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LONDON: March 22, 2016: A survey by the Confederation of British Industry (CBI), whose members employ 33 percent of the country's private-sector workers, has found that 80 percent believe being part of the EU is best for their business and 77 percent think it is better for the UK economy as a whole.

The CBI has now published a report by PwC claiming a British exit ('Brexit') from the EU would cost the country £100 billion - or 5.0 percent of GDP - and the loss of up to 950,000 jobs by 2020.

CBI director general Carolyn Fairbairn said: "If the UK leaves the EU without a free trade deal, 90 percent of British exports to the EU, by value, could face tariffs. Some sectors could be hit particularly hard. Under WTO rules, UK textile exports to the EU could face tariffs of nearly 10 percent. Transport equipment could face tariffs of about 7.0 percent."

CargoLogic AirFairbairn added that products imported from the EU into the UK could also face tariffs – passing the costs on to customers through higher prices. She said that even if Britain subsequently joined the European Economic Area (EEA) or the European Free Trade Association (EFTA), rules of origin reporting and VAT payments at borders would make it harder for small firms to trade with the EU.

"So, in short, leaving the EU could mean the return of significant barriers to trade," she declared.

Rain Newton-Smith, CBI Economics director, explained that while there is a process for leaving the EU under Article 50 of the Lisbon Treaty, no country has ever done it. If the UK referendum on June 23 opts for an exit, the European Commission would respond by drawing up an agreement for approval by the European Parliament and the EU Council of Ministers, before presenting it to the UK.

Newton-Smith pointed out that the UK can't participate in the discussions about its withdrawal at the Council and it can't vote on it in the Parliament: "In trading terms as well, the EU would hold the balance of power. Some see the fact that we import more from the EU than we export to it as proof that they need us more than we need them.

"But this ignores the fact that 45 percent of the UK's exports go to the EU, it's our biggest export market by far - compared to just 7.0 percent of total EU exports which come here. So while it may be in both sides' interest to complete a trade deal, the balance of power would be far from equal."

Fairbairn added that a Brexit would hit some of the UK's top business sectors hardest and lead to job losses anywhere from 550,000 to one million: "At the CBI we've heard from a range of firms of different sizes, sectors and from different parts of the country and we've consistently heard from our members that the majority – though not all – want to stay in a reformed European Union," she said.

LONDON: March 20, 2016. With London voters poised to elect a new Mayor in May, incumbent and EU 'Brexit' supporter Boris Johnson has resurrected his plan to replace Heathrow with either a new four-lane airport east of London or by expanding Stansted north of the capital.

Expanded HeathrowCapitalizing on the concerns of prospective voters, Johnson's new study claims a third runway at Heathrow would expose 124 more schools and 43,000 school children to a level of aircraft noise "proven to affect their level of reading and memory" and cost £20-£25 billion in additional health costs due to an increased risk of heart attacks, strokes and dementia.

The report also says 500,000 people will be exposed to a significant level of noise from a third runway - more than the five main rival European airports combined, it argues.

In addition to an "unprecedented level of debt for a private airport", Johnson said a three-runway Heathrow would be full in 2030 and subject to the same problems of congestion and delays that the airport faces today.

By comparison, his new report claims a four-runway hub airport to the east of London would spur regeneration and new housing, contribute £92 billion to the UK economy by 2050 and support 336,000 jobs around the country.

Johnson added: "There is no silver bullet for the noise nightmare of a third runway at Heathrow and any approval of expansion would clearly result in decades of legal challenges. Its cramped urban location simply cannot accommodate the kind of airport this country requires to compete on the global stage and the cost to the taxpayer of necessary road and rail connections would be huge, however well disguised."

The Mayor said the UK government should tell the owners of Heathrow their plans are not in the interest of Britain's future growth and prosperity.

WASHINGTON, DC: March 08, 2016. Federal Maritime Commission (FMC) chairman Mario Cordero says his agency needs more money and personnel to avoid becoming an impediment to the growth of U.S. international trade.

Speaking before the 
Senate Committee on Commerce, Science and the Transportation Subcommittee on Surface Transportation and Merchant Marine Infrastructure and Safety, Cordero said he wasn't sure how long the FMC's 125 employees could maintain the current level of oversight with record breaking container volumes increasing the congestion at U.S. maritime gateways.

