Protesters in the United States and around the world have marked International Workers Day, May Day, with rallies and demonstrations that turned violent in displays of anger against authoritarianism and right-wing politics from France to Turkey.

WATCH: Luis Ramirez video report on protests

 

May Day is traditionally a day of protest, and this one was no exception. Police fired tear gas on demonstrators rallying in Istanbul’s Taksim Square, the scene of past bloody May Day crackdowns.  

 

Tensions in Turkey have been high after President Recep Tayyip Erdogan narrowly won a referendum last month giving him sweeping new powers.

 

Police arrested more than 200 people Monday.

Moscow parade

Things were more jovial in Russia, on what turned out to be beautiful spring day with more than 100,000 marching in Moscow.

 “This shows people’s unity when so many people gather. This is the day of labor, peace and the weather is so beautiful. And we can see the people’s feelings by the smiles on their faces,” said Yuri, a march participant in Moscow.

The spirit was in sharp contrast to Saturday, when thousands of Russians lined up to present their grievances in letters at government offices. Organizers of the mass protest said police arrested demonstrators in cities across Russia, including 120 people in St. Petersburg.  

 

French election campaigning

France, which is still under a state of emergency and with elections less than a week away, was on high alert. The government deployed 9,000 police in various parts of the country to keep supporters of the two main candidates, centrist Emmanuel Macron and nationalist Marine Le Pen, apart.

 Le Pen, who wants to curb immigration by Muslims, get France out of the EU, and bring back jobs for French factory workers, led a rally outside Paris, where she called Macron “the candidate of the caviar Left.”  

 

Macron also campaigned Monday, but his supporters were generally not visible among the May Day demonstrators.   

 

Thousands, including labor union activists, marched in central Paris, many of them protesting Le Pen.

“We have to block Marine Le Pen, we all agree about that, and we have to do it while stopping further increases in the vote and percentage of Marine Le Pen which would cost us in the future,” said Jean-Claude Mailly, leader of Force Ouvrière, one of France’s main labor union conglomerations.

Demonstrators in Paris threw firebombs and clashed with police.

 

With elections so near and the issues so divisive, the battle lines could not be clearer on this day of protest.

In the U.S., May Day’s rallying point has shifted from workers to immigrants.  Tens of thousands of people are expected to mark the day from New York to Los Angeles to protest against President Donald Trump’s focus on boosting deportations.  Organizations have called for immigrant strikes in some cities to show Americans what a day without immigrants would look like.  

 
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Once they acclimate to their new environment, overcoming language, social and cultural barriers, refugees in the U.S. often thrive. Some translate their experiences into assets that are valuable to their new community, as did Parvin and Yadollah Jamalreza. VOA’s June Soh visited their popular tailoring shop in Charlottesville, Virginia.
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Growth in China’s manufacturing sector slowed in April, official data showed Sunday, pointing to an unsteady recovery in the world’s second-largest economy. 

 

The monthly purchasing managers’ index by the Chinese Federation of Logistics and Purchasing fell to 51.2 in April, lower than the 51.8 recorded in March. 

 

The index is based on a 100-point scale on which numbers above 50 indicate expansion.

 

National Bureau of Statistics statistician Zhao Qinghe said in the release that April’s figure was affected by sluggish growth in market demand and supply, and slower expansion in imports and exports.

 

April’s index still represented a ninth consecutive month of expansion. 

 

China saw its slowest growth in nearly three decades in 2016. China’s huge manufacturing sector is seen as an important indicator for the wider Chinese economy. It has cooled gradually over the past six years as Beijing tries to pivot it away from heavy reliance on export-based manufacturing and investment toward consumer spending.

 

The official full-year economic growth target for 2017 is 6.5 percent. 
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His birthplace in a small village outside Mumbai, India, in a home with no running water or electricity, is a far cry from the technology-filled cubicles Pete Tapaskar has come to know well as an information technology (IT) worker.

Tapaskar’s journey from India to the United States through Canada came courtesy of an H1B immigrant visa.

“H1B has been a great contributor for the innovation of America,” Tapaskar told VOA.

Now an American citizen who lives in suburban Chicago, Tapaskar has spent the past 15 years working for the IT company ProSoft as a manager in their immigration program.

Lengthy process

Most of the people Tapaskar has hired have come from India, but he said hiring those workers has not always been ideal.

“It would be cheaper for us to hire Americans where they are available,” he said, “because bringing them from outside, we have to go through the lengthy H1B process and then wait for (a) longer time, and by that time, demand would have changed.”

But Tapaskar says there aren’t enough Americans with experience to fill the jobs.

“We are not able to employ Americans fast enough into the job market to meet the challenges,” he said.

1.4 million jobs unfilled

Richard Burke is CEO of Chicago-based Envoy Global, which sells services to U.S. companies looking to hire foreign workers.

“The U.S. Department of Labor has said 1.4 million unfilled software development — software development alone — 1.4 million unfilled jobs by 2020. So the skills gap is real,” Burke said.

“Envoy helps companies with their visa and immigration needs,” he told VOA from his desk situated in the same workspace as many of his employees. “What we do is help companies bring talented foreign nationals into the country, we help companies deploy their own employees overseas to pursue opportunity, and we provide software that makes reporting and compliance much easier.”

Burke said the skills gap that drives the demand for foreign workers exists because not enough Americans are receiving education or training in high demand jobs in science, technology, engineering and mathematics, also called STEM fields, and many foreign students educated in the U.S. aren’t staying to work.

“Every year American universities graduate over 300,000 foreign nationals with STEM degrees. We don’t give them any opportunities to stay,” he said. “So what is the wisdom of a policy when we know we have a skills gap, when we know we are graduating the best and brightest — 300,000 — and sending them home to compete with us.”

Review process

During a recent visit to Wisconsin, President Donald Trump announced he was signing an Executive Order reviewing the H1B visa process. About 85,000 workers come to the United States annually through the program, far fewer than the number of jobs U.S.-based companies say they need experienced technology workers to fill.

Burke hopes the review will lead to an increase in the number of visas issued, to fill the skills gap before the jobs flee the U.S.

“Work is mobile,” Burke said. “Companies are telling us and they are saying to one another, ‘If I can’t get the work done here, I’ll just move it overseas.’”

Which is what happened to Tapaskar, the IT worker.

His employer, ProSoft, was sold to another company, which outsourced his specific job to India, Tapaskar said.

After 15 years, he’s starting over with a new company and works to help other IT workers as the president of the American Small and Medium IT Employers Association (ASMITEA).

Hope for review

Tapaskar said he supports Trump’s Executive Order, hoping it helps curb any misuse of the program. But he doesn’t want to see those visas only going to companies offering the highest salaries.

“It should be made available for all the sectors,” he told VOA. “(It) should be linked with training programs. America really lacks the training infrastructure at the moment.”

This year, U.S. Immigration officials report almost 200,000 petitions were filed for the 85,000 available H1B visas during the lottery period that ended in April.
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President Donald Trump will spend his 100th day in office talking tough on trade in one of the states that delivered his unlikely win.

 

The president is expected to sign an executive order Saturday that will direct his Commerce Department and the U.S. Trade Representative to perform a comprehensive study of the nation’s trade agreements to determine whether America is being treated fairly by its trading partners and the 164-nation World Trade Organization.

It’s one of two executive orders the president will sign at a shovel factory in Pennsylvania’s Cumberland County, the kind of place that propelled his surprise victory.

