What started as a simple desire to be able to provide for her children has turned into a multimillion-dollar business for Tammie Umbel of Dulles, Virginia. She not only runs a cosmetics company but home-schools her 14 children — and says she still finds time for herself. Leysa Bakalets has her story.
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Mexican President-elect Andres Manuel Lopez Obrador will seek to end the country’s massive fuel imports, nearly all from the United States, during
the first three years of his term while also boosting refining at home.
The landslide winner of last Sunday’s election told reporters Saturday morning before attending private meetings with members of his future cabinet that he would also prioritize increasing domestic production of crude oil, which has fallen sharply for years.
“The objective is that we stop buying foreign gasoline by the halfway point of my six-year term,” said Lopez Obrador, repeating a position he and his senior energy adviser staked out during the campaign.
“We are going to immediately revive our oil activity, exploration and the drilling of wells so we have crude oil,” he said.
On the campaign trail, the leftist former mayor of Mexico City pitched his plan to wean the country off foreign gasoline as a means to increasing domestic production of crude and value-added fuels, not as a trade issue with the United States.
Lopez Obrador also reiterated on Saturday his goal to build either one large or two medium-sized oil refineries during his term, which begins December 1.
While he said the facilities would be built in the Gulf coast states of Tabasco and possibly Campeche, he has been less clear about how the multibillion-dollar refineries would be paid for.
So far this year, Mexico has imported an average of about 590,000 barrels per day (bpd) of gasoline and another 232,000 bpd of diesel.
Foreign gasoline imports have grown by nearly two-thirds, while diesel imports have more than doubled since 2013, the first year of outgoing President Enrique Pena Nieto’s term, according to data from national oil company Pemex.
Far below capacity
Meanwhile, the six oil refineries in Mexico owned and operated by Pemex are producing at far below their capacity, or an average of 220,000 bpd of gasoline so far this year.
Gasoline production at the facilities is down 50 percent compared with 2013, and domestic gasoline output accounts for only slightly more than a quarter of national demand from the country’s motorists.
During the campaign, the two-time presidential runner-up also promised to strengthen Pemex. He also was sharply critical of a 2013 constitutional energy overhaul that ended the company’s monopoly and allowed international oil majors to operate fields on their own for the first time in decades.
The overhaul was designed to reverse a 14-year-long oil output slide and has already resulted in competitive auctions that have awarded more than 100 exploration and production contracts to the likes of Royal Dutch Shell and ExxonMobil.
“What’s most important is to resolve the problem of falling crude oil production. We’re extracting very little oil,” said Lopez Obrador.
During the first five months of this year, Mexican crude oil production averaged about 1.9 million bpd, a dramatic drop compared with peak output of nearly 3.4 million bpd in 2004, or 2.5 million bpd in 2013.
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One of the world’s biggest cargo shippers announced Saturday that it was
pulling out of Iran for fear of becoming entangled in U.S. sanctions, and President Hassan Rouhani demanded that European countries to do more to offset the U.S. measures.
The announcement by France’s CMA CGM that it was quitting Iran dealt a blow to Tehran’s efforts to persuade European countries to keep their companies operating in Iran despite the threat of new American sanctions.
Iran says it needs more help from Europe to keep alive an agreement with world powers to curb its nuclear program. U.S. President Donald Trump abandoned the agreement in May and has announced new sanctions on Tehran. Washington has ordered all countries to stop buying Iranian oil by November and foreign firms to stop doing business there or face U.S. blacklists.
European powers that still support the nuclear deal, officially called the Joint Comprehensive Plan of Action, say they will do more to encourage their businesses to remain engaged with Iran. But the prospect of being banned in the United States appears to be enough to persuade European companies to keep out.
Foreign ministers from the five remaining signatory countries to the nuclear deal — Britain, France, Germany, China and Russia — offered a package of economic measures to Iran on Friday, but Tehran said they did not go far enough.
“European countries have the political will to maintain economic ties with Iran based on the JCPOA, but they need to take practical measures within the time limit,” Rouhani said Saturday on his official website.
‘We apply the rules’
CMA CGM, which according to the United Nations operates the world’s third-largest container shipping fleet with more than 11 percent of global capacity, said it would halt service for Iran because it did not want to fall afoul of the rules, given its large presence in the United States.
“Due to the Trump administration, we have decided to end our service for Iran,” CMA CGM chief Rodolphe Saade said during an economic conference in the southern French city of Aix-en-Provence. “Our Chinese competitors are hesitating a little, so maybe they have a different relationship with Trump, but we apply the rules.”
The shipping market leader, A.P. Moller-Maersk of Denmark, already announced in May it was pulling out of Iran.
In June, French carmaker PSA Group suspended its joint ventures in Iran, and French oil major Total said it held little hope of receiving a U.S. waiver to
continue with a multibillion-dollar gas project in the country.
Total’s CEO Patrick Pouyanne said Saturday that the company had been left with little choice. “If we continued to work in Iran, Total would not be able to
access the U.S. financial world,” he told RTL radio. “Our duty
is to protect the company. So we have to leave Iran.”
Iranian Oil Minister Bijan Zanganeh called the tension between Tehran and Washington a “trade war.” He said it had not led to changes in Iranian oil production and exports.
He also echoed Rouhani’s remarks that the European package did not meet all economic demands of Iran.
“I have not seen the package personally, but our colleagues in the Foreign Ministry who have seen it were not happy with its details,” Zanganeh was quoted as saying by the Tasnim news agency.
Some Iranian officials have threatened to block oil exports from the Gulf in retaliation for U.S. efforts to reduce Iranian oil sales to zero. Rouhani himself made a veiled threat along those lines in recent days, saying there could be no oil exports from the region if Iran’s were shut.
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The opening shots have been fired in what some fear may be the start of a major trade war. China retaliating at midnight Friday with equivalent tariffs on U.S. goods after the U.S. followed through on its threat to raise tariffs on $34 billion worth of Chinese imports. All this as the U.S. job market posted solid gains last month. Mil Arcega has more.
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Amid the very real hardships Syrian refugees face, little has been said about another major health and humanitarian issue: What to do with the massive accumulations of trash and waste. But one refugee camp in Jordan is doing something about it. With the help of an international nonprofit group, the residents of the Zaatari Refugee Camp launched a recycling program to eliminate the trash left by the tens of thousands of refugees who live there … and provide jobs. Arash Arabasadi reports.
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The political squabbling between China and the United States over trade and other issues affect the world’s two largest economies through a variety of mechanisms with unpredictable results.
For example, prices of stock in both nations have been hurt as some shareholders sold their shares and other investors were reluctant to buy shares of companies that might be hurt by rising tariffs. These actions cut demand for certain stocks, making prices fall. Shareholders are part-owners of companies who hope to profit when the company prospers and grows. Rising tariff costs make growth less likely, and that hurts investor confidence.
World Trade Organization spokesman Dan Pruzin told Reuters that worries about trade are already being felt.
“Companies are hesitating to invest, markets are getting jittery, and some prices are rising,” he said, adding that further escalation could hurt “jobs and growth,” sending “economic shock waves” around the world.
