Global Public Affairs Newswire – 23 August 2024
Welcome to the latest instalment of FTI Consulting’s fortnightly Global Public Affairs Newswire.
Welcome to the latest instalment of FTI Consulting’s fortnightly Global Public Affairs Newswire. This week, we bring you an election update from the US, where Vice President Kamala Harris has officially been nominated as the Democratic Presidential candidate, along with an overview of the Democratic National Convention which took place this week.
Beyond this, we bring you our usual comprehensive market update, with analysis of the latest big public affairs developments across the world’s major markets. This week features updates covering developments in the UK, China, France, India, the EU, Spain, Colombia, Brazil, and Germany.
Our global team are closely tracking the key votes and contests in this worldwide ‘Year of the Election’. In each edition of the Newswire, we look to dive into the upcoming implications, considerations, and opportunities for business.
Democratic National Convention kicks off: Democrats united around their party and Vice President Harris on Monday night. This was a key moment for Democrats to honor the legacy of President Biden as he passed the torch of the party to Harris. He bid farewell, and looked back on all he has accomplished in his political career in his speech. Many supports lifted ‘We Love Joe’ signs in support of the President. Democrats focused on Former President Trump’s conviction as a felon, reproductive rights, and paving the way for the first African-American and female President. Other notable speakers included Rep. Alexandria Ocasio-Cortez, former Secretary of State Hilary Rodham Clinton, who both urged Democrats and viewers across the country to vote blue. AOC said ‘We have to help her win’ while just a few weeks prior on Instagram live where she said, “If you think there is a consensus among the people who want Joe Biden to leave that they will support Vice President Kamala Harris, you would be mistaken.” On Tuesday night, Former First Lady Michelle Obama and Former President Barrack Obama both spoke at the convention. It was a special night for the former President, especially because it was in his hometown of Chicago. The Obamas praised Harris, discounted Trump, and drew an energy from the crowd. On Thursday night, Harris took the stage at the DNC accepting the Democratic Party’s nomination. In her speech, she focused on the values of hard work, grit, and determination that her mother instilled in her. She spoke about policy issues supporting the middle class, legal immigration, border security, women’s reproductive rights, and a strong, pro-NATO international presence.
Neck and neck between Harris and Trump: With only 11 weeks left in the Presidential election, Vice President Harris has taken the lead in the general election polls over Former President Donald Trump for the White House. According to Real Clear Polling, Harris now has built a thin lead over Trump, 48.4% to 46.9%. In key battle ground states, Real Clear Polling gives Trump the slightest edge in Georgia 48.1% to 47.1%, Pennsylvania 47.7% to 47.5%, and Nevada 47.3% to 46% over Harris. While Harris is leading slightly in Wisconsin and Michigan over Trump with 48.6% to 47.6% in Wisconsin and 48.6% to 46.6% in Michigan respectfully.
Harris’ economic agenda: Vice President Harris’ team is focused on making her economic agenda uniquely hers, while avoiding unpopular policies of the Biden-Harris record, as well as several of her own previous policy positions. If elected in November, Harris announced she wants to provide up to $25,000 in down payment assistance to first time buyers and lower costs for families by restoring the child tax credit of $3,600 per child and proposing $6,000 for parents with newborns for one year. Additionally, she pledged not to raise taxes on anyone making less than $400,000 a year and to raise the corporate tax rate to 28%.
Market updates
Despite having boasted several early wins in negotiations with the UK’s trade unions, the new Labour government has been hit by a fresh wave of strikes. Just last week the Government agreed a pay deal with the rail union ASLEF, which ministers hailed as a major breakthrough – bringing over two years of industrial action to an end.
ASLEF has since announced a further strike, following a new dispute between the union and rail operator LNER. Despite being a separate strike, focused on working conditions rather than pay, it is an undoubtably damaging look. Worsening the situation further- LNER is a government-run part of the UK’s rail network – casting doubts over current plans to renationalise the railway system. Unions representing local government and healthcare workers have also announced strike actions, and the Trade Union Congress will vote next month on pressing Labour to agree ‘pay restoration’ deals for the public sector, with an estimated price tag of £50bn. The Government’s predicament is further complicated by its pledge to scrap the higher thresholds for strike action introduced by the previous Conservative government, strengthening union bargaining power.
