Hackers breached the U.S. Securities and Exchange Commission’s computer system last year by taking advantage of companies that used authentic financial data when they were testing the agency’s corporate filing system, according to sources familiar with the matter.

The Federal Bureau of Investigation and the U.S. Secret Service have since launched an investigation into a 2016 hack into the SEC’S EDGAR system, several of those people said.

The sources spoke anonymously because it is not a public investigation.

The SEC’s EDGAR system is a crucial network used by companies to file earnings reports and other material information.

Spokesmen for the FBI, the Secret Service and the SEC all declined to comment, saying they could neither confirm nor deny the existence of an investigation.

The breach occurred in October 2016 and was detected that same month. The attack appeared to have been routed through a server in Eastern Europe, according to an internal government memo describing the incident, which was seen by Reuters.

There was no evidence at the time that data had been improperly retrieved, according to one source familiar with the matter, and the issue was handled internally by the SEC’s Office of Information Technology.

Only after the SEC’s Enforcement Division detected a pattern of suspicious trading ahead of company public disclosures did officials go back to the agency’s technology staff and ask if some companies were using authentic data when they were testing the EDGAR system, one of the people said.

The person said that “not many companies” had submitted real
data that is believed to have been hacked.

The test process is for people to submit test filings to ensure that they format correctly and don’t have submission errors,” the person said.

“They normally use that right before they file their normal reports. They are supposed to use dummy data,” the person said. “However, it is still supposed to be protected the same way in case they do something stupid. A couple companies did, and it wasn’t protected properly.”

SEC chair to confirm probe

SEC Chairman Jay Clayton will confirm the enforcement division’s ongoing investigation when he testifies Tuesday before the Senate Banking Committee, according to prepared testimony reviewed by Reuters.

He has also asked the SEC’s Office of Inspector General to investigate the intrusion itself, the scope of non-public information that was stolen and how the SEC responded to the incident, which he said was properly reported to the Department of Homeland Security’s Computer Emergency Readiness Team.

The FBI’s investigation, which is being led out of New Jersey, is focusing specifically on the trading activity in connection with the breach, according to several sources.

One possibility the FBI is considering is that the SEC breach was connected to a group of hackers that intercepted electronic corporate press releases in a previous case which the FBI in New Jersey helped investigate, several of the sources said.

In that case, federal prosecutors in the New York borough of Brooklyn and New Jersey, as well as the SEC, charged an alliance of stock traders and suspected computer hackers based in the United States and Ukraine.

Clayton, who was installed as chairman in May, only learned of the 2016 breach in August through the enforcement investigation. SEC Commissioners Kara Stein and Mike Piwowar, who are the only other two sitting members of the agency at the moment, also only learned of it recently.

Some SEC enforcement attorneys not involved in the matter learned about it when they read it in the newspaper, sources said.

The delay in disclosing the hack and the months-long gap between uncovering it and discovering the potential insider trading are particularly embarrassing for an agency that has pushed companies to bolster their cyber capabilities and which investigates companies for failing to disclose breaches to investors faster.

While no company has ever been charged for flawed disclosures, the SEC has previously brought charges against brokerage firms over poor cyber security practices.

The SEC has experienced other cyber incidents in recent months.

Between October 2016 and April 2017, the SEC documented a variety of various cyber security incidents, according to one source familiar with the matter.

Reuters was not immediately able to ascertain the nature of all of the incidents, though the source said several involved EDGAR.

In one other case that was not related to EDGAR, a server being set up for SEC use had not been updated to fix known vulnerabilities, one person familiar with the matter said.

The SEC detected unauthorized communications from it. The FBI watched the traffic, which was early signaling or “beaconing” rather than the export of important information, and the hole was closed. In that case, the signal from the beacon was sent to a server in Ukraine, the person added.

The SEC has been criticized for its cyber defenses. The U.S. Department of Homeland Security detected 5 “critical” vulnerabilities that needed to be fixed when it scanned a sample of the agency’s computers and devices the week of January 23.

Reporting by Sarah N. Lynch in Washington and Joseph Menn in San Francisco; Editing by Leslie Adler
…

Equifax CEO Richard Smith announced his sudden retirement Tuesday following a massive data breach at the credit reporting company earlier this year.

Smith and Equifax says they learned of the hack in late July but waited until September 7 to inform its customers about the incident, which may have further compromised the personal information of about 143 million Americans.

The federal government is investigating the company’s response to the hack and Congress will hold a hearing on the matter next week.

Paulino do Rego Barros, Jr., an executive from the Asia Pacific division at Equifax, will serve as CEO while the company searches for a permanent replacement.

Equifax, one the largest credit reporting companies in the United States, said hackers were able to obtain names, Social Security numbers, birth dates and addresses of more than 40 percent of the U.S. population.

The company said credit card numbers were also compromised for 209,000 U.S. consumers, as were credit dispute accounts for 182,000 people.

Smith served as CEO from 2005 until this week. His departure follows the abrupt retirement of Equifax’s chief security officer Susan Mauldin and chief information officer Dave Webb.
…

The United States has asked China not to implement its new cybersecurity law and is concerned it could damage global trade in services, a U.S. document published by the World Trade Organization showed on Tuesday.

China ushered in a tough new cybersecurity law in June, following years of fierce debate around the move that many foreign business groups fear will hit their ability to operate in the country.

The law requires local and overseas firms to submit to security checks and store user data within the country.

If China’s new rules enter into full force in their current form, as expected by the end of 2018, they could impact cross-border services supplied through a commercial presence abroad, said the U.S. document, submitted for debate at the WTO Services Council.

“China’s measures would disrupt, deter, and in many cases, prohibit cross-border transfers of information that are routine in the ordinary course of business,” it said. “The United States has been communicating these concerns directly to high level officials and relevant authorities in China,” the U.S. document said, adding it wanted to raise awareness among WTO members about the potential impact on trade.

“We request that China refrain from issuing or implementing final measures until such concerns are addressed.”

The two-page U.S. document said the measures causing concern included the Cybersecurity Law adopted in November 2016 and taking effect June 2017 and various implementing measures connected with that law and the July 2015 National Security Law.

The law obliges companies to store all data within China and pass security reviews, fitting China’s ethos of “cyber sovereignty” – the idea that states should be permitted to govern and monitor their own cyberspace, controlling incoming and outgoing data flows. “The impact of the measures would fall disproportionately on foreign service suppliers operating in China, as these suppliers must routinely transfer data back to headquarters and other affiliates,” the U.S. document said. “Companies located outside of China supplying services on a cross-border basis would be severely affected, as they must depend on access to data from their customers in China.”