Confidence
Trade squabbles can hurt business confidence, because managers are less willing to take the risk of buying new machines, building new factories or hiring new workers. Less expansion means less demand for equipment, and a smaller workforce means fewer people have the money to rent apartments, buy food or finance a new car. Less demand for goods and services ripples through the economy and sparks less economic activity and less growth.
Agriculture
U.S. farmers are another group feeling the effects of this trade dispute, as Beijing raises tariffs on U.S. soybeans. Higher tariffs raise food costs for Chinese consumers, so demand falls for U.S. farm products, a key American export. Anticipating slackening demand for U.S. soybeans, market prices dropped even before the tariffs were imposed. That means U.S. farmers can no longer afford to buy as many tractors and hire as many workers. Fewer workers mean fewer people with the money to buy products, which slows economic growth in farm states.
Consumers
Meantime, new U.S. tariffs hit Chinese-made vehicles, aircraft, boats, engines, heavy equipment and many other industrial products. China’s Xinhua news agency said new U.S. tariffs are an effort to “bully” Beijing. The agency says the new tariffs violate international trade rules, and will hurt many companies and “ordinary consumers.”
Experts say Washington tried to avoid tariffs on China that would directly raise costs to U.S. consumers. Economists say increasing taxes on products that help create consumer goods will still raise costs to consumers, fuel inflation and hurt demand.
Currency
PNC Bank Senior Economist Bill Adams, an expert on China’s economy, says one step China could take, but has not, would be to let its currency value drop. A weaker currency would mean Chinese-made products are cheaper and more competitive on international markets. Adams says China has taken steps recently to prop up the value of its currency. While a weaker currency helps exports, it can fuel inflation by raising the costs of imported products like oil or other raw materials needed by Chinese companies.
In the meantime, uncertainty fueled by trade disputes puts upward pressure on the value of the U.S. dollar, because investors see the United States as a safe haven in times of economic strife. But a stronger, more expensive dollar means U.S. products are more expensive for foreign customers, which hurts American exports and economic growth.
All of this means it is hard to predict how this trade dispute will play out. Experts say it will depend in large measure on how many times the two sides raise tariffs in response to each other, how high the tariffs go, and how long the bickering lasts.
William Zarit, the chairman of the American Chamber of Commerce in China, writes that this is the biggest trade dispute between China and the United States in 40 years.
The two sides must work something out, Zarit says, because a “strong bilateral trade and investment relationship is too important to both countries for it to be mired in verbal and trade remedy attacks and counterattacks.”
He says a new agreement would “significantly benefit both economies.”
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So is this what a trade war looks like?
The Trump administration and China’s leadership have imposed tens of billions of dollars in tariffs on each other’s goods. President Donald Trump has proposed slapping duties on, all told, up to $550 billion if China keeps retaliating and doesn’t cave in to U.S. demands to scale back its aggressive industrial policies.
Until the past couple of years, tariffs had been losing favor as a tool of national trade policy. They were largely a relic of 19th and early 20th centuries that most experts viewed as mutually harmful to all nations involved. But Trump has restored tariffs to a prominent place in his self-described America First approach.
Trump enraged such U.S. allies as Canada, Mexico and the European Union this spring by slapping tariffs on their steel and aluminum shipments to the United States. The tariffs have been in place on most other countries since March.
The president has also asked the U.S. Commerce Department to look into imposing tariffs on imported cars, trucks and auto parts, arguing that they pose a threat to U.S. national security.
Here is a look at what tariffs are, how they work, how they’ve been used in the past and what to expect now:
Are we in a trade war?
Economists have no set definition of a trade war. But with the world’s two largest economies now slapping potentially punishing tariffs on each other, it looks as if a trade war has arrived. The value of goods that Trump has threatened to hit with tariffs exceeds the $506 billion in goods that China exported to the United States last year.
It’s not uncommon for countries, even close allies, to fight over trade in specific products. The United States and Canada, for example, have squabbled for decades over softwood lumber.
But the U.S. and China are fighting over much broader issues, like China’s requirements that American companies share advanced technology to access China’s market, and the overall U.S. trade deficit with China. So far, neither side has shown any sign of bending.
So what are tariffs?
Tariffs are a tax on imports. They’re typically charged as a percentage of the transaction price that a buyer pays a foreign seller. Say an American retailer buys 100 garden umbrellas from China for $5 apiece, or $500. The U.S. tariff rate for the umbrellas is 6.5 percent. The retailer would have to pay a $32.50 tariff on the shipment, raising the total price from $500 to $532.50.
In the United States, tariffs — also called duties or levies — are collected by Customs and Border Protection agents at 328 ports of entry across the country. Proceeds go to the Treasury. The tariff rates are published by the U.S. International Trade Commission in the Harmonized Tariff Schedule, which lists U.S. tariffs on everything from dried plantains (1.4 percent) to parachutes (3 percent).
Sometimes, the U.S. will impose additional duties on foreign imports that it determines are being sold at unfairly low prices or are being supported by foreign government subsidies.
Do other countries have higher tariffs than the United States?
Most key U.S. trading partners do not have significantly higher average tariffs. According to an analysis by Greg Daco at Oxford Economics, U.S. tariffs on imported goods, adjusted for trade volumes, average 2.4 percent, above Japan’s 2 percent and just below the 3 percent for the European Union and 3.1 percent for Canada.
The comparable figures for Mexico and China are higher. Both have higher duties that top 4 percent.
Trump has complained about the 270 percent duty that Canada imposes on dairy products. But the United States has its own ultra-high tariffs — 168 percent on peanuts and 350 percent on tobacco.
What are tariffs supposed to accomplish?
Two things: Raise government revenue and protect domestic industries from foreign competition. Before the establishment of the federal income tax in 1913, tariffs were a big money-raiser for the U.S. government. From 1790 to 1860, for example, they produced 90 percent of federal revenue, according to Clashing Over Commerce: A History of US Trade Policy by Douglas Irwin, an economist at Dartmouth College. By contrast, last year tariffs accounted for only about 1 percent of federal revenue.
In the fiscal year that ended last September 30, the U.S. government collected $34.6 billion in customs duties and fees. The White House Office of Management and Budget expects tariffs to fetch $40.4 billion this year.
Tariffs also are meant to increase the price of imports or to punish foreign countries for committing unfair trade practices, like subsidizing their exporters and dumping their products at unfairly low prices. Tariffs discourage imports by making them more expensive. They also reduce competitive pressure on domestic competitors and can allow them to raise prices.
Tariffs fell out of favor as global trade expanded after World War II.
The formation of the World Trade Organization and the advent of trade deals like the North American Free Trade Agreement among the U.S., Mexico and Canada reduced or eliminated tariffs.
Why are tariffs making a comeback?
After years of trade agreements that bound the countries of the world more closely and erased restrictions on trade, a populist backlash has grown against globalization. This was evident in Trump’s 2016 election and the British vote that year to leave the European Union — both surprise setbacks for the free-trade establishment.
