Sunday, December 2, 2018

Trump, Xi Agree to Temporary Truce in Bid to Contain Trade War [feedly]

It's too early to tell for sure, but, consulting my 'gut' -- remembering we KNOW how WRONG the 'gut' can be ---  tells me that the truce, and the signing of agreements to replace NAFTA, are retreats from Trump's bullying posture, since I do not see much change on the Chinese, Mexican, or Canadian stances all of Thumpers Thumping and Tweeting. More to come.....


Trump, Xi Agree to Temporary Truce in Bid to Contain Trade War
https://www.bloomberg.com/news/articles/2018-12-01/trump-opens-dinner-china-s-xi-with-truce-in-trade-war-at-stake

U.S. President Donald Trump and Chinese President Xi Jinping agreed to keep their trade war from escalating with a promise to halt the imposition of new tariffs for 90 days as the world's two largest economies negotiate a lasting agreement.

The truce between the U.S. and China emerged after a highly anticipated dinner Saturday between Trump and Xi on the sidelines of the Group of 20 summit in Argentina. The leaders agreed to pause the introduction of new tariffs and intensify their trade talks, Chinese Foreign Minister Wang Yi told reporters hours later in Buenos Aires.  

"Both sides believe that the principled agreement reached between the two presidents has effectively prevented the further expansion of economic frictions between the two countries," he said.

Click here for a timeline of what happened when in the trade war

The White House called the meeting "highly successful," saying the U.S. will leave existing tariffs on $200 billion of Chinese goods at 10 percent and refrain from raising that rate to 25 percent as planned on Jan. 1. In exchange, the U.S. wants an immediate start to talks on Trump's biggest complaints about Chinese trade practices: intellectual property theft, non-tariff barriers and forced technology transfer.

After 90 days, if there's no progress on structural reform, the U.S. will raise those tariffs to 25 percent, White House Press Secretary Sarah Huckabee Sanders said in a statement. China also agreed to boost its purchases of agricultural and industrial goods to reduce its trade imbalance with the U.S., she said.

"It's an incredible deal. It goes down, certainly -- if it happens, it goes down as one of the largest deals ever made," Trump told reporters aboard Air Force One as he returned from Argentina. "China right now has major trade barriers -- they're major tariffs -- and also major non-tariff barriers, which are brutal. China will be getting rid of many of them."

Read more on the Trump-Xi dinner:

Investors have been eager for signs of a progress toward keeping an already costly trade dispute from spiraling into a new and broader cold war. White House economic adviser Larry Kudlow said that the meeting went "very well" in a brief comment to reporters as the Trump delegation left Buenos Aires for Washington.

Market Positive

"This is a strongly market positive result for the short term, since over the past few days markets have been nursing hopes that a tariffs pause of this kind would happen," Evercore ISI head of political analysis Terry Haines wrote in a note. "But it is not a ceasefire as some already are touting."

The outcome gives both sides enough to boast of a win without resolving the fundamental differences between them. China gets a delay on additional tariffs, while the U.S. gets greater purchases of agriculture goods while retaining leverage to push for more structural changes to the economy.

"Neither side got their maximum demands and it's not the first time in U.S.-China relations that both sides claim victory," said Michael Pillsbury, a senior fellow at the Hudson Institute and a defense official under presidents including Ronald Reagan and George W. Bush. "Both sides avoided the worst-case scenario."

What Our Economists Say..

Ahead of the G-20, the U.S. planned to increase tariffs on $200 billion in Chinese goods from 10% to 25%, effective Jan. 1. That increase has now been deferred. Based on our calculations, tariffs at 25% would have meant a 0.9 percentage point drag on China's GDP growth. Keeping tariffs at 10% will mean the drag stays at 0.5 ppt.
-- Tom Orlik, Bloomberg Economics. For the full note click here.

The meeting ran longer than scheduled, ending after more than two hours. At the start of the dinner, Trump struck an optimistic note.

Trump-Xi Dinner Offers Chance to Avert Deeper U.S.-China Rift

"My relationship is very special, the relationship that I have with President Xi," Trump said as the two men were seated.

