US to Proceed With Mexico Trade Pact, Keep Talking to Canada

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U.S. President Donald Trump notified Congress on Friday of his intent to sign a trade agreement with Mexico after talks with Canada broke up earlier in the day with no immediate deal to revamp the tri-nation North American Free Trade Agreement.

U.S. Trade Representative Robert Lighthizer said U.S. officials would resume talks with their Canadian counterparts next Wednesday with the aim of getting a deal all three nations could sign.

All three countries have stressed the importance of NAFTA, which governs billions of dollars in regional trade, and a bilateral deal announced by the United States and Mexico on Monday paved the way for Canada to rejoin the talks this week.

But by Friday the mood had soured, partly on Trump’s off-the-record remarks made to Bloomberg News that any trade deal with Canada would be “totally on our terms.” He later confirmed the comments, which the Toronto Star first reported.

“At least Canada knows where I stand,” he later said on Twitter.

Ottawa has stood firm against signing “just any deal.” 

​’Making progress’

But at a news conference Friday afternoon, Canadian Foreign Minister Chrystia Freeland expressed confidence that Canada could reach agreement with the United States on a renegotiated NAFTA trade pact if there was “goodwill and flexibility on all sides.”

“We continue to work very hard and we are making progress. We’re not there yet,” Freeland told reporters.

“We know that a win-win-win agreement is within reach,” she added. “With goodwill and flexibility on all sides, I know we can get there.”

The Canadian dollar weakened to C$1.3081 to the U.S. dollar after The Wall Street Journal first reported that the talks had ended Friday with no agreement. Canadian stocks remained 0.5 percent lower.

Global equities were also down following the hawkish turn in Trump’s comments on trade.

Lighthizer has refused to budge despite repeated efforts by Freeland to offer some dairy concessions to maintain the Chapter 19 independent trade dispute resolution mechanism in NAFTA, The Globe and Mail reported Friday.

However, a spokeswoman for USTR said Canada had made no concessions on agriculture, which includes dairy, but added that negotiations continued.

The United States wants to eliminate Chapter 19, the mechanism that has hindered it from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to cut the mechanism. For Ottawa, Chapter 19 is a red line.

Trump argues Canada’s hefty dairy tariffs are hurting U.S. farmers, an important political base for his Republican Party.

But dairy farmers have great political clout in Canada too, and concessions could hurt the ruling Liberals ahead of a 2019 federal election.

At a speech in North Carolina on Friday, Trump took another swipe at Canada. “I love Canada, but they’ve taken advantage of our country for many years,” he said.

Coca-Cola Hopes for Caffeine Hit as It Buys Costa Coffee Chain

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Coca-Cola is hoping for a caffeine-fueled boost with the acquisition of British coffee chain Costa.

Costa is Britain’s biggest coffee company, with over 2,400 coffee shops in the U.K. and another 1,400 in more than 30 countries, including around 460 in China, its second-biggest market. Coca-Cola said Friday it will buy the Costa brand from Whitbread for 3.9 billion pounds ($5.1 billion) in cash.

The deal, expected to close in the first half of 2019, comes on the heels of Coca-Cola’s announcement earlier in August that it was buying a minority ownership stake in sports drink maker BodyArmor for an undisclosed amount. Coca-Cola’s other investments in recent years have included milk that is strained to have more protein and a push into sparkling water.

The move is Coca-Cola’s latest diversification as health-conscious consumers, at least in America, move away from traditional soda.

Rival PepsiCo, meanwhile, recently bought carbonated drink maker SodaStream, which produces machines that allow people to make fizzy drinks in their own homes.

Coca-Cola already owns the Georgia and Gold Peak coffee brands, which make bottled and canned drinks, but the purchase of Costa could allow it to compete with brands like Starbucks.

Coffee is growing by 6 percent a year, making it one of the fastest-growing beverage categories in the world, said James Quincey, Coca-Cola president & CEO.

“Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” he said.

Coca-Cola has over 500 brands in its stable including Fanta, innocent smoothies and Powerade sports drinks. In 2017, it generated operating income of $9.7 billion on revenues of $35.4 billion.

Without being specific about expansion plans, Quincey said in a video posted on Coca-Cola’s website that the company would “over time” look to take Costa “to more people in more places.”

Costa doesn’t currently have a presence in North or South America, but Quincey indicated that one potential early expansion route would be to use Costa’s vending operation and grow the company’s ready-to-drink products. In addition to its shops, Costa has self-serve coffee machines in grocery stores and gas stations.