Critics note that big corporations in rich countries exploited looser rules to move factories to China and other low-wage countries, then shipped goods back to their wealthy home countries while paying low tariffs or none at all. Since China joined the WTO in 2001, the United States has shed 3.1 million factory jobs, though many economists attribute much of that loss not just to trade but to robots and other technologies that replace human workers.
Trump campaigned on a pledge to rewrite trade agreements and crack down on China, Mexico and other countries. He blames what he calls their abusive trade policies for America’s persistent trade deficits — $566 billion last year. Most economists, by contrast, say the deficit simply reflects the reality that the United States spends more than it saves. By imposing tariffs, he is beginning to turn his hard-line campaign rhetoric into action.
Are tariffs wise?
Most economists — Trump trade adviser Peter Navarro is a notable exception — say no. The tariffs drive up the cost of imports. And by reducing competitive pressure, they give U.S. producers leeway to raise their prices, too. That’s good for those producers, but bad for almost everyone else.
Rising costs especially hurt consumers and companies that rely on imported components. Some U.S. companies that buy steel are complaining that Trump’s tariffs put them at a competitive disadvantage. Their foreign rivals can buy steel more cheaply and offer their products at lower prices.
More broadly, economists say trade restrictions make the economy less efficient. Facing less competition from abroad, domestic companies lose the incentive to increase efficiency or to focus on what they do best.
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U.S. employers kept up a brisk hiring pace in June by adding 213,000 jobs, a sign of confidence in the economy despite the start of a potentially punishing trade war with China.
The job growth wasn’t enough to keep the unemployment rate from rising from 3.8 percent to 4 percent, the government said Friday. But the jobless rate rose for an encouraging reason: More people felt it was a good time to begin looking for a job, though not all of them immediately found one.
The growing optimism that people can find work suggested that the 9-year old U.S. economic expansion — the second-longest on record — has the momentum to keep chugging along. Yet its path ahead is uncertain. Just hours before the monthly jobs report was released, the Trump administration imposed taxes on $34 billion in Chinese imports, and Beijing hit back with tariffs on the same amount of U.S. goods.
“The tariffs jumble things about what we should expect to see in the next few months,” said Cathy Barrera, chief economist at ZipRecruiter, the online jobs marketplace.
Some companies are likely to respond to the tariffs by putting their hiring plans on hold until the trade picture becomes clearer.
Major U.S. stock indexes were mostly higher in early trading Friday after the jobs report was issued, keeping the market on track for a weekly gain after two weeks of losses.
The June jobs data showed an economy that may be on the cusp of producing stronger pay growth, something that could be disrupted if additional tariffs are imposed. Trump has suggested that more than $500 billion worth of Chinese imports could be taxed in his drive to force Beijing to reform its trade policies, which he insists have unfairly victimized the United States.
Average hourly pay rose just 2.7 percent in June from 12 months earlier. That relatively modest increases means that, after adjusting for inflation, overall wages remain nearly flat. But the average was skewed downward in June because the influx of jobseekers was due mainly to those with only a high school education or less, who are generally paid lower wages,
The ranks of unemployed people seeking jobs jumped by 499,000 in June, which caused the unemployment rate to rise from its previous 18 year-low. With 93 straight months of job growth — a historical record — many employers have said they’re feeling pressure to raise wages. But significant pay gains have yet to emerge in the economic data.
Manufacturers added 36,000 jobs last month; the education and health sector added 54,000. But retailers shed 21,600 jobs, with the losses concentrated at general merchandise stores.
In its report Friday, the government revised up its estimate of job growth in May and April by a combined 37,000. Over the past three months, the economy has produced a robust average monthly job gain of 211,000.
The broader U.S. economy appears sturdy. Economists are forecasting that economic growth accelerated to an annual pace of roughly 4 percent during the April-June quarter, about double the previous quarter’s pace.
Signs of strength have helped bolster hiring despite the difficulty many employers say they’re having in finding enough qualified workers to fill jobs.
Manufacturers and services firms have said in recent surveys that their business is improving despite anxiety about the tariff showdown between the United States and China. Housing starts have climbed 11 percent so far this year. Retail sales jumped a strong 0.8 percent in May in a sign that consumers feel secure enough to spend.
Though economic growth appears to be solid, the gains have been spread unevenly. President Donald Trump’s tax cuts have provided a dose of stimulus this year, but the benefits have been tilted significantly toward wealthy individuals and corporations. Savings from the tax cuts enabled companies in the Standard & Poor’s 500 stock index to buy back a record number of shares in the first three months of 2018.
Yet the tax cuts have done little to generate substantial pay growth. Most economists say they still think the low unemployment rate will eventually force more employers to offer higher pay in order to fill jobs.
The economy also faces a substantial threat from the Trump administration’s trade war with China and from other, ongoing trade disputes with U.S. allies, including Canada and Europe. Any escalation in the conflict with China could disrupt hiring as companies grapple with higher import prices and diminished demand for their exports. On Thursday, Trump floated the prospect of imposing tariffs on more than $500 billion in Chinese imports.
The Trump administration has also applied tariffs on steel and aluminum from allies like Canada and Mexico and has threatened to abandon the North American Free Trade Agreement with those two countries. Trump has also spoken about slapping tariffs on imported cars, trucks and auto parts, which General Motors has warned could hurt the U.S. auto industry and drive up car prices.
Automakers added 12,000 jobs in June, but the tariffs could weigh on that industry’s job growth in the coming months.
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The world’s two biggest economies have fired the opening shots in a trade war that could have wide-ranging consequences for consumers, workers, companies, investors and political leaders.
The United States slapped a 25 percent tax on $34 billion worth of Chinese imports starting Friday, and China is retaliating with taxes on an equal amount of U.S. products, including soybeans, pork and electric cars.
The United States accuses China of using predatory tactics in a push to supplant U.S. technological dominance. The tactics include forcing American companies to hand over technology in exchange for access to the Chinese market, as well as outright cyber-theft. Trump’s tariffs are meant to pressure Beijing to reform its trade policies.
Though the first exchange of tariffs is unlikely to inflict much economic harm on either nation, the damage could soon escalate. President Donald Trump, who has boasted that winning a trade war will be easy, said Thursday that he’s prepared to impose tariffs on up to $550 billion in Chinese imports — a figure that exceeds the $506 billion in goods that China actually shipped to the United States last year.
Escalating tariffs would likely raise prices for consumers, inflate costs for companies that rely on imported parts, rattle financial markets, cause some layoffs and slow business investment as executives wait to see whether the Trump administration can reach a truce with Beijing. The damage would threaten to undo many of the economic benefits of last year’s tax cuts.
A full-fledged trade war, economists at Bank of America Merrill Lynch and elsewhere warn, risks tipping the U.S. economy into recession.
And those caught in the initial line of fire — U.S. farmers facing tariffs on their exports to China, for instance — are already hunkered down and fearing the worst. The price of U.S. soybeans has plunged 17 percent over the past month on fears that Chinese tariffs will cut off American farmers from a market that buys about 60 percent of their soybean exports.
