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WASHINGTON/BRUSSELS/BEIJING (Reuters) – U.S. President Donald Trump’s blunt-force use of tariffs in pursuing his “America First” trade agenda has angered many, from company executives to allied governments and members of both parties of Congress.

But there’s one effort which has drawn broad support from those who oppose him on almost everything else – his push to force Beijing to change what are widely viewed as China’s market-distorting trade and subsidy practices.

As U.S.-China talks to end a trade war reach their endgame, politicians, executives and foreign diplomats are urging Trump and his team to hold out for meaningful structural reforms in China to address entrenched problems in the relationship that hurt U.S. and other foreign companies and workers.

Trump’s trade war “has let the genie out of the bottle” by lifting expectations that the trade war will force China to reform policies that businesses and foreign governments regard as unfair, said Steven Gardon, vice president of indirect taxes and customs at Lear Corp. Gardon’s firm is an automotive seating and electrical supplier with plants in 39 countries, including the United States and China.

“Now that all these issues have been raised, there’s a lot more domestic political support to address these issues, and I don’t think you can pull back from that,” Gardon said at a Georgetown Law School forum this month. “There’s now pressure politically that they have to be addressed for the long term.”

Gardon’s comments reflect a broad shift in U.S. and international business sentiment towards China’s economic and trade policies, one that is aligned with Trump’s goals, if not his tactics.

Trump’s trade team say they are in the final stages of negotiating what would be the biggest economic policy agreement with China in decades. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin head to Beijing this week to try to accelerate talks with Chinese Vice Premier Liu He. Liu is set to travel to Washington for another round of negotiations in early April.

Eight months into the trade war that has disrupted the flow of billions of dollars of goods between the world’s two largest economies, it is unclear if a deal acceptable to both sides can be done.

China’s President Xi Jinping is seen as reluctant to make economic reforms under pressure from the United States, and Trump has said he may keep tariffs on Chinese goods in place for “a substantial period” even if a deal is struck.

Xi may find it easier to live with the tariffs Trump has imposed on trade than to change China’s model for economic development.

As part of a deal, Beijing has offered to make big-ticket purchases from the United States to help reduce a record trade gap. Trump’s team has said those purchases would be worth more than a trillion dollars over about six years.

While big Chinese purchases might be tempting for Trump’s administration, they would do nothing to address what U.S. firms competing in China or against Chinese firms say are structural problems with a system stacked against them.

The United States complains China engages in systematic intellectual property theft, forces foreign firms to give up trade secrets for market access and spends huge sums subsidizing its own industry. Redressing those complaints would require policy reform at the highest level from Xi and China’s ruling Communist Party.

A survey released by the American Chamber of Commerce in China in late February showed that a majority of member U.S. companies supported increasing or maintaining tariffs on Chinese goods, and nearly twice as many as last year want the U.S. government to push Beijing harder to create a level playing field.

The U.S. tariff demands have even encouraged some reform-minded Chinese officials and private-sector business executives to call for a faster pace of reform in China as it celebrates the 40th anniversary of its first steps toward capitalism.

Lighthizer told lawmakers in late February that Chinese-American business people in particular have urged him to “hang tough” in the talks and not to “sell out for soybeans.”

STAY THE COURSE
When Trump delayed a threatened tariff increase well before a March 1 deadline for a deal, he stoked fears that he may be swayed by the big purchase order and leave longstanding structural problems unresolved.

Since then, a steady drumbeat of lobbyists, company executives, foreign diplomats and U.S. lawmakers from both parties have urged Trump to stay the course on his structural demands.

Representative Kevin Brady of Texas, one of the most pro-trade Republicans and a critic of Trump’s tariffs, recently joined that call.

“While we want China to buy more U.S. goods … it’s even more important for us to hold China accountable to meeting high international standards on intellectual property rights, subsidization, overcapacity, and the other structural ways in which China distorts the global economy,” he said at a House Ways and Means Committee hearing just days after the tariff delay was announced.

Last week, Senate Democratic leader Chuck Schumer, a longtime China trade hawk, took to the Senate floor to urge Trump not to “back down” and take a deal based largely on Chinese purchases of American soybeans and other goods.

On Thursday, Schumer tweeted: “Now’s not the time to drop $200B in tariffs just because China’s close to a deal, @realDonald Trump.”

QUIETLY ROOTING FOR TRUMP
European Union members, traditional allies of the United States, are still smarting about the steel and aluminum tariffs Trump imposed on imports into the United States last year. The EU is also worried that Trump will impose duties on autos. But the bloc shares many of the same frustrations over China’s technology transfer policies and market access constraints.

“We get complaints every day from our companies,” one European official told Reuters in Beijing, noting that despite repeated pledges from the Chinese government to make life easier for foreign companies, little had changed.

EU trade commissioner Cecilia Malmstrom’s assessment of China’s behavior sounds almost like it was written by the U.S. Trade Representative’s office, charging that China has abused global trading rules.

China has “blurred the lines between state and private sector. The state has undue influence,” she said in a Washington speech this month. “Intellectual properties of companies are stolen. State subsidies, direct or indirect, are common. And these impacts are felt at home and abroad.”

Malmstrom says that while the U.S. and EU “agree on the diagnosis,” they differ on tactics, and she argues for a more multilateral approach, citing the EU’s work with the United States and Japan to address the issues through reform of World Trade Organization rules.

