YCLOAK

Canada escalated a trade dispute with United States by making threats Washington called inappropriate in part because Prime Minister Justin Trudeau is under pressure to secure support in a key region ahead of the country’s 2019 elections.

Washington last month slapped tariffs on timber imports, prompting Trudeau to say he was considering a ban on exports of U.S. coal through Pacific ports.

As well as lumber, the administration of President Donald Trump has targeted Canadian dairy farmers, while Boeing Corp. launched a trade challenge against Montreal-based planemaker Bombardier Inc.

All three are vital to the economy of Quebec, Canada’s second most-populous province. And Quebec is seen as vital to Trudeau’s hopes of maintaining a strong grip on power in a national election set for October 2019.

As contentious talks on renegotiating NAFTA draw closer, Trudeau has little choice but to defend dairy farmers and offer help to the lumber industry, even though that is likely to prompt fresh U.S. challenges.

“Quebec is the key,” said one senior Liberal organizer.

The predominantly French-speaking province holds 78 of the 338 seats in the House of Commons and Liberals acknowledge they need to win extra seats there to offset expected losses elsewhere in 2019.

The challenge is that they captured 40 seats in Quebec in 2015, which was far more than expected.

The Liberals say they can take another 10 to 15 seats, but only if everything goes their way. This means showing support for the dairy industry – and its influential lobby – amid fresh attacks from Washington.

No Choice?

The United States has long complained about Canada’s system of domestic protections for its dairy industry, which bars most imports and keeps prices high. Trump last month branded the industry “a disgrace.”

The system is unpopular in large parts of Canada, where people complain about high prices for milk and cheese. Trudeau, however, has little choice but to defend it.

Leger Marketing pollster Christian Bourque noted there are dairy farms in every part of Quebec.

“If you’re seen as attacking farming and the land, it’s probably easy for the farmers’ union to get Quebeckers onside.

You don’t necessarily want to forget farmers,” he said.

While observers see little risk of Trudeau being defeated outright in 2019, the danger for the Liberals is losing their majority, forcing them to rely on opposition parties to govern.

This would inevitably mean political compromises and a diluted policy agenda.

The Liberals have so far tried to maintain calm as tensions ratchet up, relying on visits from cabinet ministers and to key states to press the message that trade benefits both sides.

Bark vs Bite

The outreach efforts will continue, according to a source familiar with official strategy, adding that Ottawa will show its teeth where necessary.

“Do people honestly expect the Canadian government just to say ‘We accept these lumber duties, we will move on and pay the price?'” asked the source, who requested anonymity given the sensitivity of the situation.

In Washington, White House spokesman Sean Spicer dismissed talk of a trade war.

“That’s why we have dispute settlement mechanisms to do this in a responsible way,” he told reporters on Monday.

In a sign of the mounting pressures on Trudeau over lumber, former Quebec Liberal premier Jean Charest said Ottawa should consider loan guarantees to affected firms.

“It is very black and white now: either the government supports them or they will just close down,” he said in an interview.

Although giving such aid could prompt fresh U.S. challenges, insiders make clear Canada has no option.

Trudeau last week met with Quebec’s timber unions and tweeted “supporting softwood lumber producers in Quebec and across the country is a priority.”

In the short term, he faces few immediate threats. Polls show the Liberals well ahead of the opposition Conservatives and New Democrats, both of which have stand-in leaders and will not choose permanent replacements until later this year.

“He’s had an exceptionally long honeymoon, he’s still having a honeymoon, but that has a lot to do with the absence of opposition,” said pollster Nik Nanos.

Although being seen to openly favor one province or region over another can be politically fatal in Canada, Liberal sensitivity toward Quebec is clear.

When it came time to deciding on aid to Bombardier – which has received billions in subsidies from Ottawa – the Liberals made clear the only question was not if, but how much.

Party operatives also admitted relief once became clear Ottawa would not have to decide before the election on whether to allow TransCanada Corp. to build an oil pipeline across Quebec.

Environmentalists and aboriginal activists had promised protests that Quebec Liberals said they feared could hurt the party’s chances.
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Warren Buffett, the chairman of Berkshire Hathaway Inc., Saturday faulted Wells Fargo & Co for failing to stop employees from signing up customers for bogus accounts even after learning it was happening.

Wells Fargo, whose largest shareholder is Berkshire, with a 10 percent stake worth roughly $27 billion, gave employees too much autonomy to engage in “cross-selling” multiple products to meet sales goals, Buffett said.

This “incentivized the wrong type of behavior,” and former Chief Executive John Stumpf, who lost his job over the scandal, was too slow to fix the problem, Buffett said.

Wells Fargo was among many topics discussed at Berkshire’s annual meeting in Omaha, where Buffett, 86, and Vice Chairman Charlie Munger, 93, fielded dozens of questions from shareholders, journalists and analysts.

“If there’s a major problem, the CEO will get wind of it. At that moment, that’s the key to everything. The CEO has to act,” Buffett said. “The main problem was they didn’t act when they learned about it.”

Still, Buffett’s support of current management and board was key to ensuring the re-election of the entire board last month.

Wells Fargo spokesman Mark Folk said “we agree” with Buffett’s comments, and have taken “decisive actions” to fix the problems and “make things right for customers.”

Asked whether Berkshire’s decentralized structure could lead to a similar scandal, Buffett said “as we sit here, somebody is doing something wrong at Berkshire,” whose units employ 367,000 people. But he said Berkshire has an internal hotline to flag possible misbehavior, which gets 4,000 calls a year.

Succession and dividends

The meeting also included discussions about Berkshire’s succession plans, its controversial partnership with Brazilian firm 3G Capital, and whether it will start paying dividends or make an acquisition.

Buffett has said Berkshire could have a new chief executive within 24 hours if he died or could not continue, and that nothing had changed just because he praised fewer managers than usual in his February shareholder letter.

He said it may have been harder to single people out because “we have never had more good managers.”

But he also said it would be a “terrible mistake” if capital allocation were not the “main talent” of his successor.

Buffett did lavish much praise on top insurance executive Ajit Jain, who some investors believe could be that successor, saying “nobody could possibly replace Ajit. You can’t come close.”

