Ford chief Jim Hackett on Wednesday ramped up his warnings about the tariffs imposed by President Donald Trump, saying his company was seeing profits slashed by $1 billion.

Hackett said the global automaker could face more damage if the trade confrontations were not resolved quickly.

“The metals tariffs took about $1 billion in profit from us,” Hackett said in an interview on Bloomberg Television. “If it goes on longer, there will be more damage.”

Trump in June imposed steep tariffs on steel and aluminum and has hit $250 billion in Chinese products with tariffs, prompting retaliation from US trading partners and raising costs for many industries.

The company earlier this year estimated materials costs would be $1.5 billion over 2017, which had already seen a jump. 

And in the July earnings report Ford said it lost $500 million in China in the latest quarter due in part to the tariffs.

General Motors likewise warned the current trade wars should cost it $1 billion this year, mainly due to rising input costs.

Ford recently announced it was scrapping plans to import the compact Focus model from Chinese plants into the US market due to the tariffs.

Joseph Hinrichs, Ford’s executive vice president for global operations, said this week the company was speeding up plans to build some models in China since it was becoming less attractive to export amid the trade tensions.

He also said he did not see any easy resolution to the trade dispute between the United States and China. 
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Somalia’s finance minister says World Bank grants to the government are a sign the country has “trustable leadership” again after decades of chaos and corruption.

The World Bank said Tuesday it will provide $80 million in grants to Somalia’s federal government, the bank’s first direct grants to a Somali central authority in 27 years.

In an interview with VOA’s Somali service, Finance Minister Abdirahman Duale Beileh said the grants are “proof of Somalia’s merit.”

Beileh said $60 million will be used to increase the capacity of Somalia’s financial institutions, and $20 million will go toward education and energy projects to build the country’s resilience.

He said the grants show that international financial agencies have faith the government is capable of fighting against corruption.

“The work we have done and the trustworthiness we have earned brought us here,” he said. 

The World Bank cut ties with Somalia in 1991, following the collapse of the Mohamed Siad Barre government and the start of a long civil war.

Beileh said that in recent years, Somalia’s government has made tangible improvement in management of the economy and its institutions.

However, the latest global index of Transparency International put Somalia as the world’s most corrupt country.

Somali President Mohamed Abdullahi Mohammed, also known as Farmajo, took power last year in an election by parliament that observers said was characterized by bribes and vote-buying.

Beileh acknowledged the government’s fight against corruption is “far from over.”

“There is a perception that Somalia cannot be trusted because of its corruption history. Most of that is not perception,” he said.

He added: “We are proud that we made progress to at least a transparent level that both the World Bank and the IMF can notice.”
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The Federal Reserve on Wednesday raised a key interest rate for the third time this year in response to a strong U.S. economy and signaled that it expected to maintain a pace of gradual rate hikes.

The Fed lifted its short-term rate — a benchmark for many consumer and business loans — by a quarter-point to a range of 2 percent to 2.25 percent. It was the eighth hike since late 2015.

The central bank stuck with its previous forecast for a fourth rate increase before year’s end and for three more hikes in 2019.

The Fed dropped phrasing it had used for years that characterized its rate policy as “accommodative” by favoring low rates. In dropping that language, the central bank may be signaling its resolve to keep raising rates.

Many analysts think the economy could weaken next year, in part from the effects of the trade conflicts President Donald Trump has pursued with China, Canada, Europe and other trading partners. The tariffs and countertariffs that have been imposed on imports and exports are having the effect of raising prices for some goods and supplies and potentially slowing growth.

Compounding the effects of the tariffs, other factors could slow growth next year. The benefits of tax cuts that took effect this year, along with increased government spending, for example, are widely expected to fade.

Still, some analysts hold to a more optimistic scenario. They think momentum already built up from the government’s economic stimulus will keep strengthening the job market and lowering unemployment — at 3.9 percent, already near a 50-year low. A tight employment market, in this scenario, will accelerate wages and inflation and prod the Fed to keep tightening credit to ensure that the economy doesn’t overheat.

Full-year growth

The U.S. economy, as measured by the gross domestic product, is expected to grow 3 percent for 2018 as a whole. That would mark the strongest full-year gain in 13 years. For the first nine years of the economic expansion, annual GDP growth averaged only around 2.2 percent.