China maintains a strict censorship regime, banning access to foreign news outlets, search engines and social media, including Google and Facebook.
…

Global accountancy firm Deloitte has been hit by a sophisticated hack that resulted in breach of confidential information and plans from some of its biggest clients, Britain’s Guardian newspaper said on Monday.

Deloitte — one of the big four professional services providers — confirmed to the newspaper it had been hit by a hack, but it said only a small number of its clients had been impacted.

The firm discovered the hack in March, according to the Guardian, but the cyber attackers could have had breached its systems as long ago as October or November 2016.

The attack was believed to have been focused on the U.S. operations of the company, which provides auditing, tax advice and consultancy to multinationals and governments worldwide.

“In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilizing a team of cybersecurity and confidentiality experts inside and outside of Deloitte,” a spokesman told the newspaper.

“As part of the review, Deloitte has been in contact with the very few clients impacted and notified governmental authorities and regulators.”

A Deloitte spokeswoman declined immediate comment, saying that the firm would issue a statement shortly.
…

Airbnb is launching local tours and other experiences in New York City this week with a special host.

Her listing promises an “unforgettable shoe-shopping experience'” and her bio describes her as an “actor, producer, businesswoman” and “proud New Yorker.”

She’s Sarah Jessica Parker of ‘Sex and the City’ fame and she’ll be taking four guests shoe-shopping at Bloomingdale’s, then sending them to the ballet.

Parker’s listing goes live Tuesday, with four spots at $400 each, first come, first served. The money will benefit the New York City Ballet, where Parker is a board member.

Airbnb is primarily known for vacation rentals around the world. Officials in many cities have criticized the company, saying its short-term rentals are reducing long-term housing options for residents and forcing prices up.

 
…

Poised to reveal a tax plan that is a pillar of  his economic policy and delivering on a campaign pledge, President Donald Trump is promising “The largest tax cut in the history of our country.”

Trump’s declarations came as the health care legislation brought forward by Republicans teetered near failure. He said his “primary focus” is the tax overhaul plan, which would be the first major revamp of the tax system in three decades.

Trump has promised economic growth of 3 percent, and insists that slashing taxes for individuals and corporations is the way to achieve it. He said the tax plan that the White House and Capitol Hill Republicans have been working on for months is “totally finalized.” He was speaking on the tarmac at the Morristown Municipal Airport.

Trump’s details weren’t firm. He said “I hope” the top corporate tax rate will be cut to 15 percent from the current 35 percent. House Speaker Paul Ryan has said a 15 percent rate is impractically low, with a rate somewhere in the low- to mid-20 percent range more viable to avoid blowing out the deficit. The rate is “going to be substantially lower so we bring jobs back into our country,” Trump said.

Trump also said “We think we’re going to bring the individual rate to 10 percent or 12 percent, much lower than it is right now.” He did not say whether the tax rate for the wealthiest Americans, now at 39.6 percent would be cut, as some Republicans have advocated.

“This is a plan for the middle class and for companies, so they can bring back jobs,” he said.

The plan also is expected to reduce the number of tax brackets from seven to three.

Trump spoke as House Republicans on the tax-writing Ways and Means Committee huddled behind closed doors to discuss the plan. They have promised to reveal an outline and possible details of the plan later this week, after all Republican lawmakers in the House get a chance to discuss it and put questions to the chief architects, including Rep. Kevin Brady, R-Texas, who heads the Ways and Means panel.

“We’ll let the White House determine the timetable” of releasing the plan, Brady said following the meeting. He added it will “definitely” occur this week.

Republicans have been split on some core issues. They are divided over whether to add to the nation’s soaring $20 trillion debt with tax cuts. The GOP also is at odds over eliminating the federal deduction for state and local taxes.

Republican senators on opposing sides of the deficit debate have tentatively agreed on a plan for $1.5 trillion in tax cuts. That would add substantially to the debt and would enable deeper cuts to tax rates than would be allowed if Republicans followed through on earlier promises that their tax overhaul wouldn’t add to the budget deficit. That would mark an about-face for top congressional Republicans like Senate Majority Leader Mitch McConnell and Ryan, who had for months promised it wouldn’t add to the deficit.

Earlier Sunday, Treasury Secretary Steven Mnuchin said in a television interview the plan “creates a middle-income tax cut, it makes businesses competitive and it creates jobs.” He added that there are changes, too, for the “high end,” including “getting rid of lots of deductions.” He did not offer specifics.
…

Iraq on Sunday urged foreign countries to stop importing crude directly from its autonomous Kurdistan region and to restrict oil trading to the central government.

The call, published in statement from Prime Minister Haider al-Abadi’s office, came in retaliation for the Kurdistan Regional Government’s plan to hold a referendum on independence on Monday.

The central government’s statement seems to be directed primarily at Turkey, the transit country for all the crude produced in Kurdistan. The crude is taken by pipeline to the Turkish Mediterranean coast for export.

Baghdad “asks the neighboring countries and the countries of the world to deal exclusively with the federal government of Iraq in regards to entry posts and oil,” the statement said.

The Iraqi government has always opposed independent sales of crude by the KRG, and tried on many occasions to block Kurdish oil shipments.

Long-standing disputes over land and oil resources are among the main reasons cited by the KRG to ask for independence.

Iraqi Kurdistan produces around 650,000 barrels per day of crude from its fields, including around 150,000 from the disputed areas of Kirkuk.

The region’s production volumes represent 15 percent of total Iraqi output and around 0.7 percent of global oil production. The KRG aspires to raise production to over 1 million barrels per day by the end of this decade.

Kurdish oil production has been dominated by mid-sized oil companies such as Genel, DNO, Gulf Keystone and Dana Gas. Major oil companies such as Chevron, Exxon Mobil and Rosneft also have projects in Kurdistan but they are mostly at an exploration stage.

However, Rosneft, Russia’s state oil major, has lent over $1 billion to the KRG guaranteed by oil sales and committed a total of $4 billion to various projects in Kurdistan.
…

Swiss voters rejected raising women’s retirement age to 65 in a referendum on Sunday on shoring up the wealthy nation’s pension system as a wave of Baby Boomers stops working.

Authorities pushing the first serious reform of the pension system in two decades had warned that old-age benefits were increasingly at risk as life expectancy rises and interest rates remain exceptionally low, cutting investment yields.

But it fell by a margin of 53-47 percent, sending the government back to the drawing board on the thorny social issue.

The package turned down under the Swiss system of direct democracy included making retirement between the ages of 62 and 70 more flexible and raising the standard value-added tax (VAT) rate from 2021 to help finance the stretched pension system.

