YCLOAK

A committee exploring the effects of recreational marijuana on Nevada’s gambling industry is wrestling with how the state’s casinos might deal with the pot business while not running afoul of federal law.

Lured by a potential economic impact in the tens of millions of dollars, Gov. Brian Sandoval’s Gaming Policy Committee is trying to figure out how casinos can host conventions and trade shows on marijuana.

The 12-member committee ended its meeting Wednesday without a formal decision on the matter, but Sandoval said he hopes to have committee recommendations for possible regulations by February.

The Nevada Gaming Commission has discouraged licensees in the past from becoming involved with the marijuana business, fearing legal backlash. Committee members have also voiced opposition to the idea of allowing marijuana use at resorts.

However, events like MJBizCon, a conference on various aspects of the marijuana growing industry, have drawn the attention of the gambling industry because of their strong turnout.

Cassandra Farrington, who started the conference, told the committee that the event brought about 18,000 people to the Las Vegas Convention Center last month and it’s only expected to grow. She noted that marijuana products are not allowed on the show floor, and people who violate that ruled are expelled.

Trade shows like Farrington’s conference can generate millions of dollars in tax revenue, said Deonne Contine, the director of the Nevada Department of Taxation. Contine told the committee that a show with about 15,000 people can produce a $28.2 million economic impact on the city.

Attorney Brian Barnes said any marijuana business in gambling facilities could be considered racketeering or money laundering under federal regulations.

“Marijuana business is illegal under virtually every aspect of federal law,” Barnes said.
…

Liz Whitehurst dabbled in several careers before she ended up on a Maryland farm, crating fistfuls of fresh-cut arugula in the November chill.

The hours were better at her nonprofit jobs. So were the benefits. But two years ago, Whitehurst, 32 — who graduated from a liberal arts college and grew up in the Chicago suburbs — abandoned Washington for a three-acre plot in Upper Marlboro, Maryland.

She joined a growing movement of highly educated, ex-urban, first-time farmers who are capitalizing on booming consumer demand for local and sustainable foods and who, experts say, could have a broad impact on the food system.

For only the second time in the last century, the number of farmers under 35 years old is increasing, according to the U.S. Department of Agriculture’s latest Census of Agriculture. Sixty-nine percent of the surveyed young farmers had college degrees — significantly higher than the general population.

This new generation can’t hope to replace the numbers that farming is losing to age. But it is already contributing to the growth of the local-food movement and could help preserve the place of midsize farms in the rural landscape.

“We’re going to see a sea change in American agriculture as the next generation gets on the land,” said Kathleen Merrigan, the head of the Food Institute at George Washington University and a deputy secretary at the Department of Agriculture under President Barack Obama. “The only question is whether they’ll get on the land, given the challenges.”

The number of farmers aged 25 to 34 grew 2.2 percent between 2007 and 2012, according to the 2014 USDA census, a period when other groups of farmers — save the oldest — shrank by double digits. In some states, such as California, Nebraska and South Dakota, the number of beginning farmers has grown by 20 percent or more.

New to farming

A survey that the National Young Farmers Coalition, an advocacy group, conducted with Merrigan’s help shows that the majority of young farmers did not grow up in agricultural families.

They are also far more likely than the general farming population to grow organically, limit pesticide and fertilizer use, diversify their crops or animals, and be deeply involved in their local food systems via community-supported agriculture (CSA) programs and farmers markets.

Today’s young farmers also tend to operate small farms of less than 50 acres, though that number increases with each successive year of experience.

Whitehurst took over her farm, Owl’s Nest, from a retiring farmer in 2015.

The farm sits at the end of a gravel road, a series of vegetable fields unfurling from a steep hill capped by her tiny white house. Like the farmer who worked this land before her, she leases the house and the fields from a neighboring couple in their 70s.

She grows organically certified peppers, cabbages, tomatoes and salad greens from baby kale to arugula, rotating her fields to enrich the soil and planting cover crops in the off-season.

On Tuesdays, Thursdays and Fridays, she and two longtime friends from Washington wake up in semidarkness to harvest by hand, kneeling in the mud to cut handfuls of greens before the sun can wilt them. All three young women, who also live on the farm, make their living off the produce Whitehurst sells, whether to restaurants, through CSA shares or at a D.C. farmers market.

Finances can be tight. The women admit they’ve given up higher standards of living to farm.

“I wanted to have a positive impact, and that just felt very distant in my other jobs out of college,” Whitehurst said. “In farming, on the other hand, you make a difference. Your impact is immediate.”

Larger impact

That impact could grow as young farmers scale up and become a larger part of the commercial food system, Merrigan said.

Already, several national grocery chains, including Walmart and SuperValu, have built out local-food-buying programs, according to AT Kearney, a management consulting firm.

Young farmers are also creating their own “food hubs,” allowing them to store, process and market food collectively, and supply grocery and restaurant chains at a price competitive with national suppliers.

That’s strengthening the local and organic food movement, experts say.

“I get calls all the time from farmers — some of the largest farmers in the country — asking me when the local and organic fads will be over,” said Eve Turow Paul, a consultant who advises farms and food companies on millennial preferences. “It’s my pleasure to tell them: Look at this generation. Get on board or go out of business.”

There are also hopes that the influx of young farmers could provide some counter to the aging of American agriculture.

The age of the average American farmer has crept toward 60 over several decades, risking the security of midsize family farms where children aren’t interested in succeeding their parents.

Between 1992 and 2012, the country lost more than 250,000 midsize and small commercial farms, according to the USDA. During that same period, more than 35,000 very large farms started up, and the large farms already in existence consolidated their acreage.

Midsize farms are critical to rural economies, generating jobs, spending and tax revenue. And while they’re large enough to supply mainstream markets, they’re also small enough to respond to environmental changes and consumer demand.

If today’s young farmers can continue to grow their operations, said Shoshanah Inwood, a rural sociologist at Ohio State University, they could bolster these sorts of farms — and in the process prevent the land from falling into the hands of large-scale industrial operations or residential developers.

“Multigenerational family farms are shrinking. And big farms are getting bigger,” Inwood said. “For the resiliency of the food system and of rural communities, we need more agriculture of the middle.”

Numbers are still small

It’s too early to say whether young farmers will effect that sort of change.

The number of young farmers entering the field is not nearly large enough to replace the number exiting, according to the USDA: Between 2007 and 2012, agriculture gained 2,384 farmers between ages 25 and 34 — and lost nearly 100,000 between 45 and 54.

And young farmers face formidable challenges to starting and scaling their businesses. The costs of farmland and farm equipment are prohibitive. Young farmers are frequently dependent on government programs, including child-care subsidies and public health insurance, to cover basic needs.

And student loan debt — which 46 percent of young farmers consider a “challenge,” according to the National Young Farmers Coalition — can strain already tight finances and disqualify them from receiving other forms of credit.

But Lindsey Lusher Shute, the executive director of the coalition, said she has seen the first wave of back-to-the-landers grow up in the eight years since she co-founded the advocacy group. And she suggested that new policy initiatives, including student loan forgiveness and farm transition programs, could further help them.

“Young farmers tend to start small and sell to direct markets, because that’s a viable way for them to get into farming,” Lusher Shute said. “But many are shifting gears as they get into it — getting bigger or moving into wholesale.”

Just last year, Whitehurst was approached by an online grocery service that wanted to buy her vegetables. Because While Owl’s Nest produces too little to supply such a large buyer on its own, the service planned to buy produce from multiple small, local farmers.

Whitehurst ultimately turned the deal down, however. Among other things, she feared that she could not afford to sell her vegetables at the lower price point the service wanted.

“For now, I’m focused on getting better, not bigger,” she said. “But in a few years, who knows? Ask me again then.”
…

The city of Zibo, China’s ceramics capital, is undergoing environmental shock therapy to clear its filthy skies and transform its economy — and not everyone is happy.

Much of Zibo’s sprawling industrial district has become a ghost town of shuttered factories, empty showrooms and abandoned restaurants after a cleanup campaign that began last year intensified this winter. Dozens of chimneys stand inactive.