In opposition, Labour criticised the Conservative Government for refusing to meet with striking organisations, which they argued resulted in the extended period of industrial action that has plagued the UK over the past few years. Having taken an opposite approach to their predecessors – it remains to be seen whether the Government will be able to successfully bring widespread industrial action to an end – or whether the situation will spiral.
On 19 August, China’s Premier chaired the State Council Standing Meeting to study and facilitate the implementation of reforms in key areas, including high-quality development of trade in services, ease of barriers for foreign investment and in market access, support to innovation-driven small and medium-sized enterprises, and the development of nuclear energy.
Recognizing trade in services as a source of growth momentum and an integral part of China’s trade with the world, the State Council approved an opinion on promoting the development of trade in services to further open up China’s market for global business. While full texts are yet to be released, the opinion will most likely echo the first negative list for cross-border trade in services published months earlier, which pledged to broaden the scope of trials for market opening-up and facilitate smooth cross-border flow of talents, funds, technology, data, etc.
The meeting also signed off an update to the existing negative list for foreign investment and market access, effective since 2021. Amid domestic economic challenges and a worsening external environment, the update, whose details remain undisclosed, will likely shorten its length by scrapping barriers in market access for manufacturing sectors and reducing limitations in telecommunications, education, and healthcare sectors for foreign investors. These reforms enjoy high priority as they were emphasized in the country’s five-year reform plan due in 2029. More reform measures, including guaranteeing foreign businesses equal access to government procurement, should be expected in due course.
The conclusion of the 2024 Paris Olympics also marked the end of the ‘Olympic Truce,’ which had temporarily put political tensions on hold during the games. With negotiations between political blocs now back in full swing, pressure is mounting on President Macron to appoint a new Prime Minister in the coming weeks.
President Macron has dismissed calls by the left-wing coalition, the New Popular Front (NFP), to appoint Lucie Castets, arguing that she would fail to form a sufficiently durable government in Parliament. Instead, Macron is seeking a so-called ‘consensual figure’ capable of building a broad coalition ranging from the moderate left to the centre-right. Prominent names include Xavier Bertrand and Valérie Pécresse, two former centre-right presidential candidates and current regional presidents, as well as former socialist Prime minister Bernard Cazeneuve.
The NFP remains steadfast in its objective to form the next government, with the coalition’s nominee, Lucie Castets, writing a letter to parliamentarians on 12 August seeking their support. However, the coalition faces several challenges, including waning popularity and internal conflicts. On 17 August, the far-left party La France Insoumise (LFI) threatened to invoke Article 68 of the French Constitution to remove President Macron, though this proposal has slim chances of success due to the need for two-thirds support in the National Assembly, on top of other stringent requirements. Moreover, other members of the NFP have publicly distanced themselves from this proposal, escalating tensions within the alliance. Further strains emerged on 19 August when rumours circulated that the Socialist Party might support a potential Bernard Cazeneuve nomination, prompting outrage from LFI members, who publicly criticised their allies on social media. Although the Socialist Party denied considering Cazeneuve’s nomination, the public discord highlights the alliance’s ongoing fragility.
To break the political deadlock, President Macron will meet with the leaders of major political parties and parliamentary groups on 23 August. The aim is ‘to continue moving towards the constitution of the broadest and most stable majority possible in the service of the country’, wrote the Presidency in a press release.
The Reserve Bank of India (RBI) has been stepping up its zero-tolerance approach on compliance not just for global fintechs and Indian banks, but increasingly for Indian startups and unicorns.
An RBI directive on August 16 tightened rules for peer-to-peer (P2P) lending platforms, bringing the sector near an existential crisis and triggering a debate on the regulator’s powers to deal body blows to thriving startups “with one circular”.
The giants of India’s banking and financial sector have faced the RBI’s ire and regulatory action. In 2021 the central bank barred Amex, Diner’s Club and Mastercard from onboarding new customers, citing compliance gaps against 2018 data localization rules. Top lenders such as HDFC Bank have also faced action, for other reasons.
And then the startups and unicorns pushing the boundaries of regulatory arbitrage began to draw the RBI’s attention. In a 2022 notification, it barred non-banks from offering credit on prepaid instruments, derailing several digital challengers to traditional credit cards. In January 2024, the RBI shut down Indian fintech unicorn Paytm’s bank, stunning the startup ecosystem: Paytm had virtually pioneered digital payments in the country before the rise of the government-backed UPI real-time payment system.