On 3G, with which Berkshire controls Kraft Heinz Co and tried to merge it with Unilever NV, Buffett acknowledged a dislike for the cost-cutting for which the Brazilian firm is known.

But, he said, “it is absolutely essential to America that we become more productive,” and 3G was “very good at making a business productive with fewer people.”

Buffett also raised the possibility Berkshire could pay its first dividend since 1967, if “reasonably soon, even while I’m around,” the company had too much cash it could not reasonably deploy.

“It could be repurchases, it could be dividends,” he said.

Berkshire ended March with more than $96 billion of cash and cashlike instruments, and Munger said it could do a “$150 billion” acquisition now if it wanted.

Airlines and IBM

Buffett defended Berkshire’s foray into airlines, where it is a top investor in American Airlines Group Inc., Delta Air Lines Inc., Southwest Airlines Co. and United Continental Holdings Inc.

He had long disdained the industry, which had gone through many bankruptcies, but said he is confident it will not resort to “suicidally competitive” pricing strategies that could spell doom.

Munger added: “You’ve got to remember railroads were a terrible business for decades and decades and decades, and then they got good.” Berkshire bought the BNSF railroad in 2010.

Buffett also admitted he was wrong to think International Business Machines Corp. “would do better” when he started amassing 81 million shares six years ago.

Berkshire recently sold about one-third of those shares even as it built a huge stake in Apple Inc., which Buffett said is more as a “consumer” company that a technology company.

He also addressed criticism that Berkshire discloses too little about businesses such as aircraft parts maker Precision Castparts Corp, which it bought last year for $32.1 billion.

“We want you to understand what you own,” he said, and “there are just a million things that are of minor importance” at Berkshire, whose market value is about $411 billion.

Buffett also noted that Berkshire reported far fewer investment gains in the first quarter, which dragged on results, but said the company now has a slight preference for taking tax losses, which could lose value if Washington lawmakers reduce the 35 percent corporate tax rate.

The annual meeting, expected to draw more than last year’s estimated 37,000 shareholders, is the main event of a weekend of events that Buffett calls “Woodstock for Capitalists.”

Buffett and Munger took questions after the traditional shareholder movie, and after Buffett had roamed a nearby exhibit hall featuring products from Berkshire companies.

He was joined at the traditional newspaper tossing contest by friends including Microsoft Corp co-founder and Berkshire director Bill Gates, and Miami Dolphins defensive tackle Ndamukong Suh.

Hundreds of shareholders lined up early outside downtown Omaha’s CenturyLink Center for the meeting. Several said they got there nearly five hours before doors opened around 6:45 a.m.

“Every year it seems I have to come earlier,” said Chris Tesari, a retired businessman from Pacific Palisades, California who said he arrived at 3:20 a.m. for his 21st meeting. “It’s a pilgrimage.”
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Berkshire Hathaway Inc Chairman Warren Buffett fumed Saturday that health care costs are eating away at the U.S. economy like “tapeworm” and said the Republican approach to overhaul Obamacare is a tax cut for the rich.

The U.S. House of Representatives on Thursday narrowly approved a bill to repeal and replace Obamacare, a victory for Republican President Donald Trump who has called the 2010 law a “disaster.”

Speaking at Berkshire’s annual shareholders’ meeting in Omaha, Buffett said his federal income taxes last year would have gone down 17 percent had the new law been in effect.

“So it is a huge tax cut for guys like me,” he said. “And when there’s a tax cut, either the deficit goes up or they get the taxes from somebody else.”

The Republican bill would repeal most of the taxes that paid for the law formally known as the Affordable Care Act. The party’s leadership has promised that the new American Health Care Act, which faces a likely overhaul and uncertain passage in the Senate, would address growing health care costs.

Buffett said rising health care costs are crippling the competitiveness of U.S. companies abroad.

Unlike in many other countries where much of health care spending is publicly financed, employers provide health insurance coverage for nearly half of Americans and often face skyrocketing rates.

Buffett said health care costs have risen much faster in the United States than in the rest of the world and “will go up a lot more.”

“Medical costs are the tapeworm of American economic competitiveness,” he said. “That is a problem this society is having trouble with and is going to have more trouble with.”

Buffett is a Democrat who vocally supported Hillary Clinton’s unsuccessful bid for the presidency against Trump. The fourth richest man in the world with a net worth totaling $74.3 billion, according to Forbes magazine, Buffett has vowed to donate nearly his entire fortune to charity.

Berkshire Vice Chairman Charlie Munger added that he thinks neither political party “can think rationally” about health care because they “hate each other so much.”
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President Daniel Ortega downplayed the possible impact of a U.S. bill that would condition international lending to Nicaragua on a range of democracy and rights issues, saying it’s more of a political than an economic threat to his country.

“The world is not going to disappear, the economy is not going to disintegrate” if the so-called Nica Act passes, Ortega said late Thursday after meeting with representatives of the International Monetary Fund during a visit to the Central American nation.

The bill before the House and Senate calls for the U.S. to oppose most loans to Nicaragua’s government through organizations such as the IMF, the World Bank and the Inter-American Development Bank, with the exception of funds for humanitarian purposes or to promote democracy.

That would be the official U.S. position unless the secretary of state certifies that Nicaragua is taking steps to hold fair and competitive elections, safeguard political rights, strengthen the rule of law and fight corruption, among other conditions.

Similar legislation last year failed to advance in Congress.
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More Americans age 65 and over are still punching the clock. In fact, the last time the percentage was this high was when John F. Kennedy was in the White House.

Last month, 19 percent of Americans age 65 and over were still working, according to government data released Friday. That’s the highest rate since 1962, and the trend has been upward since the figure bottomed out at 10 percent in 1985.

As America grows older and as life expectancy gets longer, some workers keep heading to the office because they like it and still feel engaged. But many others are continuing to work for a simpler, darker reason: They can’t afford not to.

More than a quarter of workers age 55 or older say they have less than $10,000 in savings and investments, according to the latest retirement confidence survey by the Employee Benefit Research Institute. Perhaps because of small nest eggs, nearly a third of workers in that age group say they expect to work until at least 70, if they retire at all.