Some worry that Europe could lose out if Washington and Beijing strike a deal to purchase billions of dollars more in products to try to shrink the U.S. goods trade deficit with China.

“If China is buying more from America then inevitably it will buy less from Europe,” a second European official based in Beijing said, adding that could in particular affect large European multinationals.

But European diplomats and officials acknowledge a begrudging support for Trump’s goals, even if they are repulsed by his blunt tactics. Many are secretly rooting for his success.

“We are against unilateral measures, but nobody is exactly sorry for China. On content we think he does have a point,” said one EU diplomat who spoke on condition of anonymity in Brussels. “Beijing has to understand that without reform, the system could just stop working.”

Trump administration officials insist that he has gotten the message and is holding out for “structural changes” to the U.S.-China relationship, along with an enforcement mechanism that holds China to its pledges.

Clete Willems, a White House trade adviser, told the Georgetown Law School forum that Trump is determined to fix problems with China’s trade relationship that he has railed against for years, long before he ever sought office.

“The notion that he’s just going to suddenly accept a bad deal is totally inaccurate. The president is going to walk away from bad deals,” said Willems, who announced on Friday that he is leaving the White House for family reasons.

JAKARTA/OSLO (Reuters) – Indonesian airline Garuda plans to cancel a $6 billion order for Boeing 737 MAX jets, it said on Friday, saying some passengers would be frightened to board the plane after two fatal crashes, although analysts said the deal had long been in doubt.

The news came as another 737 MAX customer, Norwegian Air, played down the significance of a move by Boeing to make a previously optional cockpit warning light compulsory.

Norwegian said that, according to Boeing, the warning light would not have been able to prevent erroneous signals that Lion Air pilots received before their new 737 MAX plane crashed off Indonesia in October, killing 189 people.

Indonesia’s national carrier Garuda is the first airline to publicly announce plans to scrap an order since the world’s entire fleet of 737 MAX planes was grounded last week, following an Ethiopian Airlines crash that left 157 people dead.

“Many passengers told us they were afraid to get on a MAX 8,” Garuda CEO Ari Askhara told Reuters on Friday.

However, the airline had been reconsidering its order for 49 of the narrowbody jets prior to the Ethiopian crash, including potentially swapping some for widebody Boeing models.

Southeast Asia faces a glut of narrowbody aircraft like the 737 MAX and rival Airbus A320neo at a time of slowing global economic growth and high fuel costs.

“They have been re-looking at their fleet plan anyway so this is an opportunity to make some changes that otherwise may be difficult to do,” CAPA Center for Aviation Chief Analyst Brendan Sobie said.

Indonesia’s Lion Air has also said it might cancel 737 MAX aircraft, though industry sources say it is also struggling to absorb the number of planes on order.

Both crashes are still being investigated. But regulators have noted some similarities between the two, and attention has focused on whether pilots had the correct information about the “angle of attack” at which the wing slices through the air.

No direct link has been proven between the accidents.

RETROFITS
Boeing now plans to make compulsory a light to alert pilots when sensor readings of the angle of attack do not match – meaning at least one must be wrong -, according to two officials briefed on the matter.

Investigators suspect a faulty angle-of-attack reading led the doomed Lion Air jet’s computer to believe it had stalled, prompting the plane’s anti-stall system, called MCAS, repeatedly to push the plane’s nose down.

The Lion Air plane did not have the warning light installed because it was not compulsory. Ethiopian Airlines did not immediately comment on whether its crashed plane had the alert.

But the Ethiopian carrier, whose reputation along with Boeing’s is at stake, issued a statement on Friday emphasizing the modernity of its safety and training systems, with more than $500 million invested in infrastructure in the past five years.

The Ethiopian crash has set off one of the widest inquiries in aviation history and cast a shadow over the Boeing 737 MAX model intended to be a standard for decades.

Boeing did not comment on the plan to make the safety feature standard, but separately said it was moving quickly to make software changes and expected the upgrade to be approved by the U.S. Federal Aviation Administration (FAA) in coming weeks.

Chicago-based Boeing will also retrofit older planes with the cockpit warning light, the officials told Reuters.

Experts said it could take weeks or months to be done, and for regulators to review and approve the changes. Regulators in Europe and Canada have said they will conduct their own reviews of any new systems.

Norwegian said its 18 737 MAX jets did not have the cockpit warning light, but it would follow any recommendations made by Boeing and aviation regulations. The airline said last week it would seek compensation from Boeing for the cost of grounding its 737 MAX planes, which makes up 11 percent of its fleet.

Since the Ethiopian crash, Boeing shares have fallen 12 percent and $28 billion has been wiped off its market value.

Pressure has mounted on the company from U.S. legislators, who are also expected to question the FAA. The company faces a criminal investigation by the U.S. Justice Department as well.

Several lawsuits have already been filed on behalf of victims of the Lion Air crash referring to the Ethiopian accident. Boeing declined to comment on the lawsuits.

SEOUL/WASHINGTON (Reuters) – North Korea on Friday pulled out of a liaison office with the South, in a major setback for Seoul, just hours after the United States imposed the first new sanctions on the North since the second U.S.-North Korea summit broke down last month.

North Korea said it was quitting the joint liaison office set up in September in the border city of Kaesong after a historic summit between leader Kim Jong Un and South Korea’s President Moon Jae-in early last year.

