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    Ever Given seized as Egypt seeks $900m compensation

    The huge container ship that blocked the Suez Canal for almost a week last month is being held by Egyptian authorities as they seek compensation of more than $900m from its owners. An Egyptian court this week ordered that the Ever Given should be seized as talks continued between the Suez Canal Authority that operates the waterway and the vessel’s Japanese owner and its insurers over who pays for losses resulting from the blockage. The SCA made a claim for $916m on April 7, according to the UK P&I Club, an insurer that covers the owner, Japan-based Shoei Kisen Kaisha, against third-party liabilities. Osama Rabie, SCA head, told Egyptian television on Monday that an investigation into the cause of the incident would finish on Thursday, but that the talks over compensation continued.The ship’s owner was trying to reduce the bill by 90 per cent, Rabie said, adding: “They don’t want to pay anything.”The compensation covered the rescue as well as delay costs and damage to equipment and the canal, he explained. The canal “suffered enormous damages and we made no mistakes,” he said.Shipping industry analysts pointed out that the SCA puts two pilots on board vessels to help them navigate the waterway.UK P&I said on Tuesday that a “carefully considered and generous” counter-offer had been made to the canal authority, adding that it was “disappointed by the SCA’s subsequent decision to arrest the vessel”.Shoei Kisen Kaisha confirmed on Wednesday that the Ever Given had been impounded but declined to comment further, saying it would respond in accordance with local law.Evergreen Marine, the Taiwanese operator of the 220,000-tonne vessel, said on Wednesday that the SCA’s claims were “largely unsupported and lack any detailed justification”.“Evergreen is urging all concerned parties to facilitate a settlement agreement,” it said, adding it was also “investigating the scope” of the court order.The Ever Given is impounded in the wider Great Bitter Lake section of the canal where traffic can pass. UK P&I is part of a an international group of 13 mutuals which share the first $100m of large claims. The group also has $3bn of reinsurance cover.Fitch, the rating agency, has forecast the episode would be a “large loss event” for the reinsurance industry.UK P&I said the SCA claim included $300m for “loss of reputation,” which the insurer disputed, as well as a $300m “salvage bonus”. It continued: “The claim presented by the SCA also does not include the professional salvor’s claim for their salvage services which owners and their hull underwriters expect to receive separately.”Refinitiv, a data provider, has estimated that lost transit fees totalled less than $100m. Salvage costs will typically be paid by the hull and machinery insurer, according to insurance experts. Shoei Kisen told the Financial Times last month that this cover was provided by Tokyo-based MS&AD Insurance Group. MS&AD declined to comment at the time.Shoei Kisen sent out a letter to cargo owners last month to declare so-called general average, according to one cargo owner with goods on board. General average is an ancient maritime law that requires all parties involved in a voyage to share losses proportionally resulting from actions taken to save the vessel. The amount cargo owners or their insurers would pay depends on the value of their cargo onboard, not the number of containers, and insurers typically have to pay a guarantee to release the cargo that ensures they will adhere to the final bill determined by an insurance adjuster.The cargo owner said a quick resolution was not expected. “I’ve told my customers to plan for a life without that cargo in the medium-term.” More

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    JPMorgan profit leaps after reserve release boost