Rally in Pennsylvania 

The last week has been a frenzy of activity at the White House as Trump and his team have tried to rack up accomplishments and make good on campaign promises before reaching the symbolic 100-day mark. In addition to the visit to the Ames tool factory, which has been manufacturing shovels since 1774, the president will hold one of his signature campaign rallies in Harrisburg to cap the occasion.

 

It’s a return to fundamentals for a president who has, in recent days, sounded wistful reflecting on his term so far.

 

Earlier this week, Trump announced his intention to work to renegotiate the North American Free Trade Agreement. He also said he would begin renegotiating a free trade deal with South Korea, with which the U.S. has a significant trade deficit.

Trade discussed every day

 

“There isn’t a day that goes by that the president doesn’t discuss some aspect of trade,” Commerce Secretary Wilbur Ross said at the White House Friday.

 

The executive orders signed Saturday will mark Trump’s 31st and 32nd since taking office, the most of any president in his first 100 days since World War II. It’s a jarring disconnect from Trump’s rhetoric during the campaign, when he railed against his predecessor’s use of the tool, which has the benefit of not needing congressional sign-off.

The more significant of the two orders will give the Commerce Department and the U.S. Trade Representative 180 days to identify violations and abuses under the country’s trade agreements and recommend solutions.

World Trade Organization outdated 

Ross said the WTO, the Geneva-based arbiter of world trade rules, is bureaucratic and outdated and needs an overhaul. Ross downplayed the possibility that the United States would consider leaving the organization but didn’t rule it out. 

“As any multilateral organization, there’s always the potential for modifying the rules,” he said.

 

The administration argues that unfair competition with China and other trade partners has wiped out millions of U.S. factory jobs. Ross said dissatisfaction with trade policy is one reason voters turned to Trump.

 

“They’re fed up with having their jobs go offshore. They’re fed up with some of the destructive practices,” he said. “So in effect, the country said in this last election: It’s about time to fix these things. And the president heard that message.”

 

Trump, who campaigned on a vow to crack down on China and other trading partners, has announced several other moves on trade in recent weeks. He ordered the Commerce Department to study the causes of the United States’ massive trade deficit in goods, $734 billion last year, $347 billion with China alone. The administration is also imposing duties on Canadian softwood timber and is investigating whether steel and aluminum imports pose a threat to national security.

 

Ross said Friday that the WTO is too narrowly focused on limiting traditional tariffs — taxes on imports — and does little to counter less conventional barriers to trade or to police violations of intellectual property rights.

 

Trump has pushed a model of “reciprocal trade” agreements in which the U.S. would raise or lower tariffs on a country’s imports depending on how that country treats the U.S.
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President Donald Trump is re-opening for oil exploration areas that President Barack Obama had closed, a move that environmental groups have promised to fight.

In an executive order Friday, the president reversed the Obama administration’s decision to prohibit oil and gas drilling in the Arctic waters off Alaska.

The order also instructs the Interior Department to review current restrictions on energy development in the Atlantic Ocean and Gulf of Mexico. In addition, it bars the creation or expansion of marine sanctuaries and orders a review of all areas protected within the last 10 years.

Trump cites advantages

The White House says 90 billion barrels of oil and 327 trillion cubic feet of natural gas are buried off the U.S. coastline, but 94 percent of the area is off limits.

“Renewed offshore energy production will reduce the cost of energy, create countless new jobs and make America more secure and far more energy independent,” Trump said at a signing ceremony at the White House.

The action is the latest from the Trump administration aimed at boosting domestic energy production and loosening environmental regulations.

In his first 100 days, Trump has relaxed coal mine pollution rules and ordered a review of vehicle efficiency standards and power plant greenhouse gas rules. His administration has stopped defending Obama-era pollution regulations challenged in court.

The energy industry has cheered the moves. Environmental groups have promised strong opposition.

Fragile ecosystems

Conservationists have long opposed oil drilling in the Arctic. A spill would devastate the region’s fragile ecosystems, they say, while extreme conditions raise the risks of a spill and make cleanup harder.

Fishing and tourism on the Atlantic coast and Gulf of Mexico would suffer from an accident, too, environmentalists note.

“By his actions today, President Trump has sent a clear message that he prioritizes the oil and gas industry over the needs of working Americans in our coastal communities who depend on healthy fishing and tourism economies for their livelihoods,” Environmental Defense Fund Vice President Elizabeth Thompson said in a statement.

Reviewing and rewriting the current offshore drilling plans are expected to take several years. Environmental groups plan legal challenges to the changes.

 
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The latest economic data indicate the U.S. economy is growing at the slowest rate in three years. The GDP or gross domestic product, the broadest measure of all goods and services produced in the country, increased at a disappointing 0.7 percent annual rate, according to new government estimates released Friday.  That’s the weakest performance since 2014, as consumer spending stayed flat and business inventories remained small.  

Analysts say that’s bound to be a disappointment to U.S. President Donald Trump who predicted strong economic growth on day one, once he took over the White House. 

“Remember candidate Trump talked about GDP of about 5 percent and paraphrasing, perhaps something much, much stronger,” said Bankrate.com senior analyst Mark Hamrick. 

“Most economists believe the track for the U.S. economy for the intermediate future is going to be very familiar to what has been seen over the last number of years, and that’s somewhere between one and probably 2.5 percent on an annual basis.”

The U.S. economy grew at a 2.1 percent pace in the fourth quarter of 2016.  But economists say first quarter estimates tend to be notoriously low for a number of reasons.  

“In some years it’s been because of bad weather that kept people in their homes, keeping them from purchasing things but it’s also believed to be somewhat flawed statistically — meaning that what’s actually happening in the economy isn’t being perfectly captured by government statistics,” Hamrick tells VOA.  “It ends up being an estimate and most of them are not perfect”.

Most economists say the first quarter estimate should not be seen as a true measure of U.S. economic health. 

Other indicators suggest a more positive outlook. The U.S. unemployment rate is near a 10-year low at 4.5 percent, consumer and business sentiment are rising and major U.S. stock indexes are near record highs.
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United Airlines reached an out-of-court settlement Thursday with a doctor who was dragged off one of its flights after he refused to give up his seat.

The airline and Dr. David Dao’s lawyers agreed not to disclose the amount of money he will receive.

United put out a brief statement saying it reached an “amicable resolution of the unfortunate incident.”

United changes policy

The airline said earlier Thursday that from now on, no passenger would be forced to give up his seat except in cases of safety and security.

Those who volunteer to surrender their seats when a flight is overbooked would get up to $10,000 in compensation.

“Every customer deserves to be treated with the highest levels of service and the deepest sense of dignity and respect,” United chief Oscar Munoz said. “Two weeks ago, we failed to meet that standard and we profoundly apologize.”

Chicago aviation police dragged Dao up the aisle of the packed plane when United needed to make room for airline employees.

Three other passengers volunteered to give up their seats, but Dao was picked out at random and refused to leave, saying he had to get home to treat patients.

Congress gets involved

His nose was broken, some teeth were knocked out, and he suffered a concussion. Cellphone video captured the scene. Dao, with blood streaming down his face, could be heard screaming with other shocked passengers.

The incident prompted calls in Congress  to bring back government airline regulation.

Some lawmakers demanded outlawing the practice of overbooking flights, in which airlines sell more seats than are available to ensure a full plane.
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Ghana’s finance minister says investors were optimistic in meetings with senior government officials who accompanied Vice President Mahamudu Bawumia to the World Bank spring meetings in Washington.