It sought to secure the level of pensions through 2030 by cutting costs and raising additional revenue.

Minimum pay-out rates would have gradually fallen and workers’ contributions would rise, while public pensions for all new recipients would go up by 70 Swiss francs ($72.25) a month.

The retirement age for women would have gradually risen by a year to 65, the same as for men.

“That is no life,” complained one 49-year-old kiosk cashier, who identified herself only as Angie. “You go straight from work to the graveyard.”

Some critics had complained that the higher retirement age for women and higher VAT rates were unfair, while others opposed expanding public benefits and said the reforms only postponed for a decade rather than solved the system’s financial woes.

Opinion polls had shown the reforms just squeaking by, but support had been waning.

The standard VAT rate would have gone up by 0.3 point from 2021 to 8.3 percent — helping generate 2.1 billion francs a year for pensions by 2030 — but the rejection means the standard VAT rate will now fall to 7.7 percent next year as a levy earmarked for disability insurance ends.

A 2014 OECD survey found Switzerland, where a worker earns over $91,000 on average, spends a relatively low 6.6 percent of economic output on public pensions. Life expectancy at birth was 82.5 years. More than 18 percent of the population was older than 65.

($1 = 0.9690 Swiss francs)
…

Sunday’s national election in Germany will sound the starting gun for a renewed debate on fixing flaws in Europe’s shared currency to prevent future crises.

France’s new president Emmanuel Macron has made it clear he is willing to push for change to strengthen the euro and is expected to make proposals in a major speech Tuesday. He is pushing for, among other things, a finance minister for the eurozone to oversee a central fiscal pot of money that could even out recessions in individual members.

Even pro-euro policymakers concede their 19-nation currency union contains weaknesses that fed its debt crisis — and leave it exposed to new trouble. But action on fixes has slowed.

Macron’s ideas are not new but several of them have faced resistance from Germany, always allergic to the idea of being handed the bill for other members’ troubles. For example, German Chancellor Angela Merkel and her finance minister, Wolfgang Schaeuble, have pushed back against the idea of EU-wide insurance on bank deposits meant to keep bank troubles from hitting government finances.

Now there are signs that after its own elections are out of the way, Germany might be more open to change or at a minimum speeding up steps — like the deposit insurance idea — that have stalled. Polls suggest Merkel will win a fourth term. What’s not clear is which party her center right Christian Democratic Union will form a coalition.

“In several ways, the coming 12-18 months represent an exceptional opportunity for European reform,” says Nicolas Veron, senior fellow at the Bruegel think tank in Brussels and at the Peterson Institute for International Economics in Washington. Reasons for that, he said, include:

The two biggest EU countries, France and Germany, will now have new governments with fresh mandates from voters.
Europe’s banks are in better shape and the economy is growing, meaning leaders are not preoccupied with fighting a crisis.
 Anti-euro populists have been turned back at the polls this year in France and the Netherlands, giving pro-EU forces a fresh shot of confidence.
 Memories of the debt crisis that threatened to break up the eurozone at its peak in 2011-2012 may still be vivid enough to overcome complacency. 

Merkel has expressed cautious openness to tweaking the setup of the euro.

“I have made clear that I don’t have anything against the title of a European finance minister per se — we would just have to clear up, and we are not yet that far along in talks with France — what this finance minister could do,” she said in August.

“I could imagine an economy and finance minister … so that we achieve a higher degree of harmonization of competitiveness.”

The euro, currently worth about $1.20, was created in 1999, and 19 of the 28 EU members use it.

European officials concede that the debt crisis, which exploded when Greece revealed in October 2009 that it was bankrupt, exposed serious flaws. Once financial trouble hit, member countries such as Greece, Ireland and Portugal lacked typical crisis safety valves such as letting their national currency devalue, which can help a country’s exports and attract investment. Without their own currencies, this was no longer possible. The countries wound up needing bailouts from the other member countries led by Germany and from the International Monetary Fund.

Additionally, the cost of rescuing failing banks threatened to bankrupt entire eurozone governments. And the euro lacks a central fiscal budget that could even out recessions in member countries by investing more in economies in need.

German resistance will likely remain strong to the bolder ideas, such as a well-stocked central fiscal pot worth several percentage points of EU gross domestic product. Currently, the EU’s budget is 1 percent of GDP, spent on things like support for farmers and infrastructure to help development in the poorest members.

More modest, politically realistic steps could include:

Pushing ahead with EU-wide deposit insurance, to be implemented over a period of years.
Regulations limiting the widespread practice of European banks buying their own governments’ bonds. That would increase pressure on governments to shape up their economies and finances.
 A modest additional pot of money that could be used as targeted stimulus for eurozone countries that fall into serious recessions, with the condition that they implement economic reforms.

EU governments led by Germany, the bloc’s most influential member, have already taken some significant steps since the crisis days. They created a fund that can give bailout loans to states in need. They tightened banking oversight by moving it to the EU level at the European Central Bank, and they took steps to stick bank creditors — not taxpayers — with any losses in case of a rescue.

The new system proved its mettle in June, when the ECB pulled the plug on Spain’s troubled Banco Popular, the country’s sixth-largest bank, and then orchestrated a sale to Banco Santander for one euro. Shareholders and junior bondholders took the losses, while taxpayers and depositors were spared. It’s a step away from crisis times when the financial burden of rescuing banks drove Ireland and Spain to seek bailout help.

Carsten Brzeski, chief economist at ING Germany, says that reforms like a small central fund and deposit insurance are feasible.

“The opportunity in 2018 would be more a natural evolution of the process that has been ongoing now for the past couple of years, rather than being a revolution,” he said.
…

Cheap solar panels imported from China and other countries have led to a boom in the U.S. solar industry, where rooftop and other installations have surged 10-fold since 2011.

But two U.S. solar manufacturers say the flood of imports has led one to bankruptcy and forced the other to lay off three-quarters of its workforce.

The International Trade Commission is set to decide Friday whether the imports, primarily from Asia, are causing “serious injury” to the companies. If so, the commission will recommend this fall whether the Trump administration should impose tariffs that could double the price of solar panels from abroad.

President Donald Trump has not cozied up to the solar industry, as he has for coal and other fossil fuels, but he is considered sympathetic to imposing tariffs on solar imports as part of his “America first” philosophy. A White House spokeswoman declined to comment Thursday.

Both sides of the dispute were making their case ahead of Friday’s meeting.

“Simply put, the U.S. industry cannot survive under current market conditions,” a lawyer for Georgia-based Suniva Inc. wrote in a petition filed with the commission. Suniva brought the case with Oregon-based SolarWorld Americas.

