Brussels, Nov 27 (AP/UNB) — The European Union's highest court is hearing arguments on whether Britain could unilaterally revoke its decision to leave the EU ahead of its planned exit date of March 29.
The European Court of Justice on Tuesday opened the session, which will assess the issue under an accelerated procedure due to the urgency of Brexit.
Since Article 50 of the EU treaty of Lisbon dealing with the issue is scant on details — because it was expected that no member state would want to leave — a group of Scottish legislators want to know to what extend the U.K. can pull out of the withdrawal procedure on its own, amid increasing pressure from Brexit opponents for a second referendum on the decision to leave.
The court decision could take several months.
Washington, Nov 27 (AP/UNB) — To hear President Donald Trump tell it, he was made for a moment like this: A high-stakes face-off. A ticking clock. A cagey adversary.
The man who calls himself a supreme dealmaker will have the opportunity this week to put himself to the test. The question is whether he can defuse a trade war with China that is shaking financial markets and threatening the global economy — and perhaps achieve something approximating a breakthrough.
Trump is to meet with his Chinese counterpart, Xi Jinping, during the Group of 20 summit in Buenos Aires, Argentina, on Friday and Saturday. Unless the two leaders can achieve a truce of sorts, their conflicts will likely escalate: On Jan. 1, the tariffs Trump has imposed on many Chinese goods are set to rise from 10 percent to 25 percent, and Beijing would likely retaliate.
Most analysts have said they doubt Trump and Xi will reach any overarching deal that would settle the dispute for good. The optimistic view is that the two sides may agree to a cease-fire that would buy time for more substantive talks and postpone the scheduled escalation in U.S import taxes.
Yet no one really knows. Each side seems prepared to wait out the other in a conflict that could persist indefinitely.
In advance of the meeting, Trump has sounded his usual note of boastful confidence. Speaking to reporters on Thanksgiving Day, he said:
"I'm very prepared. You know, it's not like, 'Oh, gee, I'm going to sit down and study.' I know every stat. I know it better than anybody knows it. And my gut has always been right."
Most trade analysts are skeptical that any significant agreement is likely this week.
"Expectations should be very low," said Wendy Cutler, vice president of the Asia Society Institute and a former U.S. trade official who negotiated with China. "We need to be very clear-eyed. It's going to be a very difficult negotiation. The issues at hand don't lend themselves to quick solutions."
The trade war erupted last fall after Trump imposed import taxes on $250 billion of Chinese goods, and Beijing retaliated with tariffs on U.S. exports. The justification for the U.S. move, according to Trump, is that Beijing has long deployed predatory tactics in its drive to supplant America's technological dominance. The administration alleges — and many trade experts agree — that Beijing hacks into U.S. companies' networks to steal trade secrets and forces American and other foreign companies to hand over sensitive technology as the price of access to China's market.
Beijing disputes those allegations and asserts that Trump's sanctions are merely an effort to hinder an ambitious rival.
Besides the scheduled escalation in U.S. tariffs on $200 billion in Chinese goods — an additional $50 billion in Chinese imports already face the higher tax — another threat looms: Trump has threatened to tax $267 billion more in Chinese imports. At that point, just about everything Beijing ships to the United States would face a higher import tax.
Growing concerns that the trade war will increasingly hurt corporate earnings and the U.S. economy are a key reason why U.S. stock prices have been sinking. As of Friday's close, the Standard & Poor's 500 index has shed roughly 10 of its value since setting a record high Sept. 20.
Joining other forecasters, economists at the Organization for Economic Co-operation and Development last week downgraded their outlook for global economic growth next year to 3.5 percent from a previous 3.7 percent. In doing so, they cited the trade conflict as well as political uncertainty.
Some big U.S. companies, in reporting quarterly earnings in October, warned that they were absorbing higher costs from Trump's increased tariffs, which have been imposed not only on Chinese goods but also on imported steel and other goods from other countries.