In an interview with VOA, Ken Ofori-Atta said investors detected a new energy, and a sense of hope in a team that is focused on getting Ghana out of its current predicament. He also said that with a new government in place, the world is ready to see Ghana shine again in a much more stable West Africa.

“We came in on a platform of change and real hope that we will revitalize the economy and create jobs and there would be growth,” Ofori-Atta said. “But we met some pretty difficult challenges with regards to fiscal deficit close to 9 percent, lots of unemployment, growth of 3.4 percent, which was very low, and the discovery of some 7 billion Cedis [$1.3 billion] arrears that we all did not know about. Foreign exchange was low, and you also had the exchange rate in a pretty difficult situation. So we had to contend with all of that since we came [to power].”

But opposition groups say the new administration should get to work rather than complain about the state of affairs. They contend that Ghanaians displayed confidence in them by rejecting the previous government for failing to improve the lives of its citizens.

Ofori-Atta said that in just over 100 days, the government outlined its plans to jump-start the economy in a budget, which was presented to parliament. The aim, he said, is to create millions of jobs as the ruling party, led by President Nana Addo Dankwa Akufo-Addo, promised ahead of the December elections.

“We decided to create a budget that is both leading to a fiscal consolidation in a real way and also not compromising growth,” Ofori-Atta said. “So we brought down the deficit as a target from 8.7 percent to 6.5. We squeaked out a primary balance surplus. We’re reducing our debt-to-GDP ratio from 72.5 to 70.9 percent, and then increase revenue by 34 percent. So, quite dramatic contraction in a sense. However, we also were clear that we needed to spur growth.”

One means to achieve their goals: abolishing some taxes.

“One of the most dramatic things was to abolish about 14 taxes, which the senior minister [Yaw Osafo Marfo] termed to be nuisance taxes,” Ofori-Atta said. “Taxes that were kind of suppressive and created a sense of cohesion by the state. As a center-right party, we have to revitalize the economy, we have to give stimulus, we have to encourage people to use their creative energies.”

Ofori-Atta also said abolishing the taxes will free Ghanaian businesses, and entrepreneurs will help to “bring Ghana back” into a working mode.

Another measure the administration plans to implement is the revitalization of the rural economy. This, he said, includes establishing a factory in each of the country’s districts, as well as sending $1 million to each constituency as a resource to support the policy of one district, one factory, which was promised by the president in the run-up to the polls.

Critics, however, say the one district, one factory promise was overly ambitious. They contend that with the dramatic reduction of taxes, government revenue would be sharply reduced, thereby handicapping the ability of the administration to raise the necessary funds it needs to keep the promises to Ghanaians. They also say the reduction of taxes was just a ploy to score political points.

But supporters of the ruling party reject the criticisms as unfounded.
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Turkish President Recep Tayyip Erdogan’s referendum victory to extend his powers was bittersweet.  

For the first time he lost in Turkey’s main cities, including Istanbul, which has been his electoral power base since 1994.  In the aftermath of his narrow win he has ordered a party investigation into the vote.  The drop in support coincides with an economic slowdown, an ominous sign given the president is facing crucial polls in two years.

Erdogan’s unprecedented electoral successes were largely achieved in a period of economic boom, but those halcyon days appear to be waning.  

“Currently, inflation rate is at 11.3 percent and is expected to increase further to around 12 percent in the coming months,” observes Inan Demir, an economist for Nomura Bank, “It would constitute the highest inflation rate since before the global financial crisis in 2009.  Also, unemployment is at multi-year highs.  So we are talking about a significant jump in the inflation and unemployment rate.”

The impact of the economic slowdown has been felt the most in western Turkey, where more than 70 percent of the country’s economic production is located, and most closely linked to European markets.  The same region saw some of the biggest drops in support for the president in the referendum vote.  While the Turkish economy is predicted to grow faster than that of Europe, it is still below the rate needed to absorb new entrants into the labor market.

Disaffected youth

A striking development of the referendum was the youth vote, overwhelmingly voting no, bucking its traditionally stalwart support for Erdogan.  

“Youth unemployment is affecting the first-time vote.  The youth unemployment ratio was 25 percent, according to the last data, notes Atilla Yesilada, a political consultant with Global Source Partners, “Fifty-eight percent of first-time voters voted “No.” (citing IPSOS research).  According to OECD research, Turkish students are the unhappiest in the world with 72 percent saying they are very unhappy with conditions.  So given Turkey’s very high rate of young population, up to six percent of the voters in the next election cycle, which starts in March 2019, will be first-time voters, which in my view is slipping from their [Erdogan government’s] grasp”.

 2019 is scheduled for an unprecedented three polls – of local, general and presidential elections.

Erdogan’s success in the referendum was due in part to the overwhelmingly support he received in the rural heartland of the country, known as Anatolia, a region that has particularly benefited from the expansion of social security benefits under Erdogan’s AK Party rule.

“I detect that certain voters are becoming clients of AKP, these people can’t survive in the globalized economy of Turkey,” claims consultant Yesilada, “they are largely existing on account of the welfare state and also  AKP has been very successful in imposing the view entitlements are coming form the party, rather than the state.  So a dependency has been created between the poor in Anatolia and AKP, and these are people are so afraid if AKP ever loses they will lose their entitlements.”

In the run-up to the referendum, the government again turned to state intervention, launching major programs of cheap loans for businesses, job creation schemes, and massive public works projects.

Early elections?

Economists predict that with individuals and private companies racked with debt, more state intervention is likely, ”Turkey will find it difficult to sustain that debt-fueled growth, that’s why the public sector will play an increasing role in supporting economic activity going forward.  Personally, I expect elections to be held earlier than the current schedule.  I would not be surprised to see elections by this time next year.  So I think it can be sustained until that time.”

The pressure to call early elections will deepen worries about how the government will fund it’s growing economic and financial programs.  “So [numbers] are simple,” warns Yesilada, “we cant borrow abroad, because it very costly or foreign lenders are no longer willing, and Turkish deposits have been completely converted into loans.  I don’t know how this can go forwards.”  

Given that the bedrock of Erdogan’s electoral success has been built on economic prosperity, the continuation and trajectory of those programs ultimately could determine his fate.

 
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President Donald Trump says phone conversations Wednesday with Mexican President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau persuaded him not to imminently withdraw the United States from their countries’ three-way trade pact.

“They asked me to renegotiate. I will,” Trump told reporters in the Oval Office. “I decided rather than terminating NAFTA, which would be a pretty big shock to the system, we will renegotiate.”

Trump, sitting Thursday alongside Argentinian President Mauricio Macri, said, “I was going to terminate NAFTA as of two to three days from now.” But, he added, “If I’m unable to make a fair deal … for our workers and our companies, we will terminate NAFTA.”

 

He reiterated his long-standing assertion that the 1994 trade agreement has been “very good for Canada. It has been very good for Mexico. But it has been horrible for the United States.”

The U.S. president’s softening tone on what is perceived as America’s most crucial trade pact is being well-received.

“I am relieved,” said Notre Dame University professor of finance Jeffrey Bergstrand, who notes trade agreements “not only lower tariffs, but create stability in the global value chain.”

 

 

Trump has already withdrawn the United States from the 12-nation Trans-Pacific Partnership agreement negotiated by his predecessor, Barack Obama, although that deal had not been ratified by Congress.