Older workers still heading for jobs may also be the lucky ones. Many older Americans would like to work but say they can’t find a job, whether because they lack the skills or because employers are looking for someone younger. The unemployment rate for workers age 65 and over was 3.7 percent last month. That’s a tick higher than its median over the last 30 years, though it’s down from earlier this year.

The numbers may rise higher, critics say.

Congress this past week voted to overturn a federal rule designed to help states give more workers access to retirement savings plans.

Several states have been pushing to create their own plans to get more workers into plans like a 401(k) that automatically deduct savings from each paycheck. Low-income workers tend to have much less access to savings plans through their jobs.

Republicans and players in the investment industry, though, argue that the state-run plans could end up being much more expensive than imagined and would water down safeguards in place to protect investors.
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In Venezuela, plagued with chronic food shortages and a devastated economy, Carmen Elena Perez describes her refrigerator as merely “an ornament in my kitchen, because filling it costs me too much money.”

Dulce Maria Garcia Leon, in the western state of Trujillo, says she has corn masa and “a little bit of cottage cheese” and eggs, though her fridge often holds “only cold.”

Vane Vargas jokes that her refrigerator, with its top-mount freezer, “is like the North Pole: ice above, water below.”

Bitter humor remains among the few things in plentiful supply in this once-wealthy South American country, where many of its 31 million people struggle to find enough to eat.

So VOA’s Spanish Service invited Facebook and Twitter users there to dish about the contents of their refrigerators and cupboards. The informal, unscientific survey drew more than 60 responses – 54 on Facebook, nine on Twitter – offering a glimpse into daily lives.

Now, few people mark their days with three full meals. Instead, many count the hours spent standing in line for bread, oil and other basics.

“We eat what we can get,” says Elvis Mercado of El Tigre, a city about 340 kilometers southeast of the capital. Usually it’s a meal of arepas, the Venezuelan pan-fried staple made from corn flour, “because the salary is not enough to buy food for a fortnight.”

A raise, but little respite

Seeking to counter widespread protests, socialist President Nicolas Maduro this week ordered a 60 percent raise in the minimum wage, including food subsidies and pension increases. That translates to roughly 200,000 bolivares a month – or $278 at the official currency exchange rate on May 5.

But, given a scarcity of dollars as well as consumer goods, that amount has the buying power of just $39 on the black market – the one in which everyone does business. The International Monetary Fund predicts Venezuela’s inflation rate – already one of the world’s highest – could reach 720 percent this year.

With increases in both wages and prices, “we are practically in the same” spot, Jhonaiker Daniel Rodriguez says.

“Thank you very much, but what is needed is to keep prices stable,” Nancy Haydee Roa says.

Rsan Leuqim writes that a carton of eggs is 11,000 bolivares ($2.15) – roughly 5 percent of a minimum-wage worker’s monthly total.

If you can find eggs. Many survey respondents complained of shortages of consumer goods, most of which are imported.

“We go to a store and there is nothing! If there is, it is very expensive,” Dexcy Ramirez says via Facebook. Near her home in Barinas, in west-central Venezuela, “a kilo of [powdered] milk costs 20,000bv” or $3.91.

Adreina Chauran Pineda frets about imports: “A soda is worth three days’ salary, a little vegetable soup is worth 1,500bv (29 cents). … A kilo of meat is worth 10,000” – or $1.96.

Changing diets

Rising costs have altered Paula Pena’s diet. “I buy grains,” she writes on Facebook, saying it’s what she and her family now primarily rely on for nutrition. She purchases meat, including chicken, “when we can. We cannot buy fruits or vegetables.”

Yamile Corona of Valencia, Venezuela’s third-largest city, writes of being “blessed with the mango tree.”

Scarcity generally is more pervasive outside of Caracas.

Shortages of food and medicine last year sparked dozens of riots and spasms of looting in parts of the country. Desperation has driven some people to forage for wild roots, occasionally with dire consequences. A young man in the eastern city of Maturin died on his 16th birthday last July after eating bitter yuca, a toxic plant, The New York Times reported in chronicling the case.

Luzdary Mussa Uribe writes that she once was well fed but has involuntarily lost weight: “What we are is yellow and thin.”

Government-subsidized food delivery

Last year, the government created a program called Local Supply and Production Committees (CLAPs) to manage distribution and combat hoarding. Community leaders deliver bags or boxes of foodstuffs to the homes of people who’ve registered.

“Only rice, milk, grains and flour are in the bags that the government sells,” Ruperta@vidayarte2012 tells VOA via Twitter. “I have never received one. … And the corn meal that is really our daily bread, you just do not get it.”

Liliana Vasqez, who lives in Rio Chico in Miranda state, says she recently paid 10,500bv ($2.06) for a CLAP box containing a liter of oil, six cans of tuna, four bags of rice, small jars of mayonnaise and catsup, some pasta and a kilo of flour. Vasquez – whose son relayed her information to VOA – says it was the second time that a CLAP delivery was made in her neighborhood since the program began.

Nelly Mendez, a survey respondent from an unknown location in Venezuela, says she’s gotten deliveries “every 3 months of a case of CLAP” and the contents last just for two days.

The CLAP program has been criticized for inconsistency and for allegedly favoring supporters of the ruling United Socialist Party of Venezuela (PSUV). 

“Sadly, both scarcity and hunger” mark the “disastrous reality” for Venezuelans, Raul Ernesto Gonzalez Salazar tells VOA.

For now, humor makes the situation almost palatable.

“The refrigerators are on vacation,” Nery Acevdo echoes, adding that soon hungry Venezuelans “will eat whatever we see.”
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The United States office that handles highway safety announced it would investigate complaints that brakes can malfunction on Nissan’s popular Murano SUV.

According to documents released Friday by the National Highway Traffic Safety Administration, nearly 60 people have complained that the brakes on their cars lose pressure when trying to stop on a low-friction surface.

Some drivers reported increased stopping distances after pushing the pedal all the way to the floor. The investigation will cover upwards of 100,000 Muranos from the 2009 model year.

In a statement, Nissan said it is cooperating with the probe and encouraged any drivers experiencing brake problems to visit their local Nissan dealership.