"We need some certainty," said Craig Allen, president of the U.S.-China Business Council and a former American diplomat. "The U.S. and China cannot go into a trade war and not affect global markets ... We need to resolve our differences."
Yet as Trump and Xi prepare to meet, the backdrop is hardly encouraging. Acrimony between the two sides disrupted this month's Asia Pacific Economic Cooperation summit in Papua New Guinea. The 21 APEC countries, torn by differences between Beijing and Washington, failed to agree on a declaration on world trade for the first time in nearly three decades. Vice President Mike Pence and Xi sniped at each other in speeches.
Then last week, U.S. Trade Rep. Robert Lighthizer issued a report charging China's efforts to steal U.S. trade secrets have "increased in frequency and sophistication" this year despite American sanctions.
"China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months," the report concluded.
The tenor of the report suggested that the United States would take a hard line into this week's talks. In the meantime, "the amount of uncertainty is unprecedented and very disquieting to the markets," said Allen of the U.S.-China Business Council.
Trump himself sought Monday to increase the pressure on China. In an interview with The Wall Street Journal, Trump said it was "highly unlikely" that he would agree to Beijing's request to suspend the tariff hikes that are set to take effect Jan. 1. And he repeated his threat to target an additional $267 billion in Chinese imports with tariffs of 10 percent or 25 percent.
Clouding the outlook are mixed messages from the Trump administration. The White House appears divided between hawks like Trump's trade adviser, Peter Navarro, and free traders like the top White House economic adviser, Larry Kudlow. On Nov. 9, Navarro delivered a combative speech suggesting that Trump didn't care what Wall Street thought of his confrontational China policy.
Four days later, Kudlow went on CNBC and dismissed Navarro's remarks as "way off base."
"They were not authorized by anybody," Kudlow said. "I actually think he did the president a great disservice."
Regardless of which approach Trump takes to Buenos Aires, Trump and Xi don't have to resolve their differences this week. A cease-fire that suspends any further escalation of the U.S. tariffs wouldn't be unprecedented. The administration and the European Union, for instance, reached a truce last summer that suspended threatened U.S. tariffs on European auto imports.
"My personal guess — and I'm sticking my neck out here — is that there will be some kind of cease-fire agreed to," said Matthew Goodman, a senior adviser on Asian economics at the Center for Strategic and International Studies.
Goodman noted that Trump appears concerned about tumbling stock prices, and Xi is contending with a decelerating Chinese economy. A truce would bring at least a temporary calm.
"No one is expecting they will come out with a solid agreement," said Quincy Krosby, chief market strategist at Prudential Financial. "What the market wants — what the market needs — is a sense that they are negotiating and that the negotiations will continue."
Brussels, Nov 26 (AP/UNB) — A European Union court has thrown out a case seeking the annulment of the Brexit negotiations.
One day after the EU and Britain rubber-stamped a withdrawal agreement and a text on a future relationship, the EU general court said Monday that 13 Britons living in other EU nations had no case is seeking such a cancellation.
The 13 said they were not allowed to vote in the 2016 referendum because they were living abroad and said their court case was the only way to avoid losing EU citizenship when Britain leaves on March 29, 2019.
The court said that the opening of the Brexit negotiations had no direct impact on their situation.
Tokyo, Nov 26 (AP/UNB) — The board of Japanese automaker Mitsubishi Motors, which is allied with Renault and Nissan, met Monday to decide whether to keep or oust Carlos Ghosn as its chairman after his arrest last week.
Prosecutors arrested Ghosn on Nov. 19 on suspicion of under-reporting his income by $44 million over five years. Nissan Motor Co., which already has ousted him as its chairman, says an internal investigation found Ghosn abused company money and assets.
Seven of Mitsubishi Motors Corp.'s eight-member board were meeting in Tokyo, the company said.
