Business

PARIS —  Already reeling from the fallout of rolling "yellow vest" protests, French businesses are again counting their losses as an eight-day-old strike over pension reforms eats into their Christmas earnings.

With public transport in Paris and national rail services at a near standstill since December 5, shoppers have been thin on the ground.

Hotels and restaurants are also feeling the pinch.

"We've had a cascade of cancellations, more and more of them," said Franck Delvau, co-president of the UMIH union of hotel operators, the sector's largest.

The strike could be costing the economy as much as 400 million euros ($445 million) per day, the CPME confederation of small and medium-sized enterprises (SMEs), which represents 99.9 per cent of French companies told AFP.

Of 920 SME company bosses polled, said the CPME, 49 per cent reported a drop in sales since last Thursday, compared with last year.

"Forty-two per cent of bosses believe the combined impact of the 'yellow vests' movement and the strike is placing their business in danger," the confederation said in a statement.

Ghost of Christmas past 

As the world's most visited country with more than 89 million international arrivals in 2018, according to the World Tourism Organisation, France's economy relies heavily on tourism.

The sector had only just rebounded from the aftermath of a spate of extremist attacks in 2015 and 2016 when simmering discontent over social inequality exploded last year into the "yellow vest" revolt.

The weekly demonstrations, several of which ended in rioting and looting, forced businesses in central Paris and other cities to remain shuttered over several consecutive weekends.

Now, the retail and hospitality sector are being squeezed again as France's militant unions paralyse transport links in protest over a major overhaul of the pension system that would particularly affect public sector workers, including train drivers.

"If this action continues beyond this week, it would be catastrophic for our members, after another complicated year end last year," said Gontran Thuering of the National Council of Commercial Centres noted.

Shopping malls, he said, usually count on making double their average monthly sales in December —  a target they are likely to miss this year.

'Catastrophic' impact 

The first weekend of the strike was "catastrophic", according to the GNI-Synhorcat unions of hotels, cafes and restaurants.

"Paris was empty; the restaurants, the brasseries... even fast food outlets —  everyone was affected," with some achieving half their usual revenue, it said.

The UMIH hoteliers' association said its members were similarly affected, with Paris hotels losing almost a third of their customers and restaurants as much as 50 per cent.

Several business meetings, congresses and seminars in the City of Light were postponed.

The OECD grouping of developed and emerging economies issued an economic survey for France in April, in which it warned that "prolonged and heightened social protests would hurt private consumption and business investment as well as exports through weaker tourism".

It noted that the age at which most people in France retire was one of the lowest among OECD members, at a little over 60.

Paris on foot

In recent days, thousands of visitors to Paris have had to rely on their ingenuity and patience to move about Paris.

With most metro lines out of service for days on end, trains connecting Paris and its suburbs slashed and inter-city connections severely hamstrung, many had no choice but to walk as public bikes and electric scooters were quickly rented out, and taxis charged a premium.

"We get around best we can, mainly on foot and sometimes by Uber," Guillermo Pulido from Colombia said at the foot of the fire-charred Notre-Dame cathedral which he was visiting with his wife and children amidst the cacophony of horns from cars and scooters jamming the surrounding streets.

"The perception of the strike from abroad is that France is both blocked up and violent, an image that is not new considering the 'yellow vests' movement," said Jean-Pierre Mas, president of the Entreprises du Voyage body, which groups some 1,600 tour operators.

"This is obviously not good for tourism, for visits and reservations for the future."

GENEVA — Despite the slowdown in air travel since early 2018 as a result of the trade war, in particular, this year has seen a broad range of growth across different travel markets with the strongest being the domestic China market which posted an 8.5 per cent increase, according to the International Air Transport Association (IATA) .

Brian Pearce, IATA's chief economist, said other emerging markets, including eastern Europe and within Asia also saw a growth of 8 per cent in air travel in 2019. 

A 7.5 per cent growth witnessed within Europe in 2019 was the result of the rise in the emerging markets in eastern Europe, the IATA chief economist said, adding that developed economies in Europe with more mature markets saw much slower air travel growth, close to 3 per cent or less.

The weakest market was across the Pacific, reflecting the impact on travel of the US-China trade war, he said. 

