2024-12-13 22:50

US, allies could lower price cap on Russian oil, Yellen says Says sanctions on Chinese banks for aiding Russia not ruled out Yellen says larger Chinese banks wary of losing dollar access Leader-to-leader talks not enough for US and China, Yellen says WASHINGTON, Dec 13 (Reuters) - U.S. Treasury Secretary Janet Yellen told Reuters on Friday that the U.S. is looking at further sanctions on "dark fleet" tankers and will not rule out sanctions on Chinese banks as it seeks to reduce Russia's oil revenue and access to foreign supplies to fuel its war in Ukraine. Yellen said in an interview that the U.S. and its allies also could consider lowering their $60-per-barrel oil price cap on Russian oil, which prohibits Western insurance and maritime services on cargoes above that level. The Treasury has already sanctioned individual tankers and their owners for operating above the price cap and can do more in this area, Yellen added, suggesting additional measures in the five weeks before she leaves office. "There are a number of possibilities here. We don't preview sanctions, but we're always looking at oil revenues and if we can find ways to further impair Russian oil revenues, that would, I think, strengthen Ukraine's hand. That remains on our list," Yellen said. Earlier this week, Yellen said softness in the oil market presents an opportunity for more sanctions. Benchmark Brent crude traded at $74.50 per barrel on Friday, down from $85.57 when the $60 cap was set in December 2022. President Joe Biden's administration has been racing to shore up support for Ukraine before President-elect Donald Trump takes office on Jan. 20, given the Republican leader's frequent complaints about the cost of U.S. support for Ukraine. CHINESE BANK CONCERNS U.S. Treasury officials continue to have conversations with their Chinese counterparts on efforts to detect financial institution activity that could be aiding transactions related to Russia's war effort. Yellen said these discussions have been aided by efforts to rebuild U.S.-China economic and financial communications over the past two years. "I absolutely would not rule out the possibility we would sanction an individual bank if we had the necessary level of ... evidence to be able to put sanctions on," she said. "But we also do have a channel where we've been able to discuss specific concerns, and sometimes that could be adequate as well." She said warnings to larger Chinese banks have been successful, making them "very wary" of sanctions that would cut them off from dollar-based transactions. In an executive order about a year ago, Biden gave Treasury the authority to levy secondary sanctions on financial institutions that facilitate war-related transactions. As Russia's economy becomes more dominated by military production, it is becoming harder to distinguish between strictly commercial and war-related deals. "Authorities in China recognize that our use of these sanctions would be a serious threat with very adverse consequences," Yellen said. "They want to trade with Russia, but they do not want their banks sanctioned." COMMUNICATION CHANNELS Yellen said the final meeting of the U.S.-China Financial Working Group will take place next week in the northeast Chinese city of Tianjin, but sanctions will not likely be a major feature. Instead, it will focus on financial stability issues, including "tabletop" exercises on how to deal with potential financial crises. Yellen said it was important for the Trump administration to have open channels of communications with China, adding: "I think you can't just have leader-to-leader meetings. The relationship has to be developed at a senior official staff level, and we've worked constructively on a lot of things." While the dialogue has not changed China's state-led, export-driven economic model, it has allowed the U.S. to explain actions like application of steep tariffs on electric vehicles. Asked about a Reuters report this week that Beijing is considering weakening its yuan currency to counteract Trump's tariff plans, Yellen said China in recent years has been doing "the exact opposite," pushing up the yuan's value against the dollar. That assessment was detailed in Treasury's most recent semi-annual currency report, which found no manipulation by major U.S. trading partners. She declined to comment on Beijing's specific currency plans, but said the U.S. Treasury has tools to react strongly to address currency manipulation. Bessent is expected to oversee the Treasury's next currency report, which is due in April. "I'm not going to be here, but my guess is that Treasury will continue to push back if it thought that there was currency manipulation," Yellen said. Peter Navarro, who is Trump's designated White House trade adviser, also told Reuters earlier on Friday that Trump's Treasury Department would not look "fondly" on any attempts by U.S. trading partners to manipulate their currencies. Sign up here. https://www.reuters.com/world/yellen-wont-rule-out-sanctions-chinese-banks-curbs-dark-fleet-oil-tankers-2024-12-13/