“For soybean producers like me this is a direct financial hit,” Brent Bible, a soy and corn producer in Romney, Indiana, said in a statement from the advocacy group Farmers for Free Trade. “This is money out of my pocket. These tariffs could mean the difference between a profit and a loss for an entire year’s worth of work out in the field, and that’s only in the near term.”
Even before the first shots were fired, the prospect of a trade war was worrying investors. The Dow Jones industrial average has shed nearly 1,000 points since June 11.
The Chinese currency, the yuan, has dropped 3.5 percent against the U.S. dollar over the past month, giving Chinese companies a price edge over their U.S. competition. The drop might reflect a deliberate devaluation by the Chinese government to signal Beijing’s “displeasure over the state of trade negotiations,” according to a report Thursday from the Institute of International Finance, a banking trade group.
The Trump administration sought to limit the impact of the tariffs on U.S. households by targeting Chinese industrial goods, not consumer products, for the first round of tariffs. But that step drives up costs for U.S. companies that rely on Chinese-made machinery or components and may force them to pass them along to their business customers, and eventually to consumers.
If you like Chick-fil-A sandwiches, for instance, you may feel the impact of the tariffs. Charlie Souhrada, a vice president of the North American Food Equipment Manufacturers, says the duties could raise the cost of a pressure cooker made by one of its members, Henny Penny. Chick-fil-A uses the cooker for its sandwiches. The administration has placed “these import taxes squarely on the shoulders of manufacturers and by extension consumers,” Souhrada said.
The Federal Reserve is already picking up signs that the threat of a trade war is causing businesses to rethink investment plans. In the minutes from its June 12-13 meeting, the Fed’s policymaking committee noted: “Contacts in some districts indicated that plans for capital spending had been scaled back or postponed as a result of uncertainty over trade policy,”
And if Trump extends the tariffs to $550 billion in Chinese imports, there’s no way consumers could avoid being caught in the crossfire: The taxes would have to hit consumer products like televisions and cellphones.
Consider what happened to the price of washing machines that were subjected to a separate series of Trump tariffs in January. Over the past year, their price has surged more than 8 percent, compared with a slight drop in overall appliance prices.
Even the first round of tariffs means that “American consumers are one step closer to feeling the full effects of a trade war,” said Matthew Shay, president of the National Retail Federation.
“These tariffs will do nothing to protect U.S. jobs, but they will undermine the benefits of tax reform and drive up prices for a wide range of products as diverse as tool sets, batteries, remote controls, flash drives and thermostats,” Shay said. “And students could pay more for the mini-refrigerator they need in their dorm room as they head back to college this fall… a strategy based on unilateral tariffs is the wrong approach, and it has to stop.”
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U.S. tariffs against Chinese imports took effect early Friday, a day after President Donald Trump made clear he is prepared to sharply escalate a trade war between the world’s two biggest economies.
The administration started imposing tariffs at 12:01 a.m. Eastern time Friday on $34 billion worth of Chinese imports, a first step in what could become an accelerating series of tariffs.
China responds
Shortly after the tariffs took effect, China said it was “forced to make a necessary counterattack” to a U.S. tariff hike, but gave no immediate details of possible retaliation.
Later the Chinese foreign ministry confirmed retaliatory tariffs on U.S. goods “took effect immediately” after Washington raised import duties on its goods.
A foreign ministry spokesman, Hu Chunhua, on Friday gave no details of the increase. But Beijing previously issued a $34 billion list of American goods, including soybeans, electric cars and whiskey, it said would be subject to 25 percent tariffs.
The Commerce Ministry on Friday criticized Washington for “trade bullying” following the tariff hike in a spiraling dispute over technology policy that companies worry could chill global economic growth.
The Asian financial markets took Friday’s developments in stride.
Japan’s main stock market index, the Nikkei 225, gained 1.1 percent while the Shanghai Composite Index added 0.5 percent. Hong Kong’s Hang Seng rose 0.8 percent. Shares also gained in early European trading.
Hostilities could grow
Trump discussed the trade war Thursday with journalists who flew with him to Montana for a campaign rally. The president said U.S. tariffs on an additional $16 billion in Chinese goods are set to take effect in two weeks.
After that, the hostilities could intensify: Trump said the U.S. is ready to target an additional $200 billion in Chinese imports — and then $300 billion more — if Beijing refuses to yield to U.S. demands and continues to retaliate.
That would bring the total of targeted Chinese goods to potentially $550 billion, which is more than the $506 billion in goods that China actually shipped to the United States last year.
The Trump administration has argued that China has deployed predatory tactics in a push to overtake U.S. technological dominance. These tactics include cyber-theft as well as requiring American companies to hand over technology in exchange for access to China’s market.
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Drivers of Kenya’s digital taxis shut down operations Monday in protest of what they term as exploitative corporate practices. They say the firms are charging low rates to their clients, yet imposing high commissions on the drivers, leading them to work longer hours with little pay.
The Digital Taxi Association of Kenya, representing more than 2,000 digital taxi drivers, is in the fourth day of a protest that has seen drivers switch off their services, stalling transportation in the country.
The drivers say client charges have reduced over time as more digital taxi apps enter the market, but their commissions to the taxi firms have remained the same.
The drivers are demanding a review of their rates and working conditions. Through their association, they want the digital taxi services to double their client rates and reduce driver commissions to the companies so they can earn decent wages.
“The fare itself, it has been very low from the word go,” said Anthony Maina, an Uber driver in Kenya. “The percentage after they get their commission, we get very little returns.”
The main digital taxi services in Kenya are the American brand Uber and Estonian Taxify, as well as at least three others.
Uber charges a 25 percent commission on each ride, while apps like Taxify charge 15 percent. The drivers want rates at least doubled per kilometer, and commissions slashed to 10 percent.
Kenya Digital Taxi Services Director David Muteru is calling on Kenya’s Ministry of Transport to resolve the issue.
“All these things are happening where we have government agencies who can [take care of all these things] without having pressure from us,” Muteru said. “It is not our wish to come here and start demonstrating. Our demand is that we must have regulations. [The pricing] is very skewed in favor of the app companies to the detriment of drivers.”
Maina says Uber reduced the maximum working hours from 18 to 12 in an effort to better the working conditions, but drivers overwork to earn more to meet expenses.
“We cannot afford daily maintenance, he said. “An example, each and every day you have to fuel the vehicle, you have to wash the car, and if you happen to be in the city center, you have to pay the city council. All those expenses, when you put them together and maybe you do not own the vehicle yourself, you have to pay the partner and you know fuel has been going up every day and they are not adjusting their commission or fare. So that has been a big problem for us.”
Earlier in the week, Uber drivers in South Africa also went on strike to protest the 25 percent fee charged by Uber.
Digital Taxi Association representatives in Kenya are in negotiations with the taxi firms and Kenya’s Ministry of Transport as their strike continues.
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South Africa has become one of the biggest markets for illegal cigarette sales and is losing out on 7 billion rand ($514 million) a year in potential tax revenue, a report funded by a tobacco industry group said on Thursday.
The study carried out by Ipsos found illegal cigarette trade spiked between 2014 and 2017 after a probe into the underground industry was dropped by the South African Revenue Service (SARS) under suspended commissioner Tom Moyane.