Opposition to tariffs

Governors of four solar-friendly states — Nevada, Colorado, Massachusetts and North Carolina — oppose the tariff, warning it could jeopardize the industry. They cited a study showing that a global tariff could cause solar installations to drop by more than 50 percent in two years, a crushing blow as states push for renewable energy that does not contribute to climate change.

“The requested tariff could inflict a devastating blow on our states’ solar industries and lead to unprecedented job loss, at steep cost to our states’ economies,” the two Republicans and two Democrats wrote in a letter Thursday to the trade commission.

A group of former U.S. military officials also urged the Trump administration to reject solar tariffs, noting that the Defense Department is the nation’s largest energy consumer and follows a federal law calling for the Pentagon to procure 25 percent of its energy from renewable sources by 2025.

Suniva called the case a matter of fairness. Even with better manufacturing methods, lower costs and “dramatically improved efficiency,” the company has “suffered substantial losses due to global imports,” Suniva said in its petition. The company declared bankruptcy this spring after laying off 190 employees and closing production sites in Georgia and Michigan.

SolarWorld Americas, meanwhile, has trimmed its workforce from 1,300 to 300, with more cuts likely.

“After nearly 30 factories have shut down in the wake of surging imports, the legacy of this pioneering American industry hangs in the balance,” said Juergen Stein, CEO and president of SolarWorld Americas.

“We believe that the promise of solar — energy sustainability and independence — can be realized only with healthy American manufacturing to supply growing U.S. demand,” Stein said in a statement to The Associated Press.

Trade group speaks out

In a twist, the main trade group for the solar industry opposes tariffs and calls the trade case “an existential threat” to the industry.

“The stakes are exceedingly high. We are talking about 88,000 people in this country who could lose their jobs if these tariffs are put in place,” said Abigail Ross Hopper, president of the Solar Energy Industries Association, which represents an array of solar companies.

A global tariff could cause a sharp price hike that could force the U.S. to lose out on solar installations capable of powering more than 9 million homes over the next five years — more than has been installed to date, Hopper said. States could lose out on billions of dollars of infrastructure investment, she added.

Suniva and SolarWorld have themselves to blame for their struggles — not pressure from overseas, Hopper said.

“Here is the real story of this case: We have two foreign-owned, poorly managed companies using U.S. trade laws to put U.S. manufacturers out of business and causing U.S. employees to lose their jobs,” she said.

Indeed, while Suniva’s U.S. operations are based in Georgia, the company’s majority owner is in China. SolarWorld Americas is a subsidiary of German solar giant SolarWorld, which declared insolvency last month.

If an injury finding is made, the trade commission would have until mid-November to recommend a remedy to the president, with a final decision on tariffs expected in January.
…

German carmaker Mercedes-Benz has announced plans to invest $1 billion to start making electric vehicles at its manufacturing plant in the southern U.S. state of Alabama.

The luxury automaker said it will manufacture electric SUVs under Mercedes’ EQ subbrand at the plant in Tuscaloosa, Alabama in just more than three years. The expansion is expected to create 600 jobs.

Daimler-Benz, which has more than 30 plants worldwide, said the Tuscaloosa plant will become the first in the U.S. to produce electric vehicles, and only the sixth in the world to do so.

Construction is to begin next year on the 92,900-square-meter facility. Daimler also said it will build a new global logistics center and aftersales North American hub in Bibb County, Alabama, about 8 kilometers from the Tuscaloosa plant.
…

The United States will present new proposals and begin to weigh into thornier issues of the North American Free Trade Agreement in the third round of negotiations starting in Ottawa Saturday, U.S. chief negotiator John Melle said Thursday.

The stepped-up negotiations come with four more rounds of talks left after Ottawa and a self-imposed year-end deadline to finish the talks before Mexico launches campaigning for its July presidential election.

“With progress made in several issue areas in the first two NAFTA negotiation rounds, USTR (United States Trade Representative) looks to move forward with additional new text proposals in round three of the negotiations,” Melle said in comments emailed to Reuters.

“At this point in the negotiations, more challenging issues will start taking center stage,” he added, without elaborating.

Third round

The first two rounds of talks between the United States, Canada and Mexico focused on consolidating language on chapters covering small- and medium-sized enterprises, competitiveness, digital trade, services and the environment.

Now, negotiators will begin to weigh into more contentious issues such as rules of origin — how much of a product’s components must originate from within North America — labor standards aimed at increasing Mexican wages and mechanisms for resolving trade and investment disputes.

In its negotiating strategy for revising NAFTA ahead of the start of the talks in July, the United States said it would emphasize reducing the U.S. trade deficit as a priority.

It also said it wanted to eliminate an arbitration system for resolving trade disputes, known as Chapter 19, that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.

Canada has suggested it will walk away from the talks if Chapter 19 is tossed aside.

Dispute resolution, sunset clause

Politico reported Thursday that the United States was considering dropping a binding mechanism in NAFTA for resolving government-to-government disputes in favor of an advisory system.

The proposal would be a major shift away from a decades-old push by the United States to build an international system of enforceable trade rules, Politico reported.

Canada and Mexico have dismissed a proposal by the Trump administration to add a five-year sunset provision to NAFTA.

U.S. Commerce Secretary Wilbur Ross said last week such a provision was needed because forecasts for U.S. export and job growth when NAFTA took effect in 1994 were “wildly optimistic” and failed to live up to expectations.

Mexico’s Foreign Minister Luis Videgaray told Reuters Sept. 15 that the sunset clause was unnecessary because the pact’s members can trigger a renegotiation or leave it at any time.

Since U.S. President Donald Trump has repeatedly attacked NAFTA and threatened to tear up the agreement, Mexico has pushed to secure more access to the European Union, Brazil, Israel, Singapore, Australia and New Zealand.

Polls show support for NAFTA

A Reuters poll of economists Thursday found that Mexico and Canada will survive current talks with the United States on trade relatively unscathed.

Meanwhile, a separate poll by IPSOS published Thursday showed broad-based support among Americans, Canadians and Mexicans for NAFTA.
…

When officials from Myanmar’s commercial capital Yangon toured six European countries in June, they were hoping to drum up investment in transport, energy and education.

Instead, they were bombarded with questions about the country’s treatment of the Rohingya Muslim minority, who have long complained of persecution by the Buddhist majority in the oil-rich, ethnically divided, western state of Rakhine.

“In each of every country, that issue was always brought up,” Hlaing Maw Oo, secretary of Yangon City Development Committee, told Reuters after the 16-day trip.

