Unions press Biden administration to not change EV tax credit rules


U.S. President Biden welcomes Japanese Prime Minister Kishida at the White House in Washington

Fri, January 20, 2023 
By David Shepardson

WASHINGTON (Reuters) - Major unions and public interest and environmental groups are urging President Joe Biden to reject efforts by the European Union and other foreign governments to revise U.S. electric vehicle tax incentives.

The $430 billion U.S. Inflation Reduction Act (IRA) passed in August restricts $7,500 consumer tax credits to North American-made EVs, but the U.S Treasury in December said consumers leasing vehicles assembled outside North America could benefit from the $7,500 commercial green vehicle tax credit.

Foreign governments have been pressing the Biden administration to do more to expand credit eligibility.

"The IRA has the potential to be a gamechanger for the industrial towns hit hardest by decades of offshoring," said a made public on Friday from the United Auto Workers, International Association of Machinists and Aerospace Workers, United Steelworkers, the Sierra Club and Public Citizen.

"We strongly urge you to ensure that the IRA is implemented as intended, without delays or technical changes that erode its promises to U.S. workers and climate goals," it said.

The White House did not comment on the letter on Friday but pointed to Biden's statements in September that said the IRA bill would create "good-paying union jobs" and "increase energy security."

EU Ambassador to the United States Stavros Lambrinidis said at the Washington auto show on Thursday that he was concerned by the "discriminatory" provision of the EV tax credit, arguing it means U.S. consumers "will have much less choice in what they can buy" that can receive the $7,500 credit.

"You can move to green without discriminating," Lambrinidis said.

The letter rejected the suggestion from foreign governments that the EV tax incentives violate World Trade Organization and free trade rules. "Out-dated trade rules should not be used to undermine our laws intended to support a growing clean energy economy," the letter said.

The EU in December praised the U.S. Treasury Department decision to allow EVs leased by consumers to qualify for up to $7,500 in commercial clean vehicle tax credits.

South Korea, Europe and some automakers in December had sought approval from Treasury to use the commercial electric vehicle tax credit to boost consumer EV access.

(Reporting by David Shepardson; Editing by Bill Berkrot)

El Salvador Exposure to Bitcoin is Minimal, Lender’s Chairman Says



Esteban Duarte and Michael McDonald
Fri, January 20, 2023 

(Bloomberg) -- El Salvador’s exposure to cryptocurrencies — including Bitcoin — is minimal, according to the chairman of the Central American Bank for Economic Integration, which provided most of the funds that the country is expected to use to repay a bond next week.

“We have seen that exposure, and we consider it very small — it is a not significant one,” said Dante Mossi, executive president of the multilateral lender, which provided $450 million of loans earlier this month. “We are interested that investors also know the real situation of El Salvador.”

Uncertainty about the real exposure of El Salvador to Bitcoin, which has plummeted in value in recent months, has been among the factors weighing on the nation’s access to capital markets. President Nayib Bukele’s administration had purchased 2,381 Bitcoin through June 2022, according to his announcements on Twitter. On November 16, he said the government would buy one Bitcoin every day.

The International Monetary Fund is expected to carry out its so-called Article 4 mission — in which it provides a macroeconomic assessment and recommendations — for El Salvador, Mossi said. CABEI is working with El Salvador’s government to compile information on debt sustainability, which is expected to include disclosures on cryptocurrencies, for the IMF review.

Press officers at El Salvador’s Ministry of Finance didn’t immediately reply to a request for comment via email. The country’s $347.9 million of 5.875% bonds due in 2025 touched the highest price since November 2021 on Friday at 72.89 cents, according to Bloomberg prices.

The CABEI chief added that the covenants of the recently-provided financing bar El Salvador from using it to buy such assets.

“The use of proceeds will be audited in six months,” Mossi said.

--With assistance from Sydney Maki.