Moyane, an ally of former President Jacob Zuma, is the main focus of an ongoing SARS commission of inquiry over allegations of widespread corruption at the tax agency under his watch. He denies any wrongdoing.
Former head of enforcement at SARS, Gene Ravele, told the inquiry last week the decision to drop the investigation into illegal tobacco trade was intended to let it continue.
“After I left [in 2015], there was no inspections at cigarette factories. It was planned,” said Ravele.
A packet of cigarettes should incur a minimum tax of 17.85 rand ($1.31), yet packs are sold on the black market for as little as 5 rand as manufacturers dodge official sales channels to avoid paying tax, the Ipsos study found.
Three-quarters of all South Africa’s informal vendors — totaling 100,000 — sell illegal cigarettes in an industry that was worth 15 billion rand ($1.10 billion) over the last three years, the report said.
“Independent superettes, corner cafes and general dealers are the key channels for ultra-cheap brands, with hawkers providing a key entry point, mainly through the loose cigarette sales,” Ipsos head of measurement Zibusiso Ngulube said. “These manufacturers are perfectly primed to continue to grow at a fast rate.”
The study was funded by The Tobacco Institute of Southern Africa, which includes arms of global manufacturers like Philip Morris International, Alliance One and British American Tobacco.
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German Chancellor Angela Merkel said on Thursday she would back lowering European Union tariffs on U.S. car imports, responding to an offer from Washington to abandon threatened levies on European cars in return for concessions.
“When we want to negotiate tariffs, on cars for example, we need a common European position and we are still working on it,” Merkel said.
U.S. President Donald Trump threatened last month to impose a 20-percent import tariff on all EU-assembled vehicles, which could upend the industry’s current business model for selling cars in the United States.
According to an industry source, the U.S. ambassador to Germany told German car bosses from BMW, Daimler and Volkswagen at a meeting on Wednesday that Trump could abandon such threats if the EU scrapped duties on U.S. cars imported into the bloc.
Merkel said any move to cut tariffs on U.S. vehicles would require reductions on those imported from other countries to conform with World Trade Organization rules.
“I would be ready to support negotiations on reducing tariffs, but we would not be able to do this only with the U.S.,” she said.
German automotive trade body VDA said any suggestions about mutually removing tariffs and other trade barriers were positive signals.
“But it is clear that the negotiations are exclusively being held at a political level,” it said in a statement.
Current U.S. import tariff rates on cars are 2.5 percent and on trucks 25 percent. The EU has a 10 percent levy on car imports from the United States.
Trump hit the EU, Canada and Mexico with tariffs of 25 percent on steel and 10 percent on aluminum at the start of June, ending exemptions that had been in place since March.
The EU executive responded by imposing its own import duties of 25 percent on a range of U.S. goods, including steel and aluminum products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.
Trump’s protectionist trade policies, which also target Chinese imports, have raised fears of a full-blown and protracted trade war that threatens to damage the world economy.
Unemployment among Saudi citizens edged up to a record 12.9 percent in the first quarter of this year as private employers struggled under the weight of a new tax and a domestic fuel price hike, official data showed on Thursday.
The figures underlined the difficulties which the government faces as it pushes through reforms to reduce the economy’s reliance on oil exports.
The reforms aim to develop non-oil industries and create jobs, but they also involve austerity steps to close a big state budget deficit; a 5 percent value-added tax was imposed at the start of 2018. The austerity is hurting many private companies.
The first-quarter unemployment rate was the highest recorded by the official statistics agency in data going back to 1999. It exceeded the 12.8 percent level which had prevailed for the previous three quarters.
Authorities are keen to lure more Saudis, especially Saudi women, into the labor force to make the economy more efficient and reduce the government’s financial burden.
The latest data showed little progress in that area, however, with the number of Saudi job seekers falling to 1.07 million in the first quarter from 1.09 million in the previous quarter, even as the number of employed Saudis also declined.
The figures revealed a continued exodus of hundreds of thousands of foreign workers from Saudi Arabia because of the weak economy and hikes in fees which companies must pay the government to hire expatriates.
The number of foreigners employed in the kingdom shrank to 10.18 million from 10.42 million in the previous quarter and 10.85 million in the first quarter of 2017 – a drop which is slowing the economy by hurting consumer demand.
Saudi gross domestic product, adjusted for inflation, grew 1.2 percent from a year earlier in the first quarter of 2018, beginning to recover after shrinking in 2017, figures released earlier this week showed.
But the rebound was largely due to stabilizing oil output, and economists expect the oil sector to lead growth later this year with non-oil businesses expanding only modestly – a trend that may keep unemployment high.
U.S. President Donald Trump, who recently called on OPEC producers to help reduce oil prices, has raised prices through his tweets, Iranian OPEC Governor Hossein Kazempour Ardebili was quoted as saying by news agency SHANA on Thursday.
“Your tweets have increased the prices by at least $10. Please stop this method,” the oil ministry news agency quoted Kazempour Ardebili as saying.
Kazempour Ardebili said Trump was trying to intensify tensions between Iran and Saudi Arabia and he called on the United States to join world powers in a meeting with Iran in Vienna on Friday.
Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in Vienna to discuss how to keep the accord alive after the U.S. withdrawal from the pact.
Strait of Hormuz threat
The head of Iran’s Revolutionary Guards said on Thursday their forces were ready to implement Iran’s threat to block the Strait of Hormuz and that if Iran cannot sell its oil under the U.S. pressure, no other regional country will be allowed to.
“We are hopeful that this plan expressed by our president will be implemented if needed … We will make the enemy understand that either all can use the Strait of Hormuz or no one,” Mohammad Ali Jafari, commander of the Islamic Revolutionary Guard Corp, was quoted as saying by Tasnim news agency.
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U.S. car maker Ford Motor Co said on Thursday it has no plans currently to hike retail prices of its imported Ford and Lincoln models in China, despite steep additional tariffs on imported U.S. vehicles set to come into play on Friday.
The firm, which has been facing sluggish sales in the world’s largest auto market, said in a statement “it has no current plans to increase the manufacturer’s suggested retail price (MSRP) on its import line-up in China.”
Ford is the first foreign automaker to address pricing issues ahead of the new tariffs that will affect around $34 billion of U.S. imports from soybeans and cars to lobsters.
China, which just days ago cut tariffs on all imported automobiles, has said that it will slap an additional 25 percent levy on 545 American products, including U.S.-made cars, should the Trump administration go ahead with plans to implement tariffs on $34 billion of Chinese imports from July 6.
Ford added it encouraged Washington and Beijing to resolve their issues over trade and that it would “continue to monitor the situation as it evolves.”
United States Ambassador to Germany Richard Grenell reportedly told German auto makers Wednesday the U.S. would back off threats of tariffs on European car imports in exchange for the European Union’s elimination of duties on U.S. cars.
The German newspaper Handelsblatt reported Grenell told BMW, Daimler and Volkswagen executives of the proposal during a meeting Wednesday at the embassy in Berlin.
Daimler and Volkswagen declined to comment and BMW was not immediately available for comment, the report said.