The situation in Rakhine has worsened dramatically since then, with more than 400,000 Rohingya fleeing to Bangladesh to escape a military counterinsurgency offensive the United Nations has described as “ethnic cleansing.”

Western trade and investment in Myanmar is small, but there were hopes that a series of reforms this year would pry open an economy stunted by international sanctions and decades of mismanagement under military rule.

With most sanctions now lifted, an expected flood of Western money was seen as a key dividend from the transition to civilian rule under Nobel laureate Aung San Suu Kyi. Regional diplomats saw it balancing China’s growing influence over its neighbor.

But Aung San Suu Kyi has been beset by international criticism for saying little about human rights abuses against the Rohingya, and lawyers, consultants and lobbyists say the European and U.S. companies that had been circling are now wary of the reputational risks of investing in the country.

Louis Yeung, managing principal of Yangon-based investment firm Faircap Partners, said one of his business partners — a listed, U.S.-based food and beverage company — decided to hold off its plan to enter the Myanmar market for three to five years, citing factors including slower-than-expected reforms and the Rohingya crisis.

“Their conclusion is that it wasn’t the right time for them,” he said. “They want to see more traction from the government and Rakhine is not helpful.”

On hold

The pressure has been growing in recent months, even on existing investors, with rights group AFD International calling on foreign firms to stop investing in Myanmar.

A small group of investors in U.S. oil major Chevron filed an unsuccessful motion at its annual general meeting urging it to pull out of its production-sharing contract with a state-run firm to explore for oil and gas, while Norwegian telecoms firm Telenor, which runs a mobile network in Myanmar, issued a statement calling for human rights protection.

Chevron declined to comment on its investment in Myanmar, while Telenor did not respond to several requests for comment.

Bernd Lange, chair of the European Parliament Committee on International Trade, said last week his delegation postponed a visit to Myanmar indefinitely, saying the human rights situation “does not allow a fruitful discussion on a potential EU-Myanmar investment agreement.”

Khin Aung Tun, vice chairman of the Myanmar Tourism Federation, told Reuters that global firms planning to hold conferences in Myanmar were now considering other locations.

“People were just starting to see Myanmar as a ‘good news’ story,” said Dane Chamorro, head of South East Asia at Control Risks, a global risk consultancy.

“Now you can imagine a boardroom in which someone mentions Myanmar and someone else says ‘hold on, I’ve just seen something on Myanmar on TV: villages burned down, refugees, etc.'”

In an interview published in Nikkei Asia Review on Thursday, Aung San Suu Kyi acknowledged it was “natural” for foreign investors to be concerned, but repeated her view that economic development was the key to solving poor Rakhine’s long-standing problems.

“So, investments would actually help make the situation better,” she said.

In China’s orbit

Myanmar’s $70 billion economy should be a strong investment proposition for Western firms. It boasts large oil and gas reserves and natural resources such as rubies, jade and timber.

Wages are low and its youthful population of more than 50 million is eager for retail and manufacturing jobs.

In April, Myanmar passed a long-awaited investment law, simplifying procedures and granting foreign investors equal treatment to the locals. A game-changing law allowing foreigners to buy stakes in local firms is expected later this year.

“The investment conditions were improving,” said Dustin Daugherty, ASEAN lead for business intelligence at Dezan Shira & Associates, a consultancy for foreign investors in Asia.

Myanmar’s economy may not suffer much, however, if Western firms shun the country — or even if their governments were to reimpose some sanctions, although that appears unlikely for now.

Aung San Suu Kyi has sought to deepen relations with China at a time when Beijing is keen to push projects that fit with its Belt and Road initiative, which aims to stimulate trade by investment in infrastructure throughout Asia and beyond.

Myanmar trades with China as much as it does with its next four biggest partners: Singapore, Thailand, Japan and India.

None of that top five participated in previous sanctions.

Trade with the United States is only about $400 million and U.S. investment is just 0.5 percent of the total. Europe accounts for around a 10th of investment, while China and Hong Kong make up more than a third, and Singapore and Thailand another third.

Than Aung Kyaw, Deputy Director General of Myanmar’s Directorate of Investment and Company Administration, told Reuters that European investors might have “second thoughts,” but he expected Asian investors to stay put.

China is already in talks to sell electricity to energy-hungry Myanmar and pushing for preferential access to a strategic port on the Bay of Bengal. In April, the two countries reached an agreement on an oil pipeline that pumps oil across Myanmar to southwest China.

“It is going to feed Aung San Suu Kyi straight into the hands of [Chinese President] Xi Jinping,” said John Blaxland, director at the ANU Southeast Asia Institute and head of the Strategic and Defense Studies Center.
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Thousands of small factories in China, making everything from steel to chemicals, are scrambling for access to the country’s clogged rail network as Beijing curbs the use of diesel trucks in an effort to tackle air pollution.

The Ministry of Environmental Protection (MEP) last month gave tens of thousands of companies in 28 cities until Nov. 1 to halve their use of diesel trucks over the winter months, when pollution is at its worst.

The ministry, in a policy document, also set more stringent, permanent targets for more than 20 power and steel companies, including Zhengzhou Xinli Power, Xingtai Iron & Steel and Hebei Risun Coke, directing them to send at least half their shipments by rail.

Trucking is a cheaper and preferred mode of transport for heavy industry in China, especially for inland companies moving goods over relatively short distances and those far from railways.

Some provinces have taken even tougher stances on trucks.

In Hebei and central Henan, some steel producers must deliver as much as 90 percent of their products via rail on a permanent basis, up from around 50 to 60 percent currently.

The moves are the latest in Beijing’s years-long battle to tackle the pollution that blankets the north as houses turn up the heat between November and March, drawing on the nation’s power plants, which are mainly fueled with coal.

China is also forcing steel mills and other factories to shut up to 50 percent of capacity across the north to try and prevent toxic air during the winter.

The truck restrictions follow bans earlier this year on transporting coal by diesel trucks in major port cities.

A shift to using more of the country’s 120,000 km of railroads, one of the world’s largest networks, is also a cornerstone of Beijing’s Belt and Road initiative, which aims to revive old trade routes linking Chinese companies with overseas markets.

The scale of the change under way is immense. Highways accounted for 77 percent of more than 43 billion tons of freight transported last year, compared with 8 percent for rail.

“It’s another indication of how seriously they’re taking the environmental impact, although it’s a blunt way of doing it and some trips won’t make sense by rail,” said Jonathan Beard, head of transportation and logistics in Asia for Arcadis, a design and consultancy company.

The Ministry of Rail declined to comment. The MEP and the state planner that oversees rail freight prices did not respond to requests for comment from Reuters.