A Mexican government statement on Wednesday’s phone call between Trump and Pena Nieto stated the leaders agreed on the convenience of maintaining NAFTA and working with Canada to bring about successful negotiations.

A Canadian foreign ministry spokesman said Ottawa is “ready to come to the table at any time.”

Trump targeted Canada this week for what he said was unfair trade practices and he ordered a new 20 percent tariff on Canadian lumber imports, which could add to the cost of buying new houses in the United States.

Trump’s consent to keep the United States in NAFTA, at least for a while, “probably reflects increasing voices from the business community that these trade policies have been good,” Professor Bergstrand at the Mendoza College of Business told VOA.

Many Mexican officials have called NAFTA a disappointment, saying it has brought slow economic growth despite increased investment in factories and industry.
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Lawmakers are nearing agreement on sweeping spending legislation to keep the lights on in government, after the White House backed off a threat to withhold payments that help lower-income Americans pay their medical bills.

 

It was the latest concession by the White House, which had earlier dropped a demand for money for President Donald Trump’s border wall. Even with Republicans in control of both chambers of Congress and the White House, the Trump administration is learning that Democrats retain significant leverage when their votes are needed on must-pass legislation.

 

A temporary funding bill expires Friday at midnight, and GOP leaders late Wednesday unveiled another short-term spending bill to prevent a government shutdown this weekend, something Republicans are determined to avoid.

 

There appears little chance of that as lawmakers worked to resolve final stumbling blocks on issues like the environment, though a short-term extension of existing funding levels is likely.

 

“The fundamental issue is keeping the government open, that’s our focus,” said Rep. Patrick McHenry, R-N.C., a top member of the vote-counting team in the House.

 

At the same time, House Republicans had a breakthrough on their moribund health care legislation as a key group of conservatives, the House Freedom Caucus, announced it would support a revised version of the bill. Freedom Caucus opposition was a key ingredient in the legislation’s collapse a month ago, a humiliating episode for Republicans that called into question their ability to govern given that they’ve been promising for seven years to repeal and replace former President Barack Obama’s Affordable Care Act.

 

Yet whether the Freedom Caucus support would be enough remained uncertain. One key moderate, GOP Rep. Charlie Dent of Pennsylvania, dismissed the Freedom Caucus about-face as “a matter of blame-shifting and face-saving” for a bill going nowhere. Even if the legislation passes the House it will face major hurdles in the Senate and is certain to be extensively revised if it survives at all.

 

The changes in the bill would let states escape requirements under Obama’s health care law that insurers charge healthy and seriously ill customers the same rates, and cover a list of specified services like maternity care. Conservatives embraced the revisions as a way to lower people’s health care expenses, but moderates saw them as diminishing coverage.

 

Despite some optimism among House leaders for a quick vote on the health bill, the outcome was difficult to predict. The White House has been exerting intense pressure on House GOP leaders to deliver any tangible legislative accomplishments ahead of Trump’s 100-day mark, something that has yet to occur aside from Senate confirmation of Supreme Court Justice Neil Gorsuch.

 

The massive spending measure, which would wrap together 11 unfinished spending bills into a single “omnibus” bill, represents the first real bipartisan legislation of Trump’s presidency.

 

Democratic votes are needed to pass the measure over tea party opposition in the House and to provide enough support to clear a filibuster hurdle in the Senate, which has led negotiators to strip away controversial policy riders and ignore an $18 billion roster of unpopular spending cuts submitted by White House budget director Mick Mulvaney.

 

The outlines of a potential agreement remained fuzzy, but aides familiar with the talks said Trump would emerge with border security funding that’s unrelated to the wall and a $15 billion down payment for military readiness accounts on top of $578 billion in already-negotiated Pentagon funding. Democrats won funding for medical research, Pell Grants and foreign aid.

 

But negotiators rejected Trump’s demands for $1 billion to begin construction of his promised wall along the length of the 2,000-mile (3218.54-kilometer) U.S.-Mexico border. And after a dispute between Mulvaney and House Minority Leader Nancy Pelosi, the administration agreed to keep funding cost-sharing payments under Obamacare that go to reimburse health insurers for reducing deductibles and co-payments for lower-income people.

 

___

 

Associated Press writers Andrew Taylor and Alan Fram contributed to this report.

 

AP-WF-04-27-17 0724GMT

 
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After reports that President Donald Trump was considering an executive order to withdraw the United States from the North American Free Trade Agreement, the White House said Wednesday that Trump agreed not to take such action after phone calls with the leaders of Canada and Mexico.

Since launching his bid for president, Trump has repeatedly criticized the nation’s trade deals, especially NAFTA, saying the agreement signed in 1994 has been a “disaster” and allowed many U.S. jobs to shift to Mexico.

“President Trump agreed to not terminate NAFTA at this time, and the leaders agreed to proceed swiftly, according to their required internal procedures, to enable renegotiation of the NAFTA deal to the benefit of all three countries,” the White House said.

The statement further said Trump is honored to work with Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto, and that he believes the renegotiation process will make the three countries stronger.

A Mexican government statement confirmed the phone call between Trump and Peña Nieto, saying the leaders agreed on the convenience of maintaining NAFTA and working with Canada to bring about successful negotiations for the benefit of the three nations.

Earlier Wednesday, a Canadian foreign ministry spokesman said Canada is “ready to come to the table at any time.”

Trump targeted Canada this week for what he said was unfair trade practices, and ordered a new 20 percent tariff on Canadian lumber exports.

Many Mexican officials have called NAFTA a disappointment, saying it has brought slow economic growth despite increased investment in factories and industry.

 
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President Donald Trump’s plan to slash business and household taxes could shift the U.S. economy into higher gear, but it may have one effect the White House would not welcome — interest rates ratcheted higher than expected by a wary central bank.

The Trump administration says hundreds of billions of dollars fed into the economy via deep cuts in business taxes and more generous exemptions for individuals will unleash a wave of investment and make the U.S. economy more competitive than ever.

But the plan, if approved in the form Trump officials outlined on Wednesday, could add inflationary fuel to an economy already running near full capacity, a risk Federal Reserve officials have been warning about since Trump got elected.

Confronted with the prospect of massive cuts that would slash the corporate tax rate to 15 percent from 35 percent and overhaul the personal tax code, Fed officials will need to start debating if they can maintain a measured pace of rate hikes or they might need to move faster, say analysts and economists who follow the U.S. central bank.

Fed’s inflation goal is 2 percent

The Fed aims to hold inflation at around 2 percent, and is close to that threshold, with its target short term rate expected to rise two more times, to about 1.5 percentage points, by the end of the year.

Trump has said he hopes low rates will continue, a potential source of friction with the Fed if officials do decide they need to move faster because of his policies.

An estimated up to $700 billion a year in tax cuts could threaten to derail such a scenario, especially if not all of that money finds its way into productive investments, or drives price and wage hikes.

“The premise is that all the tax savings get plowed into high-return investments to generate growth. But if they don’t and they just get churned around into M&A and other financial engineering things, it’s even worse because you’re raising risks elsewhere in the economy,” said Mark Mazur, former U.S. treasury assistant secretary for tax policy during the Obama administration, now head of the Urban-Brookings Tax Policy Center in Washington.

Uncertainty as to whether and in what shape the plan will get implemented adds to other challenges the Fed faces in trying to chart its course over the next several months.