Activists call for Chicago to rule out natural gas in new buildings, citing health risks, costs and climate change

Nara Schoenberg, Chicago Tribune
Thu, January 19, 2023 at 4:00 AM MST·5 min read

Environmentalists, activists and consumer advocates are calling on Chicago politicians to pass a clean buildings ordinance that would effectively rule out the use of natural gas in most new buildings.

Speaking at a news conference Wednesday morning at City Hall, the Sierra Club’s Illinois chapter director, Jack Darin, called such an ordinance “the next bold step for climate action.”

Speakers pointed to a growing number of scientific studies linking nitrogen dioxide emitted by gas stoves to childhood asthma. And Citizens Utility Board Executive Director David Kolata said that even before winter began, 20% of Peoples Gas customers were more than 30 days past due on their bills, and they owed an average of over $600.

“Natural gas has thrown Chicago residents into a deep hole and it’s only getting deeper,” said Pastor Scott Onque’, policy director at Faith in Place, an environmental justice nonprofit. “We need to start planning now for cheaper, cleaner ways to heat our homes. We need to start for the sake of our planet, our kids, our health, and our bottom lines.”

Advocates want Chicago to join New York, Los Angeles and Boston in effectively banning the use of natural gas in most new construction. In Chicago, gas is often used to provide residential heat and hot water, and to power stoves and laundry dryers — all of which can now be done with electricity.

The news conference was in support of a “Clean Buildings, Clean Air” ordinance that organizers said was being drafted by Mayor Lori Lightfoot’s office, with their input. The clean buildings ordinance is not yet public, according to Kolata, but he expects it to be made available soon.

Lightfoot’s office did not comment on whether it was working on an ordinance but released a statement from the mayor commending the work of the clean energy groups.

“This topic is critically important, and that’s why I commissioned the Chicago Building Decarbonization Working Group in 2021 to better understand how we can move to decarbonize buildings and alleviate the energy burden for Chicagoans struggling to pay their utility bills,” Lightfoot said in the statement.

Kolata said the expected ordinance is not technically a ban on natural gas in new construction. Instead, advocates want Chicago to follow New York’s lead, and establish emissions standards for new buildings that are so high they basically rule out fossil fuels.

In New York, that approach has been widely referred to as a ban on natural gas in new construction.

Peoples Gas provided a written statement noting that the company has been serving Chicago for 170 years and called the reasoning behind the proposed clean buildings ordinance “flawed and unrealistic.”

“Electric heat pumps may help keep Chicago warm in the future, but they cannot be relied upon today,” the statement said. “Not only do they struggle to work in cold climates, but it costs up to $60,000 to convert a single home to an electric heat pump. Further, Chicago’s electric system will be powered by natural gas for years to come, which shows that these activists’ thinking is flawed and unrealistic.”

A Consumer Reports survey found that members paid a median price of $7,791 to purchase and install a heat pump, versus $6,870 for a gas furnace. Whole-house heat pumps for cold climates can easily cost more than $10,000, Consumer Reports noted, but that’s for both heating and cooling — heat pumps provide air conditioning. With state subsidies, heat pumps can cost less than gas furnaces, according to Consumer Reports.

The federal government’s Inflation Reduction Act provides a 30% tax credit of up to $2,000 for heat pumps and ComEd offers rebates.

There’s some debate over whether high-efficiency electric heat pump heating systems can stand up to subzero temperatures in regions such as Chicago, but some local early adopters recently told the Tribune that their homes stayed warm and comfortable, in some cases with the aid of automatic backup systems intended for the very coldest days.

In Maine, which has set a goal of installing 100,000 heat pumps by 2025, a small pilot study found participants were staying warm in winter.

Home energy use accounts for about 20% of greenhouse gas emissions in the U.S., according to a 2020 article in the Proceedings of the National Academy of Sciences.

Those emissions can be reduced by switching from gas to electricity. And as electricity becomes cleaner, due to increased reliance on sources such as solar energy and wind, emissions will fall further.

Every U.S. residence combined currently creates more greenhouse gas emissions than all but five entire countries, or about as much emissions as Brazil and more than Germany, according to the Proceedings of the National Academy of Sciences article.