Some drivers cited in the complaint said they replaced the anti-lock brake hydraulic control unit in their SUVs and that apparently fixed the problem.

The investigation will determine if Nissan needs to issue a recall on the vehicles. The NHTSA said the problem generally involves older, higher mileage vehicles.
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After yet another viral video has surfaced of people being kicked off an overbooked plane. Delta Air Lines has apologized.

In a statement, the company said it was “sorry for the unfortunate experience.”

The video, posted by Brian and Brittany Schear, showed them and their two toddlers being told to exit the flight or be arrested after a dispute over a seat the Schears bought for their teenage son.

The couple posted the video on YouTube and showed Brian Schear arguing with someone aboard Delta flight 2222 before take-off from Maui to Los Angeles.

The dispute started over whether Brian Schear could use the seat he had bought for his teenage son for his toddler and if the toddler was required to use a car seat or could sit in an adult’s lap.

“You will hear them lie to me numerous times to get my son out of the seat. The end result was we were all kicked off the flight,” Schear wrote in a blurb about the incident.

“They oversold the flight. When will this all stop?”

The Schears ended up leaving the flight and stayed at a hotel before leaving the following day.

“Delta’s goal is to always work with customers in an attempt to find solutions to their travel issues. That did not happen in this case and we apologize,” Delta’s apology stated, adding it would refund their travel expenses and provide additional compensation.

The incident came about a month after another incident was captured on video showing a man who was injured when forcibly removed from a United flight. The airline announced an undisclosed settlement with that man last month.
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Small-business owners are applauding President Donald Trump’s plan to overhaul the tax system, saying lower taxes for everyone means more buying power for consumers and more money for businesses to hire workers. But can the White House plan simplify the nation’s cumbersome tax code fairly? And how would lower- and middle-income Americans fare? Mil Arcega spoke to tax analysts to find out.
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Finance leaders of Japan, China and South Korea agreed to resist all forms of protectionism in a trilateral meeting on Friday, taking a stronger stand than G20 major economies against the protectionist policies advocated by U.S. President Donald Trump.

“We agree that trade is one of the most important engines of economic growth and development, which contribute to productivity improvements and job creations,” the finance ministers and central bank governors of the three nations said in a communique issued after their meeting.

“We will resist all forms of protectionism,” the communique said, keeping a line that was removed – under pressure from Washington – from a G20 communique in March when the group’s finance leaders met in Germany.

China has positioned itself as a supporter of free trade in the wake of Trump’s calls to put America’s interest first and pull out of multilateral trade agreements.

The trilateral meetings’ communique said Asian economies were expected to maintain relatively robust growth thanks to a long-awaited cyclical recovery in manufacturing and trade.

But it warned that downside risks remained and called for policymakers to use “all necessary policy tools” to achieve strong, sustainable, balanced and inclusive growth.

“We will continue a high degree of communication and coordination among China, Japan and Korea to cope with possible financial instability in the context of increased uncertainty of the global economy and geopolitical tensions,” the communique said.

It also said the three countries agreed to enhance cooperation under the G20 framework and work towards a successful summit of the group in Hamburg in July.

The trilateral meeting was held on the sidelines of the Asian Development Bank’s annual meeting in Yokohama, eastern Japan.
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Last week, the White House unveiled what it called “the largest tax reform in U.S. history.”  Gary Cohn, who heads the President’s National Economic Council said, “We’re going to cut taxes for businesses to make them competitive and we’re going to cut taxes for the American people, especially low- and middle-income families.”

But analysts say to call the one page proposal a plan, may be a bit of a stretch. 

Policy documents from the White House usually provide pages of detail says Scott Greenberg, a tax analyst at the conservative leaning Tax Foundation.  He says it’ s more of a wish list.

“That being said, it opens a window onto what the administration’s main priorities are,” he said.

Aside from simplifying the nation’s notoriously complicated tax forms, the plan includes doubling the current standard deductions. For individual tax filers, that means zero taxes on the first $12,000 of income, and for couples filing jointly, no taxes on the first $24,000.  

According to Greenberg, “We estimated that the average household making between the 40th and 60th income percentile, so households right in the middle would be about 1.3 percent richer as a direct result of the various tax cuts.”

But the Tax Foundation’s estimates show wealthier Americans would enjoy much larger gains, up to 16 percent more of their after tax income. 

William Gale, a senior fellow in Economic Studies at the Brookings Institution says, “It’s basically a massive tax cut for the very highest income households.”

While Trump’s tax plan eliminates some loopholes used by wealthy Americans, the Tax Foundation says the proposal aims to level the playing field for high income earners who have traditionally shouldered the country’s tax burden.

But given the widening income gap, Gale says it makes no sense to reward wealthier Americans with more tax breaks. 

“They’ve done enormously well over the last two, three, four decades, their average tax rates is actually lower now than it was in the past,” he said.

Without corresponding cuts to government programs, analysts say the Trump tax cuts are likely to “blow a hole in the deficit” (expand the deficit shortfall). 

New estimates show the revenue lost to tax cuts would add between $5 to $7 trillion to the U.S. debt over 10 years.  But U.S. Treasury Secretary Steven Mnuchin says tax reforms combined with sensible trade policies would, over time “help the economy grow at a sustained rate of three to four percent”, a claim many economists say is unrealistic.  

“What I like about this plan is that it is bold in attempting to lower the business tax burden in the United States and to create a more competitive economic climate.  In that I think perhaps the heart of the plan is in the right place,” says Greenberg.

Small business owners like Rick McVey who runs the Dilly Lily Flower Shop says the tax cuts would help his business grow. 

“I think with the decrease in the tax rate, I may be able to re-invest the money to buy some capital equipment,” he said.

And Donna Seabusch, the owner of Cookie Creations in Atlanta, says tax cuts will help businesses still trying to recover from the downturn. 

“The economy was so bad several years ago, it hurt everyone.  And I think this is going to give people a jump start.  When your taxes are lowered – from your income tax, corporate taxes – it gives more people more money to spend,” she said.