“The North’s side pulled out after conveying to us that they are doing so on the instructions from a higher level, during a liaison officials’ contact this morning,” South Korea’s Vice Unification Minister Chun Hae-sung told a briefing.

South Korea regrets the decision and urged a swift normalisation of the arrangement, Chun said, adding the South would continue to staff the office, set up as a regular channel of communication to ease hostility between the rivals, which technically remain at war.

The move came after the United States on Thursday blacklisted two Chinese shipping companies it says helped North Korea evade sanctions over its nuclear program and cited 67 vessels it said engaged in illicit trade helping the North.

It was the first such step since a second meeting between President Donald Trump and North Korean leader Kim Jong Un in Hanoi broke down over conflicting demands by the North for relief from sanctions and from the United States for Pyongyang to give up its nuclear weapons.

The North’s withdrawal from the office was another blow to Moon, who has seen his standing as a mediator between Pyongyang and Washington deteriorate and divisions grow within his government over how to break the impasse.

Moon’s administration had touted the office as a major feat resulting from his own summit with Kim last year despite U.S. concerns about possible loosening of sanctions.

The South’s Chun said he would not directly link the North’s move to the failed Hanoi summit. But experts saw a pattern in the North lashing out against the South when its crucial strategic position with Washington is in jeopardy.

“The North sees its nuclear issue and ties with the United States as a matter of greater strategic importance, so when they try to assert its position, they sacrifice the ties with the South, which is considered inferior,” said Shin Beom-chul of the Asan Institute for Policy Studies in Seoul.

Moon’s office reacted by holding an urgent meeting, headed by his national security adviser, to discuss the withdrawal.

The won weakened about 0.4 percent against the dollar in non-deliverable forward (NDF) trade after the news.

NEW SANCTIONS
The U.S. Treasury Department identified two Chinese firms for new sanctions – Dalian Haibo International Freight Co Ltd and Liaoning Danxing International Forwarding Co Ltd – which had helped the North evade U.S. and international sanctions, it said.

It also cited 67 vessels for engaging in illicit transfers of refined petroleum with North Korean tankers or facilitating the export of the North’s coal.

Reuters was unable to locate contact details for either of the Chinese companies to seek comment.

The U.S. sanctions prohibit U.S. dealings with the designated companies and freezes any assets they have in the United States.

“The United States and our like-minded partners remain committed to achieving the final, fully verified denuclearization of North Korea and believe that the full implementation of North Korea-related U.N. Security Council resolutions is crucial to a successful outcome,” Treasury Secretary Steven Mnuchin said in a statement.

The latest sanctions showed there was some “leakage” in North Korea sanctions enforcement by China, but it was mostly abiding by U.N. resolutions, a senior U.S. official told reporters on condition of anonymity.

While declining to say whether Washington was trying to send a post-summit message to Pyongyang, the official said Trump “has made clear that the door is wide open to continuing the dialogue with North Korea.”

LIMBO
U.S.-North Korean engagement has appeared to be in limbo since the Feb. 27-28 summit, despite U.S. Secretary of State Mike Pompeo saying on March 4 he was hopeful he could send a team to North Korea “in the next couple of weeks.”

North Korea has warned it is considering suspending talks and may rethink a freeze on missile and nuclear tests, in place since 2017, unless Washington makes concessions.

Activity was detected at the North’s main rocket test facility around the time of the failed summit, fueling concern that Pyongyang may be about to resume weapons development to ratchet up pressure on Washington.

On Monday, two senior U.S. senators called for the Trump administration to correct a slowing pace of American sanctions designations on North Korea, saying such actions had seen a marked decline in the past year of U.S. diplomatic engagement with Pyongyang.

They pointed to a recent U.N. report that North Korea continued to defy U.N. sanctions with an increase in smuggling of petroleum products and coal and violation of bans on arms sales.

A U.N. sanctions panel said in the report Liaoning Danxing was suspected of illicitly shipping Mercedes-Benz limousines to North Korea. Last July, the Netherlands seized a cargo of Belarusian vodka, also banned as luxury goods, en route to North Korea via the company, it said.

SHANGHAI (Reuters) – Smartphone retailers in China say it’s a tough sell of late with consumers reluctant to upgrade, put off by chill economic winds.

Even so domestic brands led by Huawei have made big strides, wooing consumers with top-notch hardware and innovative features as they move upmarket in the $500-$800 price range. The result: a loss of share in a key segment for Apple Inc and fresh price cuts for iPhones by Chinese retailers.

“Of those people who are upgrading, there are many switching from Apple to Chinese brands but very few switching from Chinese brands to Apple,” said Jiang Ning, who manages a Xiaomi store in the northern province of Shandong.

Huawei Technologies Co Ltd, Xiaomi Corp, Oppo and Vivo once sought to grab share in the world’s biggest smartphone market with value-for-money devices, but consumer demand for better phones has prompted strategic rethinks.

“People are more attached to their phone than ever and have higher expectations for the function and experience it offers. The response has been constant upgrading of hardware specs,” Alen Wu, global vice president at Oppo, told Reuters.

He Fan, CEO of Huishoubao which buys and resells used phones, said he has seen a consumer shift to Huawei from Apple, driven by the Chinese love of selfies and emphasis on camera quality. Huawei has had a tie-up with German camera maker Leica since 2016.