Through a translator, Xi said that "only with cooperation between us can we serve the interest of global peace and prosperity and that is why I look forward to this meeting."

Previous Threats

The meeting was the first face-to-face encounter between the leaders in more than a year, a period that saw Trump impose tariffs on billions of dollars in Chinese imports in a bid to force Beijing to halt trade practices the U.S. considers unfair. Trump had warned that a disappointing outcome could prompt more U.S. tariffs.

In other key results from the talks, the U.S. promised to uphold the one-China policy, Wang said, while China threw its support behind further meetings between Trump and North Korean leader Kim Jong Un.

The White House said that Xi would consider approving a possible $44 billion deal for Qualcomm Inc. to purchase NXP Semiconductors NV if it's brought to him again. It also said China agreed to designate the synthetic opioid fentanyl, which has been linked to an epidemic of overdose deaths, as a controlled substance -- a move that would expose its sellers to the maximum penalty under Chinese law.

Wang Yi

Photographer: Alejandro Pagni/AFP via Getty Images

The dinner was moved up by about an hour after U.S. leader's schedule opened up on Saturday. He had already canceled a planned meeting with Russian President Vladimir Putin, and then scrapped an afternoon press conference out of respect for the family of former U.S. President George H.W. Bush, who died late Friday night.

Other attendees on the U.S. side included Treasury Secretary Steven Mnuchin, Secretary of State Michael Pompeo, U.S. Trade Representative Robert Lighthizer, China hawk and senior adviser Peter Navarro, National Security Adviser John Bolton and Trump's son-in-law, Jared Kushner, who's a senior adviser to the president.

Trump and Xi dined on some local specialties, including grilled sirloin with red onions, goat ricotta, and dates. For the first course, the attendees had a seasonal vegetable salad with a basil mayonnaise dressing, and for dessert, they were served caramel rolled pancakes with crispy chocolate and fresh cream, according to the White House.


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Africa must manufacture, trade its way to ‘Lion economy’ [feedly]

There is a lot of evidence that manufacturing is a stage in development that cannot be skipped for a nation to independently either a) accumulate enough wealth (via trade), or b) sufficiently train a workforce (advanced skills, tools, education, ,coordination...) -- alternatively, emigrate to a country that has made this transition....

Africa must manufacture, trade its way to 'Lion economy'

http://www.atimes.com/africa-must-manufacture-trade-its-way-to-lion-economy/

Africa must manufacture, trade its way to 'Lion economy'

Joseph Dana DECEMBER 2, 2018 2:46 PM (UTC+8)

Despite a recent downturn in the global economy, an unprecedented shift is under way throughout the so-called non-West. From Southeast Asia to Latin America, these economies have seen explosive urbanization and the emergence of a new middle class.

Manufacturing remains the engine behind the re-emergence of non-Western economic power. Robust manufacturing sectors have created millions of jobs in countries such as China and India, which have in turn put these economies on impressive growth trajectories.

Africa remains an anomaly in this transformative story. With one of the world's fastest-growing populations, Africa's urbanization rates are also exploding. Yet its economies are not meeting their potential.

While the continent has benefited from the Internet to create new industries, Africa's manufacturing sector has lagged woefully behind those of the rest of the world. Poor governance (think: the lack of trade-friendly legislation), a lack of investment in local and regional infrastructure (think: a paucity of efficient ports) and high costs are all factors behind the abysmal state of the sector.

If African countries want to free themselves from the remnants of colonialism and establish healthy economies, its leaders must get serious about manufacturing. The next generation of Africans already is in desperate need of jobs.

A robust manufacturing sector that absorbs large numbers of workers is the tried and tested path to independence. Factories offer pathways from working class to middle class and even to higher management that no other sector can compete with. It worked in the West; it worked for the Asian Tiger economies.

Given rising population figures, Africa could create 100 million manufacturing jobs if the correct policies were put into place. The problem is that 'if'

According to a report this year by the Brookings Institution, business-to-business spending in manufacturing on the African continent is projected to reach US$666 billion by 2030, which would be $201 billion more than in 2015. Given rising population figures, Africa could create 100 million manufacturing jobs if the correct policies were put into place. The problem is that "if."

