Exclusive: White House delays new farm aid payments on China trade hopes – sources

WASHINGTON/NEW YORK (Reuters) – The White House is delaying additional payments from a $12 billion aid package for farmers stung by President Donald Trump’s trade war with China because it expects Beijing to resume buying U.S. soybeans, three sources familiar with the matter told Reuters.

The move comes despite a lack of evidence in agricultural markets of any return by China to the U.S. soy market. China last year purchased about 60 percent of U.S. soybean exports, but it has not inked any new soybean deals since Beijing imposed tariffs on U.S. supplies in July.

Trump told Reuters in an interview late on Tuesday that discussions to resolve U.S. trade disputes with Beijing were taking place by telephone, and that China was “just starting” to buy “tremendous amounts” of U.S. soybeans.

The Office of Management and Budget at the White House is now holding up approval of the second and final tranche of aid payments Trump had promised farmers stung by the trade disputes due to concern over the cost of the program, and because it wants to see if the trade issues with China are resolved, the three sources told Reuters.

The sources asked not to be named because the matter had not yet been made public.

“It has been no secret that OMB has not been terribly excited about the trade aid package,” one of the sources said. The source added, however, that the payments will likely eventually be approved after some “back and forth.”

The U.S. Department of Agriculture in July had authorized up to $12 billion in aid for farmers and ranchers hit by the fallout from Trump’s escalating trade war with China and the agency outlined payments for the first half last August.

An announcement on the second tranche had been expected in early December. Agriculture Secretary Sonny Perdue said on Dec. 3 that OMB was deliberating on the second round of trade aid, and that it could be outlined by the end of that week.

On Tuesday, USDA spokesman Tim Murtaugh told Reuters that the agency was still in the “final stages” of the process of approving the second tranche of payments.

“We are in discussions with the White House and anticipate that the second payment rates for the Market Facilitation Program will be published before the end of the year,” Murtaugh said in a statement.

The Office of Management and Budget declined to comment.

CHINA COMEBACK?

The sources said the White House was delaying its approval mainly on hopes China will soon resume purchases of soybeans, which has raised questions over how much aid farmers will need.

China had imposed a 25 percent tariff on American soybeans in July in retaliation for U.S. tariffs on Chinese goods.

Perdue said last week China will probably resume buying American soybeans around Jan. 1, after talks between Trump and Chinese President Xi Jinping during the G20 meeting about a potential trade ceasefire.

However, little concrete evidence has emerged of a purchase looming and farmers have been on edge.

Chicago Board of Trade soybean futures edged higher on Tuesday on hopes that new deals would be inked soon, but there were no signs of increased activity in the cash markets.

U.S. Agriculture Department rules require exporters to promptly report sales of 100,000 tonnes or more of a commodity made in a single day.

John Heisdorffer, the chairman of the American Soybean Association and a farmer in Iowa, said he feared the government was going to reduce the size of the aid payments to farmers on misplaced beliefs the trade pain was ending.

“There are a lot of farmers that sold beans out of the field and that is done,” Heisdorffer said. “They need to get the extra (support) to make sure that they’re taken care of.”

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Senate to take up criminal justice bill this month: McConnell

WASHINGTON (Reuters) – The U.S. Senate will take up a revised criminal justice bill this month, U.S. Senate Majority Leader Mitch McConnell said on the Senate floor on Tuesday, reversing his previous resistance to acting on the measure.

McConnell had declined to bring up the bill until now, despite broad bipartisan support and backing by President Donald Trump. The proposed overhaul of America’s prison policies and criminal sentencing standards was reworked on Monday as supporters sought to pass it before the end of the year.

“At the request of the president, and following improvements to the legislation that have been secured by several members, the Senate will take up the recently revised criminal justice bill this month,” McConnell said.

“I intend to turn to the new text as early as the end of this week,” said McConnell.

Still, speaking to reporters later, McConnell reserved judgment on whether he would vote for it, saying he would “decide, based on what the bill looks like at the end whether to support it.”