“Huawei’s cameras have become noticeably better than Apple’s in that they suit the tastes of Chinese consumers more,” he said.

Compared to dual-cameras common in most smartphones, Huawei’s P20 Pro device boasts three rear-facing cameras, with the additional one improving zoom capabilities.

It is one of several new devices in its P20 and Mate 20 lines, which helped Huawei’s share of the $500-$800 segment in China surge to 26.6 percent last year from 8.8 percent, data from research firm Counterpoint shows.

Apple, by contrast, saw its share of the segment tumble to 54.6 percent from 81.2 percent, also hurt by its decision to move even further upmarket with the iPhone X series.

“Most Chinese smartphone buyers are not ready to shell out beyond $1,000 for a phone,” said Neil Shah, research director at Counterpoint. “This left a gap in the below-$800 segment, which Chinese vendors grabbed with both hands.”

Shipments of phones priced above $600 in China grew 10 percent in 2018, data from research firm Canalys shows. By contrast, the overall market shrunk 14 percent, marking a second year of contraction.

OVERSEAS GAINS
The weaker cachet for Apple in China was underscored this month when several major retailers simultaneously cut iPhone prices for a second time this year.

A 64GB iPhone 8 sold at Suning.com Co Ltd now costs 3,899 yuan ($580), roughly 25 percent less than it did in December. That’s also lower than its $599 price tag in the United States, where iPhones typically cost less to buy than in China. Most iPhone models through to the iPhone 8 series have seen prices in China cut, albeit not equally.

In earnings too, it seems to be a tale of divergent fortunes. Apple’s October-December revenue from the Greater China region fell by about a quarter from a year earlier. Greater China currently accounts for 15.6 percent of its overall revenue.

Huawei, the world’s No. 2 smartphone maker, has estimated revenue for 2018 rose 21 percent, which analysts attribute in large part to robust smartphone sales.

More broadly, fewer sales for Apple means fewer customers for its App Store and media streaming services. The shift to higher-end phones by Chinese brands has also meant greater inroads in overseas markets.

Huawei’s shipments in Europe jumped 55 percent in the latest quarter and it now has 23.6 percent market share, according to Canalys. That’s not far behind Samsung Electronics and Apple which saw small declines in shipments.

OPPO, VIVO
If Huawei is taking the lion’s share of turf that Apple once had in China, Oppo and Vivo – brands owned by electronics hardware conglomerate BBK – are the newest threats.

In June, Vivo launched the Nex which starts from 3,898 yuan ($610) and in July, Oppo launched the Find X, priced at 4,999 yuan ($755).

The models mark the first time the brands have priced a phone above $600, a sharp departure from their roots selling $300-$500 models to young consumers in second-tier cities.

The devices came with features unavailable in the iPhone, including under-the-glass fingerprint sensors and “notchless” displays, both of which increase the size of usable screen.

Xiaomi too is going upmarket, announcing in January it would split off its low-budget Redmi range of phones into a sub-brand. In doing so, it is taking a leaf out of Huawei’s book which has for years sold cheaper devices under the Honor brand, helping differentiate its products.

Redmi will target international markets and e-commerce sales, while the flagship Xiaomi brand will target China and offline retail markets, company founder Lei Jun told reporters.

Last month, Xiaomi unveiled the Mi 9, its latest flagship device with a price tag of 2,999 yuan ($450). But the company also said it might be the last time a Xiaomi flagship phone would be priced under 3,000 yuan.

“Xiaomi’s flagship series phones were once always set at 1,999 yuan,” said Lei. “This was a contributing factor to our rise, but it also became an obstacle to our growth,” he said.

BRUSSELS (Reuters) – European Union leaders have given Prime Minister Theresa May two weeks’ reprieve, until April 12, before Britain could lurch out of the EU if she fails to persuade MPs to back the withdrawal treaty she concluded with Brussels.

But after seven hours of summit brainstorming on Thursday, her 27 peers kept a host of options open, ramping up pressure on parliament to support May, giving Britain an outside chance of staying in for much longer – but also preparing to deflect blame for the chaos of any no-deal Brexit.

May had wanted to be able to delay Britain’s departure until June 30 to tie up legislative loose ends, and tried to reassure the EU that she could overturn two heavy defeats to clinch a last-gasp parliamentary ratification of her deal next week, so allowing a status-quo transition period to come into effect.

EU leaders had planned to endorse a shorter extension, to May 22, the eve of EU parliamentary elections, and leave any discussion of how to deal with May losing until next week. But diplomats said the prime minister singularly failed to reassure them she could win. Some sensed she did not believe it herself.

After May left the room, and with French President Emmanuel Macron pitching a surprise ultimatum for Britain to be out, deal or no deal, by May 7 — the eve of a summit on the EU’s post-Brexit future — the meeting plunged into frantic debate.

The outcome, with which May declared herself satisfied, was that the May 22 date will apply if parliament rallies behind her next week. If it does not, Britain will have until April 12 to offer a new plan or choose to quit without a treaty.

That date corresponds to the six weeks’ legal notice required for the EU election – which the Union would insist Britain hold on May 23 if it remains a member. If it does not hold the election, leaders said, the very last date Britain must leave would be June 30, before the new EU parliament convenes.

“OPTIONS REMAIN OPEN”
Until April 12, said summit chair Donald Tusk, “all options will remain open and the cliff-edge date will be delayed”.