First, some optimism. The African Union recognizes the potential positive impact manufacturing investment – and by extension, trade – can have for the continent. The regional body placed serious focus on the sector in its Agenda 2063, with targets for infrastructure upgrades, regional trade agreements and the creation of several special economic zones in countries outside the traditional African manufacturing bases of South Africa, Nigeria and Egypt.

One such attempt is the African Continental Free Trade Area (AfCFTA), launched in March to create a single market for goods and services in Africa. While the rollout of AfCFTA has lagged because of slow country implementation, the direction of travel is positive.

There is an additional cause for optimism. Financial technology is one booming cross-border business sector. With smartphone penetration on the rise, fintech startups are devising new ways for Africans to do business, send money and bank, regardless of where they are on the continent.

Applications target migrant groups remitting money home, insurance companies providing services through mobile-phone carriers, and even funeral-insurance companies selling their products on smartphones. The fintech sector is not large enough to create sustainable growth platforms for countries but it does demonstrate that countries have what it takes to work together toward an economic goal. Such cooperation is critical for a viable continent-wide manufacturing sector to take hold.

Additionally, small countries are embracing a manufacturing ethos. In Ethiopia, for example, small textile companies are trying to create a viable manufacturing sector from the ground up. SoleRebels, a footwear company that has expanded across the world, is one such company. Each of its shoes is crafted by hand in Ethiopia, and the founder, Bethlehem Tilahun Alemu, says she has no intention of outsourcing labor as her brand continues to grow.

Yet more generally, the road is going to be long and hard for Africa's manufacturing sector. Opening a factory remains an expensive and bureaucratic process.

According to a 2017 report by the Center for Global Development, small African manufacturing plants were 39% more expensive than similar facilities elsewhere. Medium-sized and large factories were a staggering 50% more expensive. Despite high levels of unemployment, labor costs were found to be high in countries from South Africa to Tanzania.

All this makes little sense, given that countries on the continent remain among the world's poorest. The reason, in one word, is corruption. It exists on a massive scale through the accumulation of a multitude of small payoffs – almost like a differential calculus of graft.

Without broad political will on a country level, there will be little change. At a time when large numbers of people in several countries want to free themselves from the legacy of colonialism, investment in manufacturing as a path to independence must be made easier.

Politicians need to get out of the way by enacting manufacturing- and trade-friendly laws, better prevent officials from seeking bribes at every stage of life, and build the infrastructure so Africans can trade with one another their respective comparative advantage.

Africa needs a "Lion economy."

This article was provided to Asia Times by Syndication Bureauwhich holds copyright.


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Saturday, December 1, 2018

Trump’s War Against the WTO [feedly]

Socialists, and progressives, could profit from consideration of Simon Johnson's defense of the WTO as a (first) step in the erection of a rules based, global trading infrastructure. Economic institutions seeking to settle payments and  regulate against theft and piracy often arise between nations and states before other governing superstructures. 

Johnson is a former IMF Chief Economist. His note regarding the actual US job effects of INCREASING US corporate incentives to invest in China by lowering technology transfer costs is a good example of the "shooting yourself in the head" side effects of a "nationalist" trade agenda.

Trump's War Against the WTO
https://www.project-syndicate.org/commentary/trump-war-against-world-trade-organization-by-simon-johnson-2018-11

If US President Donald Trump's talks with Chinese President Xi Jinping at the G20 summit in Buenos Aires do not go well, he could make good on his threat to increase US tariffs on a wide range of Chinese goods. But the stakes are even higher than that.

WASHINGTON, DC – At the G20 Summit in Argentina this weekend, US President Donald Trump will meet with Chinese President Xi Jinping to talk, above all, about trade. If their discussions do not go well, Trump could follow through on his threat to increase tariffs on a wide range of Chinese goods. But the stakes are even higher than that.

More broadly, Trump argues that the World Trade Organization has failed – for example, with regard to China – and that the United States should withdraw from the organization. Threatening to leave the WTO makes no sense even as a negotiating strategy, let alone as a policy, but it could still happen. The consequences for the US economy and for the world could be calamitous.

