The Daily Visionary: Thursday, November 22, 2018

Photo Credit: Business Insider

Photo Credit: Business Insider

Australian drought and sportswear push up prices of wool clothing


A surge in demand for natural and sustainable fabrics, particularly from younger consumers, alongside increased popularity in sportswear due to its temperature regulating properties, has coincided with a prolonged severe drought in eastern Australia, resulting in a wool shortage. The consequent jump in the price of wool is impacting the global clothing supply chain, with some mills passing along costs and retailers either cutting down on wool or raising prices.


Australia supplies over 90 percent of the world’s exported high-quality wool and fleece used in clothing, and a lack of rain has turned pastures barren forcing farmers to buy expensive feed. Many farmers have therefore had to send their livestock to slaughterhouses, prompting Australia’s chief commodity forecaster ABARES to cut wool production forecasts by 4 percent this year. Benchmark prices for high-quality Australian wool were trading at more than A$21 per kilogram in August, up from A$16 a year earlier.


Italian clothmaker Botto Giuseppe, which supplies luxury brands Giorgio Armani and Max Mara, says it has increased prices on average by 7 to 8 percent in the last year on wool fabric, while high-end Swiss sportswear label Mover has put up the retail price of its merino wool t-shirts by 15 percent. “The wool price has increased consistently over the past three years,” said Silvio Botto Poala, Chief Executive Officer of Botto Giuseppe, a 142-year-old company, “But the big jump has been in the past year.” Botto Giuseppe has increased the price of wool flannel fabric used for suits to €19.50 per meter compared to €18 a year ago, CEO Botto Poala said. Pure merino wool t-shirts from Swiss skiwear label Mover retail for €75 compared to €65 last year, CEO Nicolas Rochat said. Swedish fast fashion company H&M has cut down on the amount of wool it uses in production, avoiding price rises on items like wool-blend sweaters and coats.


Italy stands by its budget in the face of potential E.U. sanctions


The European Commission took the first step toward disciplining Italy over its 2019 budget after Rome refused to change it, raising the stakes in a dispute that has alarmed the European Union (E.U.) and could lead to fines. The Commission said the Italian draft budget increased the 2019 structural deficit, which excludes one-offs and business cycle swings, by 1 percent of gross domestic product (GDP) rather than cut it by 0.6 percent as required by EU laws. Italy refused to trim its debt in “a particularly serious case of non-compliance” with the rules, the Commission said, warranting the launch of an excessive deficit procedure.


Italy’s debt is at 131 percent of GDP and proportionally the second highest in the euro zone after Greece’s. Under EU rules it should be falling every year towards 60 percent, but the Commission said it would be stable for the next two years.


Italy’s coalition government remained defiant against the Commission. Deputy Prime Minister Matteo Salvini said, “We are convinced about the numbers in our budget. We will talk about it in a year’s time,” adding fines against Italy would be “disrespectful”. Italian Prime Minister Giuseppe Conte is scheduled to meet Commission President Jean-Claude Juncker on Saturday and said the government is convinced the budget is excellent and in the interest of Italy and Europe.


The government believes its policy of borrow and spend, which the Commission regards as profligate, will boost economic growth, helping reduce the country’s debt ratio, while reducing unemployment, which was at 10 percent in September. Italy’s borrow and spend plans have boosted its borrowing costs to 3.5 percent for the benchmark 10-year bond.


Before any financial sanctions can be levied, the Commission must have backing for its view from the E.U.’s deputy finance ministers in the next two weeks, and then from the finance ministers, which will most likely be at their next meeting in January. A joint statement of all euro zone finance ministers in early November supported the Commission against Italy. In December, the Commission will prepare recommendations for Italy to cut the debt and a deadline to take action within three to six months to be endorsed by ministers in January. If, at that time, Italy fails to comply financial sanctions will kick in.


Israeli minister urges Airbnb boycott, talks up rival service


Global home-rental company Airbnb says it will remove approximately two hundred settlement listings after hearing criticism from people who “believe companies should not profit on lands where people have been displaced”. The delisting applies only to Israeli settlements in the West Bank, where Palestinians have limited self rule under Israeli military occupation; the delisting does not apply to Israel itself, or East Jerusalem and the Golan Heights. In a statement on their website, Airbnb said, “When we applied our decision-making framework, we concluded that we should remove listings in Israeli settlements in the occupied West Bank that are at the core of the dispute between Israelis and Palestinians.”


Human Rights Watch, who advocated for the move over the course of two years during private talks with the company, said that Airbnb’s discrimination against national origin was actually practiced against Palestinians, as they are unable to rent properties on the website on lands they own.