Whitbread bought Costa for 19 million pounds in 1995, when it had just 39 shops. In recent years, Whitbread has invested heavily in Costa’s expansion overseas, but had been looking to siphon off the business to generate funds for the expansion and for its other business, the budget hotel chain Premier Inn.

Then Coca-Cola got in touch with what Whitbread said was a “highly compelling” offer. The Whitbread board unanimously backed the deal.

Whitbread will use a “significant majority” of the net cash proceeds — around 3.8 billion pounds after taking into account such things as transaction costs — returning cash to shareholders. Some will be used to pay down debt and to make a contribution to the pension fund.

Doing so, Whitbread said, would “provide headroom” to further expand the Premier Inn budget hotel chain in Britain and Germany.

Whitbread’s share price soared 17 percent in early afternoon trading in London.

Nicholas Hyett, equity analyst at London-based stockbrokers Hargreaves Lansdown, said Costa will get “lots of care and attention” from Coca-Cola.

“Its global reach should turbo-charge growth in the years to come, and hot drinks are one of the few areas of the wider beverages sector where the soft drinks giant doesn’t have a killer brand,” he said.

Canada, US Push Toward NAFTA Deal by Friday

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Top NAFTA negotiators from Canada and the United States increased the pace of their negotiations Thursday to resolve final differences to meet a Friday deadline, with their Mexican counterpart on standby to rejoin the talks soon.

Despite some contentious issues still on the table, the increasingly positive tone contrasted with U.S. President Donald Trump’s harsh criticism of Canada in recent weeks, raising hopes that the year-long talks on the North American Free Trade Agreement will conclude soon with a trilateral deal.

“Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time,” U.S. President Donald Trump told Bloomberg Television. “I think we’re close to a deal.”

Trilateral talks were already underway at the technical level and Mexican Economy Minister Ildefonso Guajardo was expected to soon rejoin talks with U.S. Trade Representative Robert Lighthizer and Canadian Foreign Minister Chrystia Freeland, possibly later on Thursday, people familiar with the process said.

Trump said in a Bloomberg interview: “Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time,” Trump said. “I think we’re close to a deal.”

Negotiations entered a crucial phase this week after the United States and Mexico announced a bilateral deal on Monday, paving the way for Canada to rejoin talks to modernize the 24-year-old accord that underpins over $1 trillion in annual trade.

The NAFTA deal that is taking shape would likely strengthen North America as a manufacturing base by making it more costly for automakers to import a large share of vehicle parts from outside the region. The automotive content provisions, the most contentious topic, could accelerate a shift of parts-making away from China.

A new chapter governing the digital economy, along with stronger intellectual property, labor and environmental standards could also work to the benefit of U.S. companies, helping Trump to fulfill his campaign promise of creating more American jobs.

Trump has set a Friday deadline for the three countries to reach an agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

The U.S. president has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

Dairy, dispute settlement

One sticking point for Canada is the U.S. effort to dump the Chapter 19 dispute-resolution mechanism that hinders the United States from pursuing anti-dumping and anti-subsidy cases. Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

Trump also wants a NAFTA deal that eliminates dairy tariffs of up to 300 percent that he argues are hurting U.S. farmers, an important political base for Republicans.

But any concessions to Washington by Ottawa is likely to upset Canadian dairy farmers, who have an outsized influence in Canadian politics, with their concentration in the provinces of Ontario and Quebec.

 “Ultimately, we’ve got huge issues that are still to be resolved,” said Jerry Dias, head of Canada’s influential Unifor labor union. “Either we’re going to be trading partners or we’re going to fight.”

Microsoft to Contractors: Give New Parents Paid Leave

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Microsoft will begin requiring its contractors to offer their U.S. employees paid leave to care for a new child.

It’s common for tech firms to offer generous family leave benefits for their own software engineers and other full-time staff, but paid leave advocates say it’s still rare to require similar benefits for contracted workers such as janitors, landscapers, cafeteria crews and software consultants.

“Given its size and its reach, this is a unique and hopefully trailblazing offering,” said Vicki Shabo, vice president at the National Partnership for Women and Families.