Ostensibly, Trump's current priority in discussions with the Chinese is stronger protection for US patents and copyrights. On the face of it, this makes some sense: it is estimated that various forms of "theft" of intellectual property cost the US economy at least $225 billion (1% of GDP). Protecting intellectual property has long been an important part of US trade policy, as reflected, for example, in the Uruguay Round of negotiations that concluded more than 20 years ago. And there have been conspicuous cases of industrial espionage that allegedly involve Chinese companies (or perhaps some branch of the Chinese government) stealing trade secrets from firms with operations in the US.

But some of the most prominent American concerns about China's intellectual-property regime today come from companies that want to invest in China, including the establishment of productive capacity there. China conditions these investments on technology transfer – a point highlighted by the US Trade Representative in a report released earlier this year, and now one of Trump's talking points.

China's insistence on technology transfer increases the short-term cost of doing business (for US and other foreign direct investors) and creates the threat of future competition from Chinese firms. Trump vows to "bring back" manufacturing jobs to the US. How does making it easier for American companies to manufacture and innovate in China contribute to fulfilling that promise?

Perhaps Trump's agenda is the more conventional aspiration to "open markets" for US exports, and it is entirely possible that the Chinese will offer to buy more of some category of goods after the G20 summit. Trump likes headlines and most likely he would prefer a favorable news cycle or two, given the recent gyrations in financial markets. But such deals are typically meaningless – the goods were going to be bought anyway in some fashion.

A more likely outcome, at the summit or soon after, will be another lurch in US policy against the existing WTO framework. The US is already blocking the appointment of judges to a key WTO appeals court. If this continues, the WTO adjudication process will effectively grind to a halt, perhaps as soon as next year. This would be a major loss: the WTO's dispute settlement process is essential to rules-based global trade. And, contrary to what Trump claims, the US wins far more often than it loses at the WTO. From 1995 to March 2017, the US prevailed in 91% of cases that it brought against other countries, according to data from the conservative Cato Institute.

But the US stands to lose a case brought against the Trump administration's recently imposed tariffs on imported steel and aluminum, because they most likely violate WTO rules. So the White House now wants to undermine the WTO's legitimacy and rescind US commitments to a multilateral trading system more broadly.

Could the US actually pull out of the WTO? Chad Bown and Douglas Irwin of the Peterson Institute for International Economics have written a careful analysis of the possibilities (I am also affiliated with PIIE, but I was not involved with this work). In their view, the power to do so more likely lies with Congress. But Trump certainly could issue a declaration of withdrawal, and then litigate his authority to implement it. Which way would the Supreme Court decide? It is very hard to predict.

And while that litigation continues, there would be great uncertainty about tariffs and much else. Bown and Irwin point out that, given how the system works, tariffs that are currently below 5%, on average, could jump to nearly 30%. There would naturally be retaliation in the form of higher tariffs imposed by America's trading partners, which is exactly what happened after the steel and aluminum tariffs were imposed earlier this year.

There are definitely valid concerns about how China conducts trade, including what Pascal Lamy, a former WTO director-general, calls "opaque, trade-distorting subsidization of high-tech products." But, as Lamy says, a more effective way to deal with this would be to strengthen WTO rules. Plenty of other countries would like to join the US in such an effort. Unfortunately, as in so many areas, Trump prefers unproductive confrontation to cooperation. 


Simon Johnson, a former chief economist of the IMF, is a professor at MIT Sloan, a senior fellow at the Peterson Institute for International Economics, and co-founder of a leading economics blog, The Baseline Scenario. He is the co-author, with James Kwak, of White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.


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Brexit, Borders, and the Bank of England (Wonkish) [feedly]

This is a fascinating analysis by PK, demonstrating his deep understanding of trade issues (in addition to his 
polemical skills) -- check out the nyt link (if you can get thru the paywall) for enhanced graphics.

Its also a kind of tutorial on trade economics, and the reasons behind the great difficulty advanced economies
are having coping.

Brexit, Borders, and the Bank of England (Wonkish)
Paul Krugman
https://www.nytimes.com/2018/11/30/opinion/brexit-borders-and-the-bank-of-england-wonkish.html

A few days ago the Bank of England released a report on the possible macroeconomic impact of Brexit. The most pessimistic scenarios were eye-poppingly bad — see Figure 1 — showing a worse slump than the one that followed the 2008 financial crisis. Not surprisingly, Brexit opponents seized on the report, while supporters accused the BoE of engaging in scare tactics.  