Despite regressing demand, Pearce explained that airlines have continued to connect more cities with regular air service. "We forecast that unique city-pair connections will rise over 23,000 for the first time in 2020.

"Connecting cities is the airline industry's critical value proposition to the world economy... It brings the flows of trade, investment, skilled workers, competition, innovation as well as tourism," he said during the IATA Global Media Days which commenced on Wednesday. 

On airlines profit margins, he said returns on capital and operating profit margins of airlines have been on the decline since 2016. 

"This year [with data through to Q3] the industry seems to have stabilised margins at a level of 50 per cent of the peak 3-4 years ago, but still better than earlier performance."

Citing forecasts of the International Monetary Fund for a better global gross domestic product growth in 2020 as a result of the policy response to weaker growth this year, Pearce said that the growth next year should contribute to improving demand and airline profits.

However, the economist said that the global GDP forecasts are based on trade war "truce" with one major uncertainty being the trade tariffs and how the US will proceed with its trade policy over the next year.

"Our working assumption for the forecast... that ahead of the US elections, we will see a 'truce' with no reduction in existing tariffs but no additional tariffs either."

He explained that the expected global economic growth from 0.9 per cent in 2019 to 3.3 per cent in 2020 will be "moderately supportive for the air cargo business".

However, the economist explained that, in case demand growth picks up in 2020, there is a threat that supply could rise even faster, given the 2100+ aircraft that are secluded to be delivered once, as expected, the B737 MAX returns to service. 

"At 7.5 per cent of the fleet, that represents an addition of more than 2 per cent points."

"Slightly stronger economic growth in 2020, together with stable fuel prices is expected to keep air travel growth close to this year's at 4.1 per cent. 2018 was the last of 9 years of air travel growth at or above the 5.5 per cent 20-year average. We have now entered a period of below trend growth for air travel,” he elaborated. 

GENEVA — The aviation industry provides better connectivity at affordable prices nowadays. However, several forces are putting pressure on the industry, Director General and CEO of the International Air Transport Association (IATA) Alexandre de Juniac said on Wednesday.

Opening the IATA Global Media Days in Geneva, he said these forces include trade wars and the rise of nationalism.

Noting that flying is a freedom that grows prosperity and improves people’s lives, he said, “IATA has and will continue to take a strong stance that we are better off with borders that are open to people and trade”. 

“While respecting the right of countries to protect their borders, we believe that greater connectivity makes our world a better place. It is part of the DNA of our industry with a mission to bring people closer as a global community.”

On IATA’s global presence, the CEO said that the association’s 290 members represent 82 per cent of the total air traffic. “Together, they are vital to the important work of linking people and economies.”

He said that over four-and-a-half billion passengers and 61 million tonnes of freight will travel across a network of more than 22,000 unique city pairs connected by air in 2019.

“That’s more than double the number of routes that were available in 1998”, he noted.

“Flying is becoming more affordable, de Juniac said, explaining that the average return fare in 2019 before surcharges and tax is forecast to stand at 62 per cent lower than in 1998 after adjusting for inflation.”

Comparing how the condition of flying was 75 years ago when the Chicago Convention was signed with nowadays, the CEO said, “In 1945, some nine million people travelled by air. Today we transport that same number, on average, every 18 hours.”

Environment 

The CEO explained that aviation made “serious” climate action commitments in 2008 towards cutting carbon — “long before the word ‘Flyskam’ entered our vocabulary”.

He added that the aviation sector has been  committed to improve fuel efficiency by an average of 1.5 per cent annually.

With aviation held responsible for 2 per cent of global man made carbon emissions according to the Intergovernmental Panel on Climate Change, the CEO said, “We are committed to cut our emissions to half 2005 levels by 2050 which aligns aviation with the Paris agreement.”

However, the CEO urged governments to focus on driving the technology and policy solutions in a manner that can make flying sustainable. 

“In the immediate term, that means focusing on sustainable aviation fuels which have the potential to cut our carbon footprint by up to 80 per cent.”

“Carbon is the enemy, not flying. Our goal is to keep the world flying sustainably and with pride.”

AMMAN — The International Air Transport Association (IATA), in partnership with the Global Shippers Forum, the International Federation of Freight Forwarders Associations and the International Air Cargo Association, are exerting more efforts to ensure the safe air transport of lithium batteries, according to an IATA statement. 