MIAMIIn a warning to the Committees Cordero said: "If unaddressed, congestion at U.S. ports presents a serious potential impediment to continued economic growth as well as the competitiveness of the nation."

Noting 2015 was an "impressive year for shipping", he said 20 million TEUs entered the U.S. and an additional 11.5 million were exported – an overall increase of two percent over 2014 and the second consecutive year that imports have exceeded the 2007 record of 18.6 million TEUs.

Asia remains America's largest trading region and is responsible for 62 percent of all U.S. container trade volumes with China its largest single trading partner.

With International trade accounting for 32 percent of America's GDP, a figure forecast to reach 60 percent by 2030, Cordero explained the demands on the FMC "are significant in terms of accepting, processing, analyzing, and acting upon just the routine filings that provide the foundation for a transparent and competitive international ocean shipping network".

Citing the last three months of 2015, he said the FMC had received 8,491 new service contract filings and 177,382 contract amendments, while for the full 12 months it had processed 51,109 new filings and 653,315 amendments.

"Simply put, the demands on the agency's resources are continually increasing, but the resources available to the FMC to execute its mission never seem to keep pace with the work that must be done," Cordero explained.

"At some point," he warned, "we may not be able to provide service at the rate our constituents require to be able to do their business; and if that day comes, we will not be facilitating trade, we will instead risk becoming an impediment to the free flow of cargo."

WASHINGTON, DC: March 03, 2016. As Alaska, American, Delta, Jet Blue, Southwest and United bid for route authorization to Cuba, the U.S. Department of Transportation (DoT) is forecasting a 40 percent increase in America’s freight volumes in the next three decades while the trade value will almost double.

DOT US By 2045, total freight on all modes – air, vessel, pipeline, rail, and trucks – is projected to reach 25 billion tons while the value is expected to grow to US$37 trillion.

In 2015 nearly 18.1 billion tons worth US$19.2 trillion moved on America’s transportation network. On a daily basis, 49 million tons valued at US$53 billion were shipped on all modes.

The DOT projects tonnage will increase to 69 million tons per day by 2045 while the daily value will reach US$101 billion or a total of US$37 trillion by 2045.

Trucks moved 64 percent of U.S. tonnage in 2015 and 69 percent of the value. Trucking volumes are expected to grow 44 percent by 2045 while the value is forecast to rise 84 percent, according to the DoT.

(Note: Total includes shipments by other and unknown modes that are not shown in the tables.)

Weight of Freight by Mode (million tons)

Mode

2015

2045

Change

Truck

11,513

16,529

+ 44%

Pipeline

3,303

4,554

+ 38%

Rail

1,694

2,094

+ 24%

Water

835

1,156

+ 38%

Multiple

Modes and Mail

398

646

+ 62%

No Domestic Mode

273

297

+ 9%

Air

7

24

+ 234%

Total

18,056

25,331

+ 40%

Value of Freight by Mode (billion 2012 dollars)

Mode

2015

2045

Change

Truck

13,267

24,406

+ 84%

Multiple

Modes and Mail

2,129

4,336

+ 104%

Pipeline

1,445

1,797

+ 24%

Air

794

3,240

+ 308%

Water

694

1,517

+ 118%

Rail

657

1,198

+ 82%

No Domestic Mode

179

195

+ 9%

Total

19,249

37,014

+ 92%

AMSTERDAM: February 18, 2016. VimpelCom, the world’s sixth largest telecom company that reported a loss of US$691 million on revenue of US$9.6 billion last year, is to pay US$795 million to U.S. and Dutch regulatory agencies for bribing a Uzbekistan government official US$114 million between 2006 and 2012.

The company will also forfeit over US$550 million in bribe payments held in Swiss bank accounts and a further US$300 million held in Belgium, Luxembourg and Ireland that can be traced to the same Uzbek official.

