YCLOAK

Soon after presenting his credentials to the German president, the new U.S. ambassador to Germany, Richard Grenell, told German companies to start leaving Iran.

“As Donald Trump said, U.S. sanctions will target critical sectors of Iran’s economy. German companies doing business in Iran should wind down operations immediately,” Grenell tweeted Tuesday.

His tweet came as U.S. President Donald Trump announced he is pulling the United States out of the nuclear deal with Iran and reimposing sanctions.

Businesses continuing to work with Iran could be subject to U.S. penalties.

Germany is one of the signatories, and Chancellor Angela Merkel believes the U.S. should have remained in the deal.
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Wooden dhows crammed with secondhand Japanese cars have been sailing unhindered into Yemeni ports for the past three years despite rigid wartime controls on imports of aid and other vital supplies.

Like many Yemeni traders, Ali al-Mahry jumped at this chance to turn a profit by supplying customers at home with cars bought cheaply at auction in the United Arab Emirates.

A Saudi-led military coalition, of which the UAE is part, has been battling Houthi rebels since 2015 with the aim of restoring the Yemeni government in exile.

The coalition has imposed controls to deny arms to the Houthis, fighters aligned with Iran who control the capital Sanaa and Hodeidah, the largest port. The measures have choked off supplies of fuel, food and medicine to Yemen, where millions face starvation and disease.

Yet coalition forces appear to have turned a blind eye to the dhows that regularly carry cars from Port Khaled in the emirate of Sharjah to a small dock at As Shihr, a port in Yemen’s Hadramout province controlled by UAE-backed forces.

“I make this journey around 30 times a year,” Mahry said, surrounded by 180 cars taking up every corner of a dhow he has chartered for the voyage. “I sometimes also ship food and other items, but they require different permits.”

The cars have become a nice earner for traders in both the UAE and Yemen.

Yemeni dealers gather daily at Dubai’s Al-Aweer Auto Market to bid as a big screen flashes prices for Japanese cars, with as many as 80 sold in a day at one auction house.

New rules

Once sold, the automobiles are taken to Port Khaled, where up to 200 vehicles are stacked onto each dhow.

The vessels are searched at Port Khaled and on arrival at As Shihr, but have not been required to obtain permits or pay customs duties for the past three years, in contrast to the obstacles faced by ships delivering other supplies to Yemeni ports.

“The coalition would ask us for the cars’ papers and clear them here,” said Saleh al-Ali, head of the port at As Shihr. “For the past three years, there has been no need to apply for a permit from Riyadh.”

In March, however, the coalition changed the rules, requiring permits to be obtained from Saudi Arabia, according to Ali. He said he was told the new measures were introduced for security reasons.

A coalition spokesman did not reply to requests for comment on why the car-laden dhows have been exempted for so long.

Port officials said the dhows may have been simply an exception to the rule and, in any case, it had taken time to put the car trade on a more formal footing.

Good business

Mustafa al-Jaffrey, who used to send cars to Yemen over land through Oman before the war, said he had doubled his profits by using the sea route.

“It is much cheaper for me to buy and ship,” he said, adding that Japanese cars in particular were a good business for him.

“The Japanese drive their cars only for about 50,000 km (30,000 miles) before they sell them and buy new ones. That’s way less than the 150,000 km (90,000 miles) or more that people in the Gulf drive before they put a car up for sale, so the quality is better as well.”

In Japan, strict safety and pollution regulations force many drivers to sell their cars after a few years, so there are plenty of good-quality vehicles available.

Such cars can sell for as little as $1,000 at online auctions in Japan. A Toyota can be bought by traders for around $1,900 in Dubai and sell in Yemen for more than twice that.

“I buy a Japanese used car from an auction in Japan, sometimes an online auction, and then ship it here,” said Hammad Ali, marketing manager at Jan Japan (Cars 4 U), the top re-exporter at Al-Aweer in Dubai.

Ali has long imported such cars for re-export to places like Somalia and Afghanistan as many other countries that drive on the right, including the UAE, do not allow cars from Japan, where people drive on the left, on safety concerns.

“It is a safety thing … so most of them were going to Afghanistan and Somalia. Then three years ago, Yemen opened up,” he said.

Prior to 2015 in Yemen, where people drive on the right, cars with their steering wheel on the “wrong” side were banned for safety reasons, but road safety has been another casualty of a war that has killed more than 10,000 people.

As fighting continues, the Houthis control the north of Yemen, while coalition forces have seized the southern port of Aden and made gains along the southwest coast along the Red Sea.

“Yemen is a big country and people need to move around. The cars are going into the south, where it is relatively safe, and from there onward to the rest of the country,” said Mahdy al-Mahry, another dhow operator and car dealer.

“People can buy one of these cars and use them to earn money for their families. Others just buy them as a cheap and safe means of transport.”

Not everyone has profited from the trade. The Yemeni government, which has a presence in Aden while the president is in exile in Saudi Arabia, has missed out on customs dues, although it now plans to regulate the car trade.

“While it has largely been unregulated for the past three years, we are slowly coming to it and we will organize the trade as the government prepares to impose a fee,” said Salem Ali Busamir, head of the Arabian Sea Ports Corporation of Yemen. He did not say when this would happen or how much the fee would be.

Traders, however, seem confident the new measures will not disrupt their business unduly.

“This trade employs hundreds at the port now. They can’t ruin that, even if they impose a small tax,” said Ghaleb al-Mahry, who has a car showroom in As Shihr.
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Disney is seeking new frontiers.

The media company launched its $5-a-month sports streaming service, ESPN Plus, last month, and it signed a deal with Twitter this month to create Marvel, ABC and ESPN content on that service. Meanwhile, Disney is trying to buy much of 21st Century Fox, including the Fox television network and the X-Men movie franchise.

The moves come as Disney seeks ways to extend beyond the traditional cable-bundle format as more people watch TV online. Sports network ESPN was once a jewel in Disney’s crown but subscriptions have been falling as people drop cable services.

But the company has found strength elsewhere, notably its movie studio and theme parks.

Disney’s franchises such as Marvel’s Avengers and Star Wars have been raking in money. Avengers: Infinity War has grossed over $1 billion since it opened April 27.

In a statement, CEO Bob Iger said Disney was “very well-positioned for future growth” because of its ability to take advantage of such franchises across all businesses and “the unique value proposition” it’s creating with direct-to-consumer streaming services.

In Disney’s fiscal second quarter, net income rose 23 percent to $2.94 billion, or $1.95 per share, from $2.39 billion, or $1.50 per share a year ago. Excluding one-time items such as a benefit from the U.S. tax overhaul, net income totaled $1.84 per share.

The results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.68 per share.

Revenue rose 9 percent to $14.5 billion, from $13.3 billion a year ago. Four analysts surveyed by Zacks expected $14.2 billion.

Sports streaming

To prepare for the future, Disney launched a sports streaming service with video not available on the regular ESPN channels. This includes additional baseball and soccer games, and the entire 30 for 30 documentary series on demand.

The Walt Disney Co. is also working on an entertainment streaming service with classic and upcoming movies from the Disney studio, shows from Disney Channel, and the Star Wars, Marvel and Pixar movies. That service will launch in late 2019 and will include movies leaving Netflix, once its deal with Disney expires.

If the $52.4 billion Fox deal goes through, Disney could supplement the entertainment service with Fox properties — such as X-Men movies and National Geographic programming. Disney is still awaiting regulatory approval, and published reports say Comcast is mulling a counterbid.

J.P. Morgan analyst Alexia Quadrani expects the service to break even by 2021 with about 13 million subscribers. Until then, Quadrani said, Disney might lose some licensing fees and see spending increase to acquire content.

Morgan Stanley analyst Benjamin Swinburne said in a client note that the direct-to-consumer businesses like its streaming services could add $6.5 billion to revenue by 2020.
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Some Iranians had been cashing in their savings even before U.S. President Donald Trump’s announcement he would pull out from the international nuclear deal with Iran, straining a banking system weighed down by bad loans and years of isolation.