Looming threats

The threat of a government shutdown and renewed debate over the federal debt ceiling late this summer or early in the fall will test both the new administration and the Fed’s ability to set its policy course. Republican and Democratic lawmakers need to pass a series of bills to keep the government running, but are sparring over issues such as whether to fund a border wall with Mexico.

Government closures, forced budget cuts, and a tense 2013 debt ceiling debate have thrown the Fed off course before, dragging down economic growth and idling hundreds of thousands of workers.

Taken together, the coming discussions will be critical for the Fed and for world markets looking for proof Trump can oversee a functioning government, said David Stockton, a former Fed research director now with the Peterson Institute of International Economics.

“If you have a shutdown followed by a serious flirtation with default … some of the optimism built into household and business confidence could deflate and deflate pretty quickly,” Stockton said. “If all of a sudden it begins to look like even with one party in control nothing seems to be happening, it could be a shock.”

For the Fed, those would be self-inflicted wounds in an otherwise calm economic environment. From healthy corporate profits to strong consumer confidence and geopolitical developments like the recent French election results, events have been breaking in favor of steady U.S. growth and job gains — and a gradual pace of Fed rate increases.

Policymakers are hesitant

Policymakers currently foresee two more rate increases this year, a view investors largely accept in how they have priced different securities.

So far, policymakers have been hesitant to mold their thinking too much around speculation about what Trump might do because details have been scant and Congress’ reaction uncertain.

With the scope of the tax plan now revealed and fiscal deadlines on the horizon, that is now likely to change — for better or worse.

Though the Republicans now control both the White House and the Congress, there is no guarantee they will easily reach agreement on either spending or tax plans, or on the debt ceiling. Divisions in the GOP doomed Trump’s first stab at healthcare overhaul, and some Republican lawmakers are likely to oppose either raising the debt limit or cutting taxes too much because of the larger deficits that would produce.

“The next few months are going to be make or break. They are going to have to show they are going to get something done,” said IHS Markit economist Chris Christopher.
…

Ivanka Trump has been involved in discussions with the World Bank about establishing a funding operation to support female entrepreneurs, bank and administration officials said Wednesday.

The officials stressed that nothing has been set up yet and that talks are ongoing about how this would be structured.

They said it could be a World Bank-run “facility,” which accepts contributions from governments and private donors and then provides funding and support to women in developing countries.

According to a senior administration official, Trump recently pitched the idea to World Bank Group President Jim Yong Kim.

The administration official, who sought anonymity because the project is in its early stages, said Trump would have no official authority over the fund and would not solicit contributions, but would be a “strong advocate.”
…

President Donald Trump “has no intention” of releasing his tax returns to the public, Treasury Secretary Steve Mnuchin said Wednesday, asserting Americans have “plenty of information” about the president’s financial matters.

For decades, presidents have released their tax returns. But Trump has so far refused, suggesting he would share the tax documents only after the Internal Revenue Service completes an “audit” of them. He’s never disclosed proof of an audit.

Mnuchin appeared to close the door completely Wednesday.

“The president has no intention. The president has released plenty of information and I think has given more financial disclosure than anybody else. I think the American population has plenty of information,” he said, inaccurately characterizing the president’s disclosures.

 

The comment came as the secretary briefed reporters on the president’s new proposal to overhaul taxes. Democrats have sought to use the tax debate to pressure Trump to release his returns, arguing the information is necessary to evaluate how Trump’s tax proposals would affect his personal wealth and his business’ bottom line.

Mnuchin declined to comment on how Trump would benefit from his proposals. He and other administration officials left the room as reporters shouted questions about how the plan would affect the Trump family.

Trump, a billionaire, owns a global real estate, marketing and property management company, which at the start of his presidency he placed in a trust that he can revoke at any time. His daughter and son-in-law, White House advisers, are also holding onto significant business assets. And Trump’s adult sons run his Trump Organization.

Trump officials have offered varying explanations for why the president does not disclosure his returns.

White House senior counselor Kellyanne Conway said in a television interview in January that the fact that he won the election without putting out the information shows that “people didn’t care” about it.

Trump’s sons Eric and Donald Trump Jr. have made similar points in various interviews.

There’s evidence the president has been thinking about the issue in recent weeks. He asked his friend and Las Vegas business partner Phil Ruffin, a fellow billionaire, whether he should put out the returns, Ruffin said.

“I advised him not to,” Ruffin said. “It’s a waste of time, and he’ll spend years explaining them and never get to accomplishing any of his goals.”

Ruffin said he told the president that Democrats would hire “armies of accountants” to pore over the documents and “make an issue out of any and everything.”

Even with Mnuchin’s seemingly definitive answer, the issue of Trump’s tax returns isn’t likely to go away. Democrats have threatened to hold up his tax proposals until they see the returns.

Senate Finance Committee Ranking Member Ron Wyden, a Democrat from Oregon, called Trump’s tax plan “unprincipled” — and one that “will result in cuts for the one percent, conflicts for the president, crippling debt for America and crumbs for the working people.”

Democrats also have been pushing for a vote on a bill that would require the president and all major-party nominees to publicly disclose their previous three years of tax returns with the Office of Government Ethics or the Federal Election Commission.

The Democrats have initiated a petition process that would lead to a House vote if they can get a majority of lawmakers to sign it — an unlikely prospect, but one that gives Democrats a chance to highlight which Republicans declined to help with their effort.
…

The president’s desire to cut refugees is also costing U.S. jobs.

A reduction in refugee resettlement that began after an executive order by President Donald Trump in late January has led to at least 300 layoffs in the U.S. nonprofit sector and nearly 500 positions abroad, according to data collected by VOA. In some cases, the jobs slashed were held by resettled refugees.

A review of news releases, media reports, and information obtained from a survey sent by VOA to the nine primary resettlement agencies shows that seven of those organizations contracted by the government to coordinate refugees’ first months and years of living in the United States have had layoffs at their headquarters and local offices around the country, or at affiliate and partner organizations.

VOA documented more than 300 part-time and full-time positions cut in the United States, including:

 

 

 

 

 

 

Sources: World Relief; Church World Service (CWS); Exodus; Catholic Charities of Tennessee; Community Refugee and Immigration Services; Catholic Charities-San Antonio; US Together; Catholic Charities of Southeast Michigan; Refugee Empowerment Center in Omaha; Catholic Charities in Cleveland

Additional organizations reported cutting employees’ hours and not filling vacancies to trim budgets.

“Our budget as a refugee resettlement agency was heavily dependent on the government funding and the suspension and reduction of U.S. admissions for 2017 as well as [the] same dim prospect for 2018 has caused a huge negative impact on agencies like ours,” Aklilu Adeye, Executive Director of the Ethiopian Community Association of Chicago, told VOA in an email. The organization recently cut five positions.

The tally is not exhaustive: Two of the nine primary resettlement organizations — Episcopal Migration Ministries and International Rescue Committee — did not respond to VOA’s request for information or make that figure otherwise public; the United States Conference of Catholic Bishops — historically one of the most active resettlement agencies — declined to provide data or comment about layoffs.

After the first executive order in January that would have stopped refugee arrivals for four months and cut the overall number for the fiscal year to 50,000, Sister Donna Markham, President and CEO of Catholic Charities USA, said that the program’s suspension would affect about 700 employees of Catholic Charities agencies nationwide, “with layoffs expected for nearly all of the workers.”