‘Railway Armageddon’

Companies were already preparing for a grim winter, having been ordered to slash output as part of measures to clean up the air in Chinese cities.

Now, many are struggling to get space on the rail network by the Nov. 1 deadline.

Major state-owned companies like Sinopec and Aluminium Corp. of China have long-term access to the railroad, leaving little room for smaller companies. Many of the factories are also hundreds of miles away from any station.

There are also concerns that bottlenecks could create chaos, cutting off supplies of critical raw materials and hurting the ability of companies to get products to market, executives interviewed by Reuters said.

Rail is also more expensive and takes longer for some routes.

An executive from Xingtai Iron & Steel estimated that using rail will add as much as 40 yuan per ton, or 10 percent, to his costs. The executive and others interviewed by Reuters requested anonymity as they were not authorized to speak to the media.

“We might resort to reducing production in the winter if we cannot get enough supplies and have difficulties sending our products due to the railway Armageddon,” said a manager with Yanzhou Coal Mining Co’s coke plant in Shandong province, which produces two million tons per year.

In Shandong, the nation’s eastern industrial and agricultural heartland, the rail bureau proposed hiking freight rates by 1 cent per ton per kilometer at an internal meeting with key clients two weeks ago, according to the Yanzhou Coal manager.

That is equivalent to an almost 10 percent increase to move products to Jiangsu, about 100 miles to the south. It is not clear whether the plan has been submitted to the state planner for approval. The state planner sets freight prices.

“Some of our clients are only 40 miles away from us,” said a sales manager with Xingtai Iron & Steel’s steel wire subsidiary.

“Trucking is more flexible than rail and cheaper,” the manager said. “For our clients in Zhejiang and Jiangsu, about 500 miles away, rail takes almost a week but trucking takes one or two days.”

Under orders

Rail traffic has increased this year due to increased shipments of coal. Rail is the most popular mode of transport for coal, which accounted for a third of traffic last year. China’s rail network is mainly run by China Railway Corp.

State-owned companies such as China National Coal Group and coal miner China Shenhua Energy also own some specific routes, giving them lower transportation costs.

Many are bewildered by the enormity of the undertaking ahead. A manager with Longyu Chemical Co. in central Henan province said he had no access to rail.

“I honestly have no idea how we are going to deal with it this winter,” he said. “The trucking freight rate is also rising because of the crackdown on diesel trucks.”
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More than a third of migrant fishermen in Thailand clearly were victims of trafficking over the past five years, and even more workers in the industry were possibly trafficked as well, according to a report published Thursday.

Routinely underpaid and physically abused, three-quarters of migrants working on Thai fishing vessels have been in debt bondage, working to pay off an obligation, said the study by the anti-trafficking group International Justice Mission (IJM).

Thailand’s multibillion-dollar seafood sector came under fire in recent years after investigations showed widespread slavery, trafficking and violence on fishing boats and in onshore food-processing factories.

The politically unstable country, which is under military rule, has vowed to crack down on trafficking and recently introduced reforms to its fisheries law.

The IJM study of 260 fishermen from Myanmar and Cambodia found 38 percent were clearly trafficked and another 49 percent possibly trafficked.

Only 13 percent reported fair labor conditions at sea and no exploitative recruitment, it said.

Three-quarters reported working at least 16 hours a day, and only 11 percent said they were paid more than 9,000 Baht ($272 U.S.) per month, the legal monthly minimum wage in Thailand.

One fisherman was quoted in the report as saying he was held in debt bondage, owing 20,000 Baht ($604) to his brother, who worked as a supervisor overseeing fishermen.

In debt to brother

“I fear for my life as he has killed in front of me before,” he was quoted as saying. “I don’t dare to run. He would kill my children.”

Field researchers surveyed the 260 fishermen in 20 Thai fishing localities in 2016, collecting information on fishing jobs they had held in the previous five years.

Thailand, the world’s third-largest seafood exporter, had more than 42,000 active fishing vessels as of 2014, and more than 172,000 people were employed as fishermen, the study said.

The study was funded by the Walmart Foundation, the charitable arm of giant U.S. retailer Walmart. With release of the study, the foundation announced a grant to help the IJM improve law enforcement efforts against human trafficking in the Thai fishing industry.

Neither Walmart nor the charity would specify the value of the grant.

Walmart spokeswoman Marilee McInnis told the Thomson Reuters Foundation by email that “combating forced labor remains a key challenge throughout the world.”

“Regardless of where it occurs in the global supply chain, Walmart is committed to help eliminate forced labor through transparency and collaboration,” she wrote.

Gary Haugen, the chief executive of IJM, said in a statement that “no person should have to live under the oppression or ownership of another.

“As consumers, we shouldn’t have to wonder if the products we’re purchasing are the result of violent injustice,” he said.
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The Standard & Poor’s rating agency cut China’s credit rating Thursday due to its rising debts, highlighting challenges faced by Communist leaders as they cope with slowing economic growth.

The downgrade added to mounting warnings about the dangers of increasing Chinese debt, which has fueled fears of a banking crisis or a drag on economic growth. Moody’s Investors Service cut its own rating for China in May.

S&P lowered its rating on China’s sovereign debt by one notch from AA- to A+, still among its highest ratings. The agency had given a warning sign of a possible downgrade in March 2016 when it changed China’s outlook to negative.

“A prolonged period of strong credit growth has increased China’s economic and financial risks,” S&P said in a statement. “Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”

The ratings cut, announced after Chinese financial markets closed for the day, could raise Beijing’s borrowing costs slightly, but the more significant impact is on investor sentiment.

Phone calls to the Chinese Finance Ministry were not answered. After the Moody’s downgrade in May, the ministry said the agency had used improper methods and misunderstood China’s economic difficulties and financial strength.

Communist leaders have cited reducing financial risk as a priority this year. They have launched initiatives to reduce debts owed by state companies, including by allowing banks to accept stock as repayment on loans. But private sector analysts say they are moving too slowly.

Beijing relied on repeated infusions of credit to prop up growth after the 2008 global crisis.

That helped propel total nongovernment debt to the equivalent of 257 percent of annual economic output by the end of last year, according to the Bank for International Settlements. That is unusually high for a developing country and up from 143 percent in 2008.

Chinese economic growth fell from 14.2 percent in 2007 to 6.7 percent last year, though that still was among the world’s strongest.

The government is trying to make the economy more productive by giving market forces a bigger role. It is trying to shrink bloated industries such as steel and cement in which supply exceeds demand, which has depressed prices and led to financial losses.