An official with Iran’s biggest state-owned Melli Bank told Reuters savings had declined by an unspecified amount, although he said this was a temporary phenomenon and that they would recover once the uncertainty over Trump’s decision passed.

“When there is political uncertainty, its psychological impact on people causes a drop in savings. But it will pass after Trump’s deadline,” the official said before the announcement, declining to be named.

Trump said on Tuesday he would quit the deal and impose “the highest level of economic sanctions.”

A senior Iranian central bank official said conditions within the banking system had deteriorated in the past year, and “we have still not passed the danger zone” but added that the central bank had “all the measures ready to prevent any crisis.”

Officials with other leading lenders, Saman, Pasargad and Middle East Bank declined to comment.

The loss of confidence both reflects and contributes to wider problems threatening pragmatist President Hassan Rouhani in Iran’s faction-ridden clerical establishment: Investment has dried up as banks limit lending, growth is slowing and unemployment is at a record high, exposing Rouhani to growing criticism from hardliners.

“I am worried about a war,” said Mina Abdelsalehi, 61, a retired teacher in Tehran. “I have changed all my savings into gold coins that I can cash easily if anything happens.”

The rial currency lost close to half of its value in the six months to April in anticipation of a tougher U.S. approach, forcing Tehran to ban domestic foreign exchange transactions and limit foreign currency holdings to $12,000.

This failed to stop Iranians trying to buy hard currency on Tuesday, promoting a further slide in the rial, according to a foreign exchange website.

“Prices are going up almost every hour,” said Ali Rasti, 45, owner of a real estate agency in Tehran. “People are worried and prefer to keep their money at home.”

A separate Iranian banking official also said Iranians had taken out money. “Fearing a war and more sanctions, many Iranians have withdrawn their cash from banks,” he said.

Mohammad Reza Pourebrahimi, head of parliament’s economic committee, was quoted by the semi-official ISNA news agency in March as saying capital outflows had been $30 billion in recent months. The International Monetary Fund said Iran’s reserves were at nearly $112 billion in 2017/18.

Dashed hopes

Iran had struggled to reap the benefits from the accord, which lifted international sanctions on the central bank and lenders in 2016 in return for curbs on its nuclear program, but left U.S. restrictions in place to assuage fears it would benefit hardliners like the Revolutionary Guards (IRGC).

The IRGC, which reports directly to Iran’s Supreme leader Ayatollah Ali Khamenei, controls vast segments of the economy, including some banking interests as well as everything from ports management to telecommunications.

Iranian banks re-established relationships with more than 200 international counterparts, but any business active in Iran has to ensure there are no ties with IRGC interests to avoid fines or bars on trading in the United States.

“Money is moving but not as freely as governments had hoped,” said Justine Walker, head of sanctions policy with trade association UK Finance, saying complications had multiplied since Trump became president. Euro transactions were taking place, she said, but sterling payments “remain challenging.”

Sources involved in transactions said they rarely exceeded 200 million euros ($240 million) due to difficulties with clearing payments.

Nigel Kushner, chief executive of British law firm W Legal, said his clients exporting consumer goods to Iran had reported a 50 percent drop in purchases over the past two months. “There is a risk of further [bank] liquidity concerns,” he said.

George Bennet, managing partner of financial services advisory firm OSACO Financial, which is active in Iran, said European lenders still in Iran were already nervous and limiting transactions to their largest and most valuable customers.

“The larger of the European banks currently doing business, which themselves are not large, with Iran will pull out of the market altogether,” he said, when asked about the impact of the U.S. withdrawal.

Other constraints

Rouhani gambled on attracting foreign investment to help raise living standards but a raft of deals including plane purchases already have been delayed.

FATF, a global group of government anti-money-laundering agencies, has kept Iran on its blacklist, adding to wariness by Western banks with dealing with Iran due to reputational risks.

Rouhani has struggled to reform the banking system, which, with 30 banks and other credit institutions, is more fragmented than those of other emerging markets and heavily burdened by bad loans.

Finance sources have estimated outstanding loans at around $283 billion and non-performing loans (NPLs) were estimated to have reached 12.5 percent in 2017 by U.S.-based financial industry body the Institute of International Finance (IIF).

The latest official figure, 11.7 percent in 2016, equates to more than $30 billion. Some finance sources say NPLs could be even higher at close to 15 percent.

A textile factory owner in Mashhad said the government wanted to improve the economy but could not support business.

“How can I run my business when the dollar exchange rate is rising and I cannot get loans from the banks because of the high rates?” he said on condition of anonymity, explaining he had laid off around half his 65 employees to try to stay afloat. “I am not sure how long I can keep the factory open.”
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The Trump administration is unveiling a multibillion-dollar roster of proposed spending cuts but is leaving this year’s $1.3 trillion catchall spending bill alone.

 

The cuts wouldn’t have much impact, however, since they come from leftover funding from previous years that wouldn’t be spent anyway.

 

The White House said it is sending the so-called rescissions package to lawmakers Tuesday. Administration officials, who required anonymity because they weren’t authorized to speak publicly on the matter, said the package proposes killing $15 billion in unused funds. A senior official said about $7 billion would come from the Children’s Health Insurance Program, or CHIP, which provides health care to kids from low-income families, though that official stressed the cuts won’t have a practical impact on the popular program.

 

The administration is trying to use its authority to prod Congress to “rescind” spending approved years ago, but even if the package is approved it would only have a tiny impact on the government’s budget deficit, which is on track to total more than $800 billion this year. Some of the cuts wouldn’t affect the deficit at all since budget scorekeepers don’t give credit for rescinded money that they don’t think would have ever been spent.

 

For instance, more than $4 billion in cuts to a loan program designed to boost fuel-efficient, advanced-technology vehicles wouldn’t result in fewer loans since the loans are no longer being made. And $107 million worth of watershed restoration money from the 2013 Superstorm Sandy aid bill is going unused because local governments aren’t stepping up with matching funds. Another $252 million is left over from the 2015 fight against Ebola, which has been declared over.

 

Still, the cuts, if enacted by Congress, would take spending authority off the table so it couldn’t be tapped by lawmakers for other uses in the future. The catchall spending bill, for instance, contained $7 billion in cuts to CHIP that were used elsewhere to boost other programs.

 

“This is money that was never going to be spent,” a senior administration official said on a press call ahead of Tuesday’s submission. “The only thing it would be used for is offsets down the line.”

 

Democrats have supported such cuts in the past, eager to grab easy budget savings to finance new spending. But some Democrats howled over the White House proposal anyway.

“Let’s be honest about what this is: President Trump and Republicans in Congress are looking to tear apart the bipartisan Children’s Health Insurance Program (CHIP), hurting middle-class families and low-income children,” said Senate Minority Leader Chuck Schumer, D-N.Y.

 

Pressure from party conservatives to increase cuts in a tentative $11 billion proposal contributed to a delay from Monday’s original release date.

 

The White House and tea party lawmakers upset by the budget-busting “omnibus” bill have rallied around the plan, aiming to show that Republicans are taking on out-of-control spending. The administration says it will propose cuts to the omnibus measure later in the year.

The spending cuts are also a priority for House Majority Leader Kevin McCarthy, R-Calif., who likens them to “giving the bloated federal budget a much-needed spring cleaning.” But while the package may pass the House it faces a more difficult path — and potential procedural roadblocks — in the Senate.

McCarthy wants to succeed soon-to-retire House Speaker Paul Ryan, R-Wis., and some of his allies view the project as a way to improve his standing with fractious GOP conservatives who blocked his path to the speakership in 2015.

 

The proposal has already had a tortured path even before its unveiling. More pragmatic Republicans, including the senior ranks of the powerful House and Senate Appropriations committees, rebelled against the measure. They argued that it would be breaking a bipartisan budget pact just weeks after it was negotiated. In response, White House budget director Mick Mulvaney cleansed the measure of cuts to the huge omnibus bill.

Last month, Mulvaney told lawmakers the plan could have totaled $25 billion or so. Now he says he’s planning to submit several different packages of spending cuts — and it’s likely they’ll get more conservative with each new proposal.