“The UK government will still have a choice between a deal, no deal, a long extension or revoking Article 50 (the withdrawal notice),” he told a news conference.

If Britain decides by April 12 against holding the EU election, it could then leave the EU without a deal at any time up to May 22.

May said she would not cancel Brexit or seek a long delay that would mean asking people to vote in EU elections three years after voting to leave. She insisted she could secure a deal next week.

Many in London doubt that, not least after she offended many MPs on Wednesday by publicly blaming them for the deadlock. She tried to soften those remarks somewhat on Thursday.

“What this decision tonight does is show the clear choice that is open to MPs,” May said. “I think the choice is clear for people.”

But May’s stated belief in her strategy of a third vote did not communicate itself to the summit table.

“It did not go well,” said one EU official familiar with the talks. “They basically realised that she doesn’t really believe it herself. They don’t want to be seen to be forcing the Brits out now. But they are looking for ways to end the agony.”

While some brinkmanship from Brussels may be part of a strategy to bounce reluctant British legislators into backing May, there is also a growing impatience that efforts to avoid a messy Brexit are bogging the EU down when it has other priorities, from a weakening economy to rising nationalism.

“WE HAVE BOUGHT TWO WEEKS”
Macron has led the charge, calling for Britain, long a thorn in France’s plans for deeper European integration, to put up or shut up on Brexit. “We have come up with a response that protects our interests,” he said.

“It is up to the British to sort out their own internal contradictions. As for us, we don’t have any.”

May’s opponents at home range from hard-core Brexit supporters who say her deal gives the EU too much influence in Britain to others, inside and outside her own Conservative party, who would prefer to stay much closer to the EU or cancel Brexit.

Voicing the fears of business that a “no-deal” Brexit would hurt economies across the continent, German Chancellor Angela Merkel argued for caution, saying she would “work to the last minute” to avoid a disorderly departure.

By pushing the Brexit crunch toward Britain’s April 12 deadline to declare its decision on holding an EU election, EU diplomats said, the leaders also dodged potential blame if they had simply allowed Britain to crash out next Friday.

“That way, Merkel and the rest of the EU can avoid blame for forcing the British out,” one EU official said. “It will be up to the British themselves to say they are leaving with no deal.”

The basic problems of Brexit remain, however. Britain could still crash out without a transition, disrupting business and souring relations before the sides sit down to negotiate a trade pact and decide how to manage their politically sensitive land border in Ireland.

“Today was a long seven hours that bought us two weeks,” another EU diplomat said.

“It just lets us say with a clear conscience that we didn’t throw them under the bus on March 29 … But before April 12, we will face the very same questions as now.”

BRUSSELS (Reuters) – EU leaders will tell Theresa May on Thursday she can have two months to organise an orderly Brexit but Britain could face a hugely disruptive ejection from the bloc next Friday if the prime minister fails to win backing from parliament.

The pound was under pressure as investors saw risks of a no-deal Brexit rising on signs of impatience among the European Union leaders due to meet May for a 24-hour summit in Brussels.

EU diplomats said her request for a delay until June 30 seemed likely to be met by an EU preference for Britain to have completed formalities and begin a status-quo transition to departure before Europeans elect a new parliament from May 23.

German Chancellor Angela Merkel’s repetition that she would “fight to the last minute” to avoid a no-deal Brexit, highlighted the sense of danger. May could have an extension, ideally to May, she said, but if she fails to secure backing for a deal in London, Europeans are prepared for the worst.

The fate of one of Europe’s major economic powers rests on whether its lawmakers will next week reverse two heavy defeats for the Withdrawal Agreement May agreed with the EU in November.

The Bank of England kept interest rates steady and said most businesses felt as ready as they could be for a no-deal Brexit that would likely hammer economic growth and jobs.

With parliament and political parties divided, deadlock could mean Britain lurching by default into legal limbo outside the EU at 11 p.m. (2300 GMT) on March 29.

“There are more non-options on the table than options … I sometimes have the feeling that we are in the waiting room, a bit like Waiting for Godot. But Godot never came so I hope this time they will come,” Luxembourg Prime Minister Xavier Bettel said in Brussels.

If the deal is saved, EU leaders would probably sign off remotely on an extension of the deadline to mid-May, or perhaps the end of June, before the new EU parliament convenes.

“We could consider a short extension conditional on a positive vote on the Withdrawal Agreement in the House of Commons,” summit chair Donald Tusk told leaders on Wednesday.

Diplomats said a meeting of national envoys indicated that most governments would prefer Britain out by mid-May or oblige it to hold its own European Parliament election on May 23.

But if May fails next week, leaders expect to return for an emergency council at which Britain could either be given another year or more to sort out its crisis – if it can convince them it has a plan to do that – or be told it is leaving on Friday.

The small Northern Irish party, the DUP, that props up May’s minority government, was no closer to backing her deal on Thursday, its spokesman said.

More than 700,000 people signed a petition on the British parliament’s website calling for May to revoke its divorce notice and stay in the EU.

May’s spokeswoman said she would not do that.

PATIENCE SHORT
The other 27 states have struggled for three years since Britain voted 52-48 percent to leave to avoid disruption to their own economies and citizens of a hard Brexit.

Many now fear simply rolling over the problem for more weeks and months with no clear resolution in sight is doing more harm to a Union beset by populist nationalists likely to do well in the EU elections and by a fast-changing global economy in which China and the United States are posing new challenges.

