Afternoon Coffee: No Market Economy Status for China, Accenture to Leverage AI in Microsoft Relationship

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The Obama administration will not grant market economy status (MES) to China, disputing that country’s interpretation of a key clause in its agreement to join the World Trade Organization. China contends the language of the treaty grants as of Sunday an automatic upgrade to MES, which can dramatically lower tariffs and strongly influence anti-dumping trade cases for qualifying countries.

The incoming Trump administration is unlikely to modify the decision. As Spend Matters Managing Editor Taras Berezowsky put it earlier this morning:

Essentially the only thing that would force the U.S. Commerce Department to formally confront the China MES question is a trade lawsuit filed by China, or one naming China as a respondent, in which China would be explicitly able to make that type of request ... And although the European Union has been toying with giving China MES, they are certainly considering new trade rules that would make it harder for China to dump into its 28 individual country markets — but enacting anything will take several more months.”

Is your procurement organization prepared for how the Trump administration will influence global trade, environmental and economic policy? Register for our webinar on Tuesday to learn how supply chain risk and visibility be affected.

Accenture, AI & Microsoft

Accenture’s new contract with Microsoft emphasizes more than just the usual solution features. The provider will leverage artificial intelligence technologies to “interpret supplier inquiries and execute follow-up processes automatically,” as well as “apply advanced predictive and prescriptive analytics to provide data-driven insights” that drive compliance and global cash forecasting efforts.

Accenture’s collaboration with Microsoft has helped the Redmond, Washington-based company “to standardize our finance and accounting processes across 120 countries, improving compliance and control across our operations and reducing related costs by 30 percent,” said Grace Lao, general manager for Microsoft Finance Operations.

Costco Grapples with E-Commerce Push

Hesitation to accept digital technologies is not just confined to the B2B world: Costco admitted during its earnings call last week that while it performed well at its physical stores, it lagged competitors in e-commerce growth, a segment critical to the future of retail.

Costco’s current online sales stand below $4 billion, notching growth of only 8% in the most recent quarter, well below the clip at Wal-Mart and Target, according to Fortune.

Cowen & Co analyst Oliver Chen explained Costco’s challenge in a research note that should ring true for both those using and designing procurement software: “It’s not just merchandise that will make Costco special — Costco will also need to help save customers time too. The treasure hunt needs an integrated online experience as well.”

OPEC Agreement Boosts Oil Prices

And finally, oil prices rose to an 18-month high Monday, as much as 6.5%, after OPEC and other oil players agreed to cut production.  

Brent crude futures were up $1.97 at $56.30 per barrel, having hit a session peak of $57.89, the highest since July 2015. The price is 50% higher than at this time last year, marking the largest year-on-year rise on any given day since September 2011, Reuters reported.

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