The details

The new policy affects businesses with at least 50 U.S.-based employees that do substantial work with Microsoft that involves access to its buildings or its computing network. It doesn’t affect suppliers of goods. Contractors would have to offer at least 12 weeks of leave to those working with the Redmond, Washington-based software giant; the policy wouldn’t affect the contractors’ arrangements with other companies. Leave-takers would get 66 percent of regular pay, up to $1,000 weekly.

The policy announced Thursday rolls out over the next year as the company amends its contracts with those vendors. That may mean some of Microsoft’s costs will rise to cover the new benefits, said Dev Stahlkopf, the company’s corporate vice president and general counsel.

“That’s just fine and we think it’s well worth the price,” she said.

Microsoft doesn’t disclose how many contracted workers it uses, but it’s in the thousands.

The new policy expands on Microsoft’s 2015 policy requiring contractors to offer paid sick days and vacation.

Facebook

Other companies such as Facebook have also committed to improve contractor benefits amid unionization efforts by shuttle drivers, security guards and other contract workers trying to get by in expensive, tech-fueled regions such as the San Francisco Bay Area and around Washington’s Puget Sound.

Facebook doesn’t guarantee that contract workers receive paid parental leave, but provides a $4,000 new child benefit for new parents who don’t get leave. A much smaller California tech company, SurveyMonkey, announced a paid family leave plan for its contract workers earlier this year.

Washington state law

Microsoft said its new policy is partially inspired by a Washington state law taking effect in 2020 guaranteeing eligible workers 12 weeks paid time off for the birth or adoption of a child. The state policy, signed into law last year, follows California and a handful of other states in allowing new parents to tap into a fund that all workers pay into. Washington will also require employers to help foot the bill, and will start collecting payroll deductions next January.

A federal paid parental leave plan proposed by President Donald Trump’s daughter, Ivanka Trump, could rely on a similar model but has gained little traction.

“Compared to what employers are doing, the government is way behind the private sector,” said Isabel Sawhill, a fellow at the Brookings Institution who has urged the White House and Congress to adopt a national policy.

Sawhill said it is “very unusual and very notable” that Microsoft is extending family leave benefits to its contract workers. Microsoft already offers more generous family leave benefits to its own employees, including up to 20 weeks fully paid leave for a birth mother.

Pushing the feds

Microsoft’s push to spread its employee benefits to a broader workforce “sends a message that something has to happen more systematically at the federal level,” said Ariane Hegewisch, a program director for employment and earnings at the Institute for Women’s Policy Research. Until then, she said, it’s helpful that Microsoft seems willing to pay contracting firms more to guarantee their workers’ better benefits.

“Paid family leave is expensive and they acknowledge that,” Hegewisch said. Otherwise, she said, contractors with many employees of child-bearing age could find themselves at a competitive disadvantage to those with older workforces.

Republican state Sen. Joe Fain, the prime sponsor of the measure that passed last year, said Microsoft’s decision was “a really powerful step forward.”

By applying the plan to contractors and vendors around the country, “it really creates a pressure for those state legislatures to make a similar decision that Washington made.”

Republican US Senator Asks FTC to Examine Google Ads

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U.S. Senator Orrin Hatch on Thursday added to the growing push in Washington to have the Federal Trade Commission rekindle an antitrust investigation of Alphabet Inc’s Google.

Hatch, the Republican chairman of the Senate Finance Committee, sent a letter to FTC Chairman Joseph Simons recounting several news reports that identified complaints about Google’s anti-competitive conduct and privacy practices.

Alphabet shares were little changed after the release of the letter. The company declined to comment.

Lawmakers from both major parties and Google’s rivals have said this year they see an opening for increased regulation of large technology companies under the FTC’s new slate of commissioners.

Google’s critics say that ongoing European antitrust action against the web search leader and this year’s data privacy scandal involving Facebook Inc and political consulting firm Cambridge Analytica demonstrate their concerns about the unchecked power of the tech heavyweights. About 90 percent of search engine queries in the United States flow through Google.

Facebook and Twitter executives are expected to testify before the Senate Intelligence Committee on September 5 about their  efforts to deter foreign campaigns from spreading misinformation online ahead November’s midterm elections. Lawmakers have criticized Alphabet for not scheduling a top executive, such as Chief Executive Larry Page, for the hearings.

In 2013, the FTC closed a lengthy investigation of Google after finding insufficient evidence that consumers were harmed by how the company displayed search results from rivals. President Donald Trump accused Google’s search engine on Tuesday of promoting negative news articles and hiding “fair media” coverage of him.