In its August 16 directive, the RBI barred P2P platforms from offering minimum returns and instant liquidity options or promoting P2P lending as an investment product. These apps, which directly connect lenders and borrowers, were “seen acting like deposit-takers and lenders”, bypassing banks. Some “promoted P2P lending as an investment product”.
The directive has sent shockwaves through the sector, which has nearly 1.5 million lenders who have lent an estimated USD 1.22 billion.
Overall, the RBI has intensified its scrutiny, inspection and oversight of fintechs—and cancelled licences. The discovery in 2023 of lapses in customer due diligence prompted it to schedule more frequent meetings with executives, hire analysts to scrutinize customer data, and explore new technology to monitor compliance.
On 20 August, the European Commission announced its plan to impose five-year import duties of up to 36% on Chinese electric vehicles (EVs) to counter the perceived unfair advantage due to state subsidies. This decision follows provisional tariffs applied in July after an anti-subsidy probe found that Chinese EVs were undermining European competitors. Tesla, which manufactures in China, will face a lower duty of 9% due to fewer subsidies, while other major Chinese manufacturers like BYD and SAIC will see slightly adjusted tariffs ranging from 17% to 36.3%. These tariffs are subject to input from stakeholders and final approval by EU member states by October 2024.
The move has sparked strong opposition from Beijing, which has filed an appeal with the World Trade Organization (WTO), though the EU remains confident that its measures comply with WTO regulations. The EU has expressed willingness to find an alternative solution to the tariffs, putting the onus on China to propose one.
This conflict is part of a broader trade dispute between China and the EU, encompassing issues related to technology and national security. The EU is trying to protect its auto industry and support green growth while avoiding further escalation with Beijing. China’s significant investment in its domestic EV industry has given it a competitive edge, with EV exports rising by 70% in 2023, with nearly 40% of these going to the EU. The situation represents a delicate balancing act for Brussels as it navigates these complex trade relations.
Catalonia is embarking on a new political chapter with Salvador Illa’s recent appointment as President of the Catalan Regional Government, backed by parliamentary support from ERC (left-wing independentists) and Catalunya En Comú (far-left). This shift signals a potential transformation in the region’s governance and policy landscape, which could have far-reaching implications for businesses and government relations both within Spain and internationally.
Salvador Illa, the former Health Minister and leader of the Catalan Socialist Party (PSC), has been invested as President of the Catalan Government. This appointment marks the end of a long-standing political era dominated by nationalist and pro-independence factions. The change in leadership is expected to recalibrate Catalonia’s approach to key issues including economic development, public health, and regional autonomy.
Understanding Illa’s policy positions and priorities is crucial. His tenure as Health Minister during the pandemic has shaped his focus on pragmatic governance and collaborative politics. This shift may foster a more business-friendly environment in Catalonia and potentially lead to a re-evaluation of the region’s stance on independence, which has previously generated political and economic uncertainty. However, the long-term stability of his government will require careful management of its external support from ERC and Catalunya En Comú.
Moreover, Illa’s leadership could facilitate future negotiations between Catalonia and the Spanish central government, impacting regulatory frameworks, investment opportunities, and regional stability. As Catalonia enters this new phase, it presents both challenges and opportunities. This evolving political landscape will not only reshape Catalonia’s future but also highlight the interconnected nature of regional politics and international business.
Starting August 20, 2024 the United States has begun enforcing its agreement with Panama to limit and contain irregular migration from Colombia. Multiple flights have been organized as part of this deal, which includes a USD $6 million disclosed budget by the US seeking to manage and reduce migration through the Darién Gap, a major route where over 216,000 migrants have transited in 2024.
However, Panama’s recent decision to close the Darién passage without consulting Colombia has sparked criticism over potential risks to migrants. In parallel, Panama has already begun negotiating deportation agreements with Ecuador and India. However, it is unable to repatriate Venezuelans due to suspended diplomatic relations and ongoing crisis.
According to the Colombian Migration Service, the closures affect five key land routes, potentially increasing risks for migrants who may seek dangerous alternative routes in which key crime organizations participate such as the Clan del Golfo. This complex situation presents a challenge for Colombia, needing to intensify its efforts to effectively manage the growing migration flow.