The organisations are also renewing calls for governments to crack down on manufacturers of counterfeit batteries and of mis-labelled and non-compliant shipments introduced into the supply chain, by issuing and enforcing criminal sanctions on those responsible.

Consumer demand for lithium batteries is growing by 17 per cent, annually. Subsquently, the number of incidents involving mis-declared or undeclared lithium batteries has also risen. 

“Dangerous goods, including lithium batteries, are safe to transport if managed according to international regulations and standards. But we are seeing an increase in the number of incidents in which rogue shippers are not complying. The industry is uniting to raise awareness of the need to comply. This includes the launching of an incident reporting tool so that information on rogue shippers is shared. And we are asking governments to get much tougher with fines and penalties,” said Nick Careen, IATA’s senior vice president, airport, passenger, cargo and security.

The campaign includes three specific initiatives.

They are an incident reporting and alert system for airlines, an industry awareness campaign on the dangers of shipping undeclared and misdeclared lithium batteries, and the facilitation of a joined-up industry approach.

The alert system is an industry information sharing platform has been launched to target mis-declared consignments of lithium batteries. The reporting system will allow real-time information about dangerous goods incidents to be reported in order to identify and eradicate acts of deliberate or intentional concealment and misdeclaration.

As for the campaign, a series of dangerous goods awareness seminars are being held across the world targeting countries and regions where compliance has been challenging. 

In addition, an education and awareness programme for customs authorities has been developed in collaboration with the World Customs Organisation.

 Regarding the joined-up approach, the industry has pledged support for an initiative presented by the United Kingdom, New Zealand, France and The Netherlands at the recent Assembly of the UN’s International Civil Aviation Organisation which calls for the adoption of a cross-domain approach to include aviation security, manufacturing standards, customs and consumer protection agencies. 

Currently air cargo is scanned for items that pose a risk to security such as explosives, but not safety such as lithium batteries. 

Governments must play their role with much stricter enforcement of international regulations to ensure the safe transport of these vital shipments, said the statement. The four trade associations urge regulators to follow through with significant fines and penalties for those who circumvent regulations for the transport of lithium batteries.

AMMAN — The value of the country’s industrial exports during the first 10 months of 2019 posted an 8.7 per cent increase as it reached JD4.933 billion, compared to the figure recorded at the end of the same period last year, according to a report by the Jordan Chamber of Industry, the Jordan News Agency, Petra, said. Leather and textiles exports were exported at around JD1.309 billion up from JD1.112 billion, recording a 17.7 per cent increase.

Exports of the chemical and cosmetics sector grew by 18.4 per cent to JD815 million from JD689 million, the news agency added. Mining sector exports totalled JD906 million compared to JD893 million, up by 1.5 per cent. Among the sectors that saw a decline in their exports were engineering and ICT industries, packaging industries, and wood and furniture industries. 

AMMAN — The Energy and Mineral Recourses Parliamentary Committee on Tuesday endorsed a bill that nullifies a law pertaining to the ratification of an oil exploration, production, sharing and evaluation agreement that had been reached between the Natural Resources Authority and Ammonite Energy Ltd. in Al Jafr and central Jordan.

Hussein Qaisi, who heads the Parliamentary Committee, said that the government from the very beginning should decide whether companies expressing interest in oil exploration are serious about the job or not, through examining their background.

The reason for the committee’s decision is failure by Ammonite Energy Ltd. to implement its commitments, under the contract on oil exploration in Jafr and central Jordan, he said. The committee’s meeting was attended by Minister of Energy and Mineral Resources Hala Zawati and other energy sector officials.

FRANKFURT AM MAIN — The European Central Bank's (ECB) new President Christine Lagarde has announced that the Frankfurt-based institute will soon undertake a strategic review, its first since 2003.

Here is how the ECB's strategy has developed over the years and what has prompted the decision to reassess it.

What is the ECB strategy now?  

The ECB's overriding mandate is to ensure price stability.

In 2003, its main decision-making body, the governing council, defined that goal as an inflation rate of "just below, but close to" 2 per cent, a level that would encourage investment and employment, while warding off deflation.

Nevertheless, inflation has remained stubbornly low at around 1 per cent, a phenomenon that has left many economists around the world scratching their heads.