“I’m still looking at it. It’s going to have some amendments,” he said.

The lame-duck session of Congress ends later this month. Backers of the bill fear delaying it until next year could give opponents more time to pick it apart.

Entitled the First Step Act, the bill would make it easier for deserving inmates to be released from prison into halfway houses or home confinement, create programs to reduce recidivism, and prevent first-time non-violent offenders from facing harsh mandatory minimum sentences.

Trump on Tuesday praised the legislation in the Oval Office before a testy exchange with Democratic leaders about border security and government funding. The bill “looks like it’s going to be passing, hopefully, famous last words, on a very bipartisan way,” Trump said. “It’s really something we’re all very proud of.”

The measure had stalled amid opposition from hard-right Republicans such as Senator Tom Cotton, as well as the National Sheriffs’ Association, which complained it could let “thousands of criminals out” of prison.

But changes that were made Monday included one that scales back discretion that judges have to sentence felons with criminal histories beneath mandatory minimums, one source said. Cotton said Monday evening that he is still opposed.

Senator Ted Cruz, a conservative Republican, said he became a supporter after the bill’s sponsors accepted his amendment to exclude violent criminals from the proposed reforms. “My concern has always been that we should not be releasing violent criminals,” Cruz told reporters Tuesday in the Capitol.

Cruz said he had worked closely with Trump’s son-in-law Jared Kushner, a promoter of the legislation. “I think Jared is sincere and passionate that this reform will make the criminal justice system more just. I agree with him on that,” Cruz said.

Senator John Cornyn, the Senate’s No. 2 Republican, told reporters Monday he supported attaching the legislation to a broader spending measure that is pending. The Senate’s No. 2 Democrat, Dick Durbin, said Tuesday he backs the legislation.

In the House, Democratic whip Steny Hoyer told reporters Tuesday he thought the revised Senate bill would pass both chambers. “I presume it will pass, I presume as well that we will be able to approve it next week,” Hoyer said.

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Exclusive: White House delays new farm aid payments on China trade deal hopes – sources

WASHINGTON/NEW YORK (Reuters) – The White House is delaying a second round of payments from a $12 billion aid package for farmers stung by a trade dispute between China and the United States, amid optimism China will soon resume buying U.S. soybeans, three sources familiar with the matter told Reuters.

U.S. President Donald Trump’s Office of Management and Budget at the White House is holding up approval of the payments due to concern over the cost of the program, and wants to see if the trade issues with China are resolved, the sources said, asking not to be named because the matter had not yet been made public.

“It has been no secret that OMB has not been terribly excited about the trade aid package,” a source familiar with the matter said. The source added, however, that the payment will likely eventually be approved after some “back and forth.”

The U.S. Department of Agriculture in July had authorized up to $12 billion in aid for farmers and ranchers hit by the fallout from Trump’s escalating trade war with China, a major buyer of American agricultural products, and the agency outlined payments for the first half last August.

An announcement on the second tranche was expected in early December. Agriculture Secretary Sonny Perdue said on Dec. 3 that OMB was deliberating on a second round of trade aid, and that it could be outlined by the end of that week.

But on Tuesday, USDA spokesman Tim Murtaugh told Reuters that the agency was still in the “final stages” of the process of approving the second tranche of payments.

“We are in discussions with the White House and anticipate that the second payment rates for the Market Facilitation Program will be published before the end of the year,” Murtaugh said in a statement.

A senior administration official with the Office of Management and Budget said on Tuesday, “We do not comment on alleged leaks and will not discuss deliberative and pre-decisional information.”

CHINA COMEBACK?

The sources said the White House was delaying its approval mainly on hopes China will soon resume purchases of soybeans, which has raised questions over how much aid farmers will need.

China bought about 60 percent of U.S. soybean exports last year in deals worth $12 billion, but has mostly been buying from Brazil since the trade war. It imposed a 25 percent tariff on American soybeans in July in retaliation for U.S. tariffs on Chinese goods.