I personally think Brexit is a mistake, but was puzzled by how big some of the numbers were; I tweeted about that, and the BoE reached out to me to offer some explanation of what was going on in their analysis. What I want to do here is, first, to recount my understanding of their logic; then offer my own views on what a reasonable Brexit projection might assume for both the short and the long run.




1. Brexit according to the BoE

First things first: the people I spoke to at the BoE were adamant that they were not trying to scare people, push them into accepting Theresa May's deal, or anything like that. By their account, this report was about financial stability, assessing the robustness of the banks in the face of possible shocks. The very negative scenarios that caught everyone's attention weren't projections, but rather an attempt to game out the consequences if the worst happened.

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But where did these negative scenarios come from?

When economists try to assess changes in trade policy, they normally use some kind of "computable general equilibrium" (CGE) model. These models attempt to take account of the impacts of trade policy on consumption, production, and the allocation of resources. And there has been quite a lot of CGE modeling of Brexit.

This modeling is tricky because Brexit isn't about tariffs, which we know how to represent; it's about invisible barriers to trade arising from the end of open border to goods movements and so on. Still, plausible assumptions give us some sense of the magnitudes. My own rough estimate was 2% of GDP in perpetuity; other estimates run higher, but generally in the 3-4% range.

But the BoE's worst-case scenario shows a cost exceeding 10% of GDP, around three times what a CGE would tell you. Where's that coming from?

Part of the answer is that the BoE includes some nonstandard effects of trade: they assume that reduced trade (and foreign direct investment) will reduce productivity more than the direct impacts on resource allocation would predict. They cite some statistical evidence, but it's important to realize that this is black-box, reduced-form stuff: there's no explicit mechanism through which it's supposed to happen.

However, these assumed nonstandard effects aren't what's driving the really bad scenarios; they only, as I understand it, contribute something like 1 percentage point of GDP to the predicted costs.  What's key to the very bad results is, instead, the disruption that might come with a hard Brexit. Right now, goods flow into and out of Britain with minimal frictions. After Brexit, there would have to be customs inspections, and the UK doesn't have remotely enough customs infrastructure to do the job. The result would be huge delays at Dover and other ports, with queues of trucks backing up for many miles on motorways, just-in-time production massively disrupted, and more.

That disruption is what's driving the terrible scenarios. Notice that this analysis says that the costs of leaving the EU are much higher than the GDP that would have been foregone if Britain had never entered the EU, and therefore had the customs infrastructure to deal with trade flows in place.

OK, that's what I understand about the BoE analysis. What do I think about it?

2. Would it really be that bad?

So, about the BoE's purpose in issuing this report: if it wasn't intended to scare people, the Bank was extraordinarily naïve in not realizing how it would be reported and read. They really led with their chin here.

On the substance: I'm skeptical about the supposed effects of trade on productivity. I know that there's some evidence for such effects; trade seems to favor more productive firms. But relying a lot on effects we can't model seems dubious.

In particular, I have strong memories of the openness-growth debacle of the 1990s. At the time, there were many statistical studies purporting to find that open, outward oriented developing countries had much higher growth rates than inward-looking economies. This was interpreted to mean that countries that had tried to industrialize by protecting domestic markets could achieve Asian-type growth rates if they liberalized trade.

As it turned out, the supposed statistical evidence on openness and growth was quite suspect. And when massive trade liberalization happened in places like Mexico, the hoped-for growth miracles didn't materialize.  So I would treat that channel of Brexit losses as questionable. But what I learned from the BoE is that it's not that central to the analysis.  


What about disruption at the borders? This could indeed be a huge problem.

What's puzzling about the scenarios shown in Figure 1 is that they show these disruptions going on for multiple years, with barely any abatement. Really? Britain is an advanced country with high administrative capacity — the kind of country that history shows can cope well with huge natural disasters, and even wars. Would it really have that much trouble hiring customs inspectors and installing computers to recover from an 8 or 10 percent drop in GDP?