City of London financial district chief Catherine McGuinness said a Brexit extension would only be a “sticking plaster” if deep-seated issues are left unresolved.

“The real question is what do we do in the event she loses again,” one senior EU diplomat said. Concerns raised notably by French President Emmanuel Macron that Britain, long lukewarm on European integration, risked thwarting efforts to strengthen the bloc if it hung around in limbo, were “gaining ground rapidly”.

May is to meet Macron ahead the summit after France threatened to reject her request for more time if she could not guarantee that parliament would approve her deal.

“The appetite for a long extension is limited,” he said. Any offer would require all 27 leaders to agree – as well as May.

May said in a televised address late on Wednesday she opposed any further postponement, telling parliament to pick between her deal, a no-deal divorce or no Brexit.

“It is now time for MPs to decide,” she said. “You want us to get on with it. And that is what I am determined to do.”

Any long extension would be conditional on a British leader coming to Brussels next week with a clear plan of how it would use more time to resolve its stalemate, possibly through a new election or a second referendum, EU leaders have said.

Britain would be frozen out of key EU decisions while still paying in its full share of the bloc’s budget, conditions likely to hit opposition in Britain.

May’s foreign minister, Jeremy Hunt, said an emergency summit could offer a long extension but under “very onerous conditions”.

Some in May’s Conservative Party would rather leave without a deal that keeps Britain closely aligned with rules in its main trading partner, while many reject terms of the current deal that are intended to avoid disrupting traffic over Northern Ireland’s land border once a transition ends in 2021 or 2022.

CORBYN IN BRUSSELS
The opposition Labour Party has opposed the deal, arguing for a closer relationship with the EU. Its leader, Jeremy Corbyn, was in Brussels on Thursday, meeting EU negotiator Michel Barnier and centre-left national leaders who will be attending the summit later with May.

All 28 leaders assemble in Brussels at 3 p.m. (1400 GMT). May will address her peers, repeating her request for a delay to June 30, before leaving the room while they discuss the issue.

The 27 are then expected to agree what will amount to a technical extension, intended to give Britain time to pass the necessary exit legislation – if the House of Commons approves the divorce package before March 29.

As Brexit is sapping EU resources, the leaders will also turn to other pressing issues on Thursday and Friday, including the state of their economies, ties with China, climate change and ringfencing the European elections from illegitimate interference.

Eyes will also be on Hungarian Prime Minister Viktor Orban, who will be meeting his peers a day after his Fidesz party was suspended from Europe’s centre-right alliance over a campaign against EU institutions and migration policies.

OSLO (Reuters) – On the outskirts of Oslo, a row of Fiat 500es imported from California stand parked in the snow outside the Buddy Electric dealership, part of a global flow of pre-owned electric cars to Norway powered by green subsidies elsewhere in the world.

The company’s production manager, Tor Einar Hanssen, said it had sold about 110 in the past year and a half, making a small profit on the cars, most of which had been used for a few years by U.S. leasing companies.

“They’re surprisingly good in cold weather,” he said.

A gleaming blue Fiat 500e is on sale for 129,000 Norwegian crowns ($15,000) with 24,000 km (15,000 miles) on the clock. It costs about 20,000 crowns($2,300) to import and adapt each Fiat, Hanssen said.

On U.S. used car websites, similar Fiats in California are advertised for about $10,000.

Norway has the world’s highest rate of electric car ownership in the world, partly thanks to long-term perks such as free or discounted road tolls, parking and charging points, which boost the appeal of second hand models unwanted elsewhere.

The government also exempts electric vehicles from taxes on traditional vehicles that are very high in a country which does not have its own fossil fuel car industry to lobby against them. Rebates offered by other countries are another part of the equation.

In California, residents who own a new battery electric car for at least 30 months can get a rebate of up to $4,500, said John Swanton, of the California Air Resources Board.

The Fiats show how varying incentives around the world to promote electric cars, spurred by efforts to combat climate change and limit air pollution, can affect trade flows.

They can also distort national goals for shifting from fossil fuels, although U.S. exports to Norway of 4,232 used electric cars in the past two years are tiny compared with U.S. sales. The state of California alone aims to have five million zero-emission vehicles on its roads by 2030.

The issue has a bigger impact in some European countries, which may be over-estimating the greenness of their domestic car fleets due to exports to Norway, where top plug-in cars include Nissan Leafs, Volkswagens <Vow g_p.de>, BMW and Tesla.

“We’re getting a certain amount of vehicle electrification for free, paid by other countries,” said Lasse Fridstroem, a senior research economist at the Norwegian Center for Transport Research.

“But perhaps it won’t last,” he said of the used e-car imports. He and some car dealers say demand for electric cars elsewhere in Europe is picking up, and that Norway could swing to be a net exporter of used electric cars in coming years.

BOTTLENECK
At the moment, long waiting lists for new electric cars in Norway mean that people who obtain a new model in high demand, such as a Tesla Model 3 or Hyundai Kona, can potentially re-sell it above list prices that are already higher than elsewhere.

Part of the reason is a bottleneck in new e-car imports. This is caused, to some extent, by incentives for car makers to sell electric cars in the European Union, of which Norway is not a member, even if they are immediately exported to Norway.