In recent years, the link between gas stoves and childhood asthma has been of particular concern, with a growing number of scientific studies finding a link.

Gas cooking in the home was linked to a 42% higher risk that children would have asthma, in a 2013 study published in the International Journal of Epidemiology. The study, a meta-analysis combining the results of 41 previous studies, also suggested a 24% increase in children’s lifetime risk of asthma.

A subsequent study found that longer use of gas stoves caused higher nitrogen dioxide levels, which in turn were linked to increased nighttime inhaler use in children with asthma.

Homes with gas stoves have nitrogen dioxide concentrations 50% to 400% higher than homes with electric stoves, according to a report by the clean energy nonprofit RMI.

At the news conference, Adella Bass, the lead health equity organizer for the Altgeld Gardens nonprofit People for Community Recovery, said that her entire family suffers from breathing issues. She cited problems such as toxic pollution from industry, as well as gas stoves.

“We deserve to breathe,” said Bass. “We deserve to feel safe in our homes and neighborhoods. Clean air shouldn’t be a luxury that only the wealthiest neighborhoods can access.”

If Chicago moves to effectively ban gas in new construction, it would join dozens of cities and counties that have taken similarly strong measures, many of them in California, where Berkeley instated the first ban in 2019.

There’s pushback against gas bans as well. At least 20 states have passed laws prohibiting local governments from banning natural gas, according to S&P Global Market Intelligence.

States that have banned natural gas bans include Iowa, Indiana, Texas and Missouri.

New leases to significantly expand UK offshore wind power

Thu, January 19, 2023 


The UK on Thursday announced leases for six new offshore wind projects which aim to cement the country as one of the world's leading renewable energy generators in the offshore sector.

The six new sites -- three off the North Wales, Cumbria and Lancashire coast, and three in the North Sea off Yorkshire and Lincolnshire -- will be able to power more than seven million homes by 2030.

They will generate eight gigawatts (GW) of renewable electricity.

The UK currently boasts nearly 14GW of installed wind capacity across dozens of offshore sites, according to industry body RenewableUK. That places it second globally behind China, which generates 66GW.

The British government is aiming for 50GW by the end of the decade, as it bids to meet climate change targets agreed internationally.

The Crown Estate, an independently managed portfolio of land, property and other assets belonging to the monarchy, struck the agreements as part of a fourth round of leasing deals for offshore wind, which first began in 2001.

The Estate, which owns and manages most of the seabed around the UK and awards rights to extract resources, said it has now sealed offshore wind deals totalling 41GW.

Gus Jaspert, of the Estate, hailed the latest agreements as "a significant milestone... demonstrating to the world that the UK offshore wind industry is growing at pace to help meet the climate challenge".

Under the terms of the leases, which run for at least three years before the bidders eventually switch to paying rent, the projects will generate around £1 billion ($1.24 billion) annually, according to the Estate.

Its total net income is handed to the UK government under a centuries-old agreement, but the ruling monarch sees a slice of that returned through the Sovereign Grant.

It is set as equivalent to 15 percent of the profits of the Crown Estate, and goes towards funding the Royal Household.

However, it was temporarily increased to 25 percent to cover the extensive updating work on Buckingham Palace, and totalled £86.3 million in 2021-22.

Separately, Buckingham Palace said on Thursday King Charles III has asked for profits from the new wind farms to be used for the "wider public good" rather than as a funding boost for the grant.

The Keeper of the Privy Purse, Michael Stevens, who manages the monarch's finances, has contacted Prime Minister Rishi Sunak and finance minister Jeremy Hunt to request "an appropriate reduction", the palace added.

jj/phz/lcm

Sacked GM workers in India sue company, CEO Barra for unpaid compensation



Thu, January 19, 2023 

By Aditi Shah and Arpan Chaturvedi

NEW DELHI (Reuters) -A union in India has sued General Motors' local unit and its global CEO for failing to pay court-ordered compensation to sacked factory workers, deepening the U.S. automaker's struggles to exit the country years after it shuttered local operations.