Ghosn's arrest in Tokyo marked a stunning fall for an executive who dominated the Japanese auto industry for two decades and spearheaded Nissan's alliance with Renault SA of France.
Ghosn also led the addition of Mitsubishi into the alliance. Nissan took a 34 percent stake in Mitsubishi in 2016 after the smaller automaker was embroiled in an inspections reporting scandal.
Japanese media, citing unidentified sources, have reported that Ghosn and Greg Kelly, an executive who was arrested on suspicion of collaborating with Ghosn, are asserting their innocence. Ghosn has not commented publicly.
The two executives have not yet been charged. Under Japanese law, a suspect can be held in custody for up to three weeks per suspected charge without any charges being filed.
Renault has kept Ghosn as chief executive. But considering the makeup of Mitsubishi's board little opposition to his dismissal is expected.
The board consists of Ghosn, Mitsubishi Motors Chief Executive Osamu Masuko, two people from Nissan, two from the Mitsubishi group companies and two outsiders — a writer and an academic.
Worries are growing about the future of the alliance between Renault and Nissan. The future of the alliance with Mitsubishi, being more recent, could be even more precarious.
Alliances often benefit automakers because they share technology, auto parts, and supplier and sales networks. Sales volume tends to lower costs.
Analysts say such sharing has been growing in importance as companies develop electric vehicles, net connectivity and artificial intelligence for autos.
Beijing, Nov 26 (AP/UNB) — Don't mess with China and its growing cadre of powerful luxury consumers.
Dolce&Gabbana learned that lesson the hard way when it faced a boycott after Chinese expressed outrage over what were seen as culturally insensitive videos promoting a major runway show in Shanghai and subsequent posts of insulting comments in a private Instagram chat.
The company blamed hackers for the anti-Chinese insults, but the explanation felt flat to many and the damage was done. The Milan designers canceled the Shanghai runway show, meant as a tribute to China, as their guest list of Asian celebrities quickly joined the protests.
Then, as retailers pulled their merchandise from shelves and powerful e-commerce sites deleted their wares, co-founders Domenico Dolce and Stefano Gabbana went on camera — dwarfed against the larger backdrop of an ornate red wall-covering — to apologize to the Chinese people.
"We will never forget this experience, and it will definitely never happen again," a solemn-looking Gabbana said in a video statement posted Friday on social media.
The apology video , and the sharp public backlash that demanded it, shows the importance of the Chinese market and the risks of operating in it. More broadly, it highlights the huge and still-growing influence of China, a country that cannot be ignored as it expands economically, militarily and diplomatically.
These trends are intertwined in frequent outbursts of nationalist sentiment among consumers who feel slighted by foreign brands or their governments. It's not the first time a company has apologized, and it surely won't be the last. Mercedes-Benz did so in February for featuring a quote by the Dalai Lama on its Instagram account.
For Dolce&Gabbana, it could be mark the end of its growth in China, a crucial market for global luxury brands that it has cultivated since opening its first store in 2005 and where it now has 44 boutiques.
"I think it is going to be impossible over the next couple of years for them to work in China," said Cary Cooper, a professor of organizational psychology and health at Manchester University in England. "When you break this kind of cultural codes, then you are in trouble. The brand is now damaged in China, and I think it will be damaged in China until there is lost memory about it."
That could shake Dolce&Gabbana's financial health. The privately held company does not release its individual sales figures. But Chinese consumers are responsible for a third of all luxury spending around the globe, according to a recent study by Bain consultancy. That will grow to 46 percent of forecast sales of an estimated 365 billion euros ($412 billion) by 2025, fueled by millennials and the younger Generation Z set, who will make a growing percentage of their purchases online.
"Without China, the hinterland for growth, D&G will obviously be in a weak competitive position and in danger of being eliminated," the Chinese business magazine New Fortune said in a social media post Sunday. "This is one of the major reasons why D&G finally lowered its head. They really cannot survive without the Chinese market."