To tackle this issue, from January 2019, sales of new cars in Norway are included in a broader EU calculation of the greenness of each manufacturer’s European-wide car fleets, a target the carmaker must meet to avoid large penalties.

This could reduce Norway’s demand for imports but may also mean its EU neighbors record fewer sales.

Last year, plug-in electric cars accounted for 31.2 percent of new car registrations in Norway, the highest in the world, and the share rose to 34.2 percent when including second-hand imports, according to the Norwegian Road Federation (OFV). The two figures surged to 40.7 and 43.5 percent in February 2019.

Statistics Norway said 11,913 used electric cars and vans were imported last year, up from 9,063 in 2017 when it started to compile data of the second-hand trade.

They came from countries including Germany, the Netherlands, Sweden, Britain and South Korea, bringing some of the benefits of cleaner air and less noise intended for their citizens to Norway, where the environment is already far cleaner than in many other countries.

Trod Sandven, a Jaguar Land Rover dealer in Bergen in west Norway, bought 250 new Kia Soul cars last year in countries including Germany. After registering them for a day so that they counted towards manufacturers’ green goals under the EU rules, he exported them undriven to Norway to sell as “second hand”.

“They’re brand new, with the plastic still on the seats. The only thing we do is the paperwork,” said Sandven. He said he received no German subsidies, since that would require owning the cars for several months in Germany.

“Now it’s changing again, now we are exporting cars to other countries,” he said. “Norway is crowded with used electric cars and Europe is screaming for electric cars. It’s changing every year.”

SWEDEN MOVES
Stockholm tightened subsidy rules last July after finding that about 10 percent of all electric and plug-in hybrids were exported within five years. Eighty percent of those exports ended up over the border in Norway.

“It is problematic that some of the used electric vehicles, that have been subsidized by Swedish tax payers, are exported,” said Jakob Lundgren, spokesman for Sweden’s Environment Minister Isabella Lovin.

Under the new system from July 2018, Swedes have to own a new electric car for six months before receiving a 60,000 Swedish crowns ($6,398.50) rebate. Previously, they got a 40,000 crown discount on buying the car.

Lundgren said there were no data yet to show if the rule change had made an impact.

With just five million people, Norway bought 46,143 new battery electric cars in 2018, making it the biggest market in Europe ahead of Germany with 36,216 and France on 31,095, according to the European Automobile Manufacturers’ Association.

EU rules in effect from 2020-21 will force new cars sold in Europe, including Norway, to average no more than 95 grammes of carbon dioxide per kilometer, with carmakers facing hundreds of millions of euros in potential fines for non-compliance.

Other nations tend to hand out subsidies to make e-cars cheaper but lag in infrastructure, such as charging points. Norway wants all new cars to be zero emissions by 2025. Among other nations, Britain and France have similar goals for 2040.

Electric cars depreciate less quickly in Norway than elsewhere, partly due to the ongoing benefits, which include low-cost ferry trips and use of bus lanes to avoid congestion.

“Norway has become a magnet for the rest of Europe to ship used battery electric vehicles,” Matthew Harrison, executive vice president Toyota Motor Europe, said at the Geneva motor show this month. “Frankly there is no used-car demand for battery electric vehicles” elsewhere in Europe, he said.

Among sources of second hand imports, Fridstroem and other economists said they were baffled by those from Britain. Norway imported 2,147 electric cars from Britain in 2017, and 133 in 2018, according to Statistics Norway.

The steering wheel in British cars is on the right, the wrong side for driving in mainland Europe, making them unattractive in Norway.

A spokesperson for the British Department for Transport said the main conditions for plug-in car grants, of up to 3,500 pounds ($4,624.55), were that buyers have an address in Britain and register the vehicle in the country.

The Department did not comment when asked if some dealers might be buying electric cars made in Britain but designed for mainland Europe. That might be a loophole allowing dealers to pocket the grant and export the car to Norway, although it was not clear why the number of exports had dropped.

WASHINGTON (Reuters) – The U.S. Department of Defense is proposing to pay for President Donald Trump’s much-debated border wall by shifting funds away from projects that include $1.2 billion for schools, childcare centers and other facilities for military children, according to a list it has provided to lawmakers.

The Pentagon gave Congress a list on Monday that included $12.8 billion of construction projects for which it said funds could be redirected. Around 10 percent of the list relates to educational establishments and includes school buildings for the children of service members in places like Germany, Japan, Kentucky and Puerto Rico.

The move comes as a surprise given the Trump administration’s oft-touted support for the sacrifices made by military families and suggests the White House’s desire to build a wall on the border with Mexico outstrips nearly all other issues.

However, of the $1.2 billion in projects related to education, approximately $800 million worth are far in the future, and those funds could readily be used for wall construction and replaced later.

The Pentagon told Congress that just because a project was listed, it “does not mean that the project will, in fact, be used” as a funding source to build sections of the border wall.

Trump earlier in March asked for $8.6 billion in his 2020 budget request to help pay for his promised wall on the U.S-Mexico border to combat illegal immigration and drug trafficking. It drew swift criticism from Democrats.

Trump declared a national emergency in a bid to fund the wall without congressional approval, allowing his administration to use money from the military construction budget, if needed.

In a tense Congressional hearing last week, Democratic senators demanded that they be provided a list of military funds that could be utilized to fund wall construction.

Military officials have vowed that they would not use any funds from military housing. A recent Reuters investigation found thousands of U.S. military families were subjected to serious health and safety hazards in on-base housing, prompting moves from lawmakers to improve landlord controls.