And even in the short run, I wonder why Britain couldn't follow the old prescription, "When all else fails, lower your standards." If laxer enforcement, special treatment for trusted shippers, whatever, could clear the bottlenecks at the ports, wouldn't that be worth it, despite the potential for fraud, as a temporary measure?

That said, it's truly amazing that Britain finds itself in this position. If the downsides are anywhere close to what the BoE asserts, given the risk — which we've known for a long time was substantial — of a hard Brexit, it was an act of utter folly not to have put in backup capacity at the borders. We can't possibly be talking about all that much money, and the Brexit vote was more than two years ago. What has the UK government been doing?

All in all, it's quite a spectacle. Whether you're pro-Brexit or anti, you should be horrified and outraged at how the issue has been handled.

Follow The New York Times Opinion section on FacebookTwitter (@NYTopinion)and Instagram, and sign up for the Opinion Today newsletter.

Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman


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Trump Signs New Trade Deal With Canada and Mexico After Bitter Negotiations [feedly]

Trump Signs New Trade Deal With Canada and Mexico After Bitter Negotiations
https://www.nytimes.com/2018/11/30/world/americas/trump-trudeau-canada-mexico.html

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G20 opens under clouds, threats and discord [feedly]

G20 opens under clouds, threats and discord
http://www.atimes.com/article/g20-opens-under-clouds-threats-and-discord/

The Group of 20 Summit of global leaders in Buenos Aires, Argentina opened on Friday under various political and economic clouds.

Chinese President Xi Jinping rallied developing nation leaders in attendance on Friday to condemn protectionism and laud the global rules-based order ahead of his highly anticipated dinner with US President Donald Trump on Saturday night.

Trump has threatened to escalate his trade war with China, imposed to penalize what he sees as unfair trade practices. In recent months, the world's two largest economies have impose punitive tariffs on billions of dollars of one another's goods. Global markets are expected to rise or fall depending on the outcome of their meeting.

This year's two-day gathering is seen as a major test for the G20 industrialized nations to assuage trade tensions amid surging nationalist sentiment in many member countries.

The G20 accounts for two-thirds of the world population and is widely credited with avoiding a major global calamity after the 2008 financial crisis.

Xi and other leaders from the so-called BRICS group of leading emerging economies – Brazil, Russia, India, China and South Africa – issued a statement calling for a continued commitment to open international trade and support of a multilateral trading system via a strengthening of the World Trade Organization (WTO).

Chinaís President Xi Jinping arrives at the venue of G20 (Group of Twenty) summit conference in Buenos Aires, Argentina on November 30, 2018. The 2018 G20 Buenos Aires summit will be the 13th meeting of Group of Twenty (G20), and the first G20 summit to be hosted in South America. ( The Yomiuri Shimbun )
Chinaís President Xi Jinping arrives at the venue of G20 summit conference in Buenos Aires, Argentina on November 30, 2018. Photo: AFP Forum via The Yomiuri Shimbun

"The spirit and rules of the WTO run counter to unilateral and protectionist measures," the statement said. "We call on all members to oppose such WTO-inconsistent measures, stand by their commitments undertaken in the WTO."

Xi hopes to persuade Trump to abandon his announced plan to increase tariffs on US$200 billion of Chinese goods to 25% in January, from 10% at present.

A Chinese foreign ministry official in Buenos Aires said there were signs of increasing consensus ahead of the discussions, although differences remained, Reuters reported. US stocks closed slightly higher on Friday on market hopes that a compromise could be reached by the two leaders.

For the wider G20 meeting, consensus is proving elusive. G20 representatives had not yet reached consensus on the wording of the summit's communique, with differences in particular on trade. In previous years, the G20's joint statement had been hammered out well in advance.

It marks a rising trend of discord among G20 members. In November, Asia Pacific Economic Cooperation officials gathered in Port Moresby, Papua New Guinea, failed to issue a joint statement for the first time ever after the US and China delegations clashed over language addressing trade and security.