The reported proposal comes after the European Union warned U.S. President Donald Trump last Friday the potential indirect costs of imposing tariffs on cars could amount to $294 billion.
The EU report, submitted to the U.S. Commerce Department, maintained the tariffs would disrupt cross-border supply chains in the automotive industry. The report said the tariffs could possibly trigger higher U.S. industrial costs, raise consumer prices, hurt exports and cost jobs.
The World Trade Organization said Wednesday trade barriers being set by world economic powers could jeopardize the global economic recovery.
“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators,” WTO Director General Roberto Azevendo said.
Azevendo did not expound on his remarks, but the WTO’s quarter trade outlook indicator in May suggested trade growth in the second quarter would decelerate.
European businesses are unsettled as they watch the U.S. and China collide over trade. And for good reason: the nascent global trade war could represent the biggest single threat to the economic upswing that has helped the region get past its financial crisis.
In theory, some European companies could benefit, jumping into market niches if Chinese businesses are kept out of the U.S. market. But that would only be a few companies or sectors.
When your entire economy is heavily dependent on trade, an overall slowdown in global commerce caused by tit-for-tat import taxes provokes fear and undermines confidence.
And that’s just what’s happening in Europe. By one measure, business confidence has fallen in six of the past seven months in Germany, where exports are almost half of annual economic output.
“It’s worth all our efforts to defuse this conflict, so it doesn’t become a war,” German Chancellor Angela Merkel said Wednesday.
The U.S. is due to put tariffs on $34 billion worth of Chinese goods on Friday. The Chinese will respond with tariffs on an equivalent value of U.S. products such as soybeans, seafood and crude oil.
Amid all this, Europe has its own trade dispute with the U.S. After the U.S. put tariffs on steel and aluminum from many allies, including the European Union, the 28-country bloc responded with import taxes on some $3.25 billion of U.S. goods. The Trump administration is also studying the option of putting tariffs on cars, which would significantly escalate the confrontation.
The head of the EU’s executive, Jean-Claude Juncker, will head to Washington in late July to try to personally persuade Trump against further measures targeting Europe.
The disputes over trade threaten to spoil the good times for Europe’s economy.
Growth last year was the strongest in a decade, since before the global financial crisis. While that has eased in recent quarters, the economy is still strong enough to create jobs. The number of unemployed fell by 125,000 in May, leaving unemployment in the 19 countries that use the euro at 8.4 percent, the lowest since 2008 and down from a high of 12.1 percent in 2013.
“Trade tensions stoked by U.S. President Donald Trump are clouding the economic outlook in Europe,” wrote analysts at Berenberg bank in London. They rated the trade risk ahead of troubles from Italy’s heavy debt load or faster than expected interest rate increases from the U.S. Federal Reserve.
Many European companies would suffer because they both produce and sell goods in the U.S. and China, the world’s biggest economies.
For example, tariffs that China is expected to impose Friday on U.S.-made autos would hit German carmakers Daimler and BMW since they both make vehicles in the United States and export them to China.
Daimler has already lowered its outlook for profits, citing higher than expected costs from the new tariffs. BMW warned in a letter to Commerce Secretary Wilbur Ross on Friday that tariffs would make it harder for it to sell in China the vehicles it builds at its factory in Spartanburg, South Carolina, “potentially leading to a strongly reduced export volumes and negative effects on investment and employment in the United States.”
Last year, BMW exported 272,000 vehicles from the Spartanburg plant, more than half its total production. Of those, 81,000 — worth $2.37 billion — went to China. BMW says its exports reduced the U.S. trade deficit by around $1 billion.
By themselves, the tariffs that take effect Friday won’t immediately have a dramatic impact on global trade. The fear is that retaliation will spiral, hitting the total amount of global commerce.
Even if the overall effect is to harm growth, there could be benefits for some European companies and sectors. Economists Alicia Garcia Herrero and Jianwei Xu at the French bank Natixis say that European makers of cars, aircraft, chemicals, computer chips and factory machinery could in theory snare market share by substituting for Chinese or American products in the two markets. But that’s only if Europe’s own trade dispute with the U.S. does not escalate — a big if.
Europe is waiting to see whether the Trump administration will go ahead separately with tariffs on auto imports. European companies like BMW, Daimler’s Mercedes-Benz, Volkswagen’s Porsche and Audi divisions, and Fiat Chrysler send $46.6 billion worth of vehicles every year to the U.S. Some 13.3 million people, or 6.1 percent of the employed population of the EU, work in the automotive sector, according to the European Automobile Manufacturers Association.
“Europe cannot win anything” on an overall basis “for one obvious reason: we are net exporters,” said Garcia Herrero, chief economist for Asia Pacific at Natixis and a senior fellow at European research institute Bruegel. “But we should not understate the view that some sectors could get something out of a U.S.-China trade war.”
Amid the brewing conflict, China has sought to get Europe on its side, putting on a diplomatic charm offensive during visits by Merkel and French Prime Minister Edouard Philippe. The EU and China agreed last month to deepen commercial ties and support trade rules. But the EU remains a close, longtime ally of the U.S. on a range of issues, despite the current tensions with the Trump administration.
One negative outcome for Europe, Herrero said, would be if Trump can push the Chinese into a trade agreement aimed at reducing the U.S. trade deficit. The additional U.S. goods to China could come at the expense of European competitors.
“If China concedes to the U.S. proposed agreement, the whole situation faced by the EU would be much tougher,” she and Xu wrote in a research note. “For China to massively reduce its trade surplus with the U.S., it has to in some way substitute its imports away from the EU to the U.S., which would have a significant negative impact on the EU producers.”
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China is putting pressure on the European Union to issue a strong joint statement against President Donald Trump’s trade policies at a summit
this month, but it’s facing resistance, European officials said.
In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill.
One proposal has been for China and the European Union to launch joint action against the United States at the World Trade Organization.
But the European Union, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats told Reuters, ahead of the Sino-European summit in Beijing on July 16-17.
Instead, the summit is expected to produce a modest communique that affirms the commitment of both sides to the multilateral trading system and promises to set up a working group on modernizing the WTO, EU officials said.
Liu has said privately that China is ready to set out for the first time what sectors it can open to European investment at the annual summit, expected to be attended by President Xi Jinping, China’s Premier Li Keqiang and top EU officials.
Chinese state media have promoted the message that the EU is on China’s side, officials said, putting the bloc in a delicate position. The past two summits, in 2016 and 2017, ended without a statement because of disagreements about the South China Sea and trade.
“China wants the European Union to stand with Beijing against Washington, to take sides,” said one European diplomat. “We won’t do it and we have told them that.”
China’s Foreign Ministry did not immediately respond to a request for comment on Beijing’s summit aims.
In a commentary on Wednesday, China’s official Xinhua news agency said China and Europe “should resist trade protectionism hand in hand.”
“China and European countries are natural partners,” it said. “They firmly believe that free trade is a powerful engine for global economic growth.”
China’s moment?
Despite Trump’s tariffs on European metals exports and threats to hit the EU’s automobile industry, Brussels shares Washington’s concern about China’s closed markets and what Western governments say is Beijing’s manipulation of trade to dominate global markets.