 

Either way, the idea faces a challenging path in Congress — particularly the Senate, where a 51-49 GOP majority leaves little room for error even though budget rules permit rescissions measures to advance free of the threat of Democratic filibusters. But the cuts to the popular children’s health insurance program probably could still be filibustered because they are so-called mandatory programs rather than annual appropriations.
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Australia’s government is expected to release annual spending plans on Tuesday with a focus on winning votes at elections due within a year. Cheaper craft beer plus personal tax cuts compensated by strengthening company tax revenue have been flagged as well as more investment on roads and rail to stimulate economic growth.

Some media have reported that the government might better its timetable for returning the budget to surplus by the 2020-21 fiscal year by balancing the books 12 months earlier.

New budget starts July 1

Treasurer Scott Morrison, who will reveal to the Parliament later Tuesday his economic blueprint for the year starting July 1, said the government would live within its means.

“The plan for a stronger economy that I will be announcing tonight is about improving the opportunities for all Australians to live in a stronger economy,” Morrison told reporters outside Parliament House.

“It’s a plan to lower taxes and reducing the pressure on households. It’s a plan to back business to create more jobs. … It’s a plan to guarantee the essential services that Australians rely on every day,” he added.

The budget is Morrison’s third since he became treasurer and the last before the next election.

Universal health care

The government recently announced it had abandoned plans announced a year ago to increase the levy that Australians pay for their universal health care system from 2 percent of their income to 2.5 percent to pay for a newly established disability insurance program.

The Senate had refused to endorse the increase, and Morrison said it was no longer needed because the government’s bottom line had improved in the past year through more tax revenue.

Global credit ratings agency Fitch Ratings last week said scrapping the levy increase while committing to fully funding the insurance program “poses a challenge” for the forecast surplus in 2020-21.

The government recently announced it would correct an anomaly that charged craft beer brewers a higher tax rate on alcohol produced than mass beer producers because the craft brewers typically use smaller kegs.

“Why should their business be held back because of tax systems that are out of date?” Morrison asked about the unfair treatment of small breweries that are being set up by the hundreds around Australia.

The government has also flagged modest tax cuts to low and middle income earners.

Rescue plan for reef

The government has already announced AU$500 million ($376 million) for a Great Barrier Reef rescue plan that includes programs to reduce fertilizer runoff from farming, reducing numbers of the destructive crown-of-thorns starfish and to fund research into coral bleaching.

Environmentalists argue that the funding won’t tackle the main threat to the reef, global warming. They have urged the government to take greater action to reduce Australia’s greenhouse gas emissions.

Prime Minister Malcolm Turnbull has said he will call an election early next year. But he could be tempted to call an early election if the budget is well received and his conservative coalition’s standing in opinion polls improves. The government consistently trails the center-left opposition Labor Party in polling.
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U.S. oil giant ConocoPhillips is pressing for control of Venezuela’s key offshore operations in the Caribbean, seeking to recoup $2 billion from a decade-old dispute with the nation struggling to feed its people, a source confirmed Monday.

 

The Houston-based ConocoPhillips is asking a court in the Dutch Antilles for control of facilities that Venezuela’s state-run oil firm PDVSA operates, a person familiar with the claim confirmed to The Associated Press. The person was not authorized to discuss the legal action.

 

PDVSA relies heavily on the facilities on the islands of Curacao, Bonaire and St. Eustatius used to refine and store Venezuela’s heavy crude before shipment to the U.S., China and India, three major global markets.

Dozens of ships that transport oil pumped from Venezuela sat idle Monday docked in the country’s ports, according to an online vessel-tracking website.

 

Venezuela holds the world’s largest underground oil reserves but production has declined under nearly two decades of socialist leadership, casting the once-wealthy nation deep into political and economic crisis.

 

An arbitration panel under the International Chamber of Commerce in late April found that Venezuela under the leadership of then-President Hugo Chavez in 2007 had illegally expropriated joint venture operations with ConocoPhillips.

 

The firm turned to a local court to collect the award, but the petition spelling out its demands has not been made public. The $2 billion award represents the equivalent of more than 20 percent of the cash-strapped government’s foreign currency reserves.

 

“We will pursue all available legal avenues to obtain full and fair compensation for our expropriated investments in Venezuela,” ConocoPhillips said in a statement.

 

Officials at NuStar Energy, a San Antonio-based company that leases PDVSA a facility on St. Eustatius, were aware of the order against PDVSA, company spokesman Chris Cho said, adding that it was evaluating its legal and commercial options.

 

PDVSA leases facilities on two of the islands, so ConocoPhillips cannot take them over even with a court order, but it could seize Venezuela’s oil stored in them and any state-owned ships that dock there, said Russ Dallen, a Venezuela expert.

Oil tankers leaving Venezuela’s shores over the weekend turned around before reaching the Caribbean islands, the tracking website showed.

 

Two of the island storage facilities have the capacity to hold crude valued at $900 million, about half of Venezuela’s monthly production, Dallen said.

 

“It’s a devastating blow to a beleaguered country that can’t even feed its population,” said Dallen, adding that Venezuela owes billions to investors around the world. “We’re going to see a lot more of these in the future.”
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As the United States considers ramping up trade tariffs and other actions in response to China’s economic policies, tensions in another area heated up in recent days: How airlines should refer to Taiwan.

The White House released a statement over the weekend criticizing China for demanding international air carriers not refer to Taiwan, Hong Kong and Macau as countries. Airlines recently reported they had been asked to remove references on their websites that suggest the three are countries independent from China.

China classifies Macau and Hong Kong as “special administrative regions,” and calls Taiwan a renegade province. 

The White House called China’s demand “Orwellian nonsense” and said it is “part of a growing trend by the Chinese Communist Party to impose its political views on American citizens and private companies.” 

China rejected the White House criticism.

“Foreign enterprises operating in China should respect China’s sovereignty and territorial integrity, abide by China’s law and respect the national sentiment of the Chinese people,” Chinese Foreign Ministry spokesman Geng Shuang said Sunday.

The White House statement came as the U.S. trade delegation headed by Treasury Secretary Steven Mnuchin returned from China following a two-day meeting with Chinese counterparts aimed at avoiding a possible trade war.

White House Press Secretary Sarah Sanders told reporters that members of the delegation briefed the president Monday morning and the talks will continue in Washington next week.

“The president has a great relationship with President Xi, and we’re working on something that we think will be great for everybody,” Sanders said, adding, “China’s top economic adviser, the Vice Premier [Liu He] will be coming here next week to continue the discussions with the president’s economic team.”

Trump has threatened to levy new tariffs on up to $150 billion of Chinese imports while Beijing shot back with a list of $50 billion in targeted U.S. goods.

New pressure on Taiwan

Last month, Chinese Civil Aviation Administration sent letters to 36 foreign airlines, including a number of American carriers, and demanded they remove references on their websites or in other material that suggests Taiwan, Hong Kong and Macau are independent territories from China.

Hong Kong and Macau, former British and Portuguese colonies respectively, are now “special administrative regions” of China that maintain separate administrative and judicial systems from the rest of the country.

Taiwan, however, has been self-ruled since the 1949 civil war and has been deemed by Beijing a renegade province.

“We call on all businesses to resist #China’s efforts to mischaracterize #Taiwan,” tweeted Taiwanese President Tsai Ing-wen on Sunday.

Earlier this year, Delta Air Lines issued a formal apology to China for referring to Taiwan, Hong Kong, and Tibet as countries on its website.

Richard Bush, co-director for Center for East Asia Policy Studies at the Brookings Institution and former chairman of American Institute in Taiwan, says Taiwan’s legal and political status is an issue for countries, but not companies.

“It should not be an issue between the Chinese government and American companies or any companies for that matter,” he contended.

Bush pointed out China has been taking a number of steps to intimidate and pressure Taiwan, and it is appropriate for the United States government to push back.

“This is an effort to, in effect, change the status quo in the Taiwan Strait, so it is something the United State government should oppose,” he said, adding, “I’m not sure bringing George Orwell or talking about political correctness are the precise terms I would use.”