GM stopped selling cars in India in 2017 after years of low sales but its complete exit from the market has been marred by complications including legal tussles with workers and failure to find a buyer for a plant in the western state of Maharashtra after talks with China's Great Wall Motor collapsed last year.

GM and the factory workers - who allege illegal termination after the company decided to exit - have been locked in legal battles since 2021. The latest filing signals an escalation in the dispute as workers accuse GM's India unit and its executives, including CEO Mary Barra, of failing to follow court orders.

In a filing to the High Court of Bombay dated Jan 16, the General Motors Employees Union of 1,086 factory workers states the company has failed to pay them compensatory wages of 50% of their monthly salary starting April last year, as ordered by a local industrial court while it continues to hear the dispute, the documents show.

A union leader told Reuters that GM so far owes the workers around 250 million rupees ($3 million) in wages, based on the industrial court's order.

A GM spokesperson said the company remains "very confident" of its legal position. Adding: "GM is continuing to explore options for the sale of the (plant) site."

In its earlier court filings, it has said the industrial court acted beyond its power in ordering the compensation. The company has previously said it has tried to settle the issue amicably and has offered workers a generous severance package.

The union disagreed, and said GM continues to "blatantly violate" the industrial court's order by not paying the workers a single cent. In its latest filing, the union urged the court to hold the company and its executives in contempt, and punish them with imprisonment.

"The workers are unable to feed their families, pay for medical expenses, pay for their children's education," the union said in the filing, which has not previously been reported.

The lawsuit is likely to be heard in the coming days.

India has been a graveyard for some Western carmakers, especially U.S. companies, that have struggled to break the dominance of Japan's Suzuki Motor and South Korea's Hyundai Motor, which together hold a market share of about 60%. Like GM, Ford Motor ceased operations in India in 2021.

GM stopped selling cars in India at the end of 2017 but one of its two factories continued to produce vehicles for export until December 2020. After that, GM ceased all operations and moved to close the plant in Maharashtra, but it has not received permission.

The state government has rejected applications by GM to close the plant - a move that the company has previously said sends a "concerning message" to potential future investors.

(Additional reporting by Aditya Kalra; Editing by Simon Cameron-Moore)

OLD FASHIONED CRIMINAL CAPITALI$M

Vanished $4 Billion Brings Down Century-Old Retailer in a Week



Vinícius Andrade, Cristiane Lucchesi and Maria Elena Vizcaino
Fri, January 20, 2023 

(Bloomberg) -- Hours after revealing a scandal that would roil Brazilian markets, Sergio Rial joined a Zoom call with hundreds of panicked investors. It was an attempt to explain the $4 billion accounting gap that pushed him to quit his new job at the helm of retailer Americanas SA.

The Jan. 12 call was a tumultuous mix of English and Portuguese that some analysts were locked out of because the meeting reached its 1,000-participant capacity. Those who were able to cram into the headquarters of Banco BTG Pactual SA — the Sao Paulo-based creditor that was hosting the event — were left “perplexed” by Rial’s presentation, as one participant put it.

Four hours later, when the shares started trading, the stock plummeted 77%, wiping out $1.6 billion in market value. By the end of the day, bonds had lost half their value.

Within a week, the company filed for bankruptcy protection with $8.2 billion of debt.

“I don’t think there’s a company whose debt has gone down this much in two to three days,” said Omotunde Lawal, a portfolio manager at Barings UK Limited who focuses on emerging-market debt. “Maybe this is the fastest plunge ever.”

The startling and rapid meltdown has left Brazilians with the prospect of losing a ubiquitous company known for its unmistakable red-and-white logo and holiday sales, including in Rio de Janeiro where it was founded in 1929. The collapse dragged down the country’s stock market, sent creditors rushing to organize and pitted some of the nation’s most famed investors against each other. Billionaire Andre Esteves’s BTG Pactual, which days before had hosted the meeting with Rial, called it “the biggest fraud in Brazil’s capital markets.”