The robust job market has helped make consumers, the main drivers of growth, more confident than they’ve been in nearly 18 years. Business investment is up. Americans are spending freely on cars, clothes and restaurant meals.

All the good news has helped fuel a stock market rally. Household wealth is up, too. It reached a record in the April-June quarter, although the gain is concentrated largely among the most affluent.

Many economists worry, though, that Trump’s combative trade policies could slow the economy. Trump insists that the tariffs he is imposing on Chinese imports, for which Beijing has retaliated, are needed to force China to halt unfair trading practices. But concern is growing that China won’t change its practices, the higher tariffs on U.S. and Chinese goods will become permanent, and both economies — the world’s two largest — will suffer.

Fed Chairman Jerome Powell has so far been circumspect in reflecting on Trump’s trade war. Powell has suggested that while higher tariffs are generally harmful, they could serve a healthy purpose if they eventually force Beijing to liberalize its trade practices.
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The U.N. Conference on Trade and Development warns the world economy remains fragile, one decade after the collapse of the U.S. financial titan Lehman Brothers triggered a global economic crisis.

In its report Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion, UNCTAD says the world economy once again is under stress. It views trade wars and escalating tariffs as symptoms of a growing economic malaise. It warns the world economy is walking a tightrope between debt-fueled growth and financial instability.

Lead author of the report Richard Kozul-Wright says many of the underlying problems that caused the 2008 financial crisis have not been addressed. He says footloose capital, precarious jobs, persistent inequality and rising debt remain problematic.

“We see growing asset bubbles and emerging crises everywhere,” he said. “Profits have been on an all-time high and real investment in the economy has not picked up. What we know from history is that debt-fueled booms always end badly. We do not know how. We do not know when, but if history is any guide the excessive reliance on debt in the current global economy will not end well for many economies.”

Kozul-Wright says trade wars, in many ways, are a reflection of lack of trust across the political system. He blames much of the tensions and problems seen in the global trading system on hyper globalization, which has not resulted in a win-win world.

The report finds global trade continues to be dominated by big firms. It says more than 50 percent of world trade is run through the top one percent of each country’s exporting firms.

 
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Trade conflicts, rising debt and the potential impact from rising interest rates in the U.S. will likely dampen growth in the coming year, the Asian Development Bank said Wednesday in an update of its regional economic outlook report. 

The Manila, Philippines-based regional lender said Wednesday that it expects economic growth to remain at a robust 6.0 percent in 2018 but to slip to 5.8 percent next year. 

It cited looming financial and trade shocks as the biggest sources of potential trouble. If the U.S. economy shows signs of overheating, interest rate hikes by the Federal Reserve could disrupt currency markets and other capital flows, leading to problems with bad loans. 

Overly high housing prices also are risks for China, Hong Kong, Malaysia and South Korea, it said. 

But it said the bigger threat comes from potential damage to supply chains caused by trade conflicts, especially between the U.S. and China. 

President Donald Trump pushed ahead Monday with higher tariffs on $200 billion of Chinese imports.

In a conflict stemming from U.S. complaints Beijing steals or pressures foreign companies to hand over technology, Trump went ahead Monday with a tax hike on $200 billion of Chinese imports. Beijing retaliated by imposing penalties on $60 billion of U.S. goods.

That move will likely shave 0.5 percentage points off of China’s growth and 0.1 percentage points off of growth in the U.S., the report said. 

It said further expansion would cause still more pain across the region, though while the U.S. trade deficit with China might shrink, the deficit with Asia overall would not decline so much because other countries would likely exporting more to make up the difference. 

China and the United States had earlier imposed 25 percent tariffs on $50 billion of each other’s goods. Combined, the tariffs now cover nearly half the goods and services China sells America and nearly 60 percent of what the United States sells China. 

“Prolonged trade conflict can damage confidence and deter investment,” the ADB report said. It said the impact would be large both regional and globally, especially if it expands to include autos and auto trade. 

“Estimates of impacts do not fully capture possible disruption to production units as overseas business networks are severed and investment plans are cancelled amid a reallocation of global production,” it said.
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After losing his job with a foreign food company in March, Alexander Costa surveyed Brazil’s anemic labor market and decided to start selling cheap lunches by the beach in Rio de Janeiro to try and provide for his young family.

