourism, the APEC ministers said they would work to ensure safe travel in the region, with “tangible outcomes in 2022.”The trade-focused group said officials would work to foster a favorable trade and investment environment and “ensure our trade and investment environment is free, open, fair, non-discriminatory, transparent and predictable.”The APEC ministers said they would engage at the WTO’s 12th ministerial meeting (MC12) at the end of November to modernize trade rules and deliver concrete results. They called for WTO countries to negotiate effective curbs on harmful fisheries subsidies at the meeting in Geneva.”We recognise the need for a meaningful outcome on agriculture at MC12, reflecting our collective interests and sensitivities, with a view towards achieving substantial progressive reductions in support and protection,” in line with previous WTO mandates, the ministers said.On climate related issues, the ministers said they would try to accelerate efforts to rationalize and phase out “inefficient fossil fuel subsidies that encourage wasteful consumption,” a goal first agreed by APEC leaders in 2010. More

(Reuters) – DoorDash Inc said on Tuesday it would buy Finland-based rival Wolt Enterprises OY in an all-stock deal valued at about 7 billion euros ($8.09 billion), as the biggest U.S. food delivery firm expands into Europe.A pandemic-driven boom in demand for services offered by DoorDash and rivals is expected to ease in the coming months, but with most companies still losing money while seeking scale, the stage is set for a wave of consolidation.DoorDash’s deal would be one of the biggest yet in the space following Just Eat Takeaway.com $7.3 billion acquisition of American rival Grubhub and Uber (NYSE:UBER) Inc’s $2.65 billion deal for Postmates Inc last year.DoorDash’s shares surged nearly 19% in after-market trading on the acquisition that helps the company enter 22 additional markets, including Germany, Serbia, Croatia, Denmark and Sweden, as well as a beat on third-quarter revenue.Analysts have said DoorDash had been gearing up to launch in Germany and Mexico for some time now.Wolt, since its first delivery in Helsinki, Finland, in 2015, has grown to expand in Europe and Asia and has over 30,000 restaurant and retail partners.The company had more than 2.5 million monthly active users, as of Sept. 30, while DoorDash exited third quarter with over 9 million members using its subscription service.”Joining forces with Wolt will … allow us to accelerate our international growth, while elevating our focus on the U.S.,” DoorDash Chief Executive Tony Xu said in a statement.The deal would allow DoorDash “to play for a bigger prize on an even larger global stage”, he said on an earnings call. Wolt and DoorDash said they expect combined adjusted core earnings to be between breakeven and $500 million in 2022, with the deal expected to close in the first half of next year.Nearly two-thirds of Wolt’s gross order value, a metric totaling value of all orders and subscription fees, brings in positive contribution profit, DoorDash said, adding it would not share further details.DoorDash equity issued as part of the deal will be valued at $206.45 per share, the companies said.Separately, DoorDash said third-quarter revenue rose 45% to $1.28 billion, topping estimates of $1.18 billion, according to Refinitiv IBES.($1 = 0.8655 euros) (This story refiles to add dropped word in first paragraph) More

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen said on Tuesday that the bipartisan infrastructure package approved by Congress and President Joe Biden’s proposed social and climate spending plan would increase U.S. productivity and the size of its labor force.Yellen said in prepared remarks to a University of Nevada-Las Vegas economic conference that together, the two bills would increase long-term U.S. economic output without increasing the national debt, and their revenue-raising measures would reduce deficits over time.”I do believe that the passage of these pieces of legislation will lead not only to higher rates of productivity but to positive changes across a wide array of metrics. They will increase the size of our labor force and expand the productive capacity of our economy,” Yellen said.The “Build Back Better” bill’s investments in child care would allow many American mothers to return to the work force, she said, citing studies showing that from 2018 to 2019 some 2 million parents of young children had to quit a job, forego a job or greatly change their job to deal with child care issues.Universal pre-school as proposed in the bill will also help parents stay in the workforce and pay dividends in future decades by improving graduation rates and the income-earning prospects of future workers, Yellen said.In a separate interview with National Public Radio’s Marketplace program, Yellen said the bill would address longstanding problems in the economy.”Over the medium term, this is anti inflationary. It’s easing expenses for families.”In comments to Gray Television (NYSE:GTN) on Monday, U.S. Representative Kevin Brady, the top Republican on the tax-writing House Ways and Means Committee, disputed claims that the spending bill would expand the U.S. workforce, saying that higher taxes on wealthier business owners would discourage hiring, while an expanded Child Tax Credit would discourage low wage workers from taking jobs.”They’re going to make the labor shortage worse because they’re removing the requirement to work from the child tax credit, basically chasing a million-and-a-half workers out of the workforce,” he said, adding this would fuel inflation.Yellen said she did not see a 1970s-style inflation spiral developing because the Federal Reserve would not allow inflation expectations to become “embedded in the American psyche.”In her UNLV remarks, Yellen said the tax provisions in the proposal would make the U.S. tax code “substantially more progressive by imposing higher taxes on the wealthy and improving compliance by wealthy taxpayers.”Our compliance efforts to ensure wealthy people pay what they owe will raise an estimated $400 billion – and that’s probably a conservative projection,” Yellen said, echoing comments to Reuters https://www.reuters.com/world/us/irs-plan-collect-400-bln-unpaid-taxes-relies-deterrence-us-treasurys-adeyemo-2021-11-01 by her deputy, Wally Adeyemo.”Another $400 billion will come from closing loopholes utilized by wealthy taxpayers; and another $200 billion through a surtax on the country’s highest earners, people making more than $10 million a year,” Yellen said. More