But elementary and middle schools on bases around the world serving military families are at risk of suffering from the funding diversion, as well as a new engineering building and parking garage at West Point, the Army’s military academy in New York state.

Joint Base Andrews, where the president’s Air Force jet is based, was slated to receive $13 million for a “Child Development Center,” but funding for that project is on the list. The base currently has three child development centers serving the 12,000 to 14,000 active and reserve military stationed there.

The children of pilots for the F-35A jet, being made by Lockheed Martin at a cost of $89 million each, could be impacted. Alaska’s Eielson Air Force Base is slated to get $22.5 million to build a school to enroll 240 additional children “in a remote arctic climate” when the jet begins operations there.

The current school serves 108 and has an “extensive waiting list,” according to Air Force budget documents which say that if a school is not built “children will be turned away,” “directly impacting support of the F-35 mission, morale, and welfare.”

WASHINGTON (Reuters) – The U.S. Federal Reserve on Wednesday brought its three-year drive to tighten monetary policy to an abrupt end, abandoning projections for any interest rate hikes this year amid signs of an economic slowdown, and saying it would halt the steady decline of its balance sheet in September.

The measures, announced following the end of a two-day policy meeting, mean the Fed’s gradual and sometimes fitful efforts to return monetary policy to a more normal footing will stop well short of what was foreseen in late 2015 when the central bank first moved rates from the near-zero level adopted in response to the 2007-2009 financial crisis and recession.

Having downgraded their U.S. growth, unemployment and inflation forecasts, policymakers said the Fed’s benchmark overnight interest rate, or fed funds rate, was likely to remain at the current level of between 2.25 percent and 2.50 percent at least through this year, a wholesale shift of their outlook.

Rates are now seen peaking at 2.6 percent, sometime in 2020, roughly a percentage point lower than the historic average for the fed funds rate and a sign that the U.S. economy has entered a more sluggish era.

In contrast to projections through much of last year, Fed policymakers no longer see the need to move rates to a “restrictive” level as a guard against inflation, which remains lodged below the central bank’s 2 percent target.

They also said that as of May they would slow their monthly reduction of as much as $50 billion in asset holdings, and halt them altogether in September, ending what amounted to a second lever of monetary tightening that had run in the background since late 2017.

In terms of interest rates, the new Fed projections knocked the number of hikes expected this year to zero from the two forecast in December, completing a pivot to a less aggressive policy in the face of an apparent jump in economic risks. At least nine of the Fed’s 17 policymakers reduced their outlook for the fed funds rate, a comparatively large number.

“It may be some time before the outlook for jobs and inflation calls clearly for a change in policy ,” Fed Chairman Jerome Powell said in a press conference following the policy meeting, at which policymakers reaffirmed they will be “patient” before moving rates again.

“Patient means that we see no need to rush to judgment,” Powell said.

Continued growth and a healthy jobs market remains “the most likely” scenario for the U.S. economy, the Fed’s rate-setting committee said in a policy statement on Wednesday.

But doubts have accumulated, with a slowdown in household spending and business investment at the start of this year possibly signaling an early end to a growth spurt triggered in 2018 by a massive tax cut package and government spending.

The economic projections released on Wednesday showed policymakers at the median see the U.S. economy growing only 2.1 percent in 2019, a full percentage point below the roughly 3 percent growth that was seen in 2018 and which the Trump administration contends will continue.

‘MORE DOVISH’
The new rate view brings the Fed in line with investors who have argued the central bank would not raise rates this year.

“I didn’t think they’d do it, but they came across as more dovish than what was expected,” said Brian Jacobsen, senior investment strategist for Wells Fargo Asset Management.

The outlook is now also in line with President Donald Trump’s criticism of Fed rate hikes as endangering the recovery, though for the awkward reason that Fed officials do not see his policies having a lasting impact on growth.

Fed funds futures contracts began pricing in a better-than-even chance of a rate cut by next year after the release of the policy statement and projections.

Powell pushed back on that view, saying the U.S. economy is in a “good place” and that the outlook is “positive.”

Still, he said, there are ongoing risks, including those related to Britain’s exit from the European Union, U.S. trade talks with China, and even the outlook for the U.S. economy, which he said the Fed is watching closely.

“The data are not currently sending a signal that we need to move in one direction or another, in my view,” he said. “It’s a great time for us to be patient.”

Benchmark U.S. stock market indexes swung higher after the Fed’s statement was released before giving up the gains later in the trading session, and key Treasury security yields dropped to the lowest levels since early January. The dollar weakened broadly against major trading partners’ currencies.

“The Fed exceeded markets’ dovish expectations, which took a toll on the greenback,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. “The Fed did a big about-face on policy. The fact that the Fed threw in the towel on a 2019 rate hike was particularly dovish.”

The new economic projections showed weakening on all fronts compared to the Fed’s forecasts from December. In addition to the growth slowdown, the unemployment rate for 2019 is forecast at 3.7 percent, slightly higher than forecast three months ago.

Inflation for the year is now seen at 1.8 percent, compared to the December forecast of 1.9 percent.

“Growth of economic activity has slowed from its solid rate in the fourth quarter,” the Fed said. “Recent indicators point to slower growth of household spending and business fixed investment in the first quarter … overall inflation has declined.”