    (Reuters) -JPMorgan Chase & Co’s earnings jumped almost 400% in the first quarter, blowing past estimates as the largest U.S. bank released more than $5 billion in reserves it had set aside to cover coronavirus-driven loan defaults.The bank, widely seen as a barometer of the health of the broader U.S. economy, said consumer spending in its businesses had returned to pre-pandemic levels and was up 14% versus the first quarter of 2019.The results, helped by favorable comparisons to last year, also gained from a 57% jump in investment banking revenue.While the largest U.S. bank saw profits crimped last year with the economic effects of the pandemic, investors are optimistic that a recovery this year on the back of President Joe Biden’s $1.9 trillion stimulus package and widespread vaccinations could restore normalcy.”We believe that the economy has the potential to have extremely robust, multi-year growth,” Chief Executive Officer Jamie Dimon said in a statement. “Our credit reserves of $26 billion are appropriate and prudent, all things considered.”The bank’s net income rose to $14.3 billion, or $4.50 per share, in the quarter ended March 31, from $2.9 billion, or 78 cents per share, a year earlier.Analysts on average had expected earnings of $3.10 per share, according to Refinitiv.Revenue jumped 14% to $33.1 billion.JPMorgan (NYSE:JPM) changed its full-year outlook, saying it expects expenses to be slightly higher and net interest income to be lower. Revenue-related expenses rose in the first quarter, while interest rates remained near historic lows.Investment banking revenue surged to $2.9 billion on record levels of capital markets activity, fueled largely by a surge in initial public offerings by special purpose acquisition companies.Wall Street’s boom has also been driven by record volumes of fundraising, debt refinancings, convertible bond deals and stock sales.During the quarter, JPMorgan overtook investment banking powerhouse Morgan Stanley (NYSE:MS) to become the banking world’s second biggest provider of worldwide M&A advisory, according to Refinitiv. The league tables rank financial services firms by the amount of M&A fees they generate. Goldman Sachs continues to lead the rankings.Global investment banking fees hit an all-time record during the March quarter, according to data from Refinitiv, and banks like JPMorgan made the most of the dealmaking boom.JPMorgan’s trading desks also trumped expectations, helped by the retail trading frenzy that has driven unprecedented rallies in “meme stocks” including GameStop (NYSE:GME) since January.Overall trading revenue rose 37% to $10.1 billion, with bond trading up 15%. Equity markets revenue jumped 47%.JPMorgan’s shares were down 0.7% in pre-market trading. Goldman Sachs Group Inc (NYSE:GS) also beat Wall Street estimates with its profit report on Wednesday, with Wells Fargo (NYSE:WFC) & Co reporting later in the morning. More

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    UK's Johnson says he shares concerns over Greensill lobbying

    Though Cameron’s strategy ultimately failed, Johnson has launched an independent review to look at allegations that lobbyists have an “open door” to his government.Cameron’s role has raised questions about access to ministers by former colleagues, particularly on behalf of Greensill. The government said on Tuesday a former procurement chief was allowed to take a part-time role advising the company in 2015 while remaining a public official, or civil servant.The reports have fuelled accusations from some lawmakers that Johnson’s government operates a so-called “chumocracy” where contracts are handed to friends – a charge denied by the government, which says that Cameron’s lobbying did not result in his desired aim.Asked by opposition Labour leader Keir Starmer whether lobbying rules were fit for purpose, Johnson told parliament: “I indeed share the widespread concern about some of the stuff that we’re reading at the moment.”He said civil servants should have experience of the private sector but he cast doubt over whether the boundaries in the case of the former procurement chief had been “properly understood”.Asked about his contacts with Cameron, Johnson said he had not been in contact with the former leader since the case was reported and that he could not “remember when I last spoke to Dave”.Johnson launched the review on Monday after the Financial Times and Sunday Times newspapers reported that Cameron contacted ministers on behalf of Greensill, including sending text messages to finance minister Rishi Sunak and arranging a drink between banker Lex Greensill and Health Secretary Matt Hancock.Greensill was brought in to advise the government while Cameron was prime minister from 2010 to 2016. After leaving office, Cameron became an adviser to Greensill’s now-insolvent company.On Sunday, Cameron said in a statement he did not break any codes of conduct or government rules and that ultimately the outcome of the discussions on Greensill’s proposals on a loan were not taken up.Starmer summed up much of the criticism in Britain over lobbying by asking: “Does the prime minister accept there is a revolving door, indeed an open door, between his Conservative government and paid lobbyists?”Every day there’s further evidence of the sleaze that’s now at the heart of this Conservative government,” Starmer said. More

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    Dollar General to hire up to 20,000 workers as economy rebounds