“If we’re talking about American jobs, this is laying off people in these public-private partnerships,” she told the National Catholic Reporter in February.

Overseas, Church World Service has laid off almost all 600 staff members at its Resettlement Support Center Africa, which coordinates with the State Department under a separate part of the refugee process from U.S.-based affiliates: 484 in Kenya, 27 in South Africa, and 19 in Tanzania.

“The decision to reduce our staff was a direct result of these executive orders, which sabotage our ability to offer vital services, support and counsel to families seeking to rebuild their lives in safety,” CWS President and CEO Reverend John L. McCullough said in a statement in March.

The contracts between the government and the nonprofit organizations — some of which have resettled refugees for decades — are based per capita on how many refugees are resettled by the agencies. They receive about $900 for each refugee to cover the administrative costs of helping the newcomers in their first 90 days in the country, from picking them up at the airport, setting up their first home and enrolling children in school, to hosting English classes and advising on job searches. Another $1,125 goes directly to each refugee for initial costs of setting up their lives in the United States, such as rent and furniture.

Fewer arrivals mean less funding, and that jeopardizes jobs — including some held by refugees themselves, who often are hired to interpret for members of their community or find other positions in the resettlement field.

In some cases, the nonprofit organizations are planning to receive thousands fewer refugees than anticipated by the end of the fiscal year.

From high hopes to layoffs

The fiscal year started with a surge ordered by then-President Barack Obama: The United States would take 110,000 refugees — more than it had in decades.

But those plans came to a screeching halt in late January, when one of Trump’s initial executive orders trimmed that number to 50,000; a revised order in March upheld the president’s call for that 55 percent reduction.

Despite federal lawsuits and injunctions rolling back those orders, the president maintains broad power over the ultimate number of refugees that will be allowed into the country. Trump has repeatedly expressed interest in significantly lower arrivals, leaning on what he says is a lack of confidence in the screening process for admitted refugees — although refugees are among the most rigorously vetted immigrants to the U.S.

Many resettlement organizations signed amicus briefs in support of lawsuits that challenged the refugee-related executive order, stating in one case that “faith-based refugee organizations’ ability to maintain operations and services moving forward has been devastated.”

The nonprofits have tried to rally financial support from the public in recent months, but several indicated in phone and email interviews that donations would not make up for any reduction in funding from the government.

The government’s Office of Refugee Resettlement operated on a budget of $1.67 billion in fiscal year 2016. That includes more than services for refugee resettlement, however. The bureau handles other programs, such as anti-trafficking efforts, and unaccompanied children. ORR asked for $2.18 billion for FY2017.

Refugee admissions in flux

So far this fiscal year, the U.S. has resettled about 42,000 refugees, but there has been no final word from the executive branch about how many more will be allowed in. The administration could halt the process abruptly at 50,000. At the current rate of arrivals — 800 to 900 individuals a week — that cap would be reached around the end of June or early July. (Last year, the country admitted 84,995.)

Fluctuations in the weekly refugee arrival numbers since Trump’s inauguration Jan. 20 reflect a system rattled by uncertainty, though in recent weeks that number has stabilized to align with a State Department comment to Huffington Post, indicating a goal of about 900 arrivals a week.

Trump promised to dramatically change not only the number of refugees admitted but the composition of where they come from and what religions they are, initially pledging to block Syrians and increase the number of Christians. However, the demographics remain nearly identical to those from before Trump took office.

A VOA analysis of refugee arrival data from Oct. 1 to Jan. 20 — the part of the fiscal year under Obama — compared with data from the beginning of Trump’s term until the end of March, shows the top 10 origin countries remain the same (DRC, Syria, Somalia, Burma, Iraq, Ukraine, Bhutan, Iran, Eritrea and Afghanistan). At the beginning of the fiscal year, about 48 percent of arriving refugees were Muslim. That figure is now 46 percent. Forty-three percent were Christian, which remained the same under Trump.

Lavinia Limon, head of USCRI, emphasizes that while U.S. refugee policy may leave some people out of work now, she believes the greater toll is on refugees awaiting resettlement. Even as the United States reduces its intake, the need for finding permanent new home-countries for some refugees remains the same.

“USCRI has been around for 104 years, and we have seen a lot of different politicians and politics surrounding the issues related to refugees and immigrants come and go,” Limon said. “I believe the focus needs to be on those thousands of refugees who will not be rescued and who will continue to suffer and might lose their lives because of politics in their homeland and politics in America.

“Whatever financial strain we may experience pales in comparison to their plights,” she added.

***

Have you or your resettlement organization been affected by staffing reductions? We want to hear from you. Email the reporter at vmacchi@voanews.com
…

Some 200 taxis and buses have parked outside the government offices in Romania’s capital, Bucharest, demanding that Uber and other online taxi services be outlawed in the country. 

 

Transport in the already crowded city was disrupted Wednesday morning as the protest, scheduled to last until the evening, got underway.

 

Drivers arrived early and parked their yellow taxis and blew vuvuzela horns in protest. Some met Premier Sorin Grindeanu to present their demands.

 

Bogdan Dinca, a transport union leader, told The Associated Press that they want the government to approve an emergency ordinance “to eradicate the piracy” they accuse Uber of. The ordinance awaits final approval by the prime minister. 

 

The Confederation of Licensed Transport Operators says it wants “online technology platforms that provide unauthorized taxi services to be outlawed,” to protect licensed carriers. 

 

Uber says it is a ride-sharing service with transparent costs and its drivers pay taxes. It says some 250,000 clients have used its services in the Romanian capital and other major cities in the past two years.
…

President Donald Trump and Commerce Secretary Wilbur Ross on Tuesday said they did not fear a trade war with Canada after American punitive action on lumber and milk.

“They have a tremendous surplus with the United States,” Trump said, adding “people don’t realize Canada’s been very rough on the United States. … They’ve outsmarted our politicians for many years.”

Trump added that he wanted “a very big tax” on Canadian lumber and timber.

He made the comments at a meeting with American farmers where he signed an executive order aimed at helping agriculture and rural areas.   

Trump also talked to Canadian Prime Minister Justin Trudeau Tuesday. Trudeau “refuted the baseless allegations by the U.S. Department of Commerce and the decision to impose unfair duties,” according to a summary of the call released by Trudeau’s office.

“The prime minister stressed that the government of Canada will vigorously defend the interests of the Canadian softwood industry, as we have successfully done in all past lumber disputes with the U.S.,” the statement said.

The White House later issued its own brief, three-sentence readout of the call, which it called “very amicable.”

The Canadian dollar fell to a 14-month low against the greenback after the United States imposed preliminary tariffs averaging 20 percent — more than $1 billion of countervailing duties — on imported Canadian softwood.

Earlier in the day, Trump vowed moves to protect the American dairy industry.

On Tuesday morning, he tweeted: “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!”

Against NAFTA

Trump, since his time campaigning for the presidency, has voiced his strong displeasure with the 1994 North American Free Trade Agreement (NAFTA), but until now he has vented most of his ire southward, toward Mexico.

Ross, speaking to reporters on the White House podium, would not explicitly characterize the actions on lumber and dairy as the opening shots on renegotiating NAFTA, but he did say: “Everything relates to everything else when you’re trying to negotiate.”

He described Canada as “generally a good neighbor,” asserting that its allegedly unfair trade practices regarding lumber and dairy were not very neighborly.