“There used to be a lot of workers here, but now they are demolishing the entire place,” said a caretaker who gave his surname as Wei, pointing at the deserted warehouse of an abandoned factory he was guarding. “We have no idea what they will build here — that’s the boss’s decision.”

Zibo, home to 4.5 million people about 260 miles south of Beijing in Shandong province, is one of 28 northern Chinese cities targeted in an unprecedented six-month anti-pollution blitz as China scrambles to meet air quality targets.

The city is also at the heart of a wider, long-term government effort to upgrade China’s heavy industrial economy.

Once responsible for about a quarter of China’s ceramic output, mainly floor and wall tiles, Zibo has slashed capacity by 70 percent and shut more than 150 companies and 250 production lines as part of a ruthless war on pollution.

Surviving plants have rushed to comply with tough new standards, but business is still threatened by constant production suspensions ordered by the government, as well as natural gas shortages this winter as northern cities switch to the fuel from coal.

“It is a brave step that China is taking, but they have to take it,” said Alex Koszo, the founder of Vecor, a Hong Kong-based company that has built a joint-venture plant in Zibo to manufacture environmentally friendly tiles from fly ash.

“They have the will, the money, and access to technology, so I think we are looking at a very different Zibo, and a very different Shandong, in five to 10 years.”

The local environmental bureau declined to be interviewed, telling Reuters that cleanup efforts were “still at an early stage” — but changes are already conspicuous.

With old factories marked for demolition, new apartment blocks, shopping complexes and roads are being built. The city registered growth of 7.8 percent in the first three-quarters of this year, driven by the service sector, according to the local government. Displaced workers have shifted to construction sites and other industries like textiles, residents said.

Zibo has also established a “greentech” incubator in the old district and opened a new high-tech industrial park in order to attract companies and encourage innovation in ceramics.

But some local businessmen accuse Beijing of running roughshod over local industry and paying too little heed to circumstances on the ground, with one boss accusing inspectors of behaving like “imperial envoys.”

“There is a ring of 28 cities, and pollution only needs to appear in Beijing — even just medium-level pollution — and all our factories have to shut,” said the owner of a large local factory who declined to be named, fearing repercussions. “It doesn’t matter whether you meet the standards or not, you have to shut.”

Upgrades

Over the past decade, Zibo’s ceramics makers took advantage of closures elsewhere to drive up output and seize market share in China. Zibo’s tiles were used throughout China and exported around the world. In recent years, however, the industry was weighed down by poor quality and chronic overcapacity that eroded prices and exposed the sector to European Union anti-dumping measures.

Beijing’s war on pollution served as an opportunity to tackle those problems. Now, the mainstay of the local economy is a shadow of its former self.

With annual production capacity slashed to 246 million square meters, compared with 827 million square meters before the campaign began, the government hopes surviving manufacturers can upgrade and compete with higher-end producers.

“I think the steps the government is taking now will push the costs up, and therefore the price of the goods will be up and the quality will meet international standards,” said Koszo.

But the local factory owner said the campaign has inflicted long-term damage, eroding cost advantages and driving customers away.

“If Zibo was the only place producing tiles in the whole country, then it wouldn’t be a problem. But this is an unfair policy. They are closing us but not others,” he said.

Stop-start production

Environmental officials deny the pollution crackdown or the heightened vigilance of inspectors will cause deep harm to China’s economy, saying any losses would be compensated by the long-term benefits of clean investment.

But in Zibo, even environmentally compliant manufacturers are losing customers. The factory owner said he has lost 80 percent of domestic clients and half his overseas ones, with many frustrated by the stop-start nature of production.

Zibo’s ceramics companies are not only hit by emergency closures aimed at curbing smog. A year ago, they were ordered to switch from coal to gas, but suppliers are giving priority to residential winter heating.

“People are losing patience and manufacturing is shifting to the south,” said Bryan Vadas, director at the Tile Agencies Group in Australia, which used to source products for export from Zibo but has now started buying elsewhere.

Environment Minister Li Ganjie said this year that China would not adopt an “indiscriminate one-size-fits-all approach,” adding that companies have plenty of leeway to clean up and survive.

“Only enterprises that have no clear survival value, pollute heavily and have no hope of being rectified will be shut down,” Li said.

But local enterprises have struggled to cope with repeated policy changes, with industry entry requirements adjusted four times in less than two years, the local factory owner said.

“I have worked hard to build up this business,” he said.

“Personally, I just think the government should tell us directly that they don’t want us to stay in operation. There’s no need for them to torture me.”
…

Greece’s finance minister said Saturday that an agreement had been reached between the heavily indebted country and its creditors on its progress in implementing reforms.

The agreement on the so-called Third Assessment of Greece’s latest bailout program will allow Greece to receive fresh funds next year, after implementing workplace reforms, speeding up the settlement of bad loans, tightening up rules for family subsidies and selling off state-owned power plants.

European monetary affairs commissioner Pierre Moscovici also announced that a “staff-level agreement” had been reached, meaning that although creditor representatives were involved, the European Union’s finance ministers must approve the agreement, which they are expected to do Monday.

Finance minister Euclid Tsakalotos said Greece would have to vote on at least two major bills by January 22 to implement the agreement.
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Airlines canceled more flights leaving the Indonesian island of Bali on Saturday, citing forecasts of deteriorating flying conditions because of a risk of volcanic ash from the erupting Mount Agung volcano.

A Bali airport spokesman said the airport was operating normally, but airlines such as Jetstar and Virgin Australia had opted to cancel some flights.

“Bali flying conditions expected to be clear throughout the day, but forecast for tonight has deteriorated so several flights have been canceled,” Australian budget airline Jetstar said on its Twitter account Saturday.

Thousands stranded

The erupting volcano had closed the airport for much of this week, stranding thousands of visitors from Australia, China and other countries, before the winds changed and flights resumed. 

Twenty flights were canceled Friday evening because of concerns over ash. Some airlines, including Malaysia’s AirAsia, have said they would only operate out of Bali during the day, because the ash could impair visibility at night and wind conditions in the area were unpredictable.

Airlines avoid flying through volcanic ash because it can damage aircraft engines, clogging fuel and cooling systems, hampering pilot visibility and even causing engine failure.

There are also concerns over changing weather conditions with a tropical cyclone south of Java island affecting weather and wind in the area, including for Bali, the Indonesian Meteorological, Climatological and Geophysics agency said.

Consulates offer aid

Several foreign consulates have set up booths in the international departures area to assist stranded passengers.

Subrata Sarkar, India’s vice consul in Bali, told Reuters at the airport’s international departure area that they had helped around 500 passengers so far this week.

“We have advised citizens the volcano may erupt. We never say ‘please don’t come.’ But we have issued travel advisories. If it’s urgent business, then OK, but if it’s only tourism, then plans should be reconsidered,” Sarkar said.
…

President Donald Trump’s administration announced Friday that it won’t require mining companies to prove they have the financial wherewithal to clean up their pollution, despite an industry legacy of abandoned mines that have fouled waterways across the U.S.

 

The move came after mining groups and Western-state Republicans pushed back against a proposal under former President Barack Obama to make companies set aside money for future cleanup costs.

 

U.S. Environmental Protection Agency Administrator Scott Pruitt said modern mining practices and state and federal rules already in place adequately address the risks from mines that are still operating.

Requiring more from mining companies was unnecessary, Pruitt said, and “would impose an undue burden on this important sector of the American economy and rural America, where most of these jobs are based.”

 

The U.S. mining industry has a long history of abandoning contaminated sites and leaving taxpayers to foot the bill for cleanups. Thousands of shuttered mines leak contaminated water into rivers, streams and other waterways, including hundreds of cases in which the EPA has intervened, sometimes at huge expense.

 

The EPA spent $1.1 billion on cleanup work at abandoned hard-rock mining and processing sites across the U.S. from 2010 to 2014.

 

Since 1980, at least 52 mines and mine processing sites using modern techniques had spills or other releases of pollution, according to documents released by the EPA last year.

 

In 2015, an EPA cleanup team accidentally triggered a 3-million gallon spill of contaminated water from Colorado’s inactive Gold King mine, tainting rivers in three states with heavy metals including arsenic and lead.