VIMPLECOMVimpelCom, which admitted bribing a close relative of a high-ranking government official in order for its subsidiary Unitel to expand in the Uzbek market, has agreed to a deferred prosecution agreement with the U.S. Department of Justice, (DOJ), a consent agreement with the Securities & Exchange Commission (SEC) and a settlement agreement with OM, the Dutch Public Prosecution Service.

The Dutch company provides voice, fixed broadband, data and digital services to more than 200 million customers in Russia, Italy, Algeria, Pakistan, Uzbekistan, Kazakhstan, Ukraine, Bangladesh, Kyrgyzstan, Tajikistan, Armenia, Georgia, Laos and Zimbabwe.

Commenting on the settlement CEO Jean-Yves Charlier said: “The wrongdoing, which we deeply regret, is unacceptable. Since the launch of the investigation, VimpelCom has appointed a new Chief Executive Officer, Chief Financial Officer, Group General Counsel, Chief Performance Officer and Group Chief Compliance Officer to drive the necessary change forward.”

According to the DOJ, rather than implement and enforce a strong anti-corruption ethic, certain VimpelCom executives sought ways to give the company plausible deniability of illegality while knowingly proceeding with corrupt business transactions.

VimpelCom began its business providing wireless services in Moscow in 1992 following an earlier invitation from Russian defense contractor MAK Vimpel. According to the company, founders Dmitri Zimin, a scientist working for a MAK subsidiary, and American entrepreneur Augie Fabela, built VimpelCom “based on a common passion to dream the impossible and to succeed”.

“Today we mark the resolution of criminal charges and civil proceedings against corrupt corporate entities that made bribery a foundation of their business model,” noted DOJ Attorney Preet Bharara.

LONDON: March 04, 2016. The Centre for Economic Policies (CEP), a pro-market think-tank, warns that the European Commission's Ports Services Regulation (PSR), due for debate by the European Parliament, will pose a serious risk to the future of the UK ports industry.

Noting several concessions in the latest PSR draft that pander to "continental trade union interests", the CEP said this third iteration is more likely to be accepted by the Parliament.

Felixstowe Logistics Park The EC says the PSR is meant to improve competitiveness in mainland European Union ports where 80 percent are run by state or local authorities. This is in contrast to the UK where 15 of the 20 largest UK ports are private sector operations.

As a result, virtually all UK ports are privately funded and require no taxpayer subsidy. The CEP said new capacity at the port of Felixstowe (right) and Southampton was developed with 100 percent private capital - compared to €1.1 billion and €788 million of public funds for new facilities at Rotterdam and Hamburg respectively.

According to the think-tank, Britain's port industry is the second largest in Europe handling 500 million tonnes of freight per year. The UK Ports Industry Association says investment is averaging £400 million a year and workers are 1.3 times more productive than the UK's economic average.

The CEP said the UK government and the UK Major Ports Group are concerned the PSR aims to regulate market access to port services, port charges and financial transparency with "serious negative consequences for job creation and investment".

The think-tank also noted the new regulation would not be applied equally with the EC considering port investments in its Block Exemption Regulation, while some MEPs want their local ports to be protected from the proposed regulation.

The CEP said it wants the UK government and all UK MEPs to resist any attempt to allow further state subsidies of EU ports; insist on the PSR not applying to the UK; and ensure an amendment that would remove privately financed ports from its scope.

BERLIN: February 10, 2016. Following public submissions, global watchdog Transparency International (TI) has launched a “social sanctioning” campaign against nine of the world’s most symbolic cases of corruption.

The targets are senator Felix Bautista of the Dominican Republic; Zine Al Abidine Ben Ali, former president of Tunisia; the U.S. state of Delaware and its registration of anonymous companies; FIFA; the Akhmad Kadyrov Foundation of Chechnya; the corruption of Lebanon’s government, authorities and institutions; Ricardo Martinelli, former president of Panama and his associates; the Brazilian oil and gas conglomerate Petrobras; and Ukraine’s ex-president Viktor Yanukovych.

TI said the chosen nine out of 383 cases identified by the public were based on their widespread impact on human rights, the need to highlight laws allowing anonymous companies, and those who facilitate corrupt deals.

“Lying, cheating, stealing and fraud are the tools of the corrupt. We want to pursue sanctions against as many of these cases as possible. We cannot single out just one case, they all must be dealt with,” said TI chairman José Ugaz.