It was a sharp reversal for a company that had seen its stock rally after Rial was named chief executive officer last August, a job he only started on Jan. 2. Investors thought Americanas, which has been backed by billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira for more than four decades, was set for improved performance under the 62-year-old former banker’s leadership.

It unraveled on the night of Jan. 11 when it announced “inconsistencies” that had artificially boosted profits and reduced reported liabilities by half. The company’s disclosures imply it misreported numbers tied to financing of debts with suppliers while also wrongly deducting interest paid to lenders from its liabilities.

In the Thursday bankruptcy protection filing — similar to a Chapter 11 in the US — lawyers for the company said, “due to unexpected reasons that rocked the group’s structure, the petitioners saw their cash and revenue expectations crumble within minutes.”

Americanas Bondholders Face $8.2 Billion Debt Restructuring

The findings set off a whirlwind week in which Rial decided to personally deliver the bad news to a group of employees. Many of them had been working at the Brazilian retailer for decades, and put all their savings in shares of the company.

“Your faces are not particularly nice. But their faces were in deep pain,” he told investors on the BTG call, recalling the meeting with employees.

Shares in other Brazilian retailers including Via SA and Magazine Luiza SA sold off immediately, but trimmed losses as the firms rushed to reassure analysts that all their debt was properly booked on their balance sheets.

Americanas saw its market value collapse 90% from its peak hit during the coronavirus pandemic. Wall Street analysts quickly put their ratings under review and ratings firms downgraded the debt, after which banks refused to advance credit card receivables, draining more than 3 billion reais from the company’s cash.

After the Thursday bankruptcy protection filing, MSCI Inc. and Brazilian stock exchange operator B3 SA removed the stock from their indexes.

Americanas was granted emergency temporary protection against creditors from a court in Rio de Janeiro on Jan. 13, which also forbade them from freezing or seizing assets. The decision surprised bankers, who rushed to file motions to overturn the decision. Days later, BTG was allowed to block 1.2 billion reais to compensate part of the company’s debt. That triggered a similar reaction from other creditors, which also cut credit lines, and accelerated the crisis.

Americanas Scandal Pits BTG Billionaire Versus 3G ‘Demigods’

The collapse threatens to tarnish the reputation of Lemann and his partners as well as lead to losses in the shares they hold in Americanas. The trio controlled the company until they were diluted in a 2021 reorganization, which left them with a stake of 31%, still the main shareholders. They told the board they plan to keep supporting the company, but investors fear that any negative outcome may hurt other firms in which they are involved, such as Kraft Heinz Co. and Anheuser-Busch InBev SA/NV.

Americanas said in its bankruptcy protection filing the move by creditors to declare the early maturity of obligations, closed “the door to any kind of viable friendly negotiation.” The firm has approximately 43 billion reais in debt and now has 48 hours to present a list of creditors, which already started to organize.

Investment banks Moelis & Co. and Seaport Global Securities LLC are separately pitching to organize bondholders into a group. Investors holding local debt have hired lawyers and are deciding whether to work with a financial adviser, according to a person familiar with the matter who requested anonymity as the discussions are private.

“It’s hard to tell what the bankruptcy process will bring,” said Omar Zeolla, an analyst at Oppenheimer & Co. It seems Americanas’s main shareholders “are willing to contribute capital, but it’s hard for me to see at the moment how that could play out in terms of recovery for bondholders.”

STATE SANCTIONED WAGE THEFT
Treasury Taps Retirement Funds to Avoid Breaching US Debt Limit

WHO IS PAYING FOR GOP STUPIDITY?

THE WORKINGCLASS

Christopher Anstey

Thu, January 19, 2023 

(Bloomberg) -- The Treasury Department is beginning the use of special measures to avoid a US payments default, after the federal debt limit was reached Thursday.

The department is altering investments in two government-run funds for retirees, in a move that will give the Treasury scope to keep making federal payments while it’s unable to boost the overall level of debt.