The United States switched diplomatic recognition from Taipei to Beijing in the 1979 U.S.-P.R.C. Joint Communique, in which the United States recognized the Government of the People’s Republic of China as the sole legal government of China. As part of that agreement, Washington acknowledged the Chinese position that there is but one China and Taiwan is part of China.

However, U.S. lawmakers have continued to lobby to support Taiwan, and the United States still sells hundreds of millions of dollars of weapons to Taiwan, despite China’s objections. In March, President Donald Trump signed into law a bill that encourages high-level exchanges of officials with Taiwan.
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Egypt’s parliament has approved a law to govern popular ride-hailing apps Uber and Careem, which had faced legal challenges stemming from regulations designed for traditional taxis.

The new law, as described Monday by state news agency MENA, establishes operating licenses and fees. It requires licensed companies to store user data for 180 days and provide it to Egyptian security authorities upon request.

Uber and Careem welcomed the move.

“This is a major step forward for the ride-sharing industry as Egypt becomes one of the first countries in the Middle East to pass progressive regulations,” Uber spokeswoman Shaden Abdellatif said. “We will continue working with the Prime Minister and the Cabinet in the coming months as the law is finalized, and look forward to continuing to serve the millions of Egyptian riders and drivers that rely on Uber.”

Careem called the passage “a remarkable step for Egypt, Careem and our region.” It said it marked the first time in any of its markets “that a regulatory framework for ride-hailing has emerged from a consultative legislative and parliamentary process.”

Both companies provide smartphone apps that connect passengers with drivers who work as independent contractors. An administrative court in Cairo ruled in March that it is illegal to use private vehicles as taxis, but another court overruled it on appeal, and both companies have continued operating.

Data privacy is a major concern for Uber in its dealings with the Egyptian government. A strict new European law called the General Data Protection Regulation comes into effect May 25 and would affect its operations worldwide.

Uber was founded in 2010 in San Francisco, and operates in more than 600 cities across the world. Careem was founded in 2012 in Dubai, and operates in 90 cities in the Middle East and North Africa, Turkey and Pakistan.

The applications took off in Cairo, a city of 20 million people with near-constant traffic and little parking. The services have recently started offering rides on scooters and tuk-tuks, three-wheeled motorized vehicles that can sometimes squeeze through the gridlock.

The apps are especially popular among women, who face rampant sexual harassment in Egypt, including from some taxi drivers. Cairo’s taxi drivers are also notorious for tampering with their meters or pretending the meters are broken in order to charge higher rates.

In 2016, taxi drivers protested the ride-hailing apps. They have complained that Uber and Careem drivers have an unfair advantage because they do not have to pay the same taxes or fees, or follow the same licensing procedures.
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Air France’s share price dived Monday after its CEO quit and the French government warned that the country’s flagship carrier might collapse.

A new strike Monday over wage demands, meanwhile, prompted the cancellation of about 15 percent of Air France flights worldwide. The number of striking staffers appears to be slightly declining as the airline enters its 14th day of walkouts this year, but the labor action has already cost the company more than 300 million euros ($360 million) in a matter of weeks.

 

Air France’s share price plunged nearly 13 percent at the open Monday and was trading 10.9 percent lower at 7.21 euros early afternoon Paris time amid questions about its future management and direction.

 

The share price woes follow the resignation Friday evening of Air France-KLM CEO Jean-Marc Janaillac after workers rejected the company’s latest wage proposal.

 

The Air France drama is posing yet another problem for President Emmanuel Macron’s government as he marks one year in office. The airline’s labor dispute come as separate strikes over Macron’s labor reforms are hitting France’s national railways.

 

French Finance Minister Bruno Le Maire on Sunday said the government, which owns 14 percent of Air France, would not rescue the airline.

 

He urged striking pilots, crew and ground staff to be “responsible” and said “the survival of Air France is at stake.”

 

“Air France will disappear if it does not make the necessary efforts to be competitive,” he said on BFM television.

The strikes have taken a heavier toll on Air France than management and investors expected, and the company last week forecast a “notably” lower income this year compared to 2017.

 

Unions want a 5.1 percent pay rise this year, arguing that the company is making enough of a profit to meet their demands. They noted that their wages have been frozen since 2011 as the airline cut jobs and restructured.

 

The company argues that the union demands would wipe out hard-earned gains from the restructuring, which was aimed at stemming years of losses and keeping Air France afloat, as well as jeopardize efforts to win back market share from low-cost airlines and big-spending Mideast and Asian carriers.

 

After protracted negotiations, management last week offered a 2 percent pay rise this year and an additional 5 percent over 2019-2021.

 

Employees rejected that offer Friday, prompting the CEO’s decision to step down. He called the dispute a “huge waste that can only make our competitors rejoice.”

 

The Air France-KLM board asked Janaillac to stay on until May 15 when it will put a transitional leadership in place.

 

 
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The U.S. and China ended the second day of high level talks Friday aimed at avoiding a possible trade war.

The U.S. delegation, headed by Treasury Secretary Steven Mnuchin, will brief President Donald Trump Saturday and “seek his decision on next steps,” the White House said in a statement, adding that the administration had “consensus” for “immediate attention” to change the U.S.-China trade and investment relationship.

“We will be meeting tomorrow to determine the results, but it is hard for China in that they have become very spoiled with U.S. trade wins!” Trump said in a Twitter post late Friday.

“Both sides recognize there are still big differences on some issues and that they need to continue to step up their work to make progress,” China said in a statement released by Xinhua state news agency.

An editorial Saturday by China’s ruling Communist Party newspaper, the People’s Daily, however, said that “in the face of the U.S.’s fierce offensive of protectionism, China resolutely defends its national interest,” adding that Beijing “will never trade away its core interests and rejects the U.S.’s demand for an exorbitant price.”

The announcement followed comments by Mnuchin earlier in the day that the two sides were having “very good conversations.”

Trump has threatened to levy new tariffs on $150 billion of Chinese imports while Beijing shot back with a list of $50 billion in targeted U.S. goods.
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President Trump reveled in the 3.9 percent U.S. unemployment rate Friday, following the release of figures by the Bureau of Labor Statistics. But some say that these numbers don’t tell the whole story. From Washington, VOA’s Jill Craig has more.
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The Trump administration has drawn a hard line in trade talks with China, demanding a $200 billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said Friday.

The lengthy list of demands was presented to Beijing before the start of talks Thursday and Friday between top-level Trump administration officials and their Chinese counterparts to try to avert a damaging trade war between the world’s two largest economies.

A White House statement did not mention specific demands, but said the U.S. delegation “held frank discussions with Chinese officials on rebalancing the United States-China bilateral economic relationship, improving China’s protection of intellectual property, and identifying policies that unfairly enforce technology transfers.”

The statement gave no indication that U.S. President Donald Trump would back off on his threat to impose tariffs on up to $150 billion in Chinese goods over allegations of intellectual property theft.

​Trump, delegation to meet Saturday

The delegation was returning to Washington to brief Trump and “seek his decision on next steps,” the White House said, adding that the administration had “consensus” for “immediate attention” to change the U.S-China trade and investment relationship.

Trump said he would meet with the delegation Saturday.

China’s state-run Xinhua news agency described the talks as “constructive, candid and efficient” but with disagreements that remain “relatively big.”

Tariff threats have roiled stock markets in recent weeks, but the inconclusive outcome of the Beijing talks did little to stop a rally in U.S. shares prompted by jobs data that eased fears of faster Federal Reserve rate hikes. Stocks in Shanghai ended 0.5 percent lower while they fell 1.3 percent in Hong Kong.

Trump told reporters in Washington that he was determined to bring fairness to U.S.-China trade.

“We will be doing something one way or the other with respect to what’s happening in China,” Trump said. He added that he had “great respect” for China’s President Xi Jinping. “That’s why we’re being so nice, because we have a great relationship.”

​Intellectual property

China during the meetings asked that the United States ease crushing sanctions on Chinese telecom equipment maker ZTE Corp, people with knowledge of the matter said.

Washington’s demand for a $200 billion cut from China’s U.S. goods trade surplus doubles Trump’s previous request for a $100 billion cut. China had a record U.S. goods trade surplus of $375 billion in 2017.