Different theories have been put forward as to a possible explanation, from the rise of the casual "gig" economy or the suppression of workers' earnings through globalisation, to political shocks, such as trade tensions and Brexit.

There have been increasing calls for the central bank to rethink the inflation target and the issue is certain to feature highly on the ECB's review, which is expected to take many months.

At the same time, the ECB is under pressure to do more to tackle climate change and wealthier countries like Germany see the review as a chance to call into question the ECB's ultra-expansive policy.

They have long argued that the bank's record-low — and even negative — interest rates, as well as its massive "quantitative easing" bond-buying programme, are detrimental to savers and help accentuate asset price bubbles.

The review will be "an ideal opportunity for Christine Lagarde to reflect on the unconventional crisis measures adopted over the past decade", Pictet Wealth Management strategist Frederik Ducrozet said.

The aim should be "not to 'reset' monetary policy, but give it a new launching point for the coming eight years" of her mandate, he said.

A change in the definition of the inflation target to "around" 2 per cent, instead of "just below", would be "desirable and plausible, if only to make forecasts simpler and more credible", Ducrozet said.

Meanwhile, environmentalists are lobbying the ECB intensively to green both its own operations and its investments in the wider economy through its bond-buying scheme.

Lagarde acknowledged last week that "the ECB's mandate is not climate change", but said climate risks could be built into its economic forecasting and other aspects of its work, such as banking supervision, without compromising the price stability target.

Clearer communication 

Until now, ECB meetings have been shrouded in more secrecy than those of other central banks, with an "account" published only weeks later that neither names participants, nor reveals the voting record of individual governing council members. 

"We think the bank may move to a more transparent and systematic process of voting on major policy decisions," said Capital Economics analyst Andrew Kenningham.

The debate has been given fresh urgency following the decision by the ECB's governing council in September to restart a bond-buying scheme, which led to a rare public row where dissenters aired their grievances in the media. 

Lagarde has also vowed to bring the ECB closer to the public by ditching some of the bank's seemingly impenetrable jargon, where a single word can move markets, but remain incomprehensible to outsiders.

Lagarde has said she wants to "dust off" the bank's language to help citizens understand "what the ECB is for".

PARIS — Public transport in France was crippled for a fourth day on Sunday as the government prepared to respond to anger over pension reforms that brought hundreds of thousands onto the streets as workers embarked on open-ended protest.

President Emmanuel Macron, Prime Minister Edouard Philippe and senior Cabinet ministers were scheduled to hold a "working meeting" late Sunday to discuss a government project which the country's powerful labour unions claim will force many to work longer for a smaller retirement payout.

The strikes, which began on Thursday over plans for a single, points-based pension scheme, recalled the winter of 1995, when three weeks of stoppages forced a social policy U-turn by the then-government.

Macron's move to modernise France's retirement system is part of an election pledge to put the country on a solid financial footing — a mission that calls for painful changes in a country where many people have seen their spending power decline.

The biggest labour unrest in years comes as France's economy is already dented by more than a year of weekly anti-government protests by "yellow vest" activists, and with Macron's popularity falling.

The mass strike closed schools on Thursday, and hobbled commuters in Paris and its suburbs as well as other major cities through the weekend.

Many opted to take days off or to work from home, but thousands had no choice but to squeeze into perilously overfull suburban trains and metros whose numbers were slashed to a minimum.

Shows cancelled 

Regional and international trains, including the Thalys and Eurostar, were also badly affected and many flights were cancelled on the first days of the strike.

Many tourists were left disappointed too, with the world-famous Louvre closing some rooms, and the Paris Opera and other theatres in the capital cancelling performances.

The chaos was set to continue on Monday, with the three main rail unions calling for the action to be stepped up ahead of another general strike and mass protests called for Tuesday.

"In the coming days, we recommend avoiding public transport," said the website of the RATP public train, tram, bus and metro company on which some 10 million passengers in the larger Paris area rely daily to get to work.

Ten out of the RATP's 16 metro lines will be offline, four will offer limited service, and the only two driverless metros will run as usual but with a "risk of congestion" during peak hours.

Inter-city rail operator SNCF cautioned of potentially "dangerous" overcrowding.