The administration says slashing the the U.S. corporate tax rate from 35 percent to 15 percent could also potentially bring back trillions of dollars from companies that have moved capital and investments offshore in search of lower tax rates.  But William Gale, who is also co-director at the Tax Policy Center, says it’s a mistake to think other countries will not respond. 

“If we cut our rate to 15 percent other countries are going to cut theirs, and we’ll end up in a sort of race to the bottom on the corporate rate,” he said.  

Analysts who spoke with VOA believe there is little chance the president’s tax reform proposal will become law in its current form.  But at a recent panel discussion hosted by the Conference Board on the president’s first 100 days, William Hoagland at the Bipartisan Policy Center added yet another political wrinkle. 

Hoagland told the audience, “I think its going to be very difficult for Congress and Democrats to provide that 60 votes for tax reform unless the president of the United States releases his tax forms.”
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U.S. Secretary of State Rex Tillerson met Southeast Asian foreign ministers on Thursday to seek their support in pressing North Korea to give up its nuclear and missile programs.

Tillerson’s first meeting with all members of the 10-nation Association of Southeast Asian Nations will also address another pressing regional issue – China’s assertive pursuit of territory in the South China Sea, where several ASEAN members have competing claims.

Tillerson told reporters at the start of the Washington meeting that he and his counterparts would discuss North Korea.

Last week in the U.N. Security Council, Tillerson called on all U.N. members to fully implement U.N. sanctions on Pyongyang, which has ignored demands to abandon its weapons programs and is working to develop a nuclear-tipped missile capable of reaching the United States.

He also called on countries to suspend or downgrade diplomatic ties with Pyongyang, saying it abuses diplomatic privileges to help fund the arms programs. Tillerson warned countries that if they did not do so, Washington would sanction foreign firms and people conducting business with North Korea.

All ASEAN members have diplomatic relations with North Korea and five have embassies there.

The Trump administration wants Southeast Asian countries to crack down on money laundering and smuggling involving North Korea and restrict legal business too, U.S. officials said.

The administration has been working to persuade China, North Korea’s neighbor and only major ally, to increase pressure on Pyongyang. U.S. officials say they are also asking China to use its influence with more China-friendly ASEAN members, such as Laos and Cambodia, to persuade them to do the same.

U.S. efforts have included a flurry of calls by President Donald Trump at the weekend to the leaders of the Philippines, Thailand and Singapore.

Diplomats say U.S. pressure has caused some irritation in ASEAN, including Malaysia, which has maintained relations with Pyongyang in spite of the assassination of North Korean leader Kim Jong Un’s estranged half brother at Kuala Lumpur International airport on Feb. 13.

On the South China Sea, ASEAN has adopted a cautious approach recently toward China, with a weekend summit of its leaders avoiding references to Beijing’s building and arming of islands there.

Analysts say this reflects concerns among some in the region that former U.S. President Barack Obama’s “pivot” to Asia has been abandoned in favor of Trump’s “America First” agenda, leading to more countries being pulled into Beijing’s orbit.

 
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The European Union’s competition watchdog says it accepts commitments made by online giant Amazon to change part of its e-book contracts to avoid fines for anti-competitive behavior.

Amazon has promised not to enforce any contract clause that might oblige other publishers to offer it similar terms and conditions as those offered to competitors.

The EU Commission said Thursday that it has made the commitments legally binding. Amazon could be fined 10 percent of annual turnover if it reneges over the next five years.

EU Competition Commissioner Margrethe Vestager said the “decision will open the way for publishers and competitors to develop innovative services for e-books, increasing choice and competition to the benefit of European consumers.”

The Commission says Europe’s e-books market is worth more than 1 billion euros ($1.1 billion).

 
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A closely watched survey indicates that economic growth across the 19-country eurozone struck a 6-year high in April.

Financial information company IHS Markit says Thursday that its purchasing managers’ composite output index — a broad gauge of economic activity — rose to 56.8 in April from 56.4 the previous month. The reading was at its highest level since April 2011.

Anything above 50 indicates expansion.

Chris Williamson, the firm’s chief business economist, said the survey portrays “an economy that is growing at an encouragingly robust pace and that risks are moving from the downside to a more balanced situation.” He said it’s consistent with quarterly growth of 0.7 percent.

On Wednesday, figures showed the eurozone grew by 0.5 percent in the first quarter.
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President Michel Temer’s proposal to reform Brazil’s costly social security system cleared a committee vote Wednesday, but the measure, deeply unpopular with voters, faces an uphill battle in the full Congress.

The committee voted 23-14 to approve the constitutional amendment, which would make Brazilians work longer and reduce pension benefits to plug a widening budget deficit at the root of the country’s worst recession.

Temer spokesman Alexandre Parola told reporters the vote numbers showed that “Brazilian society recognizes the urgent need for reforming the social security system.”

Presidential aides said, however, the government was not certain it had secured the two-thirds vote needed in the full chamber to approve a bill that is crucial to Temer’s efforts to recover investor confidence and restore investment and growth.

A vote in the full house planned for next week has been put back to allow the government coalition to muster the necessary 308 votes by swaying lawmakers worried about angering voters ahead of next year’s elections.

A generous system

Pension reform is a contentious issue in Brazil, which has one of the world’s most generous social security systems, allowing retirement on average at the age of 54 with almost full benefits, compared with 72 years in Mexico.

The bill sets a minimum retirement age for the first time in Brazil, at 65 for men and 62 for women.

Changes to the country’s labor laws and pension system triggered violent clashes between demonstrators and police in Brazil’s main cities Friday during the first national strike called by unions against Temer’s austerity agenda.

About 71 percent of Brazilians oppose the bill, according to a Datafolha survey Monday.

Concessions

Economists warn that the social security system is one of the main threats to Brazil’s government finances, with pension expenditures accounting for nearly half of its spending before debt payments.

Temer made concessions to ease passage of the proposal at the center of his austerity plan, raising doubts among investors about the watered-down bill’s ability to help narrow a bulging budget deficit that cost Brazil its investment-grade credit rating two years ago. Temer agreed to set a lower retirement age for women, police, teachers and rural workers and grant more generous transition rules for workers after allies balked at backing it.

Finance Minister Henrique Meirelles has said the changes will reduce the reform’s impact by 25 percent over 10 years, lowering fiscal savings to 600 billion reais ($190 billion).