“I could have stayed home, looking for work, sending out resumes, with few jobs and things very hard,” Costa said. “But I didn’t stand still. I decided to create something different … to reinvent myself.”

Many other Brazilians have also had to reinvent themselves in recent years, as Latin America’s largest economy struggles to overcome a jobs crisis more than a year after officially exiting recession.

Nearly 13 million people – or more than the entire population of Greece – are out of a job, with the unemployment rate hovering between 12 percent to 14 percent since 2016. As a result, unemployment is among voters’ top concerns ahead of next month’s election.

The desperate search for work amid a string of political graft scandals and rising violence has soured the mood, polarizing debate and distracting from the country’s underlying fiscal challenges.

But only by lowering the unemployment rate will Brazil achieve the rise in household spending it needs to maintain sustained growth, said Marcos Casarin, the head of Latin America macro research at Oxford Economics.

“The only way to have a prolonged recovery in economic activity is if unemployment starts to fall in a substantial way,” he said.

However, it could take several years to get the rate below 10 percent, he said, adding: “I’m not very optimistic.”

Divisive Figures

With no presidential candidate likely to win a majority in the first-round vote on Oct. 7, it looks increasingly likely voters will face a choice between two candidates in the Oct. 28 run-off: far-right Jair Bolsonaro and leftist Fernando Haddad of the Workers Party.

Both are divisive figures — rejected by nearly half the electorate — making it likely that either one will face an uphill battle to pass ambitious economic reforms that foreign investors have long called for.

Bolsonaro has vowed to erase Brazil’s primary budget deficit by 2020 through controversial privatizations and spending cuts.

Haddad has proposed broadening the central bank’s mandate to include unemployment, while boosting government-led investments, revoking a spending ceiling and scuttling privatizations.

Both Bolsonaro and Haddad are pitching their proposals as ways to tackle the unemployment crisis, which has pushed many into the informal sector, sapping tax income and leaving workers without paid holidays, salary raises and other benefits.

Outgoing President Michel Temer last year passed an overhaul of the country’s labor laws, which was intended to make the job market more flexible and which the government said would help create new jobs, an effect that as yet has failed to materialize.

Bolsonaro supports Temer’s labor reform and wants to further cut work regulations to boost jobs. Haddad has suggested putting the labor reform, which was opposed by unions, to a referendum, while also advocating a short-term stimulus program.

Costa, however, was unwilling to wait and see what Brazil’s next president comes up with.

His meals-on-wheels business started slowly, selling 13-reais ($3) lunches from the back of his car in Rio’s wealthy Barra da Tijuca neighborhood. But business took off when he joined forces with his friend, Stefan Weiss, whose white BMW provides a ritzier shop window from which they now sell roughly 200 hot meals each day.

“At the moment, Brazil faces a big problem in relation to the economy and the lack of jobs,” said Weiss, who works on an offshore oil platform but sells meals on days off to earn extra cash. “The people who lost their jobs are trying to find new ways to establish themselves in the market.”
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A Taiwanese owned company whose parent firm posted a more than half billion dollar profit last year has been refusing to pay compensation in line with an arbitration ruling to hundreds of Cambodian workers it made redundant.

Pou Yuen (Cambodia) Enterprise Ltd, which supplies Finnish sporting goods giant Amer Sports, gave workers zero notice when it closed its Phnom Penh factory in December last year.

It’s parent company, Yue Yuen Industrial (Holdings) Limited, is the biggest footwear manufacturer in the world, supplying the likes of Nike, Adidas, Reebok, ASICS, New Balance and Puma.

Yue Yuen posted a $519 million profit for 2017, its own annual report shows, while its parent company, Pou Chen Group, posted a more than $400 million in profits.

Yet its Cambodian subsidiary has refused to give compensation to 478 workers in line with an Arbitration Council ruling that would see them receive about $2,000 each on average – according to the Center for Alliance of Labor and Human Rights (CENTRAL).

“The factory always told the workers that they were losing profit and the reason that they shut the factory down they said was because they were bankrupt, that they didn’t make any profit and they pushed workers very hard to reach the targets,” said 38-year-old former employee Yan Bunthan. “And at the end they’re still not taking care of the workers and just run away irresponsibly without providing us with fare compensation.”

Cambodia’s Arbitration Council ruled in late February that Yan and 477 others who had worked at the company for more than two years should have been compensated as permanent employees.