    But the number was lower than the more than 50,000 workers the company hired around the same time last year, which was nearly double its normal hiring rate, to support a surge in sales at its stores at the height of COVID-19 lockdowns. The discount retailer said in a statement on Wednesday that it would host hiring events from this month to fill positions in its stores, distribution centers and corporate offices.Strengthening domestic demand, the rollout of COVID-19 vaccines and additional pandemic aid from the government have boosted companies’ needs for workers, with McDonald’s Corp (NYSE:MCD) and Yum Brands’ Taco Bell saying recently that they were looking to hire thousands of workers. More

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    A fresh battle over Buy American

    Hello from DC, where the US Trade Representative has just revealed it has held a series of meetings with labour unions, advocacy groups and businesses to discuss the Trips waiver debate at the World Trade Organization. We sense there could be more to say on this topic soon. In the meantime, the main bar today is on another WTO-related matter — the Government Procurement Agreement, which is again (sort of) a talking point in DC. Charted Waters looks at the rise in the consumption of poultry.Senators and multinationals clash over the GPAPresident Joe Biden’s Buy American programme is back for another airing, but this time it has a $2tn infrastructure package in tow. To recap: Biden’s big new plan sets aside up to $621bn in funding for traditional infrastructure upgrades, including roads, bridges, public transport networks, electric vehicles and vital hubs such as ports and airports. It also sets out $561bn for green housing, schools, power and water upgrades, $400bn for elderly care improvements, as well as $480bn for manufacturing and $200bn for broadband.What has this got to do with trade policy, you might ask? Well, when he unveiled it, Biden raised eyebrows among the big non-US multinationals with US operations. “When we make all of these investments,” Biden said, “we’re going to make sure . . . that we buy American.” He added: “Not a contract will go out . . . that will not go to a company that is an American company with American products, all the way down the line, and American workers.”But, we hear you cry, where does this leave the US’s commitment to the WTO’s Government Procurement Agreement, a pact covering access of foreign companies to public procurement contracts?We’ve written before about the interaction between the Buy American programme and the GPA. Buy American aims to keep US government dollars — whether they be federal or state dollars — going to US companies, and has been around in some form since 1933. But the GPA opens up US public procurement contracts worth more than $182,000 to the twenty signatories of the GPA (these contracts are also open to other countries with which the US has bilateral trade agreements). The two can work together as the US essentially issues waivers to the Buy American rules for GPA signatories and select trade partners.What’s changed? Well, there’s now a growing US political rallying call for a suspension of all waivers that has foreign-based multinationals rattled. Last week, Democratic Senators including Tammy Baldwin, Sherrod Brown, Chris Murphy, Elizabeth Warren, Jeffrey Merkley — wrote to the White House to demand that all waivers from the Buy American restrictions — that is, waivers that allow the countries that are signatories of the GPA to bid for US government contracts — be suspended for “all extraordinary Covid-19 relief and recovery-related spending (including recovery-related infrastructure spending)”. “This approach would ensure that extraordinary Covid-19 relief and recovery funds are reinvested at home during the process of renegotiating the trade-pact terms that apply to ordinary procurement,” they wrote. Of course, this has not gone down well with multinationals who have a US presence, who argue that they do, in fact, employ American workers. The Global Business Alliance, a trade group that represents the US arms of foreign multinationals, has written to the White House and says it has contacted all of the senators who signed the letter. They argue that foreign direct investment into the US is a good thing for American workers. The US Chamber of Commerce, a business lobby group, has long argued that American companies gain more than they give by being part of the GPA, estimating that the US has only awarded about 3 per cent of federal contracts to foreign companies over the past 5 years.There is, however, a real risk that in effect pausing its commitment to the GPA would cause retaliation. While scrapping waivers for all signatories would be fine under US domestic law, it would violate the country’s international agreements, reckons Jean Grier, a US government procurement expert. There are, for sure, some foreign companies that are contributing to Biden’s overall policy goals — Korean battery maker SK Innovation, for example, is building a huge new plant in Georgia, producing electric batteries for the likes of Ford and Volkswagen. It’s been beset by its own problems — see here — but the plant brings US jobs. LG Chem, the world’s largest producer of electric-vehicle batteries, has also pledged to build two US plants, creating 10,000 jobs. None of this is to argue that they should receive federal dollars under the infrastructure bill, but to point out that foreign investment in the US does align with at least some of Biden’s stated goals. There is a risk, as the business community warns, that too much Buy America rhetoric could have a chilling effect. It isn’t clear exactly how hard a line Biden is going to take on all of this. The White House did not respond when asked if it would consider pausing the GPA, thereby ensuring that none of the federal dollars up for grabs in the big infrastructure plan go to overseas companies. That doesn’t seem to be something Biden is in a rush to do — although, from the sound of the political packaging, he absolutely has the GPA in his sights. Charted watersDespite the growing popularity of plant-based diets, meat still remains popular across the rich OECD group of nations. Notably chicken. While consumption of red meat has remained pretty stable over recent decades, poultry consumption has jumped. We’re not sure what’s caused poultry to rise up the pecking order, but the latest battle between US fast food outlets to produce the best fried chicken sandwich suggests it has some way to run yet. Don’t missThe US is urging Japan’s prime minister Yoshihide Suga to issue a joint statement of support for Taiwan amid rising Chinese aggression in the Indo-Pacific region when he becomes the first foreign leader to meet Biden on Friday.Read moreEurope’s low-tax nations have responded positively to the Biden administration’s plans for a radical reform of global corporate taxation, even though they will lose out — but signalled that Washington can expect a fight over much of the detail.Read moreManufacturers are warning the US must do more to maintain fragile PPE production. Read moreTokyo talkThe best trade stories from Nikkei AsiaChina’s largest sportswear company is at loggerheads with its own international subsidiary over whether to use cotton produced by forced labour in Xinjiang. Read moreLeading Japanese ketchup producer Kagome has stopped importing tomatoes from Xinjiang, citing human rights concerns. Read more More