Cueto LANTI alleges that the Akhmad Kadyrov Foundation of Chechnya “makes up to US$60 million per month from people, while 80 percent live in poverty”; former Panama president Ricardo Martinelli and his close allies diverted US$100 million from citizens; former president of Tunisia Zine al-Abidine Ben Ali stole up to US$2.6 billion from the country; and former president of the Ukraine Viktor Yanukovych oversaw “millions in state assets [that] ended up in private hands [and] fled to Russia before charged with embezzlement”.

In a related move the U.S. Securities & Exchange Commission has penalized LAN CEO Ignacio Cueto Plaza (right) US$75,000 for authorizing US$1.15 million in payments to a third party consultant in Argentina in connection with LAN’s attempts to settle union disputes with the employees of LAN Argentina, a subsidiary of LAN, in 2006. He neither confirms nor denies the SEC allegations.

Chilean-born Cueto has been CEO of LAN since 2012. From 1995 to 1998 he was president of LAN Cargo, based in Miami, and from 1999 to 2005 was CEO of LAN’s passenger business. In 2005, Cueto became president and COO of LAN Airlines until the merger of LAN and TAM in June 2012.

According to the SEC, as part of a deal that LAN reached with the Argentine government in March 2005, the airline was required to hire between six and eight hundred employees from the state-owned LAFSA and Southern Winds airlines that subsequently became LAN Argentina. The SEC says the five unions involved had no hesitation in seeking wage increases following the acquisitions, and by 2006 LAN’s management was involved in negotiations that eventually resulted in work stoppages, slowdowns and strikes by the pilots’ and mechanics’ unions.

Cueto responded by agreeing to pay a consultant US$1.15 million to settle the disputes. The SEC alleges he understood it was possible the consultant would pass some of the money to union officials. By August of that year, the strikes were over and all the unions had settled for wage increases less than their original demands.

As part of his settlement with the SEC, Cueto has agreed to attend all anti-corruption training sessions required for senior executives at LAN.

BEIJING: February 23, 2016. A new report from the European Chamber of Commerce in China says central government efforts to resolve excessive production capacity have failed due to regional protectionism, weak regulatory enforcement, low resource pricing, misdirected investment, inadequate protection of intellectual property rights and an emphasis on market share.

The report is an update of a study done by the Chamber in 2009 and suggests China can resolve its excess capacity by cutting capex in the following sectors: crude steel, electrolytic aluminum, cement, chemicals, refining, flat glass, shipbuilding, 
paper and paperboard.

Chinese-ShipbuildersEuropean Chamber president Joerg Wuttke commented: “China has not followed through on the attempts it has made over the last decade to address overcapacity. This has led to a further deterioration of the problem. Without a sustained effort to address it now, overcapacity may well seriously impede the effectiveness of China’s economic reform agenda.”

The Chamber also suggests a reform of the country’s fiscal system by adopting a consumption-based, VAT-sharing system to reduce local government employment subsidies; improvements in IP protection to encourage increased R&D spending; applying labor laws more rigorously; reducing energy price subsidies to industry; continued resource price reform on coal electricity, water and natural gas; and publishing more reliable and transparent industry data for companies to make more informed decisions about their production volumes.

“A review of our original study showed that the action plan we proposed in 2009 is still relevant today. We hope that our analysis and recommendations for 2016 will result in concrete actions by Chinese policymakers,” said Wuttke. “Although the [Communist] Party’s annual Central Economic Work Conference has listed addressing overcapacity as a priority every year from 2007 to 2015, fundamental changes have not yet taken place. Tackling overcapacity is now more urgent than ever: the cost of maintaining the status quo is far too high,” he added.

MONTRÉAL: February 08, 2016. The 170 experts of the International Civil Aviation Organization (ICAO) Committee on Aviation Environmental Protection (CAEP) have adopted a new CO2 emissions standard, paving the way for its ultimate adoption by the U.N. agency’s 36-state governing council.

Under the CAEP recommendation, the new CO2 standard would be applicable to new aircraft type designs from 2020 and new deliveries of current aircraft types from 2023. A cut-off date of 2028 for production of aircraft that do not comply with the standard was also recommended.