That would have entitled then to compensation for lack of prior notice, indemnity for dismissal, unused annual leave, damages and final wages.

Instead, Pou Yuen treated them as fixed duration employees and gave them 5 percent of their salary only.

Wage calculations shown to VOA by CENTRAL suggests this would result in compensation payouts ranging from between $91 to $243 for workers who had stayed with the factory in some cases for more than seven and a half years.

But though the Arbitration Council effectively ruled this compensation was illegal, its decision is non-binding because Pou Yuen chose to contest it.

In an emailed response, Amer Sports highlighted the non-binding nature of the ruling and the fact that Pou Yuen had paid the 5 percent severance to some 1,900 workers.

“Pou Yuen Cambodia owns the direct relationship with their employees,” Vice President of Amer Sports Sourcing, Pascal Covatta wrote. “We are working with Pou Yuen Cambodia but also with the parent organization Pou Chen Group to find the best solution for the employees in due course.”

Calls to Pou Yuen have gone unanswered while a former assistant to the general manager told VOA she was unaware of any update in the case.

In an emailed response, Chihchien Lin of Pou Chen Group’s legal department, stood by their decision to class the workers as non-permanent employees on fixed duration contracts, noting that all but 50 workers – some 1,900 people – had taken the payments they offered.

“PYC sincerely regrets that there are still existing complaints about the termination at factory disclosure due to different interpretation on the laws regarding FDC [fixed duration contracts] and UDC [unspecified duration contracts],” Lin wrote.

“PYC will immediately reach out to the complaining employees to initiate good faith discussion, and target to reach mutual agreement on this dispute with amicability in [the] future couple of weeks based on the direction of UDC [unspecified duration contracts] as indicated in the arbitration decision.”

Lin stressed that workers had received termination payments at the expiration of each fixed duration contract since the operation began in 2010.

Moeun Tola, executive director of CENTRAL, said it was not surprising to him that a hugely profitable company would refuse to implement an Arbitration Council ruling.

“If no pressure, those companies would continue exploiting their laborers peacefully although they have [a] clear Code of Conduct to respect workers’ rights,” he said in a written response.

While Pou Yuen were entitled to choose a non-binding arbitration, defiance of the ruling still violated the ethical sourcing policies brands like Amer Sports purported to adhere to, Moeun said.

“I think Amer Spot [sic] should look at the history of AC awards so far, how people take serious about AC decision in such corrupted system in the country and should be responsible for their consumers by stop exploiting their laborers and apply their CSR [corporate social responsibility],” said Moeun Tola.

Labor Ministry spokesman Heng Sour said the government would step in to pay workers their final salary, annual leave and severance pay, but not damages or termination compensation.

“As the government we provide the compensation to workers, as we don’t want them to worry or be frustrated about their payment,” he said.

The government, he said, would pursue the foreign investors responsible for the closure or others holding liability to recuperate the sums owed, vowing that “when they come here we’ll take action”.

He shouldn’t have to look far, as Pou Yuen is still in Cambodia, according to Amer Sport’s Covatta, who said the firm is building a new, 2,800 worker capacity facility – reflecting his company’s “commitment to provide jobs in Cambodia”.

That’s cold comfort for Sor Chanthorn, the 46-year-old president of the Cambodian Alliance of Trade Unions local branch. 

She said the closure had left her in financial dire straits since other factories refused to take workers of her age.

“It’s nearly one year that we have not got compensation. I went to work in the construction sector, it’s already hard because my husband got sick, he had a stroke, then he cannot move,” she said. “I cannot go to work because I have to take care of my husband and my daily life condition is very bad because I don’t have any income and I’m also waiting to get compensation from the factory.”
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China says it is impossible to hold trade talks with the United States with a new round of tariffs in place.

U.S. imposed duties on $200 billion worth of Chinese goods, and a retaliatory set of tariffs imposed by Beijing on $60 billion worth of U.S. goods, took effect on Monday. 

Chinese vice commerce minister Wang Shouwen asked reporters in Beijing Tuesday how can any talks proceed now that the Trump administration has adopted such “large-scale restrictions,” which he said is like “holding a knife to someone’s throat.” Wang led a Chinese delegation to Washington for the last round of talks between the two sides in August. 