 

Asked on Tuesday in Kitchener, Ontario, about the U.S. trade actions and the fate of NAFTA, Canadian Prime Minister Justin Trudeau replied, “Standing up for Canada is my job, whether it’s softwood or software.”

Trudeau added, “Any two countries are going to have issues that will be irritants to the relationship and, quite frankly, having a good, constructive, working relationship allows us to work through those irritants.”

Some other Canadians were less diplomatic in their reactions.

“In Canada, the perception is that we’re always very nice,” said Unifor President Jerry Dias, representing forestry workers across the country. “But we can’t get trampled by this guy [Trump].”

‘Ignore, do not engage’

The majority of Canadians, including the prime minister and his colleagues, “understand that President Trump is prone to making ill-informed, off-the-cuff and arbitrary comments about a host of domestic and foreign policy issues,” Donald Abelson, the chairman of the political science department at the University of Western Ontario in London, told VOA.

“Canada will likely respond to Trump’s Tuesday tweet in a manner similar to how a competent parent responds to a child’s temper tantrum — ignore, do not engage,” added Abelson, who is also director of the school’s Canada-U.S. Institute.  

Other Canadians displayed wry humor — a traditional reaction to irritations from south of the border (at least since the last U.S. invasion during the War of 1812), considering the asymmetry of power.   

The president’s messages prompted immediate puns on Canadian social media, with tweets referencing “sacred cows” and calling the American trade action on dairy “udderly stupid” and “cheesy,” Sparkle Hayter, veteran Canadian journalist and author, told VOA.

The dairy dispute goes back decades. Currently, there is an overproduction of milk, according to dairy farmers on both sides of the border.

The U.S.-Canada lumber squabble is rooted in a couple of centuries of history.

 

 

In response to the proposed tariff on softwood lumber, “Canada to strike back by charging duties on exported Cdn actors,” tweeted the account of 22 Minutes, a satirical news program on national public broadcaster CBC.

Cows are No. 1

The Twitter account also noted the U.S. president “tweeted about Canadian dairy industry first thing this morning, so on his list of priorities: 1. Canadian Cows. 2. North Korea.”  

Trump’s attention on Canada comes amid indications he is pivoting away — at least temporarily — from the southern border and his quest to quickly fund his border wall with Mexico.

“We have plenty of time” to complete the wall during his first term, Trump assured reporters Tuesday afternoon.  

The presidential desire for border protection might find a better reception to the north, considering the comments from some Canadians.

 

“Some [in Canada] would like to separate from the U.S., like literally,” by digging a two-mile moat at the border “and filling it with beavers and mosquitoes,” quipped Hayter from her home province of Alberta.   

But many Canadians see themselves confronting a cross-border creature bigger than a beaver.

“Sleeping with an elephant” is how the late Pierre Trudeau, the current Canadian prime minister’s father, once characterized relations with the United States, “affected by every twitch and grunt.”
…

Anticipation of U.S. President Donald Trump’s plans for big corporate and individual tax cuts spurred Wall Street to record highs Tuesday, and sent Asian markets soaring overnight.

Trump is planning to unveil his tax plans Wednesday, with aides saying he will ask Congress to slash the current 35 percent rate down to 15 percent, a pledge he first made during last year’s presidential election campaign.

White House spokesman Sean Spicer said the U.S. has been “uncompetitive” against other countries in attracting new businesses, “largely because of our rates.”

U.S. lawmakers have for years vowed to adopt broad tax reforms, but the efforts have foundered. Congress has been unable to reconcile competing demands to eliminate tax breaks for some corporate and individual interests and raise taxes on others.

Trump’s tax plans are likely to face months of hearings and debate in Congress, where his Republican colleagues have their own ideas on how the tax code ought to be reshaped. Some lawmakers have expressed concerns that Trump’s call for a big corporate tax cut would balloon the nearly $20 trillion in long-term debt the U.S. has accumulated if there are not corresponding measures to raise more revenue.

U.S. Treasury chief Steven Mnuchin said Monday, “The tax reform will pay for itself with economic growth” that would boost tax revenues. Mnuchin called for tax simplification as well, saying U.S. reforms ideally would let taxpayers file their annual tax returns on a “large postcard.”

The argument that tax cuts pay for themselves has little support among economists.

The U.S. economy, the world’s largest, grew at a tepid 1.6 percent pace last year, a figure Trump is hoping to boost to 3 percent a year, which the United States has not reached since 2005.

Tax experts say the 35 percent U.S. corporate tax rate is the highest among the world’s 35 industrialized nations, although U.S. corporations rarely pay that much because they are permitted to deduct their business expenses from their revenues before. A number of profitable companies pay no U.S. income taxes.

When the 35 percent rate is added to the average state corporate tax rate, the figure reaches 38.9 percent, which ranks third in the world among 188 countries surveyed by the Washington-based Tax Foundation. The U.S. figure trails only that of the United Arab Emirates at 55 percent and the U.S. territory of Puerto Rico at 39 percent.
…

Canadian officials say a new tariff imposed by the Trump administration will raise the cost of new homes in the United States by $1,000 each, and shut 150,000 Americans out of home ownership. Washington’s decision also puts “thousands” of U.S. homebuilding jobs at risk, according to Canada’s ministers of natural resources and foreign affairs.

The comments follow preliminary action by the U.S. Commerce Department to impose a 20 percent tariff on $5.77 billion worth of soft wood imports from Canada to the United States. The wood is a key ingredient of family homes.

U.S. officials allege that Canada unfairly subsidizes exported wood. Subsidies could make the product cheaper, making it difficult for U.S. companies to compete on price.

Canada “strongly disagrees” with the decision to impose this “unfair and punitive” tax, says Canada’s resources minister, Jim Carr. Canada’s foreign minister, Chrystia Freeland, says Canada will take the issue to court, where the United States has lost similar cases in the past. 

U.S. Commerce Secretary Wilbur Ross says this has been “a bad week” in U.S.-Canadian trade relations, noting an additional dispute over Canadian milk exports.

While the dispute over wood tariffs might raise the cost of new homes in the United States, a report published Tuesday by the Census Bureau shows sales of newly-constructed homes jumped upward by 5.8 percent last month. If sales continue at that pace for a year, 621,000 homes would change hands. Prices also rose.

A separate report from a business group called the Conference Board showed consumer confidence declined in April. Economists at Wells Fargo say that despite the drop, consumer confidence remains near a 12-year high. Experts watch consumer confidence for clues about consumer spending, which drives 70 percent of U.S. economic activity.
…

The magnate behind LVMH is to incorporate Christian Dior into his luxury goods empire in a multibillion-dollar deal.

 

It’s the latest business coup for businessman Bernard Arnault, who has expanded his LVMH empire to include dozens of leading luxury brands — from high-end champagne and whiskies, to exclusive Vuitton handbags, Kenzo and Givenchy perfumes and Bulgari and TAG Heuer watches. Dior Couture, launched in 1946 and seen as the pinnacle of Paris style, would be a starring jewel in his empire.

 

Shares in Christian Dior and LVMH Moet Hennessy — Louis Vuitton rose after Tuesday’s long-awaited deal. The public offers values Dior at 260 euros per share. Shares in Dior spiked 12 percent to 253.95 euros by early afternoon trading Tuesday, while LVMH shares were up 4.3 percent at 223.95 euros.