Pension reform or taxes

Investors see pension reform as the only way for Brazil to shore up its finances without resorting to huge tax hikes. The Brazilian real would probably drop more than 10 percent if the scandal-plagued Congress fails to pass the bill, currency strategists estimated in a Reuters poll Wednesday.

Without the overhaul, Brazil’s aging population is expected to lift social security spending to 17.2 percent of gross domestic product by 2060, from 8.1 percent last year, according to government estimates.
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Veterans Affairs Secretary David Shulkin says his department is seeking to close perhaps more than 1,100 VA facilities nationwide as it develops plans to allow more veterans to receive medical care in the private sector.

At a House hearing Wednesday, Shulkin said the VA had identified more than 430 vacant buildings and 735 that he described as underutilized, costing the federal government $25 million a year.

He said the VA would work with Congress in prioritizing buildings for closure and was considering whether to follow a process the Pentagon had used in recent decades to decide which of its underused military bases to shutter, known as Base Realignment and Closure, or BRAC.

“Whether BRAC is a model that we should take a look, we’re beginning that discussion with members of Congress,” Shulkin told a House appropriations subcommittee. “We want to stop supporting our use of maintenance of buildings we don’t need, and we want to reinvest that in buildings we know have capital needs.”

Aging buildings

In an internal agency document obtained by The Associated Press, the VA pointed to aging buildings it was reviewing for possible closure that would cost millions of dollars to replace. It noted that about 57 percent of all VA facilities were more than 50 years old. Of the 431 VA buildings it said were vacant, most were built 90 or more years ago, according to agency data. The VA document did not specify the locations.

While President Donald Trump’s budget blueprint calls for a 6 percent increase in VA funding, Shulkin has made clear the government’s second-largest agency with nearly 370,000 employees will have to operate more efficiently and that budget increases should not be considered a given in future years. 

The department recently announced hiring restrictions on roughly 4,000 positions despite the lifting of the federal hiring freeze and also left open the possibility of “near-term” and “long-term workforce reductions.” Shulkin is also putting together a broader proposal by fall to expand the VA’s Choice program of private-sector care.

BRAC controversial

The Pentagon’s BRAC process often stirred controversy in the past as members of Congress expressed concern about the negative economic impact of shuttering military bases and vigorously opposed closures in their districts.

Rep. Jeff Fortenberry, R-Neb., a vice chair of the appropriations panel, told Shulkin that Congress was looking forward to working with the VA “constructively” on the issue in part by determining how excess VA buildings could be put to good community use, such as for fire-fighting, security or landscape maintenance.

“Don’t ever use the term BRAC because it brings up a lot of bad memories,” Fortenberry cautioned. “You automatically set yourself up for a lot of controversy.”
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African-Americans and Hispanics, the largest racial and ethnic minorities in the United States, made positive strides economically and educationally during the past year but continue to lag behind whites, a civil rights group’s annual study contends.

“The theme of this year’s State of Black America report is ‘protecting our progress,’ ” National Urban League CEO Marc Morial said.

In its study, released Tuesday, the league found the standard of living for African-Americans was 72.3 percent of that of whites, on average. For Hispanics, the equality index was a bit higher, at 78.4 percent. The index measures quality of life for blacks and Hispanics in terms of economics, health, education, social justice and civic engagement.  

Minority employment is at its highest level in almost a decade, but “any progress made towards racial equality is increasingly under threat.” Morial said. More minorities have health care at a time when efforts are underway to roll back expanding coverage, he added.

Improvements in education

The report indicated that African-Americans made gains in education, with a growing percentage of blacks staying in school and obtaining associate degrees.

According to the report, racial disparities plague minorities in terms of social justice equality. As examples, the report noted that more blacks are jailed after being arrested than is the case with whites, and that whites posted a greater decline than blacks in their likelihood of being victims of violent crime.

The study also found a troubling rise in hate crimes committed against members of religious and racial minorities. “A nation of a great mosaic that the United States of America represents cannot tolerate hateful incidents. It is corrosive, it is divisive and it is un-American,” Morial said.

The Trump administration has proposed major budget cuts to government programs that help low-income Americans, who are disproportionately black. The civil rights organization said it would press lawmakers and private groups to invest $4 trillion over the next 10 years in job training, enhanced education programs and infrastructure projects to revitalize minority communities.
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On a trip to India, the president of Portland State University reassured prospective students they’d be safe on his campus. Purdue University sent overseas applicants a note from two mayors touting Indiana’s “friendly smiles” and hospitality. And dozens of other schools produced online videos to welcome foreign students.

As U.S. colleges face new but significant declines in applications from abroad, many are rolling out marketing efforts to combat fears of harassment and concerns that President Donald Trump’s stance on immigration reflects a United States that is becoming less welcoming to foreigners.

“Students are telling us that they don’t feel safe here in the United States. That they’re concerned about discrimination, racism,” said Katharine Johnson Suski, admissions director at Iowa State University. “This year it was a little more important to make sure that they felt comfortable with their decision.”

Drop in overseas students expected

Colleges and universities have received a financial boost in recent years from international students, who are typically charged higher tuition rates than American peers who live in state. Some schools have come to rely on revenue from foreign students, whose enrollment has climbed sharply over much of the past decade, according to federal data.

But there is evidence enrollment figures at some schools could drop next fall. Nearly half the nation’s 25 largest public universities saw undergraduate applications from abroad fall or stagnate since last year, according to data colleges provided to The Associated Press in response to public records requests. Eight schools did not provide data, while six saw gains.

International applications to the University of Arizona are down 24 percent compared with this time last year; California State University, Northridge, is down 26 percent. The University of Houston has seen a 32 percent drop, although it’s still accepting applications and its numbers will likely rise.

The U.S. Department of Education did not immediately comment.

Temple posts a ‘you are welcome here’ video

Philadelphia’s Temple University sparked a chain reaction in November when it posted an online video featuring students and staff members saying “You are welcome here” in multiple languages, set to upbeat piano music. Since then, more than 100 other schools have made similar videos and circulated them abroad. Temple, a private university, also hosted seven overseas receptions for admitted students, more than in the past.