While the Trump-Xi meeting took center-stage, many parallel geopolitical dramas were playing out on the meeting's sidelines. European Council President Donald Tusk said the European Union would extend its economic sanctions on Moscow this month after Russian ships fired last week on Ukrainian vessels in the Sea of Azov, seizing the boats and sailors.

U.S. President Donald trump (L) and Russia's President Vladimir Putin attends the commemorative photograph of G20 (Group of Twenty) summit conference in Buenos Aires, Argentina on November 30, 2018. The 2018 G20 Buenos Aires summit will be the 13th meeting of Group of Twenty (G20), and the first G20 summit to be hosted in South America. ( The Yomiuri Shimbun )
US President Donald Trump (L) and Russia's President Vladimir Putin attend at the G20 summit conference in Buenos Aires, Argentina, November 30, 2018. Photo: AFP Forum via The Yomiuri Shimbun

Trump indicated Russia's seizure of the Ukrainian ships was the reason he canceled a planned bilateral meeting with Russian President Vladimir Putin, where they had been expected to discuss Trump's threat to withdraw from the Cold War-era Intermediate-Range Nuclear Forces treaty.

The two leaders made headlines nonetheless through a hearty handshake ahead of the G20's family photo event.

A White House spokeswoman later denied that Trump said the ships' seizure was the "sole reason" he cancelled the anticipated meeting. The Kremlin said it was willing to be "patient" in arranging a meeting with Trump. Putin used the time set aside to meet with Trump to pow-wow with Turkish President Recep Tayyip Erdogan.

The presence of Saudi Arabian Crown Prince Mohammed bin Salman at the summit also made waves amid swirling controversy over the murder of Saudi journalist Jamal Khashoggi in the Saudi consulate in Istanbul on October 2.

Trump met briefly with the crown prince, with the two men reportedly exchanging pleasantries during a leaders' session, a White House official said. Trump later said "we had no discussion", though he held out the prospect of spending more time with the crown prince.

US Secretary of State Mike Pompeo and Saudi Foreign Minister Adel al-Jubeir discussed the need for progress in the investigation into slain journalist's brutal killing and dismemberment during talks in Buenos Aires on Friday, the US State Department said in a statement.

BUENOS AIRES, ARGENTINA - NOVEMBER 30: (EDITORIAL USE ONLY ñ MANDATORY CREDIT - "BANDAR ALGALOUD / SAUDI KINGDOM COUNCIL / HANDOUT" - NO MARKETING NO ADVERTISING CAMPAIGNS - DISTRIBUTED AS A SERVICE TO CLIENTS----) President of France, Emmanuel Macron (L) chats with Crown Prince of Saudi Arabia Mohammad bin Salman (R) within the G20 Leadersí Summit in Buenos Aires, Argentina on November 30, 2018. Bandar Algaloud / Saudi Kingdom Council / Handout / Anadolu Agency
French President Emmanuel Macron (L) with Crown Prince of Saudi Arabia Mohammad Bin Salman (R) at the G20 Leaders' Summit, Buenos Aires, November 30, 2018. Photo: AFP via Anadolu Agency/Bandar Algaloud/Handout

The Trump administration has come under certain fire for its perceived willingness to look the other way on the gruesome murder to maintain ties with a crucial Middle Eastern ally and big buyer of US armaments.

Reports also said British Prime Minister Theresa May told the prince in a meeting on the G20 sidelines that the killers of Khashoggi should be held to account and that Saudi Arabia should move to build confidence that such an incident would never happen again.

French President Emmanuel Macron said he told the prince in a separate meeting that Europeans will insist on international experts being part of the investigation into Khashoggi's killing, Reuters reported. Putin reportedly pulled out a pen and paper to sketch the skirmish in the meeting, Bloomberg reported.

Saudi Arabia has insisted the prince had no prior knowledge of the killing.

Meanwhile, oil markets anticipated a bilateral meeting between Putin and Prince Mohammed on Saturday for a sign that Russia will participate in a production cut by the OPEC oil cartel next month. Oil prices have slid in recent weeks on concerns of softening global growth caused by the US-China trade war.

Putin was the only leader to exchange an openly cordial greeting with the isolated Saudi prince, high-fiving him when he entered the main summit room, news reports said.

This report draws on wire agency reporting


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