 

The Obama-era rule was issued last December under court order after environmental groups sued the government to enforce a long-ignored provision in the 1980 federal Superfund law.

 

“It’s galling to see the Trump administration side with industry polluters over the America taxpayer,” said Bonnie Gestring with Earthworks, one of the plaintiffs in the case.

 

“We’ll see them back in court,” she added.

 

The proposal applied to hard-rock mining, which includes precious metals, copper, iron, lead and other ores. Coal mines already were required to provide assurances that they’ll pay for cleanups under a 1977 federal law

 

Hard-rock mining companies would have faced a combined $7.1 billion financial obligation under the dropped rule, costing them up to $171 million annually to set aside sufficient funds to pay for future cleanups, according to an EPA analysis.

 

The mining industry and members of Congress from Western states welcomed Friday’s announcement.

 

National Mining Association President Hal Quinn said the Obama proposal resulted from environmentalists using litigation to force the government into what he said was an unnecessary rule.

 

“Today’s action shows that reason can prevail,” Quinn said.

 

Hard-rock mines in the U.S. produced about $26.6 billion worth of metals in 2015, according to the association. Of those mines, the EPA had said 221 would be subject to the dropped rule.
…

Republicans pushed a nearly $1.5 trillion tax bill through the Senate early Saturday after burst of eleventh-hour horse trading, as a party starved all year for a major legislative triumph took a giant step toward giving President Donald Trump one of his top priorities by Christmas.

“Big bills are rarely popular. You remember how unpopular Obamacare was when it passed?” Senate Majority Leader Mitch McConnell, R-Ky., said in an interview, shrugging off polls showing scant public enthusiasm for the measure. He said the legislation would prove to be “just what the country needs to get growing again.”

Trump hailed the bill’s passage on Twitter, thanking McConnell and Senate Finance Committee Chairman Orrin Hatch, R-Utah. “Look forward to signing a final bill before Christmas!” the president wrote.

Senate approval came on a 51-49 roll call with Sen. Bob Corker, R-Tenn., the only lawmaker to cross party lines. The measure focuses its tax reductions on businesses and higher-earning individuals, gives more modest breaks to others and offers the boldest rewrite of the nation’s tax system since 1986.

​Corker balks at debt increase

Republicans touted the package as one that would benefit people of all incomes and ignite the economy. Even an official projection of a $1 trillion, 10-year flood of deeper budget deficits couldn’t dissuade GOP senators from rallying behind the bill.

 

“Obviously I’m kind of a dinosaur on the fiscal issues,” said Corker, who battled to keep the bill from worsening the government’s accumulated $20 trillion in IOUs.

 

The Republican-led House approved a similar bill last month in what has been a stunningly swift trip through Congress for complex legislation that impacts the breadth of American society. The two chambers will now try crafting a compromise to send Trump.

 

After spending the year’s first nine months futilely trying to repeal President Barack Obama’s health care law, GOP leaders were determined to move the measure rapidly before opposition Democrats and lobbying groups could blow it up. The party views passage as crucial to retaining its House and Senate majorities in next year’s elections.

​Democrats deride gift to wealthy

Democrats derided the bill as a GOP gift to its wealthy and business backers at the expense of lower-earning people. They contrasted the bill’s permanent reduction in corporate income tax rates from 35 percent to 20 percent to smaller individual tax breaks that would end in 2026.

 

Congress’ nonpartisan Joint Committee on Taxation has said the bill’s reductions for many families would be modest and said by 2027, families earning under $75,000 would on average face higher, not lower, taxes.

 

The bill is “removed from the reality of what the American people need,” said Senate Minority Leader Chuck Schumer, D-N.Y. He criticized Republicans for releasing a revised, 479-page bill that no one can absorb shortly before the final vote, saying, “The Senate is descending to a new low of chicanery.”

 

“You really don’t read this kind of legislation,” Sen. Ron Johnson, R-Wis., told home-state reporters, asked why the Senate was approving a bill some senators hadn’t read. He said lawmakers needed to study it and get feedback from affected groups.

Democrats took to the Senate floor and social media to mock one page that included changes scrawled in barely legible handwriting. Later, they won enough GOP support to kill a provision by Sen. Pat Toomey, R-Pa., that would have bestowed a tax break on conservative Hillsdale College in Michigan.

​Tax panel: $1 trillion added to debt

The bill hit rough waters after the Joint Taxation panel concluded it would worsen federal shortfalls by $1 trillion over a decade, even when factoring in economic growth that lower taxes would stimulate. Trump administration officials and many Republicans have insisted the bill would pay for itself by stimulating the economy. But the sour projections stiffened resistance from some deficit-averse Republicans.

 

But after bargaining that stretched into Friday, GOP leaders nailed down the support they needed in a chamber they control 52-48. Facing unyielding Democratic opposition, Republicans could lose no more than two GOP senators and prevail with a tie-breaking vote from Vice President Mike Pence, but ended up not needing it.

 

Leaders’ changes included helping millions of companies whose owners pay individual, not corporate, taxes on their profits by allowing deductions of 23 percent, up from 17.4 percent. That helped win over Wisconsin’s Johnson and Steve Daines of Montana.

 

People would be allowed to deduct up to $10,000 in property taxes, a demand of Sen. Susan Collins of Maine. That matched a House provision that chamber’s leaders included to keep some GOP votes from high-tax states like New York, New Jersey and California.

 

The changes added nearly $300 billion to the tax bill’s costs. To pay for that, leaders reduced the number of high-earners who must pay the alternative minimum tax, rather than completely erasing it. They also increased a one-time tax on profits U.S.-based corporations are holding overseas and would require firms to keep paying the business version of the alternative minimum tax.

Deal on DACA?

Sen. Jeff Flake, R-Ariz., who like Corker had been a holdout and has sharply attacked Trump’s capabilities as president, voted for the bill. He said he’d received commitments from party leaders and the administration “to work with me” to restore protections, dismantled by Trump, for young immigrants who arrived in the U.S. illegally as children. That seemed short of a pledge to actually revive the safeguards.

 

The Senate bill would drop the highest personal income tax rate from 39.6 percent to 38.5 percent. The estate tax levied on a few thousand of the nation’s largest inheritances would be narrowed to affect even fewer.

 

Deductions for state and local income taxes, moving expenses and other items would vanish, the standard deduction, used by most Americans, would nearly double to $12,000 for individuals and $24,000 for couples, and the per-child tax credit would grow.

 

The bill would abolish the “Obamacare” requirement that most people buy health coverage or face tax penalties. Industry experts say that would weaken the law by easing pressure on healthier people to buy coverage, and the nonpartisan Congressional Budget Office has said the move would push premiums higher and leave 13 million additional people uninsured.

 

Drilling would be allowed in the Arctic National Wildlife Refuge. Another provision, knocked out because it violated Senate budget rules, would have explicitly let parents buy tax-advantaged 529 college savings accounts for fetuses, a step they can already take but which anti-abortion forces wanted to inscribe into law. There were also breaks for the wine, beer and spirits industries, Alaska Natives and aircraft management firms.
…

Venezuela has arrested Diego Salazar, a relative of former oil czar Rafael Ramirez, as part of an investigation into a money laundering scandal in Andorra, the South American country’s state prosecutor said on Friday night.

President Nicolas Maduro is overseeing what his administration calls a “crusade” against corruption in the member of the Organization of the Petroleum Exporting Countries (OPEC). Some 65 oil executives have been detained in a deepening purge that could also see the leftist leader consolidate his grip over the energy sector and sideline rivals.

The Salazar case appears to relate to what the United States in 2015 said were some $2 billion in laundered funds from Venezuelan state oil company Petróleos de Venezuela, S.A., known as PDVSA, at the private bank Banca Privada D’Andorra (BPA).

Saab did not specify Salazar’s role or details on the money laundering, except that it involved around 1.35 billion euros in 2011 and 2012, but he said the case was bound to grow.

“I want to highlight that this citizen will likely not be the only one detained and the only one investigated,” Saab said in a phone call to state television announcing the arrest.