At Iowa State University, officials are ramping up their overseas mailings to sell students on the school’s Midwestern charm. The University of Minnesota is considering a phone campaign. The University of Florida has produced videos featuring “global Gators” and is offering online video chats.

“Given the current climate, it seems like this is something which is even more important,” said Joseph Glover, provost at Florida. “Obviously we are concerned about the situation, like every other public university in the United States.”

Safety concerns are nothing new among international students, but many schools say anxieties have grown since Trump was elected. Some students have said Trump’s “America first” rhetoric and his proposal to ban immigration from six majority-Muslim nations have given them pause. Some application deadlines fell before the election, but even Trump’s campaign rhetoric cast doubts, experts say.

Kansas shooting a common subject

Students in India have been particularly alarmed, especially after a gunman shot two Indian men at a Kansas bar in March, killing one, after allegedly saying “get out of my country.”

Portland State President Wim Wiewel was in India soon after the shooting to meet prospective students, and the discussion quickly turned to safety. Wiewel and his wife reassured families that Portland is friendly to foreign visitors.

“People in America recognize that even though there are a few crazies around, it’s not like it’s open season on Indians or Muslims,” Wiewel said. “Having us talk to them totally took away their fears. But the problem, of course, is we can’t talk to everyone.”

Some government officials are trying to tackle the problem, too. Several of the videos feature cameos from state governors or congressional members. A top official from America’s embassy in India penned a newspaper column last week stressing that “U.S. colleges and universities take pride in providing safe and welcoming environments.”

Along with India, fewer applications have been coming from China and Saudi Arabia, which previously sent large numbers to American colleges. Experts say factors at play include economic turmoil in China and India, but some have blamed the downturn on a “Trump effect.”

University officials offer assurances

Officials at the University of New England say Trump’s election has complicated plans to recruit Moroccan students. At a February open house in Tangier, the election was a frequent concern.

“Several students wearing hijabs wondered whether they would be welcome in the United States, given the election of Donald Trump and the rhetoric they were hearing,” said Anouar Majid, vice president for global affairs at the private school in Portland, Maine. “We assured them that the United States is very welcoming.”

When he applied to the University of New England, 17-year-old Aymane Lamharzi Alaoui was worried about discrimination, he said. Since then, he has spoken with family members in Boston and believes Americans are more welcoming than some of Trump’s comments suggest.

“I know there’s an increase in xenophobia and racism in the past couple of months in the U.S.,” he said in an interview.  “I’m sure there are some places where I wouldn’t be very welcome, especially places in the southern United States, but I think most of the country is very tolerant.”

Loss of overseas students will hurt

For most colleges, it’s too early to know how many overseas students will enroll next fall. But many say any loss could be a blow.

At Iowa State, where applications are down 23 percent, international students bring valued diversity, said Suski, the admissions director. And there is also the revenue they provide.

“There will,” Suski said, “be a financial impact on our campus come this fall.”

 
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Royal Caribbean International has announced it will resume weeklong cruises from New Orleans to the Bahamas and Mexico’s Yucatan Peninsula.

News outlets report Royal Caribbean said in a news release Monday that their 2,435-passenger Vision of the Seas cruise ship will relocate in December 2018 to the Port of New Orleans after a three-year hiatus. The company announced the move as part of an overview of its 2018-2019 fleet plans.

After a two-year agreement with the Port of New Orleans ended in 2014, the Miami-based company chose to end sailings from the city. The departure came despite several years of growth for the city as a cruise hub.

The 915-foot ship will sail from Miami to Los Angeles before setting sail for New Orleans.
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Apple Inc. reported a surprise fall in iPhone sales for its second quarter on Tuesday, indicating that customers may have held back purchases in anticipation of the 10th-anniversary edition of the company’s most important product later this year.

Under pressure from shareholders to hand over more of its $250 billion-plus hoard of cash and investments, Apple boosted its capital return program by $50 billion, increased its share repurchase authorization by $35 billion and raised its quarterly dividend by 10.5 percent.

Investors were unmoved, sending shares of the world’s most valuable listed company down 1.9 percent at $144.65 in after-hours trading.

Apple sold 50.76 million iPhones in its fiscal second quarter ended April 1, down from 51.19 million a year earlier.

Analysts on average had estimated iPhone sales of 52.27 million, according to financial data and analytics firm FactSet.

Apple Chief Financial Officer Luca Maestri argued the decline was not as bad as it looked, given the peculiarities of how phone sales are calculated.

The company reports what are called “sell-in” figures for the iPhone, a measure of how many units it sells to retailers, rather than “sell-through” figures, which measure how many phones are actually sold to consumers.

Maestri said the company reduced the volume of inventory going through its retail channel by about 1.2 million units in the quarter, meaning the company sold about 52 million phones to customers on a sell-through basis.

Despite the dip in unit sales, iPhone revenues rose 1.2 percent in the quarter, helped by a higher average selling price.

10th anniversary

Expectations are building ahead of Apple’s 10th-anniversary iPhone range this fall, with investors hoping that the launch would help bolster sales.

Apple typically launches its new iPhones in September.

A big jump in sales usually follows in the holiday quarter, before demand tapers over the next few quarters as customers hold back ahead of the next launch.

Apple’s 10th-anniversary iPhone range might sport features such as wireless charging, 3-D facial recognition and a curved display.

“There is a general softening in phone demand to contend with as well as expectations of a big upgrade, all of which softens the blow of this quarter’s miss,” said James McQuivey, a Forrester Research analyst. “If we see Apple downplaying expectations before the next upgrade cycle, it might mean that the company isn’t confident it will beat those expectations.”

The company forecast total revenue of between $43.5 billion and $45.5 billion for the current quarter, while analysts on average were expecting $45.60 billion, according to Thomson Reuters I/B/E/S.

Analysts on average expect the company to sell 42.31 million iPhones in the current quarter, according to FactSet.

For the second quarter, the company’s net income rose to $11.03 billion, or $2.10 per share, compared with $10.52 billion, or $1.90 per share, a year earlier.

Analysts on average had expected $2.02 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 4.6 percent to $52.90 billion in the quarter, compared with analysts’ average estimate of $53.02 billion.