“We agree with almost all the complaints the U.S. has against China. It’s just we don’t agree with how the United States is handling it,” another diplomat said.
Still, China’s stance is striking, given Washington’s deep economic and security ties with European nations. It shows the depth of Chinese concern about a trade war with Washington, as Trump is set to impose tariffs on billions of dollars’ worth of Chinese imports on Friday.
It also underscores China’s new boldness in trying to seize leadership amid divisions between the United States and its European, Canadian and Japanese allies over issues including free trade, climate change and foreign policy.
“Trump has split the West, and China is seeking to capitalize on that. It was never comfortable with the West being one bloc,” said a European official involved in EU-China diplomacy.
“China now feels it can try to split off the European Union in so many areas — on trade, on human rights,” the official said.
Another official described the dispute between Trump and Western allies at the Group of Seven summit last month as a gift to Beijing because it showed European leaders losing a longtime ally, at least in trade policy.
European envoys say they already sensed a greater urgency from China in 2017 to find like-minded countries willing to stand up against Trump’s “America First” policies.
No ‘systemic change’
An April report by New York-based Rhodium Group, a research consultancy, showed that Chinese restrictions on foreign investment were higher in every single sector save real estate, compared with the European Union, while many of the big Chinese takeovers in the bloc would not have been possible for EU companies in China.
China has promised to open up. But EU officials expect any moves to be more symbolic than substantive.
They say China’s decision in May to lower tariffs on imported cars will make little difference because imports make up such a small part of the market.
China’s plans to move rapidly to electric vehicles mean that any new benefits it offers traditional European carmakers will be fleeting.
“Whenever the train has left the station, we are allowed to enter the platform,” a Beijing-based European executive said.
However, China’s offer at the upcoming summit to open up reflects Beijing’s concern that it is set to face tighter EU controls, and regulators are also blocking Chinese takeover attempts in the United States.
The European Union is seeking to pass legislation to allow greater scrutiny of foreign investments.
“We don’t know if this offer to open up is genuine yet,” a third EU diplomat said. “It’s unlikely to mark a systemic change.”
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In the busy summer travel period in Cuba, a long line of people wait for hours in the sweltering heat outside the Havana office of state-owned airline Cubana, many of them eager to visit families in the provinces.
But they are not waiting to book flights. Instead, they hope to get their money back on plane tickets or exchange them for bus tickets across the island.
Cubana, which has a virtual monopoly on domestic flights, has suspended nearly all of them due to a lack of working aircraft, plunging travel on the Caribbean’s largest island into chaos and highlighting problems at what was once a vanguard of Latin American aviation.
The flight suspensions were made a month after a Cubana flight crashed after takeoff from Havana airport in May, killing 112 people. They come at a time when Communist-run Cuba is trying to stimulate tourism, one of the few bright spots in its economy, by promoting beach resorts and colonial towns hundreds of kilometers (miles) from the capital.
“Now I will have to take a 16-hour bus ride to Guantanamo, but what other options do I have?” said kindergarten teacher Marlene Mendoza, who was bathed in sweat and got a bus ticket to eastern Cuba after queuing for more than seven hours.
Analysts say Cubana’s troubles stem largely from dual ills that afflict the whole state-run economy: the U.S. trade embargo and a problematic business model.
Cubana did not reply to requests for comment for this story.
Founded in 1929 as one of Latin America’s first airlines, Cubana was nationalized after Fidel Castro’s leftist 1959 revolution. In its heyday, it flew Cuban troops to Africa and passengers to allied socialist countries around the globe.
For decades it got around U.S. sanctions that restricted it from buying planes with a certain share of U.S. components — including European Airbus and Brazilian Embraers — by acquiring first Soviet and then Russian aircraft.
The carrier maintained a decent safety record, but its reputation for mediocre service and delays prompted many foreign tourists to use mostly land transport.
Then, over the past year, it started canceling more flights than usual, often putting passengers up in hotels for days, without commenting publicly on the disarray.
After the Boeing 737 crashed on May 18, Cubana said it had leased the plane from Mexican company Damojh due to a lack of its own aircraft. A second Damojh plane has been grounded pending a safety audit of its fleet by Mexican authorities, data from Flightradar24 shows, aggravating the shortage.
Cuban, Mexican and U.S. authorities are still investigating the crash and have not commented on possible causes. Damojh has said in a press release that is fully cooperating with those investigations into the “lamentable accident.”
Just four of Cubana’s own 16 planes are flying, according to a Reuters examination of data on Flightradar24 and Planespotters.net.
Not flying high
Over the past month, the airline announced it was axing several routes mainly used by Cubans and reducing the frequency of flights to Santiago, Holguin and Baracoa, all popular tourist destinations. In a statement, it said it was working to resolve the situation and apologized for the disruption.
Cubana also suspended all international routes except to Buenos Aires and Madrid, several staff told Reuters. The company did not comment publicly, leaving would-be travelers sharing their confusion on online forums.
“It has lost a lot of prestige. It’s already not the famous Cubana that used to fly to all parts of the world,” said one former employee, who asked to remain anonymous, who retired 6-1/2 years ago after working for Cubana for 40 years. “Anywhere else in the world, a company like Cubana would have folded.”
Cubana said in mid-June it did not have enough aircraft largely because of maintenance issues and lack of parts, which aviation experts say can cost millions of dollars.
The airline sells tickets to Cuban citizens at heavily subsidized prices. Its budget is also stretched by ferrying official delegations around sometimes at a financial loss, a former Cuban diplomat familiar with Cubana operations said.
Cash-strapped Cuba points the finger at the 56-year-old U.S. trade embargo, saying it has cost its flagship carrier millions of dollars.
The coup de grace was possibly the purchase of six AN-158 regional jets from Ukrainian manufacturer Antonov since 2013.
Cubana has said those planes have had technical problems and getting parts for the joint Russian-Ukrainian project has proven difficult since Russia’s annexation of Crimea in 2014.
An Antonov representative told Reuters that Cubana had not been paying for the necessary work, but it had signed a deal in April with the airline to cooperate “to resume the use of AN-158 planes before the end of the current year.”
Typically, airlines lease planes when theirs are undergoing maintenance or there is a spike in demand, but the U.S. embargo and financial constraints likely complicate this for Cuba, said Richard Aboulafia, vice president of U.S. aviation consulting company the Teal Group.
In May, Lithuanian lessor Avion Express and Italian lessor Blue Panorama both ended their contracts with Cubana, the companies told Reuters, without explaining why. Data from Flightradar24 shows they withdrew respectively four Airbus A320s and one Boeing 737.
That is around the time when Cubana turned to the little-known Damojh, leasing the 39-year-old Boeing 737.
Damojh has faced safety concerns in other countries in the region. Guyana’s aviation authority told Reuters it had revoked Damojh’s permit to fly there last year due to issues such as overloading planes. The airline declined to comment on the matter.
The crash in May has undermined trust in Cubana.
“I like to travel by plane. It’s faster and more comfortable,” said Maylin Lopez, 48, waiting at Havana’s bus station for her 15-hour ride to eastern Cuba. “But I can’t even imagine doing that now.”