The arrest is bound to cast the spotlight on Ramirez, who was the powerful head of PDVSA and the oil ministry for a decade before Maduro demoted him as a envoy to the United Nations in 2014.

A protracted rivalry between Maduro and Ramirez has increased in the recent weeks, sources close to the situation said this week, especially after Ramirez wrote online opinion articles criticizing PDVSA’s production slump and the government’s handling of Venezuela’s crisis-hit economy.

Maduro sacked Ramirez, who was thought to have presidential ambitions, from his job this week and summoned him back to Caracas from New York, the people with knowledge of the situation said.

Ramirez and PDVSA did not respond to a request for comment on Friday. Salazar could not immediately be reached for comment.
…

A Peruvian prosecutor asked a judge to jail executives of three local construction companies that had previously partnered with  Brazilian builder Odebrecht, which has admitted to paying bribes in the country, chief prosecutor Pablo Sanchez said on Friday.

Prosecutors started investigating the five executives of Grana y Montero, JJC Contratistas Generales and Ingenieros Civiles y Contratistas Generales (ICCGSA) earlier this week. The five are accused of paying bribes to win a highway construction contract in southern Peru along with Odebrecht.

Peru has aggressively investigated bribery allegations linked to scandal-plagued Odebrecht and former President Ollanta Humala was jailed earlier this year following accusations he took illegal campaign donations from the firm.

Prosecutor Hamilton Castro made the jail request this morning, Sanchez told reporters at a business conference in Paracas, south of Lima.

ICCGSA said in a statement none of its shareholders or employees had knowledge of the alleged acts of corruption and said it was willing to collaborate with investigators. Grana y Montero and JJC Contratistas Generales did not immediately respond to request for comment.

Last month, prosecutors said they were investigating Grana for alleged involvement in bribes that Odebrecht has admitted paying to local officials in exchange for lucrative contracts.

Grana’s shares in Lima have fallen more than 60 percent this year on concerns over the probe. Shares were down 5.6 percent at 1.84 soles  ($0.5690) per share on Friday afternoon.

The company has repeatedly denied any wrongdoing and said an internal probe turned up no evidence that its employees knew about or took part in the bribes. It has said it is willing to cooperate with the investigation.

($1 = 3.2337 soles)
…

Despite criticism from Washington over Cambodia’s crackdown on the opposition and accusations that the U.S. helped plot Prime Minister Hun Sen’s downfall, U.S. Ambassador William Heidt has said that America’s support for Cambodia’s economy will not be negatively impacted.

Heidt told VOA’s Khmer service on Wednesday that the embassy’s mission to strengthen the bilateral relationship with Cambodia remained of paramount importance.

“For me, the key next step is helping to connect Cambodia’s technology sector with the big American technology companies, which are investing throughout Southeast Asia, mostly in Singapore and Ho Chi Minh City,” he said.

“I think Cambodia is developing fast in technology, but it has not yet broken out of Cambodia, gotten a hook in with the regional technology network. And, that’s what I am going to do next and I hope to do that in the first half of next year,” he added.

Economic growth

The United States is focused on promoting Cambodian economic growth to connect U.S. investors with Cambodian technology companies, Heidt said.

The U.S. Embassy and Cambodian government have been at odds over accusations that Washington conspired with the opposition Cambodia National Rescue Party (CNRP) to overthrow Hun Sen in a so-called “color revolution” — a reference to attempts by pro-democracy movements to overthrow autocratic regimes in parts of the former Soviet Union, the Balkans and the Middle East.

The U.S. Embassy has denied allegations of interference.

Heidt said the allegations were categorically false.

“I don’t spend a ton of time on this issue because there’s really no more for us to say. And, I mean, nobody, nobody believes this in America. Nobody in our government, nobody in our society,” he said. “We, on the American side, feel very strongly that we have been a great partner for Cambodia. We really helped Cambodia to develop in many ways and we want to keep doing that.”

Hun Sen, one of China’s closest regional allies, is a former Khmer Rouge officer who has ruled the southeast Asian country for more than three decades. He has intensified his rhetoric against the United States amid a crackdown on opponents and the media before next year’s general election.

Earlier this month, Cambodia banned the opposition party after arresting its leader, Kem Sokha, and charging him with treason in September.

Heidt said he felt a deep regret at the government’s decision to move to dissolve the CNRP, which has led the White House to reconsider its foreign relations with Cambodia. He said the Trump administration was reassessing Cambodia’s eligibility for preferential trade agreements.

“Since I came here, let’s be honest, the Cambodian government has taken a lot of steps against the government of the United States,” he said. “They cut our military exercises, they threw [a] detachment out of the country, they made all of those accusations against us related to the political situation.

“I feel like there has never been an honest desire by the Khmer government to have a good relationship with the United States,” Heidt added.

Some changes needed

Phay Siphan, government spokesman, said Phnom Penh did not desire to sour the relationship with the United States, but added that there were “some little activities” that needed to end in order for relations to improve, including suggesting Cambodia was “pro-China.”

Hun Sen is in China — Cambodia’s biggest donor and lender — this week for a Communist Party conference in Beijing, where he will meet Chinese President Xi Jinping.

Actions seen as anti-U.S. have included Hun Sen’s request that the U.S. forgive a $505 million debt for food and agricultural goods. Cambodia’s Lon Nol government borrowed the money in the 1970s, during its civil war with the Khmer Rouge. China wrote off debts incurred in the 1970s by the Khmer Rouge regime about 15 years ago.

In January, Phnom Penh suspended joint military exercises with the U.S., citing the local June elections as the cause, while rejecting suggestions that its decision was related to military and financial ties with China.

Most recently, after the U.S. announced on November 17 that it was ending funding for the upcoming election, the pro-government Fresh News website reported that Hun Sen said in a speech to garment workers that he welcomed the cut in U.S. aid, and urged Washington to cut all assistance.
…

Egyptian billionaire businessman Naguib Sawiris condemned on Friday a crackdown on graft in Saudi Arabia, saying the purge had undermined the rule of law in the Kingdom and would deter investment.

In unusually outspoken comments, Sawiris, a well-known business figure in North Africa and the Middle East, also accused Qatar of destabilizing the region, and said there were only a handful of Arab nations that were safe to invest in.

Saudi security forces rounded up dozens of members of the country’s political and business elite last month on the orders of Crown Prince Mohammed bin Salman in what was billed as a war on rampant corruption.

Sawiris, whose family’s Orascom businesses have interests ranging from construction to telecommunications, said influential figures should stand up to the Crown Prince, whom he referred to as “this young man”.

“We need to tell him ‘no’. There is the rule of law and order. You have a transparent process. Where is the court? What is the evidence? Who is the judge?” he told a conference in Rome, questioning the Crown Prince’s motives.

“Are you not part of this? Where did you get your money? Didn’t you do this? What is the system?” he said.

Prince Mohammed has said Saudi Arabia needs to modernize and has warned that without reform, the economy will sink into a crisis that could fan unrest. Critics say his purge is aimed at shoring up his own power base, which the Saudi government denies.

Sawiris said “everyone with a conscience” should speak out, but added that many were too frightened to do so.

“Everyone is scared because they have interests there, they have the oil, they have the money. But you need to have a conscience. When I say this, I know I am done-for in Saudi Arabia. No more business (there). Ok, I don’t care.”

A monthly Reuters poll published on Thursday showed Middle East fund managers had become more positive towards Saudi Arabian equities after an initial market sell-off following the launch of the anti-graft drive.

But Sawiris, who is not known to have major investments in Saudi Arabia, predicted business leaders would steer clear of the country in future.

“I think after what happened in Saudi Arabia, no one will invest there,” he said.

Sawiris also took aim at Iran, accusing the country of interfering in the affairs of its neighbors. He likewise denounced Qatar, saying it was funding terror groups.

“Why don’t they take care of the prosperity of their own people instead of financing crazy clergymen who push young men to go and kill?” he said.

A group of Arab nations led by Saudi Arabia and Egypt cut ties with Qatar in June, accusing it of fomenting instability. Qatar, a tiny Gulf state, has denied supporting militants.