Trump in late May had announced tariffs on steel and aluminum imports, prompting the retaliation from top trading partners like China.

Perdue said last week China will probably resume buying American soybeans around Jan. 1, after talks between Trump and Chinese President Xi Jinping during the G20 meeting about a potential trade ceasefire.

However, little concrete evidence has emerged of a purchase looming and farmers have been on edge.

John Heisdorffer, the chairman of the American Soybean Association and a farmer in Iowa, said he feared the government was going to reduce the size of the aid payments on the expectation crop prices could rise on renewed China buying.

“There are a lot of farmers that sold beans out of the field and that is done,” Heisdorffer said. “They need to get the extra (support) to make sure that they’re taken care of.”

Chicago Board of Trade soybean futures closed higher on Tuesday as traders anticipated potential Chinese purchases of U.S. agricultural products, and shrugged off a bearish monthly global soy inventories report from the U.S. Department of Agriculture.

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U.S. lawmakers propose bill to ban sales to Chinese sanctions violators

WASHINGTON (Reuters) – Two U.S. lawmakers proposed a bill on Tuesday that would direct the president to ban the sale of U.S. products to Chinese telecommunications companies that violate U.S. export or sanctions laws.

The bill proposed by the congressmen – Mike Gallagher, a Wisconsin Republican, and Ruben Gallego, a Democrat from Arizona – would require that an affected company establish “a pattern of compliance” for the ban to be lifted, according to a news release.

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Three broker-dealers settle SEC charges over incomplete data

(Reuters) – Broker-dealers Citadel Securities, Natixis Securities Americas LLC and MUFG Securities Americas Inc agreed to pay total penalties of more than $6 million to settle charges of providing incomplete trading data, the U.S. Securities and Exchange Commission (SEC) said on Monday.

Citadel were charged with submitting incorrect data for nearly 80 million trades while Natixis and MUFG were accused of submitting incorrect data for about 150,000 trades and 650,000 trades, respectively, the SEC said in a statement.

The SEC’s orders also found that Citadel, Natixis, and MUFG Securities Americas “willfully” violated the broker-dealer books and records and reporting provisions, it said, adding that the firms have admitted to the SEC findings.

The settlement relates to historic violations from May 2015 to March 2018 by MUFG Securities Americas of record keeping and reporting requirements, MUFG said.

“The firm has instituted new reporting controls and is fully committed to complying with regulatory requirements in every jurisdiction in which we operate,” an MUFG Securities Americas spokeswoman said in an emailed statement.

Citadel and Natixis did not respond to Reuters requests for comment outside regular business hours.

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Wall St. ends choppy day higher; tech helps, Brexit weighs

(Reuters) – Wall Street ended Monday’s volatile session slightly higher with help from technology stocks although bank stocks tumbled and uncertainty over Britain’s exit from the European Union kept investors on edge about global growth.

The energy index was the S&P’s biggest percentage loser as oil prices declined and financial stocks tumbled with the S&P 500 bank index confirming it was in bear territory.

But a comeback in Apple Inc shares appeared to cheer up investors in the broader technology sector.

Once the S&P neared its 2018 low – reached on Feb. 8 – trading algorithms appeared to kick in with buy signals, according to strategists. After hitting a session low late in the morning the benchmark spent the rest of the day paring losses at an uneven pace before turning positive.

“It seems we’ve found a temporary support at those levels. It might explain a little bit the reversal,” said David Joy, Ameriprise Chief Market Strategist. “It tells me it’s very short term computer driven trading, very choppy and directionless.”

British Prime Minister Theresa May added a wrinkle to global uncertainty on Monday by delaying a planned vote in parliament on her Brexit deal, saying it was set to be rejected “by a significant margin”.

“That adds to the political confusion that’s weighing on the market globally,” said Joy.

The Dow Jones Industrial Average rose 34.31 points, or 0.14 percent, to 24,423.26, the S&P 500 gained 4.64 points, or 0.18 percent, to 2,637.72 and the Nasdaq Composite added 51.27 points, or 0.74 percent, to 7,020.52.