2024-12-13 22:22

US could empower Google, Microsoft as AI gatekeepers globally New rules aim to prevent Chinese access to AI chips Exemptions planned for 19 allied countries, while nuclear embargoed nations remain blocked WASHINGTON, Dec 13 (Reuters) - In its latest jab at Beijing, the U.S. will empower companies like Google and Microsoft to act as gatekeepers worldwide for highly sought-after access to AI chips, two people familiar with the draft plan said. Under the scheme, to be released as soon as this month, these companies would have to comply with strict requirements, including reporting key information to the U.S. government and blocking Chinese access to AI chips. That would permit them to offer artificial intelligence capabilities within the cloud overseas without a license, the sources said. The new rules, some of whose details are being reported for the first time, show officials are scrambling in the waning days of the Biden administration to streamline the process for approving AI chip exports while also preventing bad actors from accessing them. The U.S. fears China could harness the power of AI to supercharge its military, unleash powerful cyber attacks or even train a bioweapon. The Commerce Department declined to comment on the content and timing of the new regulations. Sources cautioned the administration's plans may change. Alphabet's (GOOGL.O) , opens new tab Google and Microsoft (MSFT.O) , opens new tab did not immediately respond to requests for comment. The measure takes a page from a national security agreement Microsoft inked with the U.S. government in April allowing it to provide AI technology to Emirati firm G42, the people said. Under the new draft rules, other companies beyond those with gatekeeper status will compete for licenses to import a smaller number of high-end Nvidia (NVDA.O) , opens new tab and AMD (AMD.O) , opens new tab AI chips in each country, one of the sources said. Nvidia, which makes the world's most powerful AI chips, said it is ready to work with the administration on the rules. AMD did not immediately respond to a request for comment. Exempted from the caps would be 19 allied countries like the Netherlands and Japan plus Taiwan, which would have unlimited access to the AI chips or the capability they provide, two of the sources said. Also outside the framework would be a list of nuclear embargoed countries, including Russia, China, Iran and Venezuela, which are already blocked from acquiring U.S. AI semiconductors and would remain so. The caps could upset some countries, however. Geoffrey Gertz, a former White House official now at the Center for a New American Security, said a global program of country caps "would likely raise significant concerns from U.S. partners and allies around the world, who are wary of the United States acting as a unilateral arbiter on who gets to access advanced chips critical for AI." The U.S. government is conducting a final review of an "Artificial Intelligence Diffusion" rule drafted by the Commerce Department, according to a government posting this week, indicating it may be closing in on publication. Three sources said the posting referred to the AI caps. The Information Technology Industry Council, an advocacy association whose members include AMD and Google, is concerned the Biden administration is rushing the complex rule out without industry input that could head off adverse consequences. "If reports are accurate, such changes would dramatically expand the scope of export controls and have significant global implications," Naomi Wilson, the council's senior vice president of Asia and global trade policy, said in a statement. The rules build on a program unveiled in September that gives permission to pre-approved data centers overseas to receive AI chips without a license, two sources said. To achieve that status, data centers must provide information about customers, business activities, access restrictions and cybersecurity. Sign up here. https://www.reuters.com/technology/major-cloud-providers-could-get-key-role-ai-chip-access-outside-us-sources-2024-12-13/