In response, Gilad Erdan, Israel's Minister of Public Security, Strategic Affairs and Minister of Information, called for a boycott of Airbnb and promoted one of its rivals. Israeli Justice Minister Ayelet Shaked backed Minister Erdan’s call to boycott Airbnb and suggested Israel also deploy its own anti-discrimination laws.


Israel has said it would turn to the United States government and could back lawsuits against Airbnb within American states that have legislated against anti-Israel boycotts. In Israel, one 2017 law empowers courts to award cash compensation to claimants who prove they have been denied goods or services because of where they live.


The office of Ohio Senator Rob Portman, an author of the Israel Anti-Boycott Act, is looking into the issue, stating, “Senator Portman has long fought highly selective and discriminatory efforts to isolate Israel.” The Illinois state legislature, which passed the nation’s first local anti-BDS law in 2015, will meet in mid-December and is expected to debate whether Airbnb had violated its statute. The law defines boycotting Israel as “engaging in actions that are politically motivated and are intended to penalize, inflict economic harm on, or otherwise limit commercial relations with the State of Israel or companies based in the State of Israel or in territories controlled by the State of Israel” – an explicit reference to those boycotting the Jewish State’s policy in the West Bank.


Richard Goldberg, a senior adviser at the Foundation for Defense of Democracies who was involved in the drafting of the Illinois law, said, “If state regulators and boards of investment determine Airbnb’s action was politically motivated, Airbnb will become the most high-profile company blacklisted for boycotting Israel.


Read Airbnb’s full statement.


British Prime Minister Theresa May meets in Brussels to cut Brexit deal with the European Union


Britain’s Prime Minister Theresa May met with European Commission President Jean-Claude Juncker in Brussels on Wednesday to finalize an outline of future relations between the United Kingdom (U.K.) and the European Union (E.U.) come March 2019. Both British and European parliaments must ratify the tentative deal to end more than 40 years of partnership before Brexit day, or Britain could leave the EU with no treaty. In keeping with the E.U.’s inflexible position during negotiations over the past two years, E.U. diplomats announced German Chancellor Angela Merkel was not willing to come on Sunday for any negotiations, meaning a final written plan must be ready in advance.


E.U. diplomats will meet Thursday morning to discuss PM May’s draft plan. Negotiators will then look at it again at a meeting set for Friday before Sunday’s summit of E.U. leaders. The E.U. continues to discourage Britain from any renegotiation of the draft plan put forth by PM May, despite strong opposition to her plan in the U.K. Two Cabinet Ministers quit and dozens of Conservative Members of Parliament (MPs) called for PM May to step down, accusing her of making too many concessions to the E.U., and setting in motion a potential forthcoming no-confidence vote.


PM May hopes her draft blueprint, a twenty-page political document meant to be agreed side-by-side with the legally binding six-hundred-page exit treaty, will help her win back enough support at home to pass in Parliament. The draft treaty envisages Britain staying in a customs union with the E.U., which many Brexit supporters see as a compromise too far.


The worst-case scenario presented is the U.K. leaving the E.U. without an agreement, though many Brexiteers view this as an improved situation over accepting PM May’s draft plan, due to concessions heavily in the E.U.’s favour with little gained for Britain.


France could shut down nuclear plants in its energy plan, due next week


France could shut down up to six nuclear reactors by 2028 among other options, French media reported, as part of its medium-term energy policy to be presented next week. “I can confirm that there are three scenarios on the table that we are looking at, we are making final adjustments, and all will be presented next week,” French Environment Minister Francois de Rugy said. France’s multi-year energy program, Plan de programmation pluriannuelle de l'Energie (PPE), lays out the nation’s energy goals over the next ten years with the aim of reducing the share of nuclear power in its energy mix to 50 percent from 75 percent by 2035, curb carbon emissions, and boost renewables.


French news agency AFP reported on Tuesday, citing government working documents, that the government could shut down up to six nuclear reactors by 2028, including the planned closure of France’s oldest Fessenheim nuclear plant which is scheduled to stop production in 2021, according to one scenario.

It said another six reactors could close by 2035, which could set France on the path to curb nuclear generation by 50 percent.


The second intermediate scenario does not foresee any additional closures beside Fessenheim until 2028, and then twelve reactors would be shutdown between 2028 and 2035, AFP quoted the document saying.

The final option would also see no additional closures until 2028 after which only nine reactors would be halted by 2035, which could miss the 50 percent nuclear target.