After a sea of red in the morning, eight of the 11 major S&P sectors closed higher. The technology sector led the gainers with a 1.4 percent gain followed with a 0.8 percent increase in the communications sector

Energy stocks retreated 1.6 percent, the most among the 11 S&P sectors as oil prices fell. [O/R]

The second biggest decline was a 1.4 percent drop in financials as investors worried about the impact on slowing global growth and interest rates on banks. The rate-sensitive bank subsector tumbled 2.3 percent.

“What bank investors are doing is looking forward at what these guys are going to do for an encore as far as earnings growth goes,” said Sandler O’Neill analyst Jeffery Harte.

“If you look at the line items, credit probably can’t get much better. They’ve had interest rate tail winds. Loan growth seems to have slowed so the concern is what’s going to drive the next leg up.”

Apple Inc closed up 0.7 percent at $169.60 after hitting a low of $163.33 earlier in the day after Qualcomm Inc said it had won a preliminary order from a Chinese court banning the import and sale of several iPhone models in China due to patent violations.

The small-cap Russell 2000 also pulled above its session low to close 0.3 percent lower and was 16.9 percent below its record closing high on Aug. 31.

Declining issues outnumbered advancing ones on the NYSE by a 2.17-to-1 ratio; on Nasdaq, a 1.47-to-1 ratio favored decliners.

The S&P 500 posted 4 new 52-week highs and 90 new lows; the Nasdaq Composite recorded 9 new highs and 383 new lows.

Volume on U.S. exchanges was 8.40 billion shares, compared to the 8.01 billion average for the last 20 trading days.

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Huawei CFO returns to Canadian court for bail hearing

TORONTO/BEIJING (Reuters) – A top executive of Chinese tech giant Huawei Technologies returned to a Canadian court on Monday to fight for her freedom with the help of pressure from Beijing against prosecutors’ claims she cannot be trusted.

Huawei [HWT.UL] Chief Financial Officer Meng Wanzhou, 46, was arrested by Canadian authorities on Dec. 1 at the request of the United States.

She faces U.S. accusations of misleading multinational banks about Huawei’s control of a company operating in Iran, putting the banks at risk of violating U.S. sanctions and incurring severe penalties, court documents said.

U.S. officials allege Huawei was trying to use the banks to move money out of Iran. Huawei and its lawyers have said the company operates in strict compliance with applicable laws, regulations and sanctions of the United States and other parties.

Separately, Huawei appeared to suffer another setback in Japan, with the nation’s top three telecom companies deciding not to use equipment from the firm and from ZTE Corp (0763.HK) (000063.SZ), Kyodo News reported.

Sources had told Reuters that Japan planned to ban government purchases of Huawei and ZTE equipment to guard against intelligence leaks and cyber attacks. Similar concerns have left Huawei virtually locked out of the U.S. market and blocked its access to some others. Huawei has repeatedly insisted Beijing has no influence over it.

In Canada, prosecutors argued against giving Meng bail while she awaits extradition to the United States.

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Meng said that she should be released on bail while awaiting an extradition hearing due to severe hypertension and fears for her health. In a sworn affidavit, Meng said she is innocent of the allegations and will contest them at trial in the United States if she is surrendered there.

She was detained while transferring flights and appeared in a British Columbia court on Friday for her bail hearing. After nearly six hours of arguments and counter arguments, the hearing was adjourned until Monday.

China has strongly criticized her detention and demanded her immediate release, threatening “consequences” for Canada. Her arrest has roiled global markets as investors worry it could halt attempts to ease trade tensions between the United States and China.

Canadian officials already appear to be showing increased caution. The British Columbia government on Sunday said it had suspended the China leg of a Asian forestry trade mission because of the extradition case.

And in Ottawa, the foreign ministry said in a statement on Monday that Ian Shugart – the top civil servant at the ministry – had scrapped plans to visit China as part of a larger trip.