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    EU to borrow around 150 billion euros annually for recovery fund

    BRUSSELS (Reuters) – The European Commission plans to borrow around 150 billion euros annually until 2026 to finance the bloc’s unprecedented plan to make its economy greener and more digitalised, making it the biggest debt issuer in euros, the Commission said on Wednesday.The amount of the EU economic plan was agreed at 750 billion euros in 2018 prices, but now totals around 807 billion euros in current prices. The money is split into 338 billion euros in grants and 386 billion in loans for the 27 EU countries and the rest is for joint EU programmes. It will be distributed over the next five years with a third to be spent on reducing CO2 emissions in the EU’s 27 economies. Each of the 27 EU governments can get 13% of its share of the money this year in pre-financing before projects paid for by the scheme reach agreed milestones and targets. If EU governments focus on the grants component of the pre-financing this year, EU borrowing in the third quarter could be around 45 billion euros, Budget Commissioner Johannes Hahn said.To avoid crowding out the borrowing of EU governments, the EU will publish a funding plan six months in advance to allow investors to plan. The EU will sell bonds at auctions and through syndication in a primary dealer network to enable regular payouts as governments complete agreed stages of projects and reforms. The Commission said it would issue bonds with benchmark maturities of 3, 5, 7, 10, 15, 20, 25 and 30 years and bills below one year maturity – EU-Bills.The borrowing will start as soon as all 27 EU national parliaments ratify the EU’s Own Resources Decision – a law raising guarantees from EU governments to the EU budget to 2.0% of GNI from 1.4% GNI until 2058.”Our structures will be ready by June and theoretically we could start borrowing then, but it depends on how quickly member states complete the ratification process,” Han told a news conference.The ratification of the law is necessary because the guarantee of the EU budget will enable the EU to borrow at the lowest possible rates on the market. It is only a backstop measure because the repayment of the borrowing is supposed to come from new taxes the EU is to agree on over the coming years, rather than from national budgets.The repayment is to start in 2028 and continue until 2058. Loans will be repaid by the countries that borrowed and grants by the EU budget from money raised through a yet to be agreed tax on goods imported into the EU from countries observing less strict CO2 emissions goals, new levies on CO2 emissions in the transport sector and a digital levy.The EU also plans a financial transaction tax and a financial contribution linked to the corporate sector or a new common corporate tax base. More