Asked where was safe to invest in the Arab world, Sawiris mentioned Egypt, Morocco, Tunisia, Jordan and Sudan, but jokingly dismissed Lebanon.

“The problem with Lebanon is they are all sharks and they leave nothing to anyone. Only a crazy person would invest in Lebanon,” he said.

 

 
…

The United States has formally told the World Trade Organization (WTO) that it opposes granting China market economy status, a position that if upheld would allow Washington to maintain high anti-dumping duties on Chinese goods.

The statement of opposition, made public on Thursday, was submitted as a third-party brief in support of the European Union in a dispute with China that could have major repercussions for the trade body’s future.

China is fighting the EU for recognition as a market economy, a designation that would lead to dramatically lower anti-dumping duties on Chinese goods by prohibiting the use of third-country price comparisons.

The U.S. and EU argue that the state’s pervasive role in the Chinese economy, including rampant granting of subsidies, mean that domestic prices are deeply distorted and not market-determined.

A victory for China before the WTO would weaken many countries’ trade defenses against a flood of cheap Chinese goods, putting the viability of more western industries at risk.

U.S. Trade Representative Robert Lighthizer told Congress in June that the case was “the most serious litigation we have at the WTO right now” and a decision in China’s favor “would be cataclysmic for the WTO.”

Lighthizer has repeatedly expressed frustration with the WTO’s dispute settlement body and has called for major changes at the organization.

The USTR brief, which follows a Commerce Department finding in October that China fails the tests for a market economy, argues that China should not automatically be granted market economy by virtue of the expiration of its 2001 accession protocol last year.

“The evidence is overwhelming that WTO members have not surrendered their longstanding rights … to reject prices or costs that are not determined under market economy conditions in determining price comparability for purposes of anti-dumping comparisons,” the brief concludes.

The move comes as trade tensions between Washington and Beijing are increasing as the Trump administration prepares several possible major trade actions, including broad tariffs or quotas on steel and aluminum and an investigation into Chinese intellectual property misappropriation.

Chinese Foreign Ministry spokesman Geng Shuang told a regular news briefing on Friday that some countries were trying to “skirt their responsibility” under WTO rules.

“We again urge relevant countries to strictly honor their commitment to international principles and laws, and fulfill their agreed upon international pacts,” Geng said.

The Commerce Department on Tuesday launched the first government-initiated anti-dumping and anti-subsidy investigations in decades on Chinese aluminum sheet imports.

U.S. officials say that 16 years of WTO membership has failed to end China’s market-distorting state practices.

“We are concerned that China’s economic liberalization seems to have slowed or reversed, with the role of the state increasing” David Malpass, U.S. Treasury undersecretary for international affairs, told an event in New York on Thursday.

“State-owned enterprises have not faced hard budget constraints and China’s industrial policy has become more and more problematic for foreign firms. Huge exports credits are flowing in non-economic ways that distort markets,” Malpass said.

The brief submitted to the WTO also argues that China should be treated the same way as communist eastern European countries, including Poland, Romania and Hungary were when they joined the WTO’s predecessor organization, the General Agreement on Tariffs and Trade, in the late 1960s and early 1970s.

A senior U.S. official said those countries eventually earned market economy status as evidence of state subsidies and state distortions waned. He added that going forward, WTO members wishing to use third-country price comparisons against Chinese imports would need to keep presenting evidence of economic distortions.

 
…

Senate Republicans delayed a final vote on an overhaul of the U.S. tax code late Thursday amid furious, behind-the-scenes efforts to fine-tune the legislation to satisfy a small group of fiscal hawks whose support is needed to pass one of President Donald Trump’s core campaign promises.

“Senators will continue to debate the bill tonight,” Majority Leader Mitch McConnell, a Kentucky Republican, said, adding that further votes pertaining to the tax bill would occur later Friday.

Only hours earlier, Republicans appeared poised to pass a massive restructuring of federal taxes and deal a stinging defeat to Democrats. Several wavering Republicans had signaled support for the bill, including John McCain of Arizona.

Late in the day, however, three Republicans, led by Senator Bob Corker of Tennessee, clung to a demand that proposed tax cuts would be pared back if future U.S. economic performance did not meet projections.

Republicans have a two-seat Senate majority. Three defections from their ranks would torpedo the bill, given unified Democratic opposition.

With time needed to rewrite portions of the bill to satisfy the Corker contingent, Republican leaders opted to postpone further votes.

Details of plan

The underlying proposal would permanently cut corporate taxes, temporarily cut taxes on wages and salaries, boost some tax deductions Americans can claim while eliminating others, and increase the U.S. national debt, which currently is more than $20 trillion.

The nonpartisan Joint Committee on Taxation issued a report Thursday estimating the Republican plan would sap federal coffers by more than $1 trillion over a decade, even taking into account more than $400 billion in new revenue generated by a projected increase in economic activity.

“The [JCT] score ends the fantasy about magical growth, about unicorns and growth fairies showing that tax cuts pay for themselves,” Democratic Senator Ron Wyden of Oregon said.

Republicans insisted a vibrant economy was necessary for fiscal health, and that tax cuts would promote growth.

“If this legislation is signed into law, we are going to have a smaller deficit in future years than we are on the path to have now,” Senator Pat Toomey of Pennsylvania said. “The right incentives lead to stronger growth.”

Democrats shot back that the federal deficit and income inequality both expanded after every tax cut enacted in recent decades.

“Trickle-down economics did not work under Ronald Reagan, did not work under George W. Bush,” independent Senator Bernie Sanders of Vermont, who caucuses with Democrats, said. “It is a fraudulent theory.”

“All we are doing is shifting the tax to our kids,” Maine Senator Angus King, another independent who also caucuses with Democrats, said. “If 5-year-olds knew what we were doing and could vote, none of us would have a job.”

Corporate tax rate

The tax plan would cut corporate taxes from a maximum rate of 35 percent to 20 percent.

“Other countries have learned how to use their tax codes to entice U.S. businesses overseas, businesses around the globe, to their country — to move away from the United States to their countries’ more competitive tax code,” Republican Senator Cory Gardner of Colorado said. “That disparity between the U.S. tax code and foreign tax rates has literally chased jobs and wages out of this country.”

Some Democrats agreed that U.S. corporate taxes should be lowered, but insisted the Republican plan goes too far and would eventually trigger painful cuts to federal programs that benefit the poor and elderly in the future.

Massachusetts Senator Ed Markey accused Republicans of mounting a “con game” in which they tout tax breaks but gloss over “their brutal, vicious cuts to programs for the poorest, the sickest, the elderly, neediest in our country.”

In a sign that Republicans were confident of passing the bill, House Speaker Paul Ryan laid the groundwork for creating a bicameral committee to reconcile differences between the Senate’s legislation and a House version that was approved several weeks ago.

A unified tax plan would have to pass both chambers before it could go to the White House for Trump’s signature.
…

Venezuela’s Avior Airlines has been banned from European Union skies after a commission determined it no longer meets international safety standards, another blow to troubled nation’s already beleaguered flight industry.

The European Commission announced Thursday that Avior had been added to a list of international airlines prohibited from flying within the union because the European Aviation Safety Agency detected “unaddressed safety deficiencies.”

No further details were provided.

The Venezuelan airline is one of a handful still offering international flight destinations as major carriers like United and Delta halt operations in the crisis-ridden nation. Air carriers have cited financial and safety concerns as reasons for suspending service.

An Avior flight made an emergency landing in Ecuador earlier this month after passengers described seeing fire and smelling smoke. Videos posted on social media showed nervous passengers wearing deployed oxygen masks.

“We thought it was our final moments,” one passenger said.

Avior operates flights within Venezuela, throughout Latin America and to Miami, Florida, and lists an office location in Madrid on its website.

The airline is certified under U.S. federal aviation regulations and Venezuela remains in good standing with the International Aviation Safety Assessment, the Federal Aviation Administration’s program to determine whether foreign countries provide sufficient safety and oversight of airlines that fly to the U.S.