The Reserve Bank of Australia’s chaotic exit from yield curve control last week, after markets crashed through its cap on three-year bond yields, illustrates the growing pressure on central banks to tighten monetary policy as the world economy recovers from the pandemic.But it has also exposed a serious problem with the whole policy of yield curve control: unlike asset purchases, which can easily be tapered when the economy improves, it is very difficult to make a smooth exit from a cap on bond yields.That means the episode has important lessons for other central banks, such as the Bank of Japan, which either use yield curve control or have considered the policy. “Putting all the experience together it’s quite unlikely that we will have a yield target again,” said RBA governor Philip Lowe. “And it is not just because of the experience of last week.”Under yield curve control, the RBA promised last year to buy as many three-year bonds as needed to keep their yield at 0.1 per cent, the same as its overnight rate. The Bank of Japan introduced a target for 10-year bond yields in 2016 and that policy continues.The aim of yield curve control is to stimulate the economy when short-term interest rates are already at zero. Targeting three-year yields made sense in Australia, said analysts, because most loans were either variable rate or have terms below five years. Initially, it was easy for the RBA to keep yields on target because the economy was weak and markets expected rates to stay low. But it never formally committed to keeping overnight rates on hold for three years. Instead, it said that was its “central scenario”.“This meant that if markets thought that the economy would significantly outperform this central scenario, and pushed yields higher, the RBA would be forced to intervene heavily into the bond market or abandon the peg,” said Isaac Gross, a former RBA economist who now teaches economics at Monash University.“When faced with this dilemma the RBA was always going to choose the latter as the least bad option,” he said. Improved Australian economic data and the recent rise in global bond yields meant the 0.1 per cent yield on April 2024 bonds began to look too low. The market started questioning the RBA’s forecasts and duly forced it to abandon the peg.One big problem the RBA had with yield curve control was that, in Australia, the large, highly liquid futures market drives the cash bond market and not the other way around. It eventually solved that problem in July by keeping the April 2024 bond as the target when it dropped out of the futures basket, rather than moving on to the November 2024 bond. But it chose to keep the cap.“The RBA should have ended yield curve control in July 2021 rather than pegging the target to the April 2024 bond,” said Gareth Aird, head of Australian economics at Commonwealth Bank. Aird had suggested as early as November last year the target should be abandoned.Fixing on April 2024 gave the impression that the RBA policy had a time-based expiry date rather than being linked to economic conditions. The RBA realised the inconsistency, but an improved outlook — the central bank now expects growth of 5.5 per cent next year — meant markets had already begun to challenge its guidance not to raise overnight rates before 2024.

“The Delta variant simply delayed the inevitable. It would have been a better policy to proactively exit before markets forced the RBA’s hand,” Aird said. With no precedent for an exit from yield curve control, the RBA struggled to communicate its plan. At one point, the central bank was so convinced of its forecasts that it planned to continue with the target until the April 2024 bond matured.Eventually, the lack of a clear exit plan led to the abrupt denouement, when markets pushed yields through the cap. What was once touted as a successful innovation ended with the RBA losing some credibility.Gross said: “Any future decision to introduce a novel programme should carefully consider what future commitment this will involve and what its potential exit strategies will be — including the potential cost of having to abruptly abandon the strategy.” More

Hundreds of city and regional authorities have signed a deal to push for the elimination of new car emissions by 2040 but the agreement lacks the support of some of the largest auto players and biggest markets in the world.The pledge to be announced at COP26 on Wednesday covers a quarter of the world’s cars and is backed by manufacturers including Daimler, Ford, General Motors and China’s BYD, as well as governments including Canada and Chile.Yet despite months of pressure by the UK, four of the world’s five largest carmakers — Volkswagen, Toyota, the Renault-Nissan alliance, and Hyundai-Kia — have not signed up.China, the world’s largest car market, did not sign. The US, the second largest, was also absent from the agreement by Tuesday evening, although individual states including California, New York and Washington backed the deal, as well as cities such as Dallas, Charleston, Atlanta and Seattle. São Paulo in Brazil and Buenos Aires in Argentina also joined the pledge.The agreement commits the signatories to ending the sale of new cars that produce emissions in “leading markets” by 2035, and globally by 2040.The world’s largest car leasing company LeasePlan joined the deal, while Uber also signed, committing to make its entire fleet zero emission by 2030.Daimler chair Ola Kallenius said the deal “shows there is an underlying mindset that something must be done and can be done”. He said the missing signatories, which includes carmakers BMW and VW and the German government, did not take away from the impact of the statement. “Each company has to make their own choice, but all the colleagues I know are all moving forwards at a very fast pace,” he told the Financial Times. “There are very few countries putting as much money, resources or brain power into the transformation than the German auto industry.”Backing the deal costs the owner of Mercedes-Benz little extra, as it had already committed to selling only electric cars by 2035 where feasible, and will only launch battery models after 2025.Other automotive supporters such as Jaguar Land Rover and Volvo Cars had also already set out electric plans that fall within the timeline.But UK transport secretary Grant Shapps said the deal marked “a tipping point in the transition to clean road transport”.