Treasury Secretary Janet Yellen informed congressional leaders of both parties of the step in a letter on Thursday. She had already notified them of the plan last week, when she flagged that the debt limit would be hit Jan. 19.

Yellen reiterated that the period of time that the extraordinary measures will avoid the government running out of cash is “subject to considerable uncertainty,” and urged Congress to act promptly to boost the debt limit. Last week she said the steps wouldn’t likely be exhausted before early June.

The specific funds affected by the Treasury’s move are:

• The Civil Service Retirement and Disability Fund, or CSRDF, which provides defined benefits to retired and disabled federal employees

• The Postal Service Retiree Health Benefits Fund, or PSRHBF, which provides postal-service retiree health-benefit-premium payments. The fund is also invested in special-issue Treasuries

The two funds invest in special-issue Treasury securities that count under the debt limit. After the debt limit is increased, the three will be “made whole,” with participants unaffected.

EXPLAINER: What’s the Debt Ceiling, and Will the US Raise It?

It’s far from the first time the Treasury has resorted to these moves: Since 1985, the agency has used such measures more than a dozen times.

For the CSRDF, Yellen said that the Treasury is entering a “debt-issuance suspension period” starting Thursday and lasting through June 5. The Treasury will suspend additional investments credited to the fund and redeem a portion of the investments held by it, she said.

As for the PSRHBF, the Treasury will suspend additional investments of amounts credited to that fund, Yellen said.

Last week, Yellen had advised that the Treasury also anticipated tapping — this month — the resources of a third fund, the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan, which is a defined-contribution retirement fund for federal employees.

The so-called G Fund is a defined-contribution retirement fund for federal employees, and also invests in special-issue Treasury securities that count under the debt limit. Yellen’s letter on Thursday made no mention of the G Fund.

Yellen’s letter didn’t specify the amount of headroom under the debt ceiling that would be created by the extraordinary measures she listed.

The Treasury probably now has $350 billion to $400 billion of headroom available in all, said Gennadiy Goldberg, a senior US rates strategist at TD Securities. That, along with the influx of revenue that will come from individual income taxes due in April, should let the Treasury go until sometime in the July to August window without running out of cash, he said.

Other measures the Treasury has taken in the past to conserve headroom under the debt limit include suspending the daily reinvestment of securities held by the Exchange Stabilization Fund. That’s a special vehicle that dates back to the 1930s, over which the Treasury secretary has wide discretion.

The Treasury previously has also suspended issuance of state and local government series Treasuries. Those securities are a place where state and local governments can park cash, and they count toward the federal debt limit. Those governments need to invest in other assets when SLGS issuance is suspended.

--With assistance from Sydney Maki.

WEF DAVOS

View from the top

Even amid high-profile layoffs and economic clouds, U.S. workers should be optimistic about their prospects, according to political and business leaders at Davos.

A majority of CEOs have no plans to freeze hiring or lay off workers over the next 12 months, according to new research from PricewaterhouseCoopers. “When I look at the bulk of our clients, they’re still hiring in the right areas,” said Tim Ryan, U.S. Chair at PwC.

It’s partly simple math: there are still close to two job openings for every person who’s looking for work. Longer-term demographic trends also favor workers. “We aren’t having enough babies and the U.S. immigration policy isn’t bringing in enough workers to meet the needs,” said Rachel Romer, CEO of Guild, an education, skilling, and career-mobility platform, via phone. She also noted that the current layoffs wave is concentrated in the tech and finance industries and corporate headquarters, with limited impact beyond that.

Senior executives in Davos also privately acknowledged that their efforts to drag employees back into offices more days per week are being broadly ignored. They admitted they’re unlikely to be able to enforce traditional office attendance, even as it’s less easy for workers to hop from company to company these days, theoretically diminishing some of their leverage.

U.S. Labor Secretary Martin Walsh contended that businesses need to continue increasing pay and benefits as well. “It’s going to come down to retention,” Walsh told a group of reporters. “If you have a happy workforce and a loyal workforce, then you don’t have to worry about retention.”