A government official, who declined to be identified given the sensitivity of the situation, cited logistical issues and said “at no point did the Chinese government say Mr. Shugart could not come to China”.

HEALTH ISSUES

Speaking in Beijing on Monday, Chinese Foreign Ministry spokesman Lu Kang said it was “totally up to Canada” what the consequences would be if it did not “correctly handle” the situation with Meng.

Canada did not inform China “at the first instance” of her detention, despite the two having a consular agreement, and Meng has not been given proper access to medical attention, Lu added.

“This has breached her human rights,” he told a daily news briefing. China has lodged repeated complaints with Canada about the case, Lu said.

Meng, the daughter of Huawei’s founder, has been held in custody since her arrest. Meng said in the sworn affidavit she was taken to a hospital for treatment for hypertension after being detained.

Meng also has sleep apnea and was treated for a carcinoma, lawyer David Martin told court on Friday.

At issue is whether Meng should be set free while her extradition case proceeds. The U.S. has 60 days to file a formal request; if its evidence convinces a judge the case has merit, Canada’s justice minister will decide whether to extradite Meng.

On Monday a judge could decide to set Meng free on any number of conditions, including high-tech surveillance, or to keep her in jail, according to some legal experts.

Huawei is one of the world’s biggest telecommunications hardware companies, building everything from networks to handsets and is seen as one of China’s best chances to change the global technology landscape.

It is now China’s largest technology company by employees, with more than 180,000 staff and revenue of $93 billion in 2017.

The European Union’s technology chief said on Friday the EU should be worried about Huawei and other Chinese technology companies because of the risk they pose to the bloc’s industry and security.

China’s Foreign Ministry said these worries were nonsense.

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Huawei CFO bail hearing to resume in Canada as Beijing steps up pressure

TORONTO/BEIJING (Reuters) – A top executive of Chinese tech giant Huawei Technologies is due back in a Canadian court on Monday where she’ll fight for her freedom with the help of pressure from Beijing against prosecutors’ claims she cannot be trusted.

Huawei [HWT.UL] Chief Financial Officer Meng Wanzhou, 46, was arrested by Canadian authorities on Dec. 1 at the request of the United States.

She faces U.S. accusations of misleading multinational banks about Huawei’s control of a company operating in Iran, putting the banks at risk of violating U.S. sanctions and incurring severe penalties, court documents said. U.S. officials allege that Huawei was trying to use the banks to move money out of Iran.

Separately, Huawei appeared to suffer another setback in Japan, with the nation’s top three telcos deciding not to use equipment from the firm and from ZTE Corp (0763.HK) (000063.SZ), Kyodo News reported on Monday.

Just last week, sources told Reuters that Japan planned to ban government purchases of equipment from Huawei and ZTE to guard against intelligence leaks and cyber attacks. Similar concerns have left Huawei virtually locked out of the U.S. market and blocked its access to some others. Huawei has repeatedly insisted Beijing has no influence over it.

In Canada, prosecutors argued against giving Meng bail while she awaits extradition to the United States.

Meng said that she should be released on bail while awaiting an extradition hearing due to severe hypertension and fears for her health while incarcerated in Canada, court documents released on Sunday showed. In a sworn affidavit, Meng said she is innocent of the allegations and will contest them at trial in the United States if she is surrendered there.

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She was detained while transferring flights in Canada and appeared in a British Columbia court on Friday for her bail hearing. After nearly six hours of arguments and counter arguments, the hearing was adjourned until Monday.

China has strongly criticized her detention and demanded her immediate release, threatening “consequences” for Canada if it does not. Her arrest has roiled global markets as investors worry that it could torpedo attempts to thaw trade tensions between the United States and China.

Speaking in Beijing on Monday, Chinese Foreign Ministry spokesman Lu Kang said it was “totally up to Canada” what those consequences would be if it did not “correctly handle” the situation with Meng.

Canada did not inform China “at the first instance” of her detention, despite the two having a consular agreement, and Meng has not been given proper access to medical attention, Lu added.

“This has breached her human rights,” he told a daily news briefing.