Trump’s economic adviser, Larry Kudlow, later said the White House was “taking a look” at Google, and that the administration would do “some investigation and some analysis,” without providing further details.

Earlier this year, Representative Keith Ellison, a Democrat, and Representative Todd Rokita, a Republican, sent separate letters asking the FTC to probe Google.

Simon, the new Republican chairman of the FTC, said in July the agency would keep a close eye on big tech companies that dominate the internet.

An FTC representative was not immediately available for comment.

Hatch, at event hosted by reviews website and Google rival Yelp Inc in May, said moves made by “an entrenched monopolist” deserve extra skepticism.

“They may well be used, not to further consumer welfare, but to foreclose competitors,” he said, according to prepared remarks.

Yelp, a local-search service, said in a statement that Hatch’s letter was “heartening to see” as it underscored the bipartisan plea for FTC scrutiny of Google.

Minnesota’s Hmong Farmers Drive Local Food Economy

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Hmong farmers in St. Paul, Minnesota have the best advocate for their business enterprises: themselves, working together.

Originally from China, the Hmong are an Asian ethnic group that migrated to Vietnam and Laos in the 18th century. They have never had a country of their own. After the Vietnam War ended, many resettled in the U.S., giving the U.S. the largest Hmong population outside of Asia. The population in Minnesota is more than 60,000, second behind the state of California.

The Hmong, who are long time farmers, did what they knew best when they got to Minnesota. And by the late 1980’s they spearheaded the revitalization of local farmers’ markets, making them some of the most vibrant in the city.

But the Hmong also discovered that as immigrant farmers, they faced barriers in buying land, obtaining financing, accessing markets and building sustainable family businesses. They were struggling. To combat all that, a group of Hmong farmers established the non-profit Hmong American Farmers Association (HAFA) in 2011.

“One of the reasons HAFA was created was because Hmong farmers were experiencing so much uncertainty. They didn’t always have access to land,” HAFA co-founder Pakou Hang explained. “So when you don’t have land tenure or land certainty you can’t actually invest in organic certification, you can’t invest in perennials, which actually have higher profit margins.”

HAFA’s intent was to “advance the prosperity of Hmong American farmers through cooperative endeavors.” At the center of the association is a 63-hectare (155-acre) farm outside St. Paul where member farmers have long-term leases on two to four hectare (five to 10-acre) parcels to grow their vegetables and flowers.

How HAFA helps

On a recent Friday, Mao Moua and her husband were harvesting vegetables at their plot – for a Saturday farmer’s market.

The Mouas were among the mass exodus of Hmong people fleeing Laos for Thailand and eventually the U.S. in the 1970s. Ever since they arrived, they have been farming in Minnesota and in recent years on the HAFA membership farm.

“I like farming on the HAFA farm because this is a Hmong association,” Moua said. “There are Hmong workers who help us. They are like our hands, eyes and ears. I like there is also water, electricity and the food hub.”

She added proudly, “[I grow] corn, sweet potato, cherry, snap pea, cucumber, and a little cherry tomato. That’s all.”

HAFA’s alternative markets program is called Food Hub.

“Our Food Hub is the place where we aggregate HAFA farmers’ produce and we distribute, sell it to different institutions such as schools, co-ops, or restaurants. And then we also have a CSA program or community supported agriculture that we have about 350 currently members. They get a weekly subscription of produce,” explained Operations Manager Kou Yang.

And if any of the farmers need micro loans to buy tractors or new farming equipment, HAFA’s business development programs are there to help. But Hang said all the programs are not just for income generation.

“What we’re really interested in, what we are focused on is actually wealth creation not just intergenerational wealth but community wealth,” Hang said.

Community wealth

Today, Hmong American farmers make up more than 50 percent of all produce growers selling at area farmers’ markets.

“The Hmong growers’ participation in the farmers’ market has really revitalized the farmers’ market,” said David Kotsonas a director of the Minnesota Farmers’ Market Association.

The Hmong are also at the center of a Minnesota-based local foods economy that has changed the way Minnesotans eat.

“Hmong farmers are major contributors to our local food economy and to our overall economy,” Hang said. “I mean studies have shown that they produced over $250 million in sales.”

Hang was born in a refugee camp in Thailand and came to the U.S. with her parents in 1976.