Trump has also demanded “reciprocity” between U.S. and Chinese tariffs, frequently complaining about China’s 25 percent car tariff while the U.S. equivalent is 2.5 percent.

The U.S. team, led by U.S. Treasury Secretary Steven Mnuchin, demanded that China lower tariffs to levels no higher than those imposed by the United States, two people familiar with the demands said. The delegation also asked China to halt subsidies for advanced technology linked to its “Made in China 2025,” the sources said.

At the heart of the dispute are U.S. allegations that Chinese joint venture requirements and other policies force American companies to turn over their intellectual property, costing them billions of dollars annually and giving China’s state enterprises an edge in the race to develop new industries crucial to future growth.

China denies such coercion. Its 2025 industrial plan seeks to upgrade China’s manufacturing sector to more advanced products, including information technology, semiconductors and aircraft.

“I think the U.S. is asking for the impossible. Reducing the deficit by $200 billion by 2020 is quite an unrealistic demand, but it may also be a negotiation tactic to start high first,” said Tommy Xie, economist at OCBC Bank in Singapore.

Beijing offers

China offered to increase U.S. imports and lower tariffs on some goods, including cars, according to the sources.

But Beijing asked the United States to treat Chinese investment equally under national security reviews, refrain from new restrictions on investments and halt a proposal to impose 25 percent tariffs under its “Section 301” intellectual property probe.

China also offered to reconsider anti-dumping duties on U.S. sorghum, according to a proposal it submitted.

Xinhua said there had been exchanges of opinion on intellectual property protections, expanding U.S. exports and bilateral services trade. It gave no indication of what actions might be taken but said the two sides committed to resolve their trade disputes through dialogue.

U.S. negotiators agreed to bring up the ZTE sanctions with Trump after new representations from the Chinese side, Xinhua said. ZTE was hit last month with a seven-year ban on American companies’ selling components and software to it after the U.S. Commerce Department found ZTE failed to comply with an agreement to settle breached U.S. sanctions on Iran.

“My impression was that (the talks) didn’t go well given the rhetoric,” said Kevin Lai, senior economist at Daiwa Capital markets in Hong Kong. “I think the divide is still very big.”
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The Central Bank of Nigeria (CBN) and Peoples Bank of China (PBoC) have agreed on a currency swap worth $2.5 billion to reduce their reliance on the U.S. dollar in bilateral trade.

CBN Governor Godwin Emefiele led Nigerian officials, while the PBoC governor, Yi Gang, led the Chinese team to the signing ceremony in Beijing last week.

The agreement is aimed at providing sufficient local currency liquidity for Nigerian and Chinese industrialists and other businesses and to reduce difficulties as they search for a third currency.

The deal, purely an exchange of currencies, also will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain naira, the Nigerian currency, from Chinese banks to pay for their imports.

According to Nigerian economist Yusha’u Aminu, excluding United States in the agreement would help to lower the exchange rates between both countries.

This report originated in VOA’s Hausa service.
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U.S. employers stepped up hiring modestly in April, and the unemployment rate fell to 3.9 percent, evidence of the economy’s resilience amid the recent stock market chaos and anxieties about a possible trade war.

Job growth amounted to a decent 164,000 last month, up from an upwardly revised 135,000 in March. The unemployment rate fell after having held at 4.1 percent for the prior six months largely because fewer people were searching for jobs.

The overall unemployment rate is now the lowest since December 2000. The rate for African-Americans — 6.6 percent — is the lowest on record since 1972.

Many employers say it’s difficult to find qualified workers. But they have yet to significantly bump up pay in most industries. Average hourly earnings rose 2.6 percent from a year ago.

 

WATCH: US Unemployment Rate 3.9 Percent, Lowest Since 2000

The pace of hiring has yet to be disrupted by dramatic global market swings, a recent pickup in inflation and the risk that the tariffs being pushed by President Donald Trump could provoke a trade war.

Much of the economy’s strength, for the moment, comes from the healthy job market. The increase in people earning paychecks has bolstered demand for housing, even though fewer properties are being listed for sale. Consumer confidence has improved over the past year. And more people are shopping, with retail sales having picked up in March after three monthly declines.

Workers in the private sector during the first three months of 2018 enjoyed their sharpest average income growth in 11 years, the Labor Department said last week in a separate report on compensation. That pay growth suggests that some of the momentum from the slow but steady recovery from the 2008 financial crisis is spreading to more people after it had disproportionately benefited the nation’s wealthiest areas and highest earners.

The monthly jobs reports have shown pay raises inching up. At the same time, employers have become less and less likely to shed workers. The four-week moving average for people applying for first-time unemployment benefits has reached its lowest level since 1973.

The trend reflects a decline in mass layoffs. Many companies expect the economy to keep expanding, especially after a dose of stimulus from tax cuts signed into law by Trump that have also increased the federal budget deficit.

Inflation has shown signs of accelerating slightly, eroding some of the potential wage growth. Consumer prices rose at a year-over-year pace of 2.4 percent in March, the sharpest annual increase in 12 months. The Federal Reserve has an annual inflation target of 2 percent, and investors expect the Fed to raise rates at least twice more this year, after an earlier rate hike in March, to keep inflation from climbing too far above that target.

The home market, a critical component of the U.S. economy, has been a beneficiary of the steady job growth. The National Association of Realtors said that homes sold at a solid annual pace of 5.6 million in March, even though the number of houses for sale has plunged. As a result, average home prices are rising at more than twice the pace of wages.
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Venezuela said on Thursday it would take over the country’s leading private bank, Banesco, for 90 days and announced the arrest of 11 top executives for “attacks” against the country’s rapidly depreciating bolivar currency.

The detentions came on the heels of last month’s shock arrests of two Venezuelan executives working in the country for U.S. oil company Chevron Corp.

Oil-rich Venezuela is suffering from hyperinflation and a steady collapse of the bolivar currency, which President Nicolas Maduro has attributed to an “economic war,” but critics blame on incompetence and failed socialist policies.

Maduro’s foes say he is cracking down on the business sector to try to shore up support and halt price increases ahead of a controversial May 20 presidential election, which key opposition parties have boycotted as a sham.

Chief Prosecutor Tarek Saab announced the arrests in a televised press conference, but did not provide evidence of wrongdoing or take any questions.

“We have determined the [executives’] presumed responsibility for a series of irregularities, for aiding and concealing attacks against the Venezuelan currency with the aim of demolishing the Venezuelan currency,” said Saab, a former ruling party governor.

State television late on Thursday broadcast a statement announcing the temporary takeover of Banesco, which the government said was designed to ensure the bank continues operating.

The government also said it would be appointing a board of directors led by the country’s vice finance minister, Yomana Koteich.

Banesco’s president, Juan Carlos Escotet, who lives in Spain, earlier blasted the arrests as “disproportionate” and said he was flying to Venezuela to try to free the 11 executives, who include Chief Executive Oscar Doval.

“In the next few hours, I’m taking a plane for Venezuela. We’re going to knock on every door so that this problem is cleared up and they are freed as they deserve to be,” Escotet, who was born in Venezuela to Spanish parents and holds both nationalities, said in a video posted on Twitter.

Escotet has been a frequent target of criticism by ruling party heavyweight Diosdado Cabello, who recently announced that the government was buying Banesco. Escotet denied any sale.

Escotet temporarily excused himself from his role as chairman of Galicia-based bank ABANCA, the bank said in a statement to Spain’s stock market regulator on Thursday.

‘More crisis and misery’

Venezuela’s opposition said the arrests were another sign of Maduro’s turn to authoritarianism.

“The irresponsible government … continues to deny its responsibility in the destruction of our bolivar. Now they’re attacking Banesco. [This] … will only spawn more crisis and misery,” tweeted opposition lawmaker Carlos Valero.

Venezuela maintains exchange controls under which the government is meant to provide hard currency at a steadily weakening official rate, currently 69,000 bolivars per dollar.

But the dollar is fetching around 800,000 bolivars in unofficial trade, which government officials have for years harshly criticized but broadly tolerated.