Philippe vowed to the Sunday newspaper Journal du Dimanche he was "determined" to pursue the reform — which will see 42 pension plans merged into one.

"If we do not make a far-reaching, serious and progressive reform today, someone else will do a really brutal one tomorrow," said the head of government.

But the leader of the hardline CGT union, Philippe Martinez, told the paper: "We will keep up until the withdrawal" of the reform plan, which he said contained "nothing good".

'Positive outcomes' 

Under pressure, the government held talks with union representatives over the weekend, ahead of Sunday evening's emergency meeting.

Jean-Paul Delevoye, who Macron appointed to lead the pension reform project, is set to unveil the outcome of his months-long consultations on Monday, followed by Philippe announcing the final details of the proposed reform plan on Wednesday.

Delevoye has already angered unions by suggesting cancelling the more advantageous pensions enjoyed by some professions including public transport and utilities workers, sailors, notaries and even Paris Opera workers.

The proposals have brought thousands out on the streets in recent months, including train drivers, pilots, lawyers, doctors and police.

At least 800,000 took part in countrywide rallies on Thursday, one of the biggest demonstrations of union strength in nearly a decade.

On Saturday, some 23,500 people including "yellow vest" protesters marched against unemployment and waning spending power.

Philippe insisted the reform will "provide extremely positive outcomes for many people who are suffering injustices in the current system", including women and farmers.

Businesses, however, feared for their bottom line with empty beds in many hotels and shopping hit by the transport stoppage on a key weekend in the run-up to Christmas.

PARIS — A US proposal for international digital taxes to be made “optional” is “not acceptable”, French Finance Minister Bruno Le Maire said on Friday.

Le Maire urged the United States to negotiate “in good faith” with the Organisation for Economic Cooperation and Development (OECD) members to reach an agreement on taxing global computing giants rather than resorting to “regrettable” trade measures that target symbolic products.

France has been at the forefront of efforts to tighten taxation of digital giants and parliament infuriated the administration of President Donald Trump in July by adopting a law taxing digital firms like Google, Apple, Facebook and Amazon for revenues earned inside the country.

In a letter addressed on Thursday to the OECD, US Treasury Secretary Steven Mnuchin reiterated support for ongoing talks on a deal that is to be finalised by June, but also made new propositions that unsettled trade partners.

The notion of a “safe harbour regime” that Mnuchin presents as a solution to US concerns includes the principle of “optionality” which Le Maire, however, said would not work.

“Frankly, I do not believe in the US proposal for an optional solution, where companies choose freely to be taxed or not,” Le Maire told an audience in Paris.

“An optional solution would clearly not be acceptable to France or its OECD partners,” the minister said.

“I have not seen many companies that accept to be taxed of their own free will. While you can always count on individual philanthropy, I am not sure that when it comes to public finances that goes very far,” Le Maire said.

The French finance minister argued for a binding text being mulled by 135 countries under OECD auspices that would replace France’s own 3-per cent tax on sales by digital giants within France.

‘In good faith’ 

Le Maire urged Washington to “return to the path of negotiations... in good faith, not on an optional basis but on a binding basis for all states that sign up to the agreement”.

France and other countries argue that multinational digital giants must pay taxes on revenues accrued in a country even if their corporate or tax headquarters are elsewhere, such as Ireland or Luxembourg where company profits are taxed at comparatively low levels.

In response to the French digital tax plan, the US has threatened to impose tariffs of up to 100 per cent on $2.4 billion in French goods including champagne, cosmetics, yoghurt and Roquefort cheese. 

In his letter, Mnuchin underscored the importance of the OECD talks “to prevent the proliferation of unilateral measures, like digital services taxes” that he urged member countries to suspend.

The row now threatens to block the OECD negotiations.

“It is regrettable that these trade wars lead our US allies and friends... to directly attack products that symbolise the French culture,” Le Maire said.

He said the French tax did not single out US companies, and that European Trade Commissioner Phil Hogan had expressed his “full support” for an EU-wide plan that would reply to the US threat in kind should it take effect.

Meanwhile, Hogan said he was planning to sit down with US Trade Representative Robert Lighthizer next month to discuss the American threat against French exports.

“We are looking at all possibilities, but we prefer to have a negotiated settlement,” Hogan told Bloomberg News.