Business leaders in Davos discussed concerns that the accelerating application of artificial intelligence could reduce the demand for human workers. But Romer countered that AI isn’t for the foreseeable future capable of replacing many front-line workers in industries such as retail, healthcare, and services. “If you develop the right skills, the world is your oyster—and not only that, you’re going to get to do some amazing things,” said Ryan. “I think climate is exciting. I think reinventing on the backs of world class technology is exciting.”
— Kevin Delaney

Peak moment

Speaking at the Victor Pinchuk Foundation’s Ukrainian Breakfast on Thursday, Canadian Deputy Prime Minister Chrystia Freeland, invoking a Wayne Gretzky metaphor, told attendees that the “puck is going to Ukrainian victory, so let’s skate there.” Former British Prime Minister Boris Johnson added: “Tell Putin to get the puck out of Ukraine.”

Dutch export rules on China in focus ahead of ASML results


ASML Holding logo is seen at company's headquarters in Eindhoven

Fri, January 20, 2023 
By Toby Sterling and Stephanie van den Berg

AMSTERDAM (Reuters) - Expectations that the Dutch government will further limit sales to China by chip equipment giant ASML Holding NV may overshadow what are expected to be strong fourth quarter results due next week.

The Hague is expected to impose at least some additional restrictions on ASML's exports to China, a Dutch government source familiar with security discussions between the United States and Netherlands told Reuters, though they could not give a timeframe.

ASML, a key supplier to chipmakers, generates about 15% of its sales in China, an important growth market even after it was restricted from selling its most advanced machines there under U.S. pressure in 2019.

Tensions between Washington and Beijing over semiconductors have since steadily worsened.

Washington in October imposed export restrictions on its own chip equipment companies aimed at hobbling China's ability to make chips and to blunt its military progress.

U.S. officials say they expect the Netherlands to follow suit.

Dutch Prime Minister Mark Rutte on Jan. 17 said he expected a "good outcome" to discussions with the United States on the matter after meeting with President Joe Biden in Washington.

But Dutch trade minister Liesje Schreinemacher has underlined the Netherlands will not simply adopt U.S. rules.

"I know there's a lot of pressure internationally but I will be fighting for open trade and against protectionism," she told a panel in Davos on Jan. 19.

The government source said The Hague has been working to resolve several concerns.

One is making sure Dutch rules are drafted in such a way that they are not actually more restrictive for ASML than for U.S. companies.

Another is that Japan, home to ASML competitor Nikon, have similar rules, and a third is that new restrictions do not upend the global chip market, which is just emerging from COVID-19 era shortages and needs Chinese production, especially for less-advanced chips.

"We will figure it out," the source said.

EARNINGSThe Dutch Foreign Affairs Ministry, which oversees export controls, declined to comment. ASML also declined to comment citing a quiet period ahead of earnings due on Jan. 25.

ASML is expected to post fourth-quarter net income of 1.68 billion euros ($1.82 billion) on record revenue of 6.37 billion euros, according to Refinitiv Eikon data.

In November ASML raised its annual revenue estimates by 25% to at least 30 billion euros by 2025.

The company's top customers including TSMC, Samsung and Intel are engaged in major expansions, so any loss of Chinese sales could initially be offset elsewhere.

Still, the U.S. restrictions are expected to impact 5% of ASML's 38-billion-euro order backlog.

There could be further losses from tougher Dutch rules, if for example, limits are re-applied to sales to China of older technology deep ultraviolet lithography (DUV) equipment.

ASML has sold more than 8 billion euros worth of such equipment in China since 2014, when DUV was removed from international lists of goods deemed of possible military use.

The government would need to expand its definition of sensitive technology to include DUV in order to restrict it and may not specify that such a move is targeting China.

($1 = 0.9223 euros)

(Reporting by Toby Sterling; editing by Jason Neely)

SCOTLAND UPHOLDS LGBTQ RIGHTS

Nicola Sturgeon: Alister Jack has acted like a ‘governor-general’ over trans law

Simon Johnson
Thu, January 19, 2023 

Nicola Sturgeon - Jane Barlow/PA Wire

Nicola Sturgeon has accused the Scottish Secretary of acting like a colonial “governor-general” after he vetoed her gender reforms over their impact on UK-wide protections for women.