“During the Vietnam war in Laos my father joined actually a secret army that was allied with the United States CIA. When the Vietnam War ended and the communist faction came into power in Laos they actually began to target Hmong soldiers,” she said.

Hang has big dreams for the HAFA farm which in addition to enabling farmers, conducts research and fosters community ties.

“A hive of learning. A hive of community building,” Hang described it.

Indian Currency Decree Did Little to Root Out ‘Black Money’

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Nearly all of the currency removed from circulation in a surprise 2016 attempt to root out illegal hoards of cash came back into the financial system, India’s reserve bank has announced, indicating the move did little to slow the underground economy.

Prime Minister Narendra Modi’s currency decree, which was designed to destroy the value of billions of dollars in untaxed cash stockpiles, caused an economic slowdown and months of financial chaos for tens of millions of people.

Modi announced in a November 2016 TV address that all 500-rupee and 1,000-rupee notes, then worth about $7.50 and $15, would be withdrawn immediately from circulation. The banned notes could be deposited into bank accounts but the government also said it would investigate deposits over 250,000 rupees, or about $3,700. The government eventually released new currency notes worth 500 and 2,000 rupees.

In theory, the decree meant corrupt politicians and businesspeople would suddenly find themselves sitting on billions of dollars in worthless currency, known here as “black money.”

“A few people are spreading corruption for their own benefit,” Modi said in the surprise nighttime speech announcement of the order. “There is a time when you realize that you have to bring some change in society, and this is our time.”

But even as the decree caused turmoil for those in India who have always depended on cash — the poor and middle class, and millions of small traders — the rich found ways around the currency switch. In the months after the decree, businesspeople said that even large amounts of banned currency notes could be traded on the black market, though middlemen charged heavy fees.

The reserve bank report said in its Wednesday report that 99.3 percent of the $217 billion in notes withdrawn from circulation had come back into the economy. Some officials had originally predicted that number could be as low as 60 percent.

“Frankly, I think demonetization was a mistake,” said Gurcharan Das, a writer and the former head of Proctor & Gamble in India. He said that while it did broaden the country’s tax base, it was a nightmare for the immense, cash-dependent informal economy.

“You can’t overnight change that in a country which is poor and illiterate. Therefore, for me it’s not only an economic failure but a moral failure as well,” Das said.

 

Trump OKs Tariff Relief for Three Countries

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U.S. President Donald Trump has signed proclamations permitting targeted relief from steel and aluminum quotas from some countries, the U.S. Commerce Department said on Wednesday.

Trump, who put in place tariffs on steel and aluminum imports in March, signed proclamations allowing relief from the quotas on steel from South Korea, Brazil and Argentina and on aluminum from Argentina, the department said in a statement.

“Companies can apply for product exclusions based on insufficient quantity or quality available from U.S. steel or aluminum producers,” the statement said. “In such cases, an exclusion from the quota may be granted and no tariff would be owed.”

Trump, citing national security concerns, placed tariffs of 25 percent on steel imports and 10 percent on aluminum imports.

The tariffs on steel and aluminum imports from the European Union, Canada and Mexico took effect June 1, and Commerce Secretary Wilbur Ross said May 31 that arrangements had been made with some countries to have non-tariff limits on their exports of the two metals to the United States.

Ross said the arrangement with South Korea was for a quota of 70 percent of average steel exports to the United States in the years 2015 to 2017.

The Brazilian government said at the time the U.S. quotas and tariffs on Brazil’s steel and aluminum exports were unjustified but that it remained open to negotiate a solution.

Brazilian semi-finished steel exports to the United States are subject to quotas based on the average for the three years from 2015-2017, while finished steel products will be limited to a quota of 70 percent of the average for those years.

Trump, Trudeau Upbeat About Prospects for NAFTA Deal by Friday

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The leaders of the United States and Canada expressed optimism on Wednesday that they could reach new NAFTA deal by a Friday deadline as negotiators prepared to talk through the night, although Canada warned that a number of tricky issues remained.

Under pressure, Canada rejoined the talks to modernize the 24-year-old North American Free Trade Agreement after Mexico and the United States announced a bilateral deal on Monday. Canadian Foreign Minister Chrystia Freeland said late on Wednesday that talks were at “a very intense moment” but said there was “a lot of good will” between Canadian and U.S. negotiators.

“Our officials are meeting now and will be meeting until very late tonight. Possibly they’ll be meeting all night long,” Freeland said. She and U.S. Trade Representative Robert Lighthizer had agreed to review progress early on Thursday.