Hyperinflation has turned once-powerful banks into warehouses of unwanted and mostly useless cash worth a total of only $40 million, according to a recent Reuters analysis of regulatory data.
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A federal grand jury in Detroit has indicted former Volkswagen CEO Martin Winterkorn with conspiracy and wire fraud in the car builder’s scheme to rig diesel emissions tests.

“If you try to deceive the United States, then you will pay a heavy price,” Attorney General Jeff Sessions said Thursday. “The indictment unsealed today alleges that Volkswagen’s scheme to cheat its legal requirements went all the way to the top of the company.”

Winterkorn is alleged to have conspired with other top Volkswagen bosses to defraud the U.S. government and consumers with false claims that the company was complying with the Clean Air Act.

Volkswagen already admitted it installed devices on diesel models designed to turn on pollution control devices during emissions tests and turn them off when the car is driven on actual highways.

Volkswagen was fined $2.5 billion and ordered to recall the affected cars.

Winkerton is the ninth Volkswagen executive or employee to be charged. However, he currently lives in Germany, which has no extradition treaty with the United States, and is unlikely ever to see the inside of the U.S. courtroom.
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The U.S. trade deficit narrowed sharply in March as exports increased to a record high amid a surge in deliveries of commercial aircraft and soybeans, bolstering the economy’s outlook heading into the second quarter.

While other data on Thursday showed a modest increase in new applications for jobless benefits last week, the number of Americans receiving unemployment aid fell to its lowest level since 1973, pointing to tightening labor market conditions.

Wage growth is also rising, with hourly compensation accelerating in the first quarter, more evidence that inflation pressures are building.

“The good news is that we are exporting more, but with the labor markets incredibly tight, labor costs are accelerating as well,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “The rise in labor costs will undoubtedly factor into policymakers’ thinking when they meet again in June.”

The Federal Reserve on Wednesday left interest rates unchanged. The Fed said policymakers expected “economic activity will expand at a moderate pace in the medium term and labor market conditions will remain strong.”

The Commerce Department said the trade deficit tumbled 15.2 percent to $49.0 billion in March, the lowest level since September. The trade gap widened to $57.7 billion in February, which was the highest level since October 2008.

March’s decline ended six straight monthly increases in the trade deficit. Economists polled by Reuters had forecast the trade gap narrowing to $50.0 billion in March.

The politically sensitive goods trade deficit with China dropped 11.6 percent to $25.9 billion, which will probably do little to ease tensions between the United States and China.

U.S. President Donald Trump has threatened tariffs on up to $150 billion worth of Chinese goods to punish Beijing over its joint-venture requirements and other policies Washington says force American companies to surrender their intellectual property to state-backed Chinese competitors.

China, which denies it coerces such technology transfers, has threatened retaliation in equal measure, including tariffs on U.S. soybeans and aircraft. A U.S. trade delegation arrived in China on Thursday for trade talks.

Trump, who claims the United States is being taken advantage of by its trading partners, has already imposed broad tariffs on imported solar panels and large washing machines. He recently slapped 25 percent import duties on steel and 10 percent on aluminum.

The Trump administration argues that the perennial trade deficit is holding back economic growth. The government reported last week that trade contributed 0.20 percentage point to the first quarter’s 2.3 percent annualized growth pace. The economy grew at a 2.9 percent rate in the fourth quarter.

Brightening prospects

Prospects for the economy are brightening. In a separate report, the Labor Department said initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 211,000 for the week ended April 28.

Claims remained near a more than 48-year low of 209,000 touched during the week ended April 21. The labor market is considered to be near or at full employment. The unemployment rate is at a 17-year low of 4.1 percent, close to the Fed’s forecast of 3.8 percent by the end of this year.

The number of people receiving benefits after an initial week of aid dropped 77,000 to 1.76 million in the week ended April 21, the lowest level since December 1973. With labor conditions tightening, wage growth is picking up.

A second report from the Labor Department showed hourly worker compensation accelerated at a 3.4 percent rate in the first quarter after rising at a 2.4 percent pace in the October-December period. It increased at a 2.5 percent rate compared to the first quarter of 2017.

Prices for U.S. Treasuries were trading higher, while the dollar was little changed against a basket of currencies. U.S. stocks were lower.

In March, exports of goods and services increased 2.0 percent to an all-time high of $208.5 billion, lifted by a $1.9 billion increase in shipments of commercial aircraft. There were also increases in exports of soybeans, corn and crude oil. Real goods exports were the highest on record.

Exports to China jumped 26.3 percent in March.

Imports of goods and services fell 1.8 percent to $257.5 billion, in part as the boost from royalties and broadcast license fees related to the Winter Olympics faded. Imports of capital goods fell by $1.5 billion, weighed down by declines in imports of computer accessories, telecommunications equipment and semiconductors.

Imports of consumer goods decreased by $0.9 billion. Crude oil imports dropped by $0.5 billion in March. Imports from China fell 2.1 percent.

Another report from the Commerce Department showed factory goods orders rose 1.6 percent in March after a similar increase in February. The department, however, revised March orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans, to show them falling 0.4 percent instead of dipping 0.1 percent as reported last month.

Orders for these so-called core capital goods rose 1.0 percent in February. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, declined 0.8 percent in March instead of the 0.7 percent drop reported last month.

March’s drop in core capital goods orders and shipments suggest business spending on equipment is slowing.
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South Korea is looking into developing and financing economic projects with North Korea that could take effect if a nuclear deal is reached with the United States.

South Korean Finance Minister Kim Dong-yeon said on Wednesday the government was “internally carrying out preparations” to organize, finance and implement possible inter-Korea projects. But he also emphasized that Seoul would first seek support from the international community for any North Korean development projects, and would only proceed if the U.S. -North Korea summit, expected to be held in late May or June, produces a joint denuclearization agreement.

North Korea is under tough sanctions imposed by the U.N. Security Council for its nuclear weapons and missiles tests, including accelerated efforts in the last two years to develop a long-range nuclear missile that could potentially target the U.S. mainland. The international sanctions ban an estimated 90 percent of the country’s external trade.

Seeking sanctions relief is considered a key motivating factor in North Korean leader Kim Jong Un’s diplomatic pivot this year to suspend further provocative missile and nuclear tests, and to engage in talks to dismantle his nuclear arsenal.

But easing sanctions would make it more difficult to enforce the North’s denuclearization promises.

“Once the sanctions are lifted, North Korea will gain autonomy over its trade, and considering its low labor costs and skilled workforce, I think the North Korean economy would gain power again,” said Shin Beom-chul, the director of Center for Security and Unification at the Asan Institute for Policy Studies in Seoul.

U.S. President Donald Trump has insisted he will keep sanctions in place until North Korea completely dismantles its nuclear program.

Infrastructure projects

South Korea, however, is considering a range of economic incentives to encourage Kim to follow through on a nuclear deal with Trump. But these investments are prohibited by the U.N. sanctions and would require a Security Council exemption to proceed.

At the recent inter-Korean summit, Kim and South Korean President Moon Jae-in agreed to increase economic cooperation, in addition to supporting the complete denuclearization of the Korean Peninsula.

Developing modern railways that would connect South and North Korea to Russia and China were specifically mentioned in their joint statement. Other possible projects include improving seaports, as well as building roads and electrical power plants in the impoverished and underdeveloped North.

The cost of these infrastructure projects could cost more than $65 billion, and would require extensive financing, as South Korea currently has only $1 billion in its Inter-Korean Cooperation Fund that was established for this purpose.

If North Korea does give up its nuclear weapons, there will likely be economic aid provided by strategic regional powers, including the U.S., China, Japan and Russia. But South Korea is taking a proactive role to be a major investor in developing the North’s mineral trade and other markets.

“It is expected that South Korea will carry most of the costs. In fact there are many economic resources that are strategically valuable in developing North Korea,” said Joung Eun-lee, a research fellow at the Korea Institute for National Unification.

Peacetime economy

Funding infrastructure projects could also help transition the North to a peacetime economy, even while the trade sanctions remain in place.