 

According to the announcement, LVMH, which already owned Christian Dior cosmetics and perfumes, would buy Christian Dior Couture, its fashion business, for 6.5 billion euros ($7.1 billion). In addition, the Arnault Family Group is making a public offer for the Christian Dior shares it doesn’t currently hold.

 

The hope is that combining Dior’s entities under one roof and simplifying internal activities, savings will be generated.

 

The statement says the boards of both companies approved the transactions on Monday. The proposed deal will still need regulatory approval and consultations with workers. The companies also hope to issue the public offer in June, and finalize the purchase of Dior Couture in the second half of this year.

 

The companies laid out their hope that Dior’s fashion revenues and profit, which have risen in recent years, will be a  “source of growth” for LVMH, particularly with development in the U.S., China and Japan.

 
…

The financial industry is closely watching Alibaba affiliate Ant Financial’s attempt to acquire Dallas-based MoneyGram International, the world’s second biggest money transfer company after Western Union. Ant is offering $1.2 billion, more than U.S.-based competitor Euronet Worldwide.

If successful, the deal would turn Ant Financial into a financial behemoth with access to MoneyGram’s vast network of 350,000 outlets of retail shops, post offices and banks across 200 countries. At present, Ant’s business is largely based on the Chinese yuan. The acquisition would also give it access to U.S. dollar funds and escrow accounts for managing the funds.

“If you look at MoneyGram, what they might be doing here (to Ant Financial) is bringing a unique extra key that has much to do with that escrow account surplus and be able to hold a lot of dollars,” Jacob Cooke, chief executive officer of Web Presence in China, told VOA. “That, of course, will give them access to a whole bunch more opportunities to Ant’s financial services.”

Bidding war

As Euronet entered the race, Ant Financial hiked its bid by 36 percent, leaving no one in doubt about its determination to acquire MoneyGram and take on Western Union, the world’s biggest money transfer company, on its own terms. But Euronet has so far refused to give up, saying it is reviewing the new situation.

Euronet is also battling the Ant’s bid at another level. It has gone public in saying the Chinese acquisition bid poses serious security risks as payment companies hold vast amounts of financial data of their customers.

Protectionist moves

For Ant Financial, the biggest challenge would be obtaining approval of the Committee for Foreign Investment in the United States (CFIUS). Some analysts see it as the first major test for Chinese investments in the face of protectionist moves by the Trump administration.

“Getting approval from CFIUS might be more difficult this year. Plus, Chinese acquisitions are more on the media radar than before,” Jeffrey Towson, professor of Investments at Peking University’s Guanghua School of Management, said. “And finally, there is also a competing bidder, Euronet, and they will probably push for a regulatory denial based on security concerns”.

Two members of the U.S. House of Representatives, Kevin Yoder and Eddie Bernice Johnson, have written to Treasury Secretary Steven Mnuchin questioning the deal.

“The proposal merits careful evaluation as it would provide Chinese access to the U.S. financial infrastructure, a move that would pose significant national security risks if completed,” they said.

Allaying concerns

Ant Financial has tried to allay security concerns, saying that MoneyGram’s data will be stored in “iron-clad U.S.-based servers.”

In an open letter to MoneyGram’s shareholders, Douglas Feagin said MoneyGram will “continue to be headquartered in Dallas and run by its current U.S.-based management team after the deal closes.” He also promised Ant will “continue to invest in MoneyGram’s systems and compliance programs.”

Alibaba Group chairman Jack Ma was among the first to visit Trump Towers after Donald Trump won the U.S. presidency. Trump recently met Chinese president Xi Jinping, and later said he does not regard China as a currency manipulator anymore. Some analysts see these developments as positives for Ant Financial.

“Though CFIUS has given thumbs down to quite a few recent attempted Chinese takeovers, there isn’t an obvious national security case here as to why they should stop the transaction,” said Peter Fuhrman, chairman of consultancy firm, China First Capital.

Alibaba magic again?

An important question is whether it will also enhance the capabilities of the online shopping giant, Alibaba, and in turn pose a new challenge to similar players like Ebay. Ant Financial has served as a platform for carrying out Alibaba’s financial transactions in the past, analysts said.

“Ant Financial was born out of the fact that Alibaba’s e-commerce platforms were holding huge sums of money in escrow while transactions were completed between buyers and sellers,” Cooke of Web Presence in China, said. “So the natural assumption is that Alibaba can utilize MoneyGram’s escrow accounts and add to its own strengths”.

Jacob Kirkegaard, a fellow at the Washington-based Peterson Institute of International Economics, said, “Alibaba is arguably the world’s most sophisticated internet finance company. If they see a potential for MoneyGram in their product portfolio, I have no doubt that they can execute the deal and ensure integration.”

When contacted, Ant Financial did not reply to VOA’s questions and referred VOA to past statements by the company. A public relations firm representing Ant said the company has no relationship with Alibaba and refused further comment.

But several analysts, and most recent media reports, describe Ant Financial as a financial affiliate of Alibaba.
…

U.S. Senator Dan Sullivan on Monday called on both the American and Chinese governments to exercise “true reciprocity” in relations, including trade and diplomacy. 

 

The Republican senator from Alaska, in a speech concerning Chinese outbound investment, and in an interview with VOA afterward, said China has been aggressively buying companies in key sectors such as robotics, biotech, advanced machineries, software, entertainment and media “throughout America and Western Europe. But if you’re an American firm, or a firm from Germany, and you want to go to China and buy Chinese companies in those same sectors, you would be told ‘no;’ you would be prohibited.”

 

Making “true reciprocity” US policy

 

Sullivan’s proposed “true reciprocity” is rather simple and straightforward: “If Chinese companies want to invest in America’s biotech sector, then American companies should be able to invest in China’s biotech sector. It’s simple, it’s fair, it’s what China has said it wants to do but it doesn’t do, and we need to be much more serious about implementing it.”

 

Should China continue to ignore Washington’s calls for equal treatment and a level playing field, Sullivan says he is prepared to introduce legislation aiming at closing what he identifies as China’s “credibility gap,” and making sure that “true reciprocity” becomes official U.S. policy.

 

The Alaska Republican, who serves on both the Senate’s Commerce and Armed Services Committees, called on the U.S. government to reject “Middle Kingdom diplomatic practices” that fail to grant U.S. diplomats the same level of access Chinese diplomats receive in Washington. 

 

“Middle kingdom” diplomatic practices

 

Quoting from a study done by the New York-based Asia Society, Sullivan said “for a number of years, the U.S. ambassador in Beijing was only getting deputy minister level access while we, of course, give higher access to Chinese ambassadors here in Washington.”He called the solution to such unequal diplomatic treatments “a no brainer.” 

“If our ambassador in Beijing only gets deputy minister level access, then that’s what we should provide China’s ambassador in Washington, period. Middle Kingdom diplomatic practices should be firmly and aggressively rejected by the U.S. government everywhere,” Sullivan said.

 

He agreed that his proposed “true reciprocity” ought to also include issues such as granting journalists visas and access in both countries.

 

Growing domestic consensus

 

Sullivan said “there’s growing domestic consensus” in the United States that America’s strategic interests, including strategic economic interests, outweigh the market price of individual transactions, while acknowledging that each individual American businessman or woman naturally want the highest return for their individual product.

“The broader strategic interest of having a strong U.S. economy, and signaling to the next biggest economy in the world, China, that you need to play by the rules we play by, is also very important; and in my view, that importance strategically overrides the interest of the ability of American firms to sell to