While Dolce&Gabbana has displayed a knack for social media engagement, inviting millennial influencers with millions of collective followers to sit in their front rows or walk in their shows, that engagement has been a double-edged sword. Pop idol Karry Wang, who has drawn hundreds of screaming Chinese fans to the designer's Milan showroom for season runway shows, was one of the first to disavow the brand, saying he was ending his role as Asia-Pacific brand ambassador.
Dolce found himself on the defensive several years ago after Elton John lashed out for comments that suggested he did not support gay couples using surrogate mothers to have children. At the time, more than 67,000 tweets urged #boycottdolcegabbana, while Courtney Love vowed to burn her Dolce&Gabbana garb and Martina Navratilova pledged to trash her D&G shirts.
Gabbana, who has 1.6 million Instagram followers, faced a more contained backlash earlier this year when he responded to a collage of Selena Gomez photos on Instagram with the comment, "She's really ugly."
Celebrities took to social media Wednesday to blast Dolce&Gabbana and said they would boycott the show, which was canceled. By Thursday, the company's goods had disappeared from major e-commerce websites. The prevailing sentiment was captured by an airport duty-free shop that posted a photo of its shelves emptied of D&G products: "We have to show our stance. We are proud to be Chinese."
The rapid escalation into a public relations disaster was fueled by social media. Individuals posted videos of themselves cutting up or burning their Dolce&Gabbana clothes, or picking them up with chopsticks and putting them in the trash. A parody of the offending Dolce&Gabbana videos, which featured a Chinese woman using chopsticks to eat pizza and an oversized cannoli, shows a white man trying to eat Chinese food with a fork and knife. At least three rap bands took up the cause with new songs.
"Companies that don't respect us don't deserve our respect," Wang Zixin, team leader of CD Rev, a nationalist rap band, said by phone from Chengdu, the capital of Sichuan province. Its new song had been viewed more than 850,000 times on Weibo.
"We hope people will remember companies that have ever insulted China, and not forget about them when the fallout passes," Wang said.
That sense of pride reflects a nationalism that has been encouraged by the government, often in disputes China has with other countries over other foreign products.
Sales by Japanese automakers plunged in 2012 amid tensions between islands both countries claim in the East China Sea. The clash also illustrated the complexity of Chinese sentiment: Industry analysts said buyers didn't want to be seen in Japanese auto showrooms but went ahead with planned purchases once tensions had passed.
More recently, several foreign companies ran afoul of Beijing's insistence that they explicitly refer to Taiwan, a self-governing territory, as part of China. Many complied, showing how important the Chinese market has become.
Delta, American and other airlines agreed to refer to Taiwan as part of China, and Zara now says "Taiwan, China" on its website after regulators criticized the fashion brand for calling Taiwan a country. Marriott announced it "respects and supports" China's sovereignty after it was ordered to shut its China website for a week.
Actor Richard Gere, a supporter of the Dalai Lama, has told The Hollywood Reporter that movie studios balk at hiring him for fear of an official or public backlash that might affect ticket sales in China.
It remains unclear whether the D&G mea culpa video will stop the backlash — or if it will have implications for Made-in-Italy at large. The scandal erupted as Italy's high-end furniture and design companies were making an annual presentation in Shanghai and as Miu Miu, the Prada Group's little sister line, showed its cruise line in Shanghai.
Italian designers have so far refrained from comment.
Italian commentators mused whether the Dolce&Gabbana protests were truly spontaneous or if there was some level of government control behind them. The government has publicly said the spat had no diplomatic element and would not comment.
"Anywhere in the world, an entrepreneur can make a mistake, use inappropriate language. Usually it is the consumers and the market to decide the seriousness of the offense," the Milan daily Corriere della Sera wrote in a commentary. "Only in China is one forced to produce a humiliating video with public self-criticism, like in the time of Mao's revolution. Now China feels powerful and is applying re-education on a global scale."