Beijing is trying to steer the economy to slower, more sustainable growth based on domestic consumption instead of investment and exports. But growth has dipped faster than planners wanted, raising the risk of politically dangerous job losses. Beijing has responded by flooding the economy with credit.

Official efforts to rein in debt “could stabilize the trend of financial risk in the medium term,” S&P said. “However, we foresee that credit growth in the next two to three years will remain at levels that will increase financial risks gradually.”

S&P kept its outlook for China stable. It said that reflected expectations the country will “maintain robust economic performance over the next three to four years.”

“We may raise our ratings on China if credit growth slows significantly and is sustained well below the current rates while maintaining real GDP growth at healthy levels,” S&P said. “A downgrade could ensue if we see a higher likelihood that China will ease its efforts to stem growing financial risk and allow credit growth to accelerate to support economic growth.”

 
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On the sidelines of the United Nations General Assembly in New York on Wednesday, business and political leaders around the world met to urge cooperation on such issues as trade, investment and international technology to help boost globalization. Without integration between nations, such issues as the environment, economic development and the well-being of societies suffer. VOA’s Daniel Schearf reports from New York.
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U.S. central bank officials will hold off on the third interest rate hike of the year. But the Federal Reserve says it will go ahead with plans to unload its massive portfolio of Treasuries and mortgage bonds. The decision to delay the rate hike and reduce (or normalize) the Fed’s $4.5 trillion balance sheet had been widely expected. The more pressing question is who will lead the central bank when Fed Chair Janet Yellen’s term ends next year. Mil Arcega has more
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The Securities and Exchange Commission says a cyber breach of a filing system it uses may have provided the basis for some illegal trading in 2016.

In a statement posted Wednesday evening on the SEC’s website, Chairman Jay Clayton says a review of the agency’s cybersecurity risk profile determined that the previously detected incident was caused by a software vulnerability in its EDGAR filing system.

The SEC chairman says this breach did not result in exposing personally identifiable information.

The SEC files financial market disclosure documents through its EDGAR system, which processes more than 1.7 million electronic filings in any given year.

Clayton’s statement also mentioned that a 2014 internal review was unable to locate some agency laptops that may have contained nonpublic information. 
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After a troubled youth himself, Phillip Cohen made it a practice to hire people at his woodworking business who have also struggled with addiction and mental health issues. But when an employee died from a drug overdose, he adopted a zero-tolerance policy.

“I think I have saved lives,” says the owner of Cohen Architectural Woodworking in St. James, Missouri — an area hit very hard by the nation’s growing opioid epidemic. Opioids range from prescription pain medicine like oxycodone to illegal drugs like heroin.

Cohen still hires former drug addicts, felons and people who have been traumatized in life. One person, now a top employee, was hired right after he finished drug rehabilitation. Another used to sell illegal drugs. Still, Cohen says, if a worker fails a periodic random drug or alcohol test, “we’ll fire them on the spot.”

The epidemic of drug use — a report from the surgeon general last year said that 20 million Americans have a substance use disorder — is forcing many small business owners to think about what they would do if they suspect an employee is abusing drugs or alcohol.

Between 1999 and 2015 the number of overdose deaths from opioids and heroin quadrupled, the National Institute on Drug Abuse says. The government also reported more than 15 million adults with what’s called alcohol use disorder in 2015.

Over 70 percent of employers with 50 or more workers have been affected by prescription drugs, according to a survey released this year by the National Safety Council. But more than 80 percent don’t have a comprehensive drug-free workplace policy.

Although Cohen understood the dangers of drugs and knew that some staffers had a history of substance abuse, he wasn’t prepared when a worker overdosed in 2010, three days after the staffer attended a leadership conference.

“I didn’t care what people did at first,” says Cohen, whose workers use saws and other potentially dangerous machinery to create reception desks, cabinets and furniture for businesses, schools and health care facilities. But the devastating death of an employee prompted him to hire an attorney to write a tough drug policy that workers must read and sign.

“You have to draw the line somewhere,” says Cohen, who also brings in counselors and people who run support groups to help staffers who are struggling with personal problems.

Many small business owners don’t think ahead and create a written policy on alcohol and substance abuse, says employment law attorney Shira Forman. That forces them to be reactive, trying to figure out what to do when presented with an employee who shows up drunk, high or hung over, whose work is suffering or who causes an accident.

“It’s often not something that an employer knows how to deal with until they’re confronted with a scenario,” says Forman, who works at Sheppard, Mullin, Richter & Hampton in New York.

Having a policy in place doesn’t make it easier for a boss to confront a staffer they believe to have a drug or alcohol problem. It’s hard on an emotional level, especially if the employee denies there’s an issue and gets angry. But there can also be legal questions that must be considered before an owner broaches the topic.

While a staffer’s behavior might seem to point to a substance abuse problem, it’s often not a clear-cut situation, says Michael Schmidt, an employment law attorney with Cozen O’Connor in New York. An employee may have a prescription for opioids, and therefore be protected by federal, state or local laws. A staffer might have shaking hands, a sign of possible alcohol withdrawal but also a symptom of anxiety or a condition like Parkinson’s disease.

Even when it’s clear that the problem is due to drugs or alcohol, many owners seek help from a lawyer or HR professional. David Grant was taken by surprise when an employee at his public relations company told him that a co-worker had gotten drunk at a lunch with a client.

Grant turned to his human resources provider and a consultant on dealing with alcoholics.

“It was a world I don’t know anything about,” says Grant, whose eponymous company is based in New York. “I was aware of how litigious everyone is, so I did it by the book.”

Grant’s HR provider had created a substance abuse policy that he followed. He told the staffer she had a choice: go into rehabilitation treatment for a month or be fired. She chose treatment, which Grant paid for. He also warned she’d be dismissed if it happened again. And it did; a few weeks after she returned to work she was again drunk at a client lunch.

“I fired her instantly,” Grant says. He had to follow some painful advice from his consultants: “You can’t back off. You can’t be a nice guy.”

At Abbey Research, a market research firm based in Philadelphia, the substance abuse policy calls for employees to be suspended if they fail a random drug test or tell management they have a drug problem.

Their jobs will be held until they pass a drug test, since the company wants to give people a second chance, says Kristen Donnelly, who is in charge of human resources. But if they fail a second time, they’ll be fired.

The company, which seeks to help people who are struggling economically and personally, is located in a neighborhood where drug use has taken a toll. Two staffers have been suspended and then fired for drug use in the 18 months since Donnelly has headed HR.

But even afterward, the company has helped them find resources aimed at getting them back on their feet. “First and foremost they’re human beings, and they’re human beings with a disease,” Donnelly says.
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China has announced a crackdown on violations of patents and trade secrets in an effort to mollify foreign companies ahead of a visit to Beijing by U.S. President Donald Trump.