U.S. President Donald Trump has set a Friday deadline for the three countries to reach an in-principle agreement, which would allow Mexican President Enrique Pena Nieto to sign it before he leaves office at the end of November. Under U.S. law, Trump must wait 90 days before signing the pact.

Trump has warned he could try to proceed with a deal with Mexico alone and levy tariffs on Canadian-made cars if Ottawa does not come on board, although U.S. lawmakers have said ratifying a bilateral deal would not be easy.

“They (Canada) want to be part of the deal, and we gave until Friday and I think we’re probably on track. We’ll see what happens, but in any event, things are working out very well.” Trump told reporters at the White House.

The upbeat tone contrasted with Trump’s harsh criticism of Canada in recent weeks, railing on Twitter against Canada’s high dairy tariffs that he said were “killing our Agriculture!”

Canadian Prime Minister Justin Trudeau said he thought the Friday deadline could be met.

“We recognize that there is a possibility of getting there by Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada,” he said at a news conference in northern Ontario on Wednesday.

“No NAFTA deal is better than a bad NAFTA deal.”

 Freeland, who is Canada’s lead negotiator, was sidelined from the talks for more than two months, and will be under pressure to accept the terms the United States and Mexico worked out.

She declined comment on the issues still in play, but said on Tuesday that Mexico’s concessions on auto rules of origin and labor rights had been a breakthrough.

Ottawa is also ready to make concessions on Canada’s protected dairy market in a bid to save a dispute-settlement system, The Globe and Mail reported late on Tuesday.

Sticking points

One of the issues for Canada in the revised deal is the U.S. effort to dump the Chapter 19 dispute resolution mechanism that hinders the United States from pursuing anti-dumping and anti-subsidy cases. U.S. Trade Representative Robert Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.

To save that mechanism, Ottawa plans to change one rule that effectively blocked American farmers from exporting ultra-filtered milk, an ingredient in cheesemaking, to Canada, the Globe and Mail reported, citing sources.

Trudeau repeated on Wednesday that he will defend Canada’s dairy industry.

Earlier on Wednesday, the Trump administration’s own anti-dumping duties on Canadian paper, used in books and newsprint, were thrown out by the U.S. International Trade Commission.

The independent panel ruled that about $1.21 billion in such paper imports from Canada were not harming U.S. producers.

Other hurdles to a NAFTA deal include intellectual property rights and extensions of copyright protections to 75 years from 50, a higher threshold than Canada has previously supported.

Some see the tight time-frame as a challenge.

“There’s nothing here that is not doable for Canada,” said Brian Kingston, vice president for international affairs at The Business Council of Canada.

“We’ve got the best negotiators in the world, but they can only stay awake so many hours of every day.”

Germany, Seeking Independence From US, Pushes Cybersecurity Research

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Germany announced a new agency on Wednesday to fund research on cybersecurity and to end its reliance on digital technologies from the United States, China and other countries.

Interior Minister Horst Seehofer told reporters that Germany needed new tools to become a top player in cybersecurity and shore up European security and independence.

“It is our joint goal for Germany to take a leading role in cybersecurity on an international level,” Seehofer told a news conference with Defense Minister Ursula von der Leyen. “We have to acknowledge we’re lagging behind, and when one is lagging, one needs completely new approaches.”

The agency is a joint interior and defense ministry project.

Germany, like many other countries, faces a daily barrage of cyberattacks on its government and industry computer networks.

However, the opposition Greens criticized the project. “This agency wouldn’t increase our information technology security, but further endanger it,” said Greens lawmaker Konstantin von Notz.

The agency’s work on offensive capabilities would undermine Germany’s diplomatic efforts to limit the use of cyberweapons internationally, he said. “As a state based on the rule of law, we can only lose a cyberpolitics arms race with states like China, North Korea or Russia,” he added, calling for “scarce resources” to be focused on hardening vulnerable systems.

Germany and other European countries also worry about their dependence on U.S. technologies. This follows revelations in 2012 by U.S. NSA whistleblower Edward Snowden of a massive spying network, as well as the U.S. Patriot Act which gave the U.S. government broad powers to compel companies to provide data.

“As a federal government we cannot stand idly by when the use of sensitive technology with high security relevance are controlled by other governments. We must secure and expand such key technologies of our digital infrastructure,” Seehofer said.