2024-12-13 21:58

HAVANA, Dec 13 (Reuters) - Cubans still reeling from months of hours-long blackouts now have a new problem on their hands: fuel shortages. Many gas stations across the island have been shuttered for days as an unusually severe shortfall has left the nation nearly devoid of gasoline and diesel, stranding motorists and sprouting seemingly interminable lines at the pump in Havana. "We have been waiting for a fuel truck to arrive for three days," said Armando Corrales from the driver's seat of his gray Kia SUV at a gas station in the capital. "People have slept here in line so they don't lose their spot." The latest crisis comes on the heels of three nationwide blackouts in two months that left millions in the dark for days, prompting the communist-run government to temporarily close schools and non-essential industry. Cuba has yet to provide an explanation for the most recent shortfall. Only a comparative trickle of fuel has been served in Havana since Wednesday, according to a government application that records deliveries to individual gas stations. Officials have previously blamed fuel shortages on the decades-old U.S. trade embargo, which complicates Cuba's financial transactions, making it more difficult for the government to purchase fuel on the spot market. Cuba's long-time allies have reduced fuel shipments this year. Venezuela has sent 44% less crude and fuel to the Caribbean island during the January to November period, according to tanker monitoring data and documents from Venezuela's state company PDVSA. Mexico, which has become a regular supplier to the island, has made up for some of the difference. But both Venezuela and Mexico send mostly crude to Cuba, whose obsolete refineries must use it to make gasoline and diesel for cars, trucks and generators. Cuba this year began selling fuel in dollars at non-subsidized prices on par with regional neighbors. The government said this was necessary, in part, to raise enough foreign currency to ensure a steady supply at the pump. Even those far pricier "dollar gas stations" faltered this week, said Jorge Figueredo as he waited to pump fuel in the Havana suburb of Miramar. "The lines are now miles long even when you go to buy fuel in dollars," Figueredo said. Sign up here. https://www.reuters.com/business/energy/cuba-runs-short-fuel-pump-energy-crisis-festers-2024-12-13/

2024-12-13 21:04

Yellen argues against radical changes to bank oversight She highlights importance of bank supervision to prevent crises US banks thriving despite Dodd-Frank regulatory concerns WASHINGTON, Dec 13 (Reuters) - U.S. Treasury Secretary Janet Yellen on Friday urged the incoming Trump administration to refrain from interfering with what she called critically important appropriate regulation of American banks' capital levels, liquidity and risk-taking. Yellen, who has served as U.S. President Joe Biden's Treasury secretary since he took office in January 2021, said the current U.S. oversight system was not perfect, and it was legitimate to look for ways to reduce its regulatory burden. But she warned against taking radical steps that would interfere with needed oversight or the current system of insuring banks' deposits, given the long history of bank failures triggering financial crises. "I don't want to say that exactly what we have is utterly sacrosanct and couldn't possibly be touched. But I do not think it's broken. We've got a good system," Yellen told Reuters as she prepares to hand off to Scott Bessent, President-elect Donald Trump's nominee to be Treasury secretary. Trump's return to office has raised the prospect of radical changes to the federal government's current structure and a regulatory framework put in place over decades to oversee financial services and banking, as well as digital currency. "Bankers always complain about over-regulation," Yellen said. "It's legitimate to look for areas where the burdens of regulation exceed the benefits and to try to redress that. But appropriate regulation of capital, liquidity, risk taking and the like are critically important to a sound banking system and economy, and that should not be interfered with." Yellen said she was troubled by a report that Trump's transition team was exploring ways to reduce, merge, or even eliminate the top bank regulators in Washington, but had no specific insight into their plans. "We've seen what happens when banks are inappropriately supervised," she said, referencing the unexpected failures of Silicon Valley Bank and Signature Bank in March 2023, and others before them that had "created the possibility of a contagious financial crisis." "The lessons we learned from those 100-plus years of history is that banks need to be supervised and regulated appropriately to greatly mitigate the odds of failure; that deposit insurance is a critical element in promoting safety and soundness and confidence in the system, and that there needs to be adequate access to liquidity when banks get in trouble," she said. FINANCIAL STABILITY Yellen said U.S. banks were doing "exceptionally well" despite warnings that the Dodd-Frank legislation passed after the 2008-2009 global financial crisis would make it difficult for them to compete. The legislation resulted in the creation of the Financial Stability Oversight Council, the Federal Reserve's division of financial stability, and the Treasury's Office of Financial Research to anticipate and assess threats to financial stability. Yellen, who led the Fed from 2014 to 2018, agreed that the U.S. had a complicated system of banking regulation involving many agencies at the state and federal levels. She said there had been discussions over the years about possible consolidation moves at the federal level, and the Office of Thrift Supervision was eliminated after the global financial crisis with no adverse impact. But she added that changing the structure of the system had not been at the top of her agenda. Sign up here. https://www.reuters.com/business/finance/yellen-warns-incoming-trump-team-against-interfering-with-bank-supervision-2024-12-13/