The new U.S. duties covers thousands of Chinese-made products, including including electronics, food, tools and housewares. The new tariffs begin at 10 percent, then will rise to 25 percent on January 1, 2019. Among the items included in the new Chinese tariffs on U.S. products are liquefied natural gas.

The Trump administration has argued tariffs on Chinese goods would force China to trade on more favorable terms with the United States.

It has demanded that China better protect American intellectual property, including ending the practice of cyber theft. The Trump administration has also called on China to allow U.S. companies greater access to Chinese markets and to cut its U.S. trade surplus.

The U.S. has already imposed tariffs on $50 billion worth of Chinese goods, and China has retaliated on an equal amount on U.S. goods. And President Donald Trump has threatened even more tariffs on Chinese goods — another $267 billion worth of duties that would cover virtually all the goods China imports to the United States.

Economic forecasters say the trade spat between the world’s two biggest economies could slow the global economy through 2020.
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At a community center on Shek Lei public housing estate in northern Hong Kong, stacks of mooncake boxes are waiting to be distributed on Mid-Autumn Festival the following day. 

Inside they contain some of the 76,000 mooncakes that have been collected by Food Grace, a local charity, this holiday season to be redistributed to low-income families and individuals. 

Most are leftovers from manufacturers, says Food Grace Project Officer Casey Ng, who over-produced in an attempt to cash in on the Chinese tradition of exchanging boxes of mooncakes with friends and family each autumn – now a $2 billion international industry. 

“I would say the excessive situation has been there [historically], but it’s kind of a growing situation because some mooncake manufacturers have to record higher sales each year,” he said. 

Redistributing mooncakes is just one solution in how to tackle the more than 2 million mooncakes, valued at least $12.8 million, that will be thrown out after in Hong Kong alone after Mid-Autumn Festival. 

Ng attributed much of the glut to the trend for new flavors each year or expensive luxury varieties of mooncakes. 

While mooncakes, calorie-dense flaky pastries meant to represent the full moon, are traditionally made with simple fillings like red bean or egg yolk, they now come in a range of flavors from chocolate to pandan or vanilla custard. 

An ordinary box of four retails for around $25, but specialty boxes produced by high end hotels or luxury manufactures can sell for over $100 each in complex packaging.

While they are exchanged between family members, they are also often given out at work to mark a business relationship. 

The exchange, though, can become a financial and social burden, according to Ng, which is why Food Grace has also created a mooncake charter for companies to pledge not to share them at work. 

“We have to educate or we have to encourage them that [even if] you are not sending a mooncake as a gift, [it] does not harm your relationship with your partners or with your employees,” Ng said. 

“We have run some surveys and people actually don’t want to receive mooncakes anymore,” he added, saying they often end up with too many. 

Convincing individuals, however, to donate their mooncakes is still taking time to catch on, according to Conrad Tsang, another project officer. 

“If they have a religious background, say if they are Buddhist or Christian, they might have more motivation to do something like that but let’s just say ordinary folk [no],” he said. 

While Food Grace placed collection boxes in over 60 locations around Hong Kong, most of the mooncakes they received are still from manufacturing companies. 

While giving away gifts is a well-established Hong Kong tradition, he felt giving to charity was still not as strong – one reason so many mooncakes may still end up in the trash this year, uneaten. 
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The five remaining parties to the Iran nuclear deal have agreed to establish a special payment system to allow companies to continue doing business with the regime, bypassing new sanctions imposed by the United States.

Envoys from Britain, France, Germany, Russia, China and Iran issued a statement late Monday from the United Nations announcing the creation of a “Special Purpose Vehicle” that will be established in the European Union. The parties said the new mechanism was created to facilitate payments related to Iranian exports, including oil. 

Federica Mogherini, EU’s foreign policy chief, told reporters after the deal was announced that the SPV gives EU member states “a legal entity to facilitate legitimate financial transactions with Iran…and allow European companies to continue to trade with Iran in accordance to European Union law and could be open to other partners in the world.”

Mogherini said the financial agreement is also aimed at preserving the agreement reached in 2015 with Iran to scale back its nuclear program in exchange for relief from strict economic sanctions. The deal was reached under then-President Barack Obama, but Obama’s successor, Donald Trump, pulled out of the accord in May of this year, saying it didn’t address Tehran’s ballistic missile program or its influence in the Middle East.
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