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The U.S. Commerce Department on Tuesday granted a temporary reprieve to ZTE that allows China’s No. 2 telecommunications equipment maker to conduct business needed to maintain existing networks and equipment in the United States as it works toward the lifting of a U.S. sales ban.
The authorization from the department’s Bureau of Industry and Services, dated July 2 and seen by Reuters, runs until August 1.
ZTE and spokespeople for the Commerce Department did not respond to requests for comment.
ZTE, which makes smartphones and networking gear, was forced to cease major operations in April after the United States slapped it with a supplier ban saying it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea.
The company had also agreed to pay a $1 billion penalty and put $400 million in an escrow account as part of the deal to resume business with U.S. suppliers — which provide almost a third of the components used in ZTE’s equipment.
The escrow agreement is still pending, according to a source. Until it is executed, ZTE cannot deposit the $400 million in escrow necessary to get the ban lifted.
While the denial order is still in place, the authorization grants a waiver to some companies that do business with ZTE to do so for one month, a source told Reuters.
The waivers allow for a limited type of activity but do not authorize any new business.
The uncertainty about the ban amid intensifying U.S.-China trade tensions has hammered ZTE shares, which have fallen 60 percent since trading resumed last month following a two-month hiatus, wiping out more than $11 billion of the company’s market valuation.
ZTE announced a new board last week in a radical management shakeup as part of a $1.4 billion deal with the United States.
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Eike Batista, the former mining and oil magnate who was once Brazil’s richest man, was convicted and sentenced to 30 years in prison for bribing Rio de Janeiro state’s disgraced ex-governor, according to a court document published Tuesday.
Batista’s conviction and sentencing by federal judge Marcelo Bretas are the latest in a wave of graft investigations that have sent scores of powerful businessmen and politicians to jail.
The eccentric former billionaire’s meteoric rise and fall mirrored the recent fortunes of Brazil, where the commodities boom faded as his energy, mineral and logistics empire fell apart earlier this decade.
His swashbuckling attitude and confident forecasts of a prolonged golden era for Brazil evaporated just as Latin America’s largest economy suffered its worst recession on record.
Batista, whose legal team said he would appeal, was found guilty of paying a $16.5 million bribe to former Rio governor Sergio Cabral, who also was found guilty in the case.
Batista’s companies won state contracts in exchange for the bribe, including one awarding his consortium the rights to run Brazil’s temple of soccer, the Maracana in Rio, the stadium where the 2014 World Cup final was played and the 2016 Olympic Games’ opening and closing ceremonies were held.
The bribes were also linked to the construction of the $3.7 billion Acu port facility, controlled since 2013 by Prumo Logistica, which is majority owned by U.S.-based EIG Energy Partners.
Prosecutors said Batista paid a quarter of the bribes to Cabral in cash and the rest in shares of state-led oil company Petroleo Brasileiro SA, miner Vale SA and drinks company Ambev SA, a unit of Anheuser Busch Inbev NV.
Batista was last year fined 21 million reais ($5.4 million) for trading shares based on insider information about shipbuilding company OSX Brasil.
Tuesday’s ruling was the sixth corruption conviction for Cabral, who has been sentenced to over 120 years.
Six years ago, Batista, 61, had a net worth exceeding $30 billion and ranked among the world’s 10 richest people, according to Forbes magazine, and he had declared he would soon top the list. He sat atop EBX, then one of the world’s most expansive industrial conglomerates, with units ranging from oil and shipping to entertainment and beauty care.
However, Batista made massive bets on offshore oil plays that did not pan out and the extension of a commodity boom that fizzled as he inflated investors’ hopes.
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Major U.S. trading partners including the European Union, China and Japan voiced deep concern at the World Trade Organization (WTO) on Tuesday about possible U.S. measures imposing additional duties on imported autos and parts.
Japan, which along with Russia had initiated the discussion at the WTO Council on Trade in Goods, warned that such measures could trigger a spiral of countermeasures and result in the collapse of the rules-based multilateral trading system, an official who attended the meeting said.
More than 40 WTO members — including the 28 countries of the European Union — warned that the U.S. action could seriously disrupt the world market and threaten the WTO system, given the importance of cars to world trade.
The United States has imposed tariffs on European steel and aluminum imports and is conducting another national security study that could lead to tariffs on imports of cars and car parts. Both sets of tariffs would be based on concerns about U.S. national security.
U.S. President Donald Trump said on June 29 that the probe would be completed in 3 to 4 weeks.
But the European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to countermeasures by its trading partners on $294 billion of U.S. exports.
A Russian official told the WTO meeting that the issue of U.S. investigations had been raised over the past year in different WTO meetings, only to see things change for the worse.
The United States was losing its reputation as a trusted trade partner, the Russian delegate told the meeting, adding that the United States could soon start an investigation into the case for import tariffs on uranium products.
China, Canada, Switzerland, Norway, Turkey, Costa Rica, Hong Kong, Venezuela, Singapore, Brazil, South Korea, Mexico, Qatar, Thailand and India all echoed the same concerns and said they doubted the U.S. tariffs were in line with WTO rules.
The U.S. diplomat at the meeting said the matter was already the subject of formal disputes at the WTO, so it should not be on the committee’s agenda, the official who attended the meeting said.
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The U.S. government moved on Monday to block China Mobile Ltd. from offering services to the U.S. telecommunications market, recommending its application be rejected because the government-owned firm posed national security risks.
The Federal Communications Commission (FCC) should deny China Mobile’s 2011 application to offer telecommunication services between the United States and other countries, the National Telecommunications and Information Administration (NTIA) said in a statement posted on its website.
“After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved,” said the statement, which quoted David Redl, assistant secretary for communications and information at the U.S. Department of Commerce, which NTIA is part of.
China Mobile, the world’s largest telecom carrier with 899 million subscribers, did not immediately respond to Reuters’ request for comment.
Its shares fell 2.6 percent at start of trading on Tuesday to their lowest in more than four years.
The Trump administration’s move on China Mobile comes amid growing trade frictions between Washington and Beijing. The United States is set to impose tariffs on $34 billion worth of goods from China on July 6, which Beijing is expected to respond to with tariffs of its own.
And ZTE Corp., China’s No. 2 telecommunications equipment maker, was forced to cease major operations in April after the U.S. slapped it with a supplier ban saying it broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran and North Korea. ZTE is in the process of getting the ban lifted and announced a new board last week.
China Mobile Communications Corp., a state-owned firm, owned almost 73 percent of China Mobile, according to Thomson Reuters data as of December.
In its recommendation, the NTIA said that its assessment rested “in large part on China’s record of intelligence activities and economic espionage targeting the US, along with China Mobile’s size and technical and financial resources.”
It said the company was “subject to exploitation, influence and control by the Chinese government” and that its application posed “substantial and unacceptable national security and law enforcement risks in the current national security environment.”
U.S. senators and spy chiefs warned in February that China was trying, via means such as telecommunications firms, to gain access to sensitive U.S. technologies and intellectual properties.
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