Nigel Topping, who represents the UK on climate change at the UN, said: “We are getting to the end of the internal combustion engine, the only question is when.”The cities signing up in countries where there was not a national level commitment still sent a “strong market signal”, he said.Yet the failure to get universal backing was derided by environmentalists.“For this announcement to have credibility all major auto manufacturing countries need to be part of it, including Germany and the US,” said Juan Pablo Osornio, head of the Greenpeace delegation at COP26. “This week is crunch time, and it’s vital leaders send a signal that fossil fuels are on the way out and are no longer a viable investment.”Helen Clarkson, the head of non-profit organisation Climate Group, said companies that were “not at the table on ‘Transport Day’ are on the wrong side of history”.In a separate deal, truckmakers at COP26 including Scania and fleet operators including DHL also pledged to make all new vehicles zero-emission by 2040. However, the deal, backed by the UK, Chile, Turkey and New Zealand, again lacked the support of the US government.As part of our coverage of COP26 we want to hear from you. Do you think carbon pricing is the key to tackling climate change? Tell us via a short survey. We will share some of the most interesting and thought provoking answers in our newsletters or an upcoming story.  More

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen said on Tuesday she still believes Congress should pass a debt limit deal on a bipartisan basis and that both Democrats and Republicans understand the consequences of a default on U.S. debt if they do not.Asked during an interview with the Marketplace program on National Public Radio if she would support Democrats passing a debt limit without Republican votes, Yellen said: “I want it to be done. I believe that both Republicans and Democrats should do it. It’s a kind of housekeeping chore.” More

Whether that clarity leaves them convinced interest rates should stay at their current near-zero level for another year or more, or moves them to join the half of their fellow Fed policymakers who support more immediate rate hikes, will depend on two main factors, their remarks suggested: if inflation has begun to abate as they expect, and if workers are flooding back into the labor force as they have long hoped.Minneapolis Federal Reserve Bank President Neel Kashkari, who in September was the Fed’s only policymaker to call for leaving rates at their current near-zero level until 2024, said Tuesday he is keeping an “open mind” on monetary policy.With the latest COVID-19 surge fading in the United States but still disrupting economies globally, “we are getting these mixed signals out of the economy,” Kashkari said at an event at University of Wisconsin-Eau Claire. Wages are rising, for instance, but the U.S. economy is supporting an estimated 5 million to 7 million fewer jobs than would have been expected had there been no COVID-19 crisis, and the percentage of the population who are working or want to work has stalled at 61.6%, well below pre-pandemic levels, data shows. Inflation is well above the Fed’s 2% target, driven by factors that ought to be temporary — supply-chain disruptions as well as a surge in demand as the economy reopens — but are proving to be longer lasting than earlier thought, Kashkari said.”I’m optimistic, in the next three, six, nine months we will get a lot more information” and clarity about whether the millions who left the workforce during the pandemic will return, he said. If they don’t, “that’s going to give me more concern that the high inflation readings that we’ve been seeing may be sustained.”Earlier Tuesday, San Francisco Federal Reserve Bank President Mary Daly also set her clock to mid-2022, telling a National Association of Business Economists virtual meeting, “let’s be patient” on policy and wait to see whether inflation fades when the pandemic does, as she expects. Raising interest rates too soon, she said, will do very little to reduce prices but will “absolutely” reduce the pace of job gains. “That’s too much risk to take when we don’t have any indication that these are today persistent trends,” she said. “I’m looking at the summer of 2022 is when we should – knock on wood, no more variants, no more Delta surges – get some clarity” on whether inflation will persist post-pandemic and if the labor supply is truly tight, as many employers say it is, or if higher wages and an improving public health environment bring more people back to the job market. In the meantime it could be a “challenging time” as consumers have to pay more for gasoline and food and other necessities, she said. On Monday, Chicago Fed President Charles Evans, who also leans dovish, said he too thinks inflation is being driven mostly by COVID-19-related supply shortages that will fade. But he said he’s less sure than he had been three or four months ago, and appeared to set a more rapid timetable for proving his expectations out.”By the spring we are going to know a lot more about this, and if I’m still kind of making the same excuses, boy they better be really good excuses because it’s just not going to sound quite right,” he told reporters. More