This initiative aligns with Panama’s goal to become a key strategic ally for the U.S., especially in addressing the political and humanitarian crisis in Venezuela amidst tension in the Colombian diplomatic service with the U.S.
Given the political instability in Venezuela between 13% and 18% of Venezuelans are considering migration due to the recent electoral results, according to recent surveys. As a result, Colombia faces increased diplomatic pressure to manage the economic and political impacts of an eventual increase in migration in the following months.
Over the last few months, Brazilian lawmakers have turned their attention to a growing gambling industry, whose social and economic impacts have dominated the headlines of the country’s main newspapers. Since the approval of Law No. 14,790, in December 2023, specific rules for the operation of fixed-odds betting have been published, leading companies that comply with the new rules to apply for a license if they wish to operate starting in January 2025. Up to this point, more than 113 operators have applied for a license within Ministry of Finance’s Secretariat of Prizes and Betting, potentially generating over R$3.3 billion in revenue for the government.
In addition to the authorization of Sports Betting and iGaming operators, Congress is also expected to approve by year-end bill No. 2234/2022, allowing the establishment of casinos in tourist and entertainment complexes such as high-end hotels, restaurants, bars and businesses through concessions. Members of the government argue that the authorization of casinos should stimulate tourism, job creation and tax collection, fostering the country’s economic development. Estimates by PwC’s Strategy show that the sports betting market is expected to move up to R$130 billion in Brazil by the end of 2024.
Although the regulation of the gambling industry should increase government’s revenue and help to balance public accounts, critics dispute the benefits of legalizing these activities. According to a report by Itaú, Brazilians have spent a net R$23.9 billion on online casino games and sports betting over the last 12 months, with many industries claiming that this behavior have been impacting household consumption and contributing to the population indebtedness. Furthermore, health associations have raised concerns about the risks of gambling addiction and its impact on players’ health. Therefore, as the regulation of this market generates opportunities for companies interested in operating in Brazil, close attention is needed on the ground as these debates evolve.
Following extensive negotiations within the cabinet to reduce the budget deficit of the last draft bill from 17 billion euros to 9 billion euros, the cabinet approved a new draft bill on August 16. However, a 12-billion-euro deficit remains. This shortfall is addressed through a so-called global underspend, which assumes that some planned expenditures will not be realized, allowing the budget to balance by year-end.
Amid this tight budgetary situation, uncertainty arose regarding Germany’s continued military support for Ukraine in 2025. A letter from Finance Minister Christian Lindner (FDP) to Defense Minister Boris Pistorius (SPD) indicated that new commitments for Ukraine could only be made if funding was secured in the budget, causing confusion both domestically and internationally. However, the German government has since clarified that it remains fully committed to supporting Ukraine, reaffirming the Chancellor’s promise that aid will continue as long as necessary.
Further changes to the budget during the parliamentary process are expected before its final adoption at the end of November.
Expert Analysis |
Implications of the EU’s Carbon Border Adjustment Mechanism for Asia
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Senior Managing Director Kerstin Duhme and Director Rachel Yeo shed light on why understanding what CBAM means for businesses operating in Asia is critical for success.
Pension adequacy in Britain’s evolving retirement landscape
Pension policy has been a priority for both the previous and current UK governments, with a specific focus on unlocking schemes to enhance investment in the UK.
Read the latest snapshot from the UK Public Affairs team below, which analyses the scope of these challenges, alongside the potential solutions for the UK pensions landscape.
Psychedelic Frontiers: Diverse Perspectives on a Mental Health Revolution
In Psychedelic Frontiers: Diverse Perspectives on a Mental Health Revolution, our Healthcare & Life Science Public Affairs experts embark on a journey to explore the various ways in which psychedelic medicine is perceived across different stakeholder groups, including the research community, medical and mental health providers, and political stakeholders.
Fabian Society’s Housing Group London Summer Reception
Earlier this week, FTI Consulting’s UK Public Affairs team were delighted to host and sponsor the Fabian Society’s Housing Group drinks at our London office. The event brought together housing industry experts, government advisers and pro-housing campaigners.
Upcoming Conferences, Elections and Webinars
- 01 September: Presidential Election (Venezuela)
- 07 September: Parliamentary Election (Azerbaijan)
- 10 September: Presidential Election (Algeria)
- 15 September: Parliamentary Election (Jordan)
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