The two Koreas have agreed to pursue a peace treaty to replace the armistice put in place at the end of the Korean War in 1953. If implemented, North Korea would likely be expected to significantly reduce its conventional forces that currently include over one million soldiers.

International funding could also be used to provide jobs for former soldiers to work on building roads, bridges and other needed development projects.

“It is not so much the relaxation of the trade sanctions as it is subsidized infrastructure development. That is what North Korea needs upfront,” said Bruce Bennett, a North Korea analyst at the Rand Corporation research organization.

South Korea had invested billions of dollars into North Korean development projects in the past, like the Kaesong Industrial Complex that employed over 5,000 North Korean workers before it was shut down in 2016 following a nuclear test, and the Kumgang Mountain tourism program that ended when a South Korean visitor was shot by a North Korean soldier in 2008.
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A high-level U.S. trade delegation has begun talks with Chinese officials in Beijing as Washington tries to address deep concerns about China’s economic policies. The meeting is seen by some as a positive step, as the two sides attempt to avoid the possible outbreak of a trade war. Analysts say it is unlikely their differences will be resolved during the meetings but a decision to keep talking would be welcome progress.

President Donald Trump said on Twitter U.S. officials are “trying to negotiate a level playing field on trade.”

Raymond Yeung, a senior economist for Greater China at the Australia and New Zealand Banking Group, says if the two sides can at least agree to keep talking with each other that would be big progress.

 

“I think it is too demanding to expect that both sides can come up with an agreement or an announcement or sign a deal,” Yeung said. “But if they are able to promise that they are willing to sit down and continue the dialogue and try and resolve their differences, at least that would signal that the relationship between the two governments is warming up.”

 

Differences over trade policy and market access have been a persistent concern for the United States and other foreign investors in China. In recent weeks, the debate has become even more heated with President Trump threatening to slap a long $50 billion list of tariffs on Chinese goods to punish Beijing for what his administration calls its unfair trade practices: forced technology transfer, intellectual property rights and state subsidies for technology development.

Beijing has denied Washington’s accusations and insists its market is opening. It recently pledged to do away with a 25 percent tariff on imported foreign cars, albeit by 2022. The Chinese government has also responded with threats of its own, saying that if the U.S. presses ahead with tariffs it will respond in kind.

The seven-member U.S. delegation is led by Treasury Secretary Steven Mnuchin and is meeting with a group of Chinese officials led by Chinese Vice Premier Liu He, a close aide to China’s president, Xi Jinping.

 

Although it is difficult to predict how the meetings will turn out, Liao Qun, chief economist at China CITIC Bank International, says it is a positive sign that both sides have a desire to sit down and negotiate. How much can be accomplished, depends on Washington, he says.

 

“It depends on how big Washington’s expectations are and how big its demands for reform and opening up of the Chinese market,” Liao says. “China will make some concessions, but if Washington’s appetite is too big, that will be tough for Beijing to accept.”

Since Xi Jinping rose to power in 2012, China has taken big steps to increase the central government and the communist party’s control over the economy and business, even as Beijing pledges to continue to further open its markets.

 

In 2015, the government unveiled a key policy plan called Made in China 2025, a plan that aims to make China dominant in 10 major next generation industries from robotics to electric cars, artificial intelligence, bio-tech and aerospace, among others. An investigation by the Trump administration into China’s unfair trade practices mentions the policy more than 100 times.

 

The policy clearly sets goals for domestic industries to dominate over foreign players in the Chinese market and globally. Beijing has characterized President Trump’s threats to tax exports and attack the government’s policies as an attempt to contain China and force the Chinese market to become more open, something that officials and state media have repeatedly stressed will never happen.

 

Bridging such a huge gap during two days of talks will be difficult, says Christopher Balding, a professor at Peking University’s HSBC Business School.

 

“I would be somewhat surprised if there was any real change in the negotiating stance of either party. Specifically China, they don’t want to open their markets, that’s the fundamental point,” Balding says.

 

He says the best that could be hoped for is that the two can find enough room to compromise to not go forward with the trade war. But these disputes are unlike any other in recent history, he adds.

 

“This is about how disputes are settled: About how one country views the international system as compared to the other. This is about how one country views how a country should be run and how they have conflicting views of those two things,” Balding says.

 
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The International Monetary Fund censured Venezuela on Wednesday for failing to hand over essential economic data to the fund.

“The [Executive] Board noted that adequate data provision was an essential first step to understanding Venezuela’s economic crisis and identifying possible solutions,” an IMF statement said.

The board is giving Venezuela another six months to comply or face possible expulsion from the IMF.

“The Fund stands ready to work constructively with Venezuela toward resolving its economic crisis when it is prepared to re-engage with the Fund,” the IMF said.

Venezuela has not responded to the IMF’s action. But President Nicolas Maduro’s socialist government has long declined to provide data to the IMF. It regards the IMF as a U.S. tool and part of a Washington-inspired economic war against Venezuela.

Corruption and the collapse of world energy prices has led to an economic calamity in oil-rich Venezuela, including hyperinflation and severe shortages of many basic goods.
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A Chinese company that manufactured Ivanka Trump shoes and has been accused of serious labor abuses is being celebrated in a blockbuster propaganda film for extending China’s influence around the globe.

 

The state-backed documentary “Amazing China” portrays the Huajian Group as a beneficent force spreading prosperity — in this case, by hiring thousands of Ethiopians at wages a fraction of what they’d have to pay in China. But in Ethiopia, Huajian workers told The Associated Press they work without safety equipment for pay so low they can barely make ends meet.

 

“I’m left with nothing at the end of the month,” said Ayelech Geletu, 21, who told the AP she earns a base monthly salary of 1,400 Birr ($51) at Huajian’s factory in Lebu, outside Addis Ababa. “Plus, their treatment is bad. They shout at us whenever they want.”

With epic cinematography, “Amazing China” — produced by China Central Television and the state-owned China Film Group Co. Ltd. — articulates a message of how China would like to be seen as it pursues President Xi Jinping’s vision of a globally resurgent nation, against a reality that doesn’t always measure up.

China’s ruling Communist Party recently announced it would take direct control of major broadcasters and assume regulatory power over everything from film and TV to books and news.

 

As the party deepens its ability to cultivate “unity of thought” among citizens, “Amazing China” demonstrates the scope of China’s propaganda machine, which not only crafted a stirring documentary about China’s renaissance under Xi but also helped manufacture an adoring audience for it.

 

The movie, which weaves together extraordinary feats of engineering and military, environmental and cultural achievements, hit theaters three days before China’s rubber-stamp legislature convened to amend the constitution and allow Xi to potentially rule China for life.

 

The star — duly noted by IMDb.com — is Xi himself, who appears more than 30 times in the 90-minute film.

 

“Amazing China” presents Huajian as an inspiring example of China exporting the success of its own economic miracle by creating transformative jobs for thousands of poor Ethiopians and sharing China’s knowledge, language and can-do discipline to build a new industrial foundation for Ethiopia’s economy.

The company is celebrated as a model of the inclusiveness at the heart of a much larger project: Xi’s signature One Belt One Road initiative, a plan to spread Chinese infrastructure and influence across dozens of countries so ambitious in scope that it’s been compared to the U.S.-led Marshall Plan after World War II.

 

“In opening to the outside world, China’s pursuit is not to only make our lives better, but to make the lives of others better,” the narrator says.

 

In the film, Huajian chairman Zhang Huarong stands before neat rows of Ethiopian workers singing a song about unity, describing himself as a father to his employees, who “like me very much.”

 

But four current and former Huajian employees told the AP their wages were so low that they struggled to pay their bills. They said they had no protective gear, were forced to work 12 hours a day and participate in military-style physical drills, were not permitted to form a union and were regularly yelled at by their Chinese managers.

 

All that made it hard for them to relate to the inspirational video about Huajian circulated by mobile phone with its sweeping shots of a gleaming factory and a soundtrack that repeats in operatic Mandarin: “Huajian has come, Huajian has come … holding the torch of hope.”