China has lodged repeated complaints with Canada about the case, Lu said.

HEALTH ISSUES

Meng, the daughter of Huawei’s founder, has been held in custody since her arrest. Her lawyer argues that this situation is untenable due to her health. Meng said in the sworn affidavit she was taken to a hospital for treatment for hypertension after being detained.

Meng also has sleep apnea and was treated for a carcinoma, lawyer David Martin told court on Friday.

At issue is whether Meng should be set free while her extradition case proceeds. The U.S. has 60 days to file a formal request; if its evidence convinces a judge the case has merit, Canada’s justice minister will decide whether to extradite Meng.

On Monday a judge could decide to set Meng free on any number of conditions, including high-tech surveillance, or to keep her in jail, according to some legal experts.

According to local media reports, Meng is being kept in the Alouette Correctional Center for Women, a Vancouver-area jail. Reuters could not independently verify these reports.

Meng’s wealth and power are undeniable as the financial chief of one of the world’s biggest telecommunications hardware companies, which builds everything from networks to handsets and is seen as one of China’s best chances to change the global technology landscape.

Huawei is now China’s largest technology company by employees, with more than 180,000 staff and revenue of $93 billion in 2017.

The European Union’s technology chief said on Friday the EU should be worried about Huawei and other Chinese technology companies because of the risk they pose to the bloc’s industry and security.

China’s Foreign Ministry said these worries were nonsense.

“These people have never produced evidence to prove that Huawei has affected their security,” Lu said. “To date we have never heard of a country having had any security problems because they have cooperated with Huawei.”

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Trump backs $750 billion defense budget request to Congress: official

WASHINGTON (Reuters) – U.S. President Donald Trump has backed plans to request $750 billion from Congress for defense spending next year, a U.S. official said on Sunday, signaling a Pentagon spending hike at a time of potential belt-tightening elsewhere in the government.

Trump, faced with a budget deficit at a six-year high, told his Cabinet earlier this year to come up with proposals to cut spending by their agencies by 5 percent, but he suggested the military would be largely spared.

The $750 billion would be even more than the $733 billion request that the Pentagon had been expected to make for fiscal year 2020. It is also well above a $700 billion figure Trump cited in October.

A U.S. official, speaking on condition of anonymity, said Defense Secretary Jim Mattis had discussed the budget with Trump in recent days and outlined the risks of flat defense spending.

The official said that it was clear during that discussion that Trump wanted to “accelerate the progress his administration has made in rebuilding the military.”

In August, Trump signed a $716 billion defense policy bill.

The White House did not immediately respond to a request for comment.

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U.S. says March 1 'hard deadline' for trade deal with China

WASHINGTON (Reuters) – U.S.-China trade negotiations need to reach a successful end by March 1 or new tariffs will be imposed, U.S. Trade Representative Robert Lighthizer said on Sunday, clarifying there is a “hard deadline” after a week of confusion among administration advisers.

Global markets are jittery over prospects of a collision between the world’s two largest economic powers over China’s huge trade surplus with the United States and U.S. claims that China is stealing intellectual property and technology.

“As far as I am concerned it is a hard deadline. When I talk to the president of the United States he is not talking about going beyond March,” Lighthizer said on the CBS show “Face the Nation,” referring to President Donald Trump’s recent decision to delay new tariffs while talks proceed.

“The way this is set up is that at the end of 90 days, these tariffs will be raised,” said Lighthizer, who has been tapped to lead the talks and appeared to tamp down expectations that the negotiation period could be extended.

In Argentina last weekend, Trump and Chinese President Xi Jinping agreed to a truce that delayed the planned Jan. 1 U.S. hike of tariffs to 25 percent from 10 percent on $200 billion of Chinese goods while they negotiate a trade deal.

However, the arrest of a top executive at China’s Huawei Technologies Co Ltd’s [HWT.UL] has roiled global markets amid fears that it could further inflame the China-U.S. trade row.

(This story has been refiled to correct word in first paragraph to new, not news)

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