2024-12-13 20:20

Dec 13 (Reuters) - The U.S. Supreme Court agreed on Friday to hear a bid by fuel producers to challenge California's standards for vehicle emissions and electric cars under a federal air pollution law in a major case testing the Democratic-governed state's power to fight greenhouse gases. The justices took up an appeal by a Valero Energy (VLO.N) , opens new tab subsidiary and fuel industry groups of a lower court's rejection of their challenge to a decision by Democratic President Joe Biden's administration allow California to set its own regulations. The dispute centers on an exception granted to California in 2022 by the U.S. Environmental Protection Agency to national vehicle emission standards set by the agency under the landmark Clean Air Act anti-pollution law. Though states and municipalities are generally preempted from enacting their own limits, Congress allowed the EPA to waive the preemption rule to allow California to set certain regulations that are stricter than federal standards. California, the most-populous U.S. state, has received more than 75 waivers since 1967, requiring increasingly better emissions performance and EV sales. The EPA's action in March 2022 reinstated a waiver for California to set its own tailpipe emissions limits and zero-emission vehicle mandate through 2025, reversing a 2019 decision under Republican former President Donald Trump's administration rescinding the waiver. Valero's Diamond Alternative Energy and related groups challenged the reinstatement of California's waiver, arguing that the decision exceeded the EPA's power under the Clean Air Act and inflicted harm on their bottom line by lowering demand for liquid fuels. The U.S. Court of Appeals for the District of Columbia Circuit threw out the lawsuits in April, finding that Valero and the states lacked the necessary legal standing to bring their claims. In their appeal to the Supreme Court, the fuel producers said that California is acting as a "junior-varsity EPA" and does not have the power to set regulations to fight climate change and force a transition to electric vehicles. They invoked the "major questions" doctrine embraced by conservative members of the Supreme Court, which gives judges broad discretion to invalidate executive agency actions unless it is deemed that Congress clearly authorized them. The Supreme Court, which has a 6-3 conservative majority, has taken a skeptical view toward expansive authority for federal regulatory agencies, and has restricted the powers of the EPA in some important rulings in recent years. In June, the court blocked the EPA's "Good Neighbor" rule aimed at reducing ozone emissions that may worsen air pollution in neighboring states. In 2023, the court hobbled the EPA's power to protect wetlands and fight water pollution. In 2022, it imposed limits on the agency's authority under the Clean Air Act to reduce coal- and gas-fired power plant carbon emissions. Sign up here. https://www.reuters.com/legal/us-supreme-court-hear-dispute-over-california-tailpipe-emissions-ev-standards-2024-12-13/

2024-12-13 20:17

TORONTO, Dec 13 (Reuters) - Ottawa and the provinces will respond robustly if the incoming U.S. administration goes ahead with a promise to impose tariffs on imports from Canada, Finance Minister Chrystia Freeland said on Friday. Prime Minister Justin Trudeau, Freeland and the 10 provincial premiers have held two phone calls recently to discuss how best to react if President-elect Donald Trump slaps a 25% tariff on U.S. imports from Canada. "In the event that the United States were to impose unjustified tariffs on Canada, of course we would respond, and the Canadian response would necessarily be robust. I am confident that it would be effective," Freeland told reporters. Trump has said he will keep the tariffs in place until Canada clamps down on drugs and migrants crossing the border. Bloomberg reported on Thursday that Canada was examining the possible use of export taxes on commodities including uranium, oil and potash. A Canadian government source said while all options for retaliation were on the table, ministers and officials were nowhere near taking any kind of decision. Although Freeland said Ottawa and the provinces would need to present a united front, some provincial premiers are unhappy about the proposed response. Scott Moe, premier of the western province of Saskatchewan, said export taxes "would be a complete betrayal" by the Trudeau government. Saskatchewan produces oil, uranium and potash, he noted. "Export taxes on these commodities would be a self-destructive response to U.S. tariffs as they would only increase the harm to our economy and jobs," he said in a post on the X social media network. Alberta Premier Danielle Smith said her oil-producing province would "not support cutting off our Alberta energy exports to the U.S., nor will we support a tariff war with our largest trading partner and closest ally". Sign up here. https://www.reuters.com/world/americas/canada-says-it-will-respond-robustly-if-us-imposes-tariffs-2024-12-13/