Venezuela has grown increasingly isolated as an expanding list of airlines cancel service amid low customer demand and financial distress. The head of the International Air Transport Association has said that Venezuela owes $3.8 billion to several international airlines, a debt it is unexpected to repay anytime soon. The government defaulted on billions of dollars’ worth of bonds earlier this month.

The last United Airlines flight departed Caracas in late June, with crewmembers waving a Venezuelan flag out of the pilot’s window. American Airlines, Air France and Iberia are among the large international carriers that still offer service to the South American nation.
…

The 2017 Atlantic hurricane season has finally ended

In all, 17 named storms swept across the Atlantic this year and 10 rose to hurricane status. But the season will be remembered for the deadly trio — Harvey, Irma and Maria — that brought death and destruction to Caribbean nations and the southern U.S.

This was the first year on record in which the continental United States was hit by two Category 4 hurricanes, Harvey and Irma.

Harvey made landfall in South Texas on August 25, leading to days of downpours that dumped an unprecedented 152 centimeters (60 inches) of rain. It was the greatest rainfall amount recorded from a single storm in U.S. history.

Harvey also damaged or destroyed about 200,000 homes as the storm system flooded much of Houston and smaller coastal communities.

Then, on September 11 came Irma — the strongest storm on record in the Atlantic, outside the Gulf of Mexico and the Caribbean Sea. With maximum winds of nearly 300 kilometers an hour, Irma destroyed the Caribbean island of Barbuda, shredded vast sections of the Virgin Islands and knocked out power in much of Florida.

September also saw the arrival of Hurricanes Jose, Katia and Lee, before Category 4 Hurricane Maria slammed into Puerto Rico on September 20.

It was the U.S. territory’s strongest hurricane landfall since 1928. With sustained winds of 250 kilometers per hour, Maria knocked out power across the island, causing the biggest blackout in U.S. history. The island is still struggling to restore power as millions remain without electricity two months later.

Bloomberg News reports the 2017 hurricane season was the most expensive on record, with an estimated $202.6 billion in damage. The National Oceanic and Atmospheric Administration is expected to release the official damage tally early next year.
…

Germany, Europe’s most robust economy, said Thursday that its unemployment rate fell to 5.3 percent in November, the lowest figure since West and East Germany were unified in 1990.

Even as Chancellor Angela Merkel and other Berlin politicians struggle to form a coalition government, the German economy remains strong, with a months-long dip in the country’s jobless rate and solid demand for German products from other countries.

The German report came as Eurostat, the statistics agency for the European Union, said the jobless rate for the 19-nation eurozone bloc that uses the euro currency dropped to 8.8 percent in October. It was the lowest figure since January 2009, when Europe and countries across the world were in the midst of a steep recession.

The German and European jobless rates trail those in the United States, the world’s largest economy, where unemployment has dropped to 4.1 percent, a 17-year low. But the U.S. and European numbers point to steady improvement that had been slow to emerge after the devastating job losses and high unemployment seven to nine years ago.

Eurostat said more than 14 million people remained out of work, but that was 1.5 million fewer than a year ago. In Spain, the jobless rate has been cut from about 25 percent to 16.7 percent.

European Central Bank President Mario Draghi said that while wages still are not increasing much, they could rise in the coming months as the continent’s economy continues to rebound.

Patrick Chovanex, chief strategist at New York-based Silvercrest Asset Management, told VOA the U.S. is in the eighth year of its recovery.

“It’s a recovery that has kind of waxed and waned,” he said. “One of the things that has been happening over the past couple years is that different parts of the economy were waxing and waning out of sequence with one another. So housing would be strong while manufacturing would be weak, and then vice versa. Every so often they happen to coincide.

“Right now we’re seeing a pattern of several elements of the economy being strong at once. Hopefully, that will continue.”
…

OPEC agreed on Thursday to extend oil output cuts until the end of 2018 as it tries to finish clearing a global glut of crude while signalling it could exit the deal earlier if the market overheats.

Non-OPEC Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival U.S. shale firms don’t boost output further.

The producers’ current deal, under which they are cutting supply by about 1.8 million barrels per day (bpd) in an effort to boost oil prices, expires in March.

Two OPEC delegates told Reuters the group had agreed to extend the cuts by nine months until the end of 2018, as largely anticipated by the market.

OPEC also decided to cap the output of Nigeria at around 1.8 million bpd but had yet to agree a cap for Libya. Both countries have been previously exempt from cuts due to unrest and lower-than-normal production.

The Organization of the Petroleum Exporting Countries has yet to meet with non-OPEC producers led by Russia, with the meeting scheduled to begin after 1500 GMT.

Before the earlier, OPEC-only meeting started at the group’s headquarters in Vienna on Thursday, Saudi Energy Minister Khalid al-Falih said it was premature to talk about exiting the cuts at least for a couple of quarters and added that the group would examine progress at its next meeting in June.

“When we get to an exit, we are going to do it very gradually… to make sure we don’t shock the market,” he said.

The Iraqi, Iranian and Angolan oil ministers also said a review of the deal was possible in June in case the market became too tight.

International benchmark Brent crude rose more than 1 percent on Thursday to trade near $64 per barrel.

Capping Nigeria, Libya

With oil prices rising above $60, Russia has expressed concerns that such an extension could prompt a spike in crude production in the United States, which is not participating in the deal.

Russia needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude.

“Prices will be well supported in December with a large global stock draw. The market could surprise to the upside with even $70 per barrel for Brent not out of the question if there is an unexpected interruption in supply,” said Gary Ross, a veteran OPEC watcher and founder of Pira consultancy.

The production cuts have been in place since the start of 2017 and helped halve an excess of global oil stocks although those remain at 140 million barrels above the five-year average, according to OPEC.

Russia has signaled it wants to understand better how producers will exit from the cuts as it needs to provide guidance to its private and state energy companies.

“It is important… to work out a strategy which we will follow from April 2018,” Russian Energy Minister Alexander Novak said on Wednesday.
…

The International Labor Organization says a majority of the world’s population, four billion people, have no social protection, leaving them mired in an endless cycle of poverty. 

The report says 45 percent of the global population is covered by at least one social benefit.  But that leaves 55 percent without any social protection, a situation ILO Director General Guy Ryder calls unacceptable.

“That means that they do not receive any child benefit, any maternity benefit, any unemployment protection, any disability benefit, any old age pension and that they do not actively contribute to social security systems,” Ryder said.

The consequences are severe and tangible.  The report finds the lack of social protection leaves people vulnerable to illness, poverty, inequality and social exclusion.  The ILO regards the situation as a significant obstacle to economic growth and social development.

Ryder tells VOA governments would benefit from considering social protection as an investment in their populations.

“Social protection is a human right and we should be pursuing it because it is a human right,” Ryder said. “But, also, I think there is a great deal of evidence to demonstrate that when social protection systems are in place and where they function well and one can think of the whole cycle of protection from kids right through to old age, then you reap economic benefits from it.” 

The report says the lack of social protection is most acute in Africa, Asia, and the Arab States.  It recommends those regions increase their public expenditure to at least guarantee basic social security coverage to all their people.
…

The buoyant economic recovery across the 19-country eurozone has pushed unemployment down to its lowest level in nearly nine years but has yet to translate to a sustained pick-up in wages and prices, official figures indicated Thursday.

 

Eurostat, the European Union’s statistics agency, said the jobless rate fell to 8.8 percent in October, from 8.9 percent the previous month. That’s the lowest since January 2009, when the region, like the world economy, was reeling from the global financial crisis and the ensuing deep recession.

 

Across the region, there were 14.34 million people out of work, down 1.5 million in the past year. That’s clear evidence that the economic recovery, which has gathered momentum during 2017, has invigorated the jobs market, especially in some of those countries that saw the biggest spikes in unemployment after the financial crisis. That’s especially true in Spain, which for much of the past few years lumbered under the weight of an unemployment rate of around 25 percent. Now, following strong growth, unemployment has fallen to 16.7 percent.

 

Though the eurozone is growing strongly, inflation is still a way short of the European Central Bank’s goal of just below 2 percent, a level it considers healthiest for the economy.