 

“If someone complains, he will be accused of disturbing the workplace and will be fired right away,” said Ebissa Gari, a 22-year-old who estimated he earns 960 Birr ($35) a month. “That’s why we keep quiet and work no matter how much we are subdued.”

Getahun Alemu, a 20-year-old who quit Huajian last year to continue his studies, complained of inadequate safety gear.

 

“There are chemicals that hurt our eyes and nose, and machines that cut our hands,” he said. “They have no idea about hand gloves! If you refuse to work without that protective gear, then you will be told to leave the company.”

 

Huajian declined the AP’s requests for comment. Ivanka Trump’s brand said it no longer does business with Huajian and “has always and continues to take supply chain integrity very seriously.”

 

Huajian’s investment in Ethiopia was part of a government-led industrialization drive. In the last few years, Ethiopia’s leaders and business allies came under intense criticism, with more than 300 businesses attacked by protesters who saw them as bolstering a repressive regime.

 

These days, armed soldiers stand guard at the entrance to the Eastern Industrial Zone in Ethiopia’s Oromia region, where Huajian opened its first factory.

 

Six years after the company’s arrival, the dream of turning Ethiopia into a shoe-manufacturing hub remains unrealized, and few harbor illusions about the main incentive for Huajian’s investment in a country where there is no legal minimum wage.

 

“These companies are moving out of Asia and coming to Africa to save labor costs,” said Fitsum Arega, who recently stepped down as head of the Ethiopian Investment Commission to become an adviser to the new prime minister. He praised Huajian for employing more than 5,000 Ethiopians, but said the company “could have done better.”

 

“I’m not saying all employees are happy and there are no abuses here and there,” Arega said, adding that the government pushes companies to protect workers. “There’s a labor law which actually the companies say favors the employees.”

 

The Chinese-owned Eastern Industrial Zone effectively took fertile land from Ethiopian farmers and handed it over to foreign investors — a strategy the Ethiopian government is rethinking, according to Nemera Mamo, a teaching fellow in economics at the University of London.

 

“You can clearly see that these industrial zones are absolutely favorable to the Chinese investors, but not to the local communities or the local private investors,” he said. Huajian workers told the AP they made 960 Birr ($35) to 1,700 Birr ($62) a month. A basic living wage in Ethiopia is about 3,000 Birr ($109) a month, according to Ayele Gelan, a research economist at the Kuwait Institute for Scientific Research.

 

In a post promoting “Amazing China” on its official WeChat account, Huajian claimed to be Ethiopia’s largest exporter — an exaggeration also promulgated by China’s official Xinhua News Agency.

Huajian is Ethiopia’s largest shoe exporter, shipping out $19.3 million worth of goods last fiscal year, according to Ethiopia’s Leather Industry Development Institute. But coffee producer Mullege PLC said it exported $42 million worth of coffee during the same period and that other companies export even more.

 

Huajian’s record within China also has been troubled. In at least five cases since 2015, Huajian sued workers in Chinese court rather than pay compensation mandated by a government arbitration panel. Huajian lost every case, court records show, and the court had to freeze Huajian’s assets to get one worker the 44,174 yuan ($7,000) he was owed.

 

Last year, Huajian found itself entangled in labor and human rights controversies that made global headlines but attracted little attention in China’s official media. Three men working with the New York-based non-profit group China Labor Watch were arrested after their investigation of Ivanka Trump’s suppliers zeroed in on Huajian. The men are out on bail, but remain under police surveillance.

 

China Labor Watch founder Li Qiang said Huajian’s factory in Ganzhou, in southeastern Jiangxi province, had some of the worst conditions he has ever encountered, including excessive overtime, low pay, and verbal and physical abuse.

 

Huajian has called those allegations “completely not true to the facts, taken out of context, exaggerated” and accused the investigators of conducting industrial espionage — a charge that was parroted in China’s party-controlled media.

Wei Tie, the director of “Amazing China,” said he wasn’t aware of the controversy surrounding Huajian until the AP informed him. That’s not too surprising given the years of positive coverage of Huajian in party-controlled media and the fact that many foreign news sites, especially Chinese-language ones, are blocked inside China.

 

Wei said he included the company in the film because it is “introducing China’s experience of prosperity to Africa.”

 

He said he prefers to focus on the good. “What I did was absorb the essence and discard the dross,” he said, citing a longstanding aphorism of Chinese political thought.

 

At first glance, Wei’s selective approach appears to have resonated with Chinese audiences. “Amazing China” smashed box-office records for documentary films, raking in 456 million yuan ($72 million) in its first five weeks, according to ticketing website Maoyan.com. It even thumped “Star Wars: The Last Jedi.”

 

Wei attributed this success to the “spontaneous feeling” of citizens inspired by the arc of tremendous progress they’ve witnessed, a national rejuvenation forged with sweat and skill that he compared to Europe’s Renaissance and the pioneering days of the American republic.

In Shanghai, midday screenings during the week sold out immediately, suggesting either unquenchable public appetite or organized bulk ticket sales.

 

None of the viewers surveyed by AP had purchased their own tickets. Instead, they said they got them from state-run companies, neighborhood committees or government departments that handed them out as part of their “party building work.”

 

Douban, a popular film review website, blocked users from rating and commenting on the movie. The only entries came from official media, which gave it an 8.5 out of 10 ranking. On IMDb.com, a subsidiary of Amazon, “Amazing China” earned only one star.

 

But for some, “Amazing China” is balm for old feelings of inferiority and a welcome reaffirmation that China is ready to resume its rightful place in the community of great nations.

 

“I did not know how good our country is until I watched this movie,” said Zuo Qianyi, a 68-year-old retiree. “I have been to many countries, Britain, Spain, and they are not as good as China, at least not as Shanghai. I am very happy, and I will love my country more.”
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U.S. President Donald Trump is extending tariff exemptions on aluminum and steel exports from the European Union, Canada, and Mexico for at least another month.

The temporary exemptions of the tariffs already imposed on such nations as China, Japan, and Russia, were to have expired Tuesday.

But the White House says it is giving negotiators 30 more days to work out a deal.

The European Commission criticized the temporary extension in a statement Tuesday, saying the EU has been willing to discuss the issue and “will not negotiate under threat.”

“The U.S. decision prolongs market uncertainty, which is already affecting business decisions,” it said. “The EU should be fully and permanently exempted from these measures, as they cannot be justified on the grounds of national security.”

Trump has called the tariffs a national security issue because overproduction by some countries makes U.S. exports more expensive and undesirable on the global markets.

WATCH: US trade and tariffs

​The White House also announced late Monday it reached a final deal on steel exports with South Korea — granting it a permanent exemption — while reaching agreements in principle with Argentina, Australia, and Brazil.

“These agreements underscore the Trump administration’s successful strategy to reach fair outcomes with allies to protect our national security and address global challenges to the steel and aluminum industries,” a White House statement said. 

Trump imposed a 25 percent tariff on steel imports and 10 percent on aluminum in March on China, Russia, Japan, and other exporters to for what he says is a remedy for unfair competition. 

U.S. Treasury Secretary Steven Mnuchin and other senior U.S. officials head to China this week for trade talks, as reminded by Trump in a post on Twitter.

“Delegation heading to China to begin talks on the Massive Trade Deficit that has been created with our Country.  Very much like North Korea, this should have been fixed years ago, not now.  Same with other countries and NAFTA…but it will all get done.  Great Potential for USA!”

Canadian Prime Minister Justin Trudeau said Monday imposing tariffs on Canadian steel and aluminum would be a major disruption because U.S. and Canadian industries — including U.S. car and fighter jet manufacturing — are closely integrated.

German Chancellor Angela Merkel is warning of a possible trade war if the U.S. does not grant the European Union a permanent exemption.
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U.S. President Donald Trump has postponed his decision on whether to impose tariffs on steel and aluminum imports from the European Union, Canada and Mexico until June 1. The announcement Monday provides more time to negotiate deals to exempt those countries from U.S. steel and aluminum tariffs. The Trump administration announced broad tariffs in early March that went into effect for China, Russia, Japan and many other exporters. VOA’s Zlatica Hoke reports.
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