The crackdown might give Beijing diplomatic ammunition to respond to mounting U.S. and European trade complaints. But it fails to address what foreign companies say are bigger problems with intellectual property protection.

The four-month campaign will attack theft of foreign trade secrets and violations of patents, copyrights and trademarks, according to a Ministry of Commerce announcement this month. It says the goal is to “increase foreign investment.”

Investment into China fell in the first half of 2017 following two decades of regular double-digit annual increases. That reflects what business groups say is growing frustration with difficult operating conditions and regulatory and other hurdles.

Companies complained for years that China was the global center for unlicensed copying of goods ranging from Hollywood movies and designer clothes to drugs and computer software. More recently, companies complain that Chinese entities try to steal technology and other trade secrets, sometimes with government encouragement.

Beijing has increased some penalties, but business groups say the Communist government needs to go much further in developing its enforcement and court system to protect intellectual property rights on which its economy increasingly depends.

“As welcome as further public commitments to protecting IPR are, this cannot be achieved through a campaign-style approach,” said Lance Noble, policy director for the European Union Chamber of Commerce in China.

“It requires a sustained commitment to enforcing existing laws and applying protections equally to foreign and domestic companies,” Noble said in an email. “Doing so is in China’s own interest.”

In a survey this year, the American Chamber of Commerce in China said the share of its member companies that cited China as a global priority dropped to 56 percent from a peak of 78 percent in 2012.

The chamber said American companies were reconsidering investment plans in China due to “unfavorable regulations” and “uncertainty about intellectual property protection.” It said 72 percent considered positive U.S.-Chinese relations important to their business but 83 percent expected them to remain the same or deteriorate.

The two governments say Trump is likely to visit China this year, though no date has been announced.

The American president agreed in April to temporarily set aside trade disputes while Washington and Beijing cooperate over North Korea. But U.S. officials have criticized Chinese policy with increasing force in recent weeks.

On Monday, the U.S. trade representative, Robert Lighthizer, complained in a speech in Washington that Chinese efforts to create industrial champions and induce foreign companies to hand over technology threaten the world trading system.
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Egypt’s economy has started to improve but has yet to recover from the country’s 2011 uprising and the years of unrest that followed, an international credit rating agency said.

Moody’s hailed recent economic and fiscal reforms in its annual report released Tuesday, saying they point to “improved government effectiveness and policy predictability.” Weak finances, however, remain a “key challenge” for the government, it added.

Egypt embarked on an ambitious economic reform plan shortly after President Abdel-Fattah el-Sissi took office in 2014. The government has slashed subsidies, imposed a value-added tax and allowed currency devaluation in order to qualify for a $12 billion bailout loan from the International Monetary Fund.

The austerity measures have hit the public hard, however, with inflation hovering around 30 percent for months, many import products unavailable, and soaring electricity and fuel costs.

Moody’s said reforms and financial support provided by international lenders have helped in restoring Egypt’s foreign reserves, which are currently above $36 billion, their highest level since December 2010.

“We also expect that Egypt’s high fiscal deficits and government debt levels will gradually reduce,” said Steffen Dyck, a Moody’s vice president.

Egypt’s Finance Minister Amr el-Garhy announced earlier this week that the country will face a $10-$12 billion budget deficit for the current fiscal year 2017-18, which started in July. He also said the government plans to plug the gap by increasing foreign debt issuance, and will announce future bond offerings in the coming weeks.

Egypt’s sovereign rating by Moody’s remains unchanged at B3, far below investment grade and subject to high credit risk, but the outlook remains stable.
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A human rights organization says millions of workers in India’s brick kiln industry are trapped in a perpetual cycle of imposed debt and low wages, which forces them to bring their children to work alongside them in the hot, dusty kilns.

An estimated 23 million workers are employed in at least 100,000 brick kilns operating across the northern state of Punjab, according to a study released Wednesday by Anti-Slavery International. Nearly all the workers are provided loans from the kiln owners before the brick making season begins, immediately putting them into debt. The owners withhold their wages during the entire season, which lasts up to 10 months, and keep no records, allowing them to pay their workers far less than what is due.

Up to 80 percent of children under 14 years old working an average of nine hours a day during the hot weather months. Because workers are paid for each piece of brick they make, families are forced to put their children to work to increase their output.

The report also says living conditions at the kilns are dire, with the air filled with dust and other chemicals and no access to running water, and entire families living in cramped rooms of just under eight meters.

Volunteers for Social Justice, which partnered with Anti-Slavery International in the report, is urging India’s government to enact a minimum wage for the brick kiln workers, along with child labor laws to ensure that children get a proper education. “It is time that the government takes that responsibility and ends this exploitation that shouldn’t be taking place in the 21st century,” says Jai Singh, the director of Volunteers for Social Justice.
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The deficit in the broadest measure of U.S. trade rose to the highest level in more than eight years this spring, reflecting in part a drop in fines and penalties paid by foreign companies.

The deficit in the current account increased to $123.1 billion, up 8.5 percent from an imbalance of $113.5 billion in the first quarter, the Commerce Department reported Tuesday. It was the biggest deficit since a gap of $150 billion in the fourth quarter of 2008.

The current account is the most complete measure of trade because it includes not only goods and services but investment flows and other payments between the United States and the world.

President Donald Trump has promised to reduce America’s trade deficit, contending it costs U.S. factory jobs.

One of the biggest contributing factors to the larger deficit in the April-June quarter was a decline in receipts from foreigners after they had risen sharply in the first quarter. The government attributed the $5.2 billion decrease in receipts of secondary income from foreigners to a decline in fines and penalties paid by foreign companies. That category had risen sharply in the first quarter.

Exports of goods and services increased $2.2 billion in the second quarter. Exports are getting a lift from a pickup in global growth and a drop in the value of the U.S. dollar against other currencies. A weaker dollar makes American products more competitive on foreign markets.

Imports of goods and services were also up in the second quarter, rising $11.8 billion, reflecting rising domestic demand from stronger U.S. growth.

The rise in the current account deficit put the imbalance in the second quarter at a level equivalent to 2.6 percent of the total economy, as measured by the gross domestic product, up from 2.4 percent in the first quarter. By comparison, the largest current account deficit in relation to GDP was in the fourth quarter of 2005 when the deficit totaled 6.3 percent of GDP.

Trump says America’s trade deficits have been caused by bad trade deals and abusive practices by China and other U.S. trading partners. He has pledged changes that he says will reduce the deficit and bring back American factory jobs.

 
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