 

Eurostat said its headline measure of consumer price inflation rose to 1.5 percent in November, largely because of higher energy prices. While up from October’s 1.4 percent, it was below expectations in markets for a rise to 1.6 percent and indicates that underlying inflation pressures largely related to wages remain modest despite falling unemployment. The core rate of inflation, which strips out volatile items like food, energy, alcohol and tobacco, was stuck at 0.9 percent in November – again below expectations of a rise to 1 percent.

 

ECB President Mario Draghi has said there are a number of reasons why wages are not rising strongly, including the possibility that after years of low interest rates and weak inflation, wage negotiators may have been focused more on keeping jobs than on securing higher pay. He said these kinds of factors are likely to be “transitory” and that the recent “remarkable” increases in employment should start to show in a rise in nominal wages. With spare capacity in the economy diminishing, the hope is that a pick-up in wages that can support consumer demand and give inflation a boost.

Over the past few years, the ECB has enacted a series of stimulus measures, including cutting its main interest rate to zero, in the hope of getting inflation back up to target. Recently it eased up on its bond-buying stimulus program, which aims to keep market interest rates low, amid mounting evidence of economic growth.

 

Economists are not predicting any further changes soon, with Thursday’s figures adding to that perception.

 

“Today’s figures are unlikely to prompt the bank to accelerate the process of monetary normalization,” said Pablo Shah, an economist at the Center for Economics and Business Research.
…

Mexican Economy Minister Ildefonso Guajardo said Wednesday that Trump administration demands for a U.S.-specific automotive content requirement in NAFTA were “not viable,” and he declined to specify when Mexico would formally respond.

At a news conference following a series of meetings with senior U.S. trade officials and lawmakers in Washington, Guajardo said that Mexico was still trying to understand the U.S. proposals that would require 50 percent of vehicles’ value content to be produced in the United States as part of updated North American Free Trade Agreement rules.

“I was clear that the domestic content [requirement] is something that is not viable at this point,” Guajardo said.

He added that Mexico would eventually make a counterproposal on automotive rules of origin, but declined to specify the timing of that response.

His visit was partly aimed at bolstering support in Congress for NAFTA at a time when tax legislation is consuming lawmakers’ attention and U.S. Trade Representative Robert Lighthizer is growing frustrated with the slow pace of NAFTA talks.

U.S. President Donald Trump has repeatedly threatened to scrap the trade agreement if it cannot be renegotiated to shrink U.S. trade deficits and return manufacturing jobs to the United States.

House Speaker Paul Ryan said after meeting with Guajardo earlier  Wednesday that congressional Republicans “are determined” to strengthen trade ties with Mexico.

“I expect the administration will continue to work with us to modernize NAFTA and bolster our robust relationship with such an important ally,” Ryan said in a statement.

US waiting on counterproposals

After the last NAFTA negotiating round ended last week, Lighthizer complained that Mexico and Canada had not offered counterproposals to its demands on autos and other major areas aimed at “rebalancing” the trade pact.

The United States also is seeking to lift the regional value content requirement for NAFTA-produced cars and trucks to 85 percent from 62.5 percent. Guajardo said that once Mexico has a firm understanding of the U.S. autos proposal, it can work with its own stakeholders to see what adjustments could be made to regional content for autos.

But he said that the U.S. demand to move to 85 percent regional content within three years was “entirely unrealistic.”

Guajardo said he discussed with Lighthizer on Tuesday how to move the talks toward consideration of potential “rebalancing” outcomes. But first, he said, Mexico needed to be clear with its American and Canadian counterparts about unacceptable proposals and its priorities for keeping the pact beneficial to all parties.

“We have to start a process of looking at what’s next after we complete the modernization effort,” he added.

On dispute settlement, Guajardo said that Mexico would be willing to consider some adjustments to the investor-state dispute settlement system, after the United States proposed making the use of such arbitration panels optional.

“We can explore the opt-in, as long as we can define our own opt-in,” Guajardo said of the dispute settlement proposal, adding that otherwise, Mexico is “not interested.”

At a more limited round of NAFTA talks in mid-December in Washington, Guajardo said it would be important to agree on key issues in order to close some NAFTA chapters, such as those on food safety, telecommunications, regulatory practices and digital commerce.
…

Opposition has grown among Americans to a Republican tax plan before the U.S. Congress, with 49 percent of people who were aware of the measure saying they opposed it, up from 41 percent in October, according to a Reuters/Ipsos poll released on Wednesday.

Congressional Republicans are trying to rush their tax legislation to a vote on the Senate floor before the end of the week. President Donald Trump strongly backs the bill and wants to sign it into law before the end of the year.

In addition to the 49 percent who said they opposed the Republican tax bill, 29 percent said they supported it and 22 percent said they “don’t know,” according to the Reuters/Ipsos opinion poll of 1,257 adults conducted from Thursday to Monday.

When asked “who stands to benefit most” from the plan, more than half of all American adults surveyed selected either the wealthy or large U.S. corporations. Fourteen percent chose “all Americans,” 6 percent picked the middle class and 2 percent chose lower-income Americans.

The tax bill being crafted in the Senate would slash the corporate tax rate, eliminate some taxes paid only by rich Americans and offer a mixed bag or temporary tax cuts for other individuals and families.

As congressional discussion on the bill has unfolded, public opposition to it has risen, on average, following Trump’s unveiling of a nine-page “framework” on September 27 that started the debate in earnest, Reuters/Ipsos polling showed.

On October 24, for example, among adults who said they had heard of the “tax reform plan recently proposed by congressional Republicans,” 41 percent said they opposed it, while 31 percent said they “don’t know” and just 28 percent said they supported it.

Trump and his fellow Republicans are determined to make a tax code overhaul their first major legislative win since taking control of the White House and Congress in January.

The House of Representatives on November 16 approved its own tax bill. The Senate is expected to decide on Wednesday whether to begin debating its proposal, as the measure moves toward a decisive floor vote later this week.

The two chambers would need to reconcile differences between their plans before legislation could be sent to the White House for Trump’s signature.

In the November 23-27 poll, 59 percent of Republicans supported the tax bill, 26 percent said they did not know and 15 percent opposed it. Among Democrats, 82 percent opposed it, 11 percent said they did not know and 8 percent supported it.

 
…

Colombia’s palm oil industry and big businesses have pledged to eliminate deforestation from their supply chains as the country battles to reverse the growing destruction of its tropical rainforests.

The commitment signed this week makes Colombia the first country in the world to launch its own chapter of the Tropical Forest Alliance 2020, a global effort by governments, companies and nongovernmental organizations.

The TFA 2020 Colombia Alliance aims to help businesses shift to deforestation-free supply chains by sharing best practices, monitoring forest clearance and training small farmers in sustainable agricultural methods.

It also aims to promote development of certified sustainable products from beef to palm oil for consumers to buy in local supermarkets.

Rainforests in Colombia, Latin America’s largest palm oil producer, are coming under increasing pressure, and deforestation is rampant.

Deforestation in the country’s Amazon region rose 23 percent and across the country rose by 44 percent from 2015 to 2016, said Vidar Helgesen, Norway’s environment minister.

Norway is one of four main donor countries, along with the United Kingdom, Germany and the Netherlands, backing the TFA 2020, an initiative hosted by the World Economic Forum.

“These numbers have been higher than what we expected and that’s why it is important to intensify efforts,” he told the Thomson Reuters Foundation.

Getting the private sector to commit to deforestation-free supply chains is a “critical part of the puzzle” to protect forests, he said.

First such cooperation

“This is the first time in Colombia we see the government and the private sector joining forces like this,” he said.

“My hope and belief is that this partnership will find ways of ensuring that it is not only an agreement on paper but something that will happen in practical terms.”

Protecting forests helps cut carbon emissions, a key driver of climate change. When forests are degraded or destroyed, the carbon stored in the trees is released into the atmosphere.

Colombia is home to a swath of rainforest roughly the size of Germany and England combined and has declared a goal of zero net deforestation by 2020 and halting the loss of all natural forest by 2030.

Its rainforests have been increasingly threatened since a 2016 peace deal to end its decades-long civil war opened up former conflict areas to business, agriculture and development, Helgesen said.