The proposed global standard will have the greatest impact on aircraft weighing over 60 tonnes - accounting for more than 90 percent of international aviation emissions.  

Oman Air  KLM“The goal of this process is ultimately to ensure that when the next generation of aircraft types enter service, there will be guaranteed reductions in international CO2 emissions,” said Olumuyiwa Benard Aliu, president of the ICAO Council. “Our sector presently accounts for under two percent of the world’s annual CO2 emissions, but we also recognize that the projected doubling of global passengers and flights by 2030 must be managed responsibly and sustainably.”

Commenting on the announcement Boeing said the new standard would ensure older aircraft are replaced by more efficient types that will further reduce fuel consumption and carbon emissions.

"This standard represents more than six years of work by a group of international experts from ICAO member states, industry and non-governmental organizations, [and] represents real progress beyond the substantial industry achievements already made to reduce aviation emissions, with more steps ahead. The new standard is ambitious and will become part of the certification process applied to every airplane before delivery based on the ICAO schedule,” the company declared.

In a related move, Oman Air has chosen Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) to provide flight hour support for the CFM56-7 power plants that equip its B737NG aircraft. Four more aircraft will join Oman Air’s fleet this year in addition to two more B787 Dreamliners.

AFI KLM E&M is a major MRO provider with a workforce of over 14,000 supporting nearly 1,500 aircraft operated by 200 international and domestic airlines and structured around an extensive logistics network.

The long-term contract was signed in Amstelveen, The Netherlands by Oman Air CEO Paul Gregorowitsch (left in picture) and Ton Dortmans, EVP KLM E&M.

 

 

Havana airport CubaHAVANA: February 18, 2016. Following the re-establishment of air services between the U.S. and Cuba after 50 years, the U.S. Department of Transportation (DOT) has invited U.S. air carriers to apply for a total of 110 daily roundtrip passenger and cargo services. A decision on who gets what is expected in late March.

The new agreement provides each country with the opportunity to operate up to 20 daily flights between the U.S. and Havana's José Martí International Airport (right), and a further 10 daily flights to each of Cuba’s nine other international airports. Existing charter flights and frequencies are not affected by the decision.

“We are excited to announce the availability of new scheduled air service opportunities to Cuba for U.S. carriers, shippers, and the traveling public, and we will conduct this proceeding in a manner designed to maximize public benefits,” said DOT secretary Anthony Foxx.

The air service agreement covers 12 categories authorized by the U.S. Department of the Treasury’s Office of Foreign Assets Control. They are: family visits; U.S. government official business, foreign governments, and certain intergovernmental organizations; journalistic activity; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban people; humanitarian projects; activities of private foundations or research or educational institutes; exportation, importation, or transmission of information or information materials; and “certain authorized export transactions”, according to the statement. 

BRUSSELS: February 05, 2016. The World Horse Welfare and Federation of Equine Veterinary Associations (FEEVA) is part of a group of stakeholders that have released guidelines to assess whether an equine is fit for transport.

Intradco horseThe move, which has been welcomed by the European Commission (EC), is aimed at reducing the risk of animal disease while enabling logistics companies to avoid penalties, financial losses and the possible withdrawal of licenses.

The group said that while the guidelines will help protect animal welfare, they also aim to help protect the health and safety of transport professionals in the enforcement and understanding of EU regulation 1/2005 that states: “No animal shall be transported unless it is fit for the intended journey.”

The new publication has been endorsed by Andrea Gavinelli, head of the EC unit for Official Controls and Eradication of Diseases in Animals, who commented: “These guidelines will be an essential resource for anyone involved in the transportation of horses, donkeys, mules or their hybrids and I am pleased that the Commission has been able to support their production and dissemination.”

Last month the EC announced it had committed over €160 million to support eradication, control and surveillance programs that aim to eliminate animal diseases as well as further strengthen the protection of human and animal health.

The new guidelines are in English with Dutch, French, German, Italian, Polish, Romanian and Spanish versions available in the next few months. For more information: Federation of Veterinarians of Europe, www.fve.org

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