A 17.5 percent jump in the company’s services business – which includes the App Store, Apple Music, Apple Pay and iCloud — to $7.04 billion, boosted revenue.

“We are particularly encouraged by the fact that service revenue is nowhere near as cyclical as product revenue,” Neil Saunders, Managing Director of GlobalData Retail, wrote in a note to clients.

Apple’s revenue from the Greater China region fell 14.1 percent to $10.73 billion in the quarter, as cheaper rivals in the region chipped away at sales.

Maestri said that sales of Macs and the company’s services were strong in China during the March quarter. “The performance we’re seeing in China should get better going forward this year,” he said.

Apple’s gross margin hit 38.9 percent, slightly ahead of analysts’ average expectation of 38.7 percent, despite higher prices for memory chips. The company said it expects gross margins next quarter between 37.5 percent and 38.5 percent, versus analysts’ expectation of 38.3 percent, according to FactSet.

“NAND and DRAM [memory chips] are under pressure right now in terms of some price pressure. We saw that in the March quarter and expect that to continue into the June quarter, but for all the other commodities, we see prices declining,” Maestri said.

 
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U.S. lawmakers have put the nation’s airlines on notice: Improve customer service or we will make you.

The House Transportation and Infrastructure Committee held a hearing for top airline executives to testify, and to determine how Congress might respond after a passenger was violently dragged off an overbooked United Airlines flight.

“Seize this opportunity,” committee Chairman Bill Shuster, a Pennsylvania Republican, told United CEO Oscar Munoz and other airline executives at a hearing. Otherwise, “we’re going to act and you’re not going to like it,” he said, predicting a “one-size-fits-all” solution that may serve some airlines but not all.

Munoz apologized repeatedly for the removal of David Dao, 69, who last month refused to give up his seat to make room for airline employees. The video of airport police dragging Dao from his seat went viral.

“In that moment for our customers and our company we failed, and so as CEO, at the end of the day, that is on me,” Munoz said. “This has to be a turning point.”

Munoz was joined at the hearing by United President Scott Kirby and executives from American Airlines, Southwest Airlines and Alaska Airlines.

American Airlines experienced its own public relations fiasco last month when a passenger video went viral, showing a woman on a plane in tears holding a child in her arms and another at her side after an encounter with a flight attendant over a baby stroller.

United and other airlines have announced policy changes regarding overbooked flights. Airlines have said they routinely overbook flights because a small percentage of passengers do not show up.
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Greece reached a deal with its European lenders Tuesday for more reforms in exchange for a badly needed bailout installment so Athens could avoid possible bankruptcy.

After months of often tough talks, Greek officials agreed to more pension cuts and tax increases.

The European Commission and European Central Bank will bring the deal to their finance ministers at their May 22 meeting.

Greek Prime Minister Alexis Tsipras’ leftist government says it is confident parliament will approve the new round of cuts.

Greece desperately needs about $8 billion to meet a debt payment in July or stare possible bankruptcy in the face.

International Monetary Fund official Poul Thomsen says while the IMF welcomes the deal between Greece and its eurozone lenders, the country needs debt relief and restructuring. Thomsen says the Greek debt of close to 180 percent of its gross domestic product is unsustainable.

The IMF has balked at taking part in the latest Greek bailout unless the debt is renegotiated.

Greece has been relying on international bailouts since 2010, when the outgoing conservative government badly underreported the country’s debt.

The harsh economic reforms, including cuts in social spending and tax hikes, have caused pain and chaos for many Greeks. But the bailouts have helped Greece fend off total collapse.
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President Donald Trump’s nominee to be the U.S. ambassador to China said on Tuesday he would do everything possible to address what he called China’s “unfair and illegal” sales of underpriced steel in the world market.

“I want to do everything I can to make sure that we stop the unfair and illegal activities that we’ve seen from China in the steel industry,” the nominee, Iowa’s Republican Gov. Terry Branstad, said at his U.S. Senate confirmation hearing.
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African military expenditures have finally slowed down after more than a decade of steady increases, according to a new report on global defense spending. The main reason, the report found, is a drop in oil prices.

“The sharp decreases in oil prices has affected quite a number of African countries, namely South Sudan and Angola.  This has kind of driven almost the entire regional trend,” said Nan Tian, a researcher at the Stockholm International Peace Research Institute’s (SIPRI) Arms and Military Expenditure Program, the organization that authored the report.

The SIPRI report found military spending in Africa in 2016 was down by 1.3 percent from the previous year and totaled about $37.9 billion.

Despite the drop, Africa’s military spending remains 48 percent higher than it was a decade ago.  “A few of the top spenders within these regions are generally oil economies, so the low oil prices have meant sharp cutbacks in government financing and that includes military spending,” he said.

Some of Africa’s biggest spenders in recent years have included oil-rich Angola, which has sought to modernize its air force and navy, and Algeria which has tried to preserve its stability amid the collapse of Libya and the rise of extremism in North Africa.  Both of those countries have slowed spending recently, Tian said.

Weighing spending against needs

Tian said that perhaps the most important question to ask, is whether military spending in Africa is at appropriate levels.

Ten African countries have military expenditures greater than 3 percent of their GDP. The highest are the Republic of the Congo where military expenditures totaled 7 percent of GDP in 2016, and Algeria where military spending totaled 6.7 percent of GDP.

Globally, military spending is 2.2 percent of GDP or about $227 per person.

“You have the security aspect also in Africa.  We have the opportunity costs,” Tian said.  “It is the poorest continent.  The question is: should this continent be spending?  Are they spending enough or are they spending too much on military based on their current income levels?  Should they rather be prioritizing other aspects of spending maybe health care, maybe education, maybe infrastructure?”

Not all African countries saw a decline in military spending.  According to the report, Botswana’s military spending grew by 40 percent, or about $152 million.  Botswana is regularly noted for having a long record of peace and good governance, and is undergoing a military modernization program.

Nigeria increased its military spending by 1.2 percent to $1.7 billion as it strives to defeat the radical Islamist group Boko Haram.  Similarly, Kenya and Mali increased military spending due to extremist threats in their regions.
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