Trees also are being cleared for cattle ranching, illegal mining and growing coca — the raw ingredient for cocaine.

Signing up with the Alliance are about 25 palm oil producers and buyers, Colombia’s Federation of Oil Palm Growers and Alqueria S.A., its third-largest dairy company. Also signing up are retail giant Grupo Exito and international companies operating in Colombia such as consumer goods company Unilever.

“The launch of the TFA 2020 Colombia Alliance is important as a strengthening mechanism for joint action in Colombia to reach our deforestation goals,” said Mariana Villamizar, a spokeswoman for Grupo Exito.

Producers and buyers from the beef, dairy and timber sectors are expected to join the partnership soon.

Each company will set targets to achieve zero deforestation across their often complex supply chains, and the government and NGOs will help monitor deforestation.
…

The number of international visitors to the United States through June fell sharply from last year, according to government data released Wednesday.

And the number of business travelers fell by much more than the drop in tourists, according to the monthly report from the Commerce Departments National Travel and Tourism Office.

Total foreign visitors fell four percent compared to the first six months of last year, with travelers from Mexico down more than nine percent and from Britain down six percent, but visits from Canada up nearly five percent.

Excluding Canada and Mexico, overseas visitors fell nearly six percent, but business travel dropped nearly nine percent compared to a 5.6 percent decline in tourists.

President Donald Trump in his first year in office repeatedly promised to build a wall on the border with Mexico, and has ordered bans on visitors from several Muslim-majority countries in the Middle East and Africa.

Visits from the Middle East plunged 30 percent in the first half of the year, and from Africa dropped 27 percent. There also were double-digit declines in visitors from South and Central America, the Caribbean and Eastern Europe.

Among the top 20 countries with the most visitors, Venezuela, Argentina, Brazil and India saw travelers fall well over 10 percent.

In contrast, arrivals from South Korea jumped 18 percent, while Ireland saw a 4.7 percent increase, Italy was up 4.2 percent, Spain 3.5 percent and France 1.5 percent, according to the monthly data.
…

Turkey’s deteriorating finances are hurting the country’s banks whose reliance on dollar funding makes them vulnerable to the worst-case scenario: a sudden halt or reversal of foreign investment flows.

International investors are growing nervous about Turkey for a variety of reasons. But U.S. legal action against a number of Turkish individuals over alleged Iran sanctions busting – and the risk that some of the country’s banks might be sucked into the case – lies at the heart of the latest concerns.

Since Turkey’s financial crisis in 2000, its banks have earned a reputation as being among the best-run in emerging markets, holding capital reserves far above those required by global rules.

They are still borrowing funds on international markets for lending on to domestic clients, and executives say they do not expect any significant future difficulties.

Nevertheless, borrowing costs are rising for the banks, which have accumulated dollar debt piles equal to a third of Turkey’s total foreign debt. Bank shares are down 20 percent since mid-August, outstripping a 5 percent fall on the broader Istanbul index in this period.

The lira has fallen more than 10 percent against the dollar and euro in the past three months alone, clocking losses of over 50 percent since the end of 2012 .

Several factors are at work, including fears that Turkey’s credit rating might be downgraded, government resistance to higher interest rates despite double-digit inflation, and tensions between Ankara and NATO ally Washington.

Now a Turkish-Iranian gold trader on trial in New York has pleaded guilty to conspiring to evade U.S. sanctions against Iran and will testify against a Turkish bank official charged with arranging illegal transactions involving American lenders.

Any possibility that Turkish banks themselves might become involved, landing the kind of huge fines slapped on others for sanctions-busting, would have severe consequences for the lenders and the wider economy.

“If [fines] do materialize, I would assume that all lending would stop until it becomes clear if institutions around the world can lend to Turkish banks or not,” said Alaa Bushehri, an emerging debt portfolio manager at BNP Paribas Asset Management.

Turkey’s bank regulator and government officials have denied reports in Haberturk newspaper that six unnamed Turkish banks could face fines worth billions of dollars.

But Turkish banks’ dollar bonds generally reflect investors’ nervousness, Bushehri said. On average, yields are 100 basis points above sovereign debt, whereas most big Turkish non-bank firms have lower funding costs than the government, she noted.

Turkish banks also trade with higher yields than similarly-or worse-rated banks in Russia, an emerging market peer which is directly subject to Western sanctions.

Adverse implications

U.S. prosecutors have charged nine people in the case, including the deputy general manager of Turkey’s Halkbank, who is also on trial in New York. He denies all charges.

A former Turkish economy minister is among the defendants, although he is not currently on trial and likewise denies all charges. Ankara says the case is politically motivated, while Halkbank has said all of its transactions have fully complied with national and international regulations.

“If the trial were to end with fines on Turkish lenders, economic implications for Turkey could be highly adverse,” TD Securities said in a note to clients.

Inflation hit a 9-year high of 11.9 percent in October, while Turkish bond yields have reached record levels above 13 percent. Ratings agency Standard & Poor’s said on Wednesday an insufficient response by the central bank would be an immediate concern for Turkey’s sovereign debt rating.

Deputy Prime Minister Mehmet Simsek has promised the government will do whatever is necessary if its banks are hit by the U.S. trial but Mehmet Emin Ozcan, CEO of state-owned Vakifbank, expects no negative impact.

“We didn’t face any problem with borrowing from international markets and I don’t think we’ll have a problem in the future,” he said this week.

Still, investors’ fears persist. While international sanctions on Iran were eased last year, U.S. measures remain and penalties for any infringements can be devastating – as a $9 billion fine on French bank BNP Paribas last year attests.

The potential damage of any fines on Turkish bank reserves has exaggerated the lira’s weakness, compounding the problems of the banks which have about $172 billion in external debt, according to Fitch ratings agency. Of this, $96 billion is due within the next year, the data showed at the end of September.

Health and growth

The issue is central to Turkey’s economic health and growth.

As in other countries with low domestic savings, it relies on foreign borrowing, with banks acting as the conduit for a major part of the flows. Any stop in the financing could wreak havoc.

Turkish banks have average capital ratios that are double the 8 percent minimum stipulated by Basel 3 global banking rules. Also, the lira’s depreciation should not compromise their ability to repay dollar debt as the regulator does not permit lenders to hold open, or unhedged, hard currency liabilities.

Fitch reckons banks can, if needed, access up to $90 billion over 12 months by tapping reserves they hold at the central bank and by unwinding currency derivatives positions. But a prolonged funding crunch will be a different story.

That would risk “pressures on foreign currency reserves, the exchange rate, interest rates and economic growth”, Fitch warns.

That’s because the lenders’ capital buffers held with the central bank – totaling just over $60 billion – are a major part of authorities’ $117 billion reserve war chest, and any depletion of this would leave the lira dangerously exposed.

“Usable” reserves – excluding gold and bank reserves – are around $35 billion, analysts estimate. That means the central bank will have no option but to raise interest rates sharply to counter any lira selloff, with damaging consequences for economic growth.

So far, the banks have avoided refinancing stress; Turkish lending is lucrative for European banks which may be unwilling to risk those long-standing ties.

Indeed, external debt rose around $9 billion in the first half of 2017, Fitch data showed, while Garanti Bank last week announced a $1.35 billion syndicated loan, with 38 banks participating.

But costs are rising – Garanti paid 1.25 percent above LIBOR on a one-year loan, while in 2016 and 2015 it paid 1.10 percent and 0.75 percent above LIBOR respectively.

Huseyin Aydin, chairman of the Banks Association of Turkey, told Reuters he had not observed any low appetite for taking Turkish risk. However, he added: “Foreign borrowing interest rates increased around 50-60 basis points in a tough year like 2017. It is possible that a limited increase will continue in

rates in 2018.”

Paul McNamara, investment director at GAM, has been among those who have warned for some time of trouble. He said he has sold all his Turkish debt because of the banks’ vulnerability.

“Local banks have borrowed an immense amount – north of $100 billion – abroad and lent that money on locally,” he said. “Any stress on Turkish bank syndications and this goes bad very fast.”

 
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