The First Minister said Alister Jack had treated the Scottish Parliament as a “subordinate body” by “deciding which democratic decisions and laws to veto”.

In a speech to a group of pro-independence businessmen and women, she claimed the decision signalled the start of “a new and more dangerous phase for devolution” that showed Scotland should leave the UK.

Ms Sturgeon claimed that the Tories have “broken cover” and their “stealth attacks” on the Scottish Parliament had “been joined by a full-frontal assault”.

But UK Government sources rejected her allegations, saying that her decision to resort to personal slurs against Mr Jack demonstrated the weakness of her case.

Her outspoken assault on the Scottish Secretary came after one of the country’s most eminent legal authorities rejected as “quite wrong” the First Minister’s claim that the veto represented an attack on Holyrood.

Lord Hope of Craighead, a former deputy president of the UK Supreme Court, said the power was “not destroying devolution at all” but was included in the Scotland Act that created it.

Despite her claims to be very confident of victory, he warned Ms Sturgeon that she had a “very low” chance of overturning the veto in her planned judicial review court action and questioned whether it was a “sensible use of public money”.

Alister Jack - Andrew Milligan/PA Wire

On Thursday, Shona Robison, the SNP’s Social Justice Secretary, said Mr Jack should “immediately” withdraw the block to “show the UK Government is serious about improving the lives of trans people and respecting Scottish democracy”.

She claimed that Tory ministers had failed to raise any issues about the Bill undermining UK-wide protections for women during its passage at Holyrood.

But, although she said the Scottish Government remained “absolutely determined to vigorously defend the Bill”, she did not repeat her previous threat of court action and warned a legal battle “only raises further uncertainty”.

Mr Jack has offered talks to try and find a compromise but Ms Sturgeon argued his actions demonstrated that “Westminster control means the worst of both worlds” for Scotland, with a weaker Holyrood and a weaker economy.

She said: “Through his actions, the UK Government Secretary of State for Scotland is demonstrating he is, sadly, not interested in working in partnership.

“He’s decided to act like a governor-general: treating the Scottish Parliament as a subordinate body and deciding which democratic decisions and laws to veto.”

Ms Sturgeon also argued that Westminster decision-making was also undermining the Scottish economy, despite her plans to join the EU requiring a hard border with England, the country’s dominant trading partner.

The UK Government said it raised “a number of concerns” about the impact of the Bill on the rest of the UK “as part of our constructive approach, in advance of the legislation passing”.

A series of potential problems were also highlighted by women’s rights groups and the Equalities and Human Rights Commission (EHRC), the UK's equalities watchdog.

But Ms Robison insisted the Scottish Government kept UK ministers informed about the Bill’s development during its passage at Holyrood and “at no point” did they ask for it to be amended.

She said: “Put bluntly, this was a one-way conversation up until the final moments this Bill should have gone for Royal Assent and become law.

“So for the Scottish Secretary to announce this week that he was unilaterally vetoing the Bill is fundamentally disrespectful to Scotland’s parliament and the MSPs who have been part of its scrutiny, consideration and passing.”

Referring to Mr Jack’s offer of talks, she said: “If he really wants to work together in a partnership of equals, then he should acknowledge that yesterday’s announcement is completely incompatible with such a partnership, and he should immediately revoke the Section 35 order.

“That would show the UK Government is serious about improving the lives of trans people and respecting Scottish democracy.”

But a UK Government spokesman said a Section 35 order was only issued “after thorough and careful consideration of all the relevant advice and the policy implications”.

He said: “This legislation would have an adverse impact on the operation of Great Britain-wide equalities legislation.

“Transgender people deserve our respect, support and understanding. Our decision is about the legislation’s consequences for the operation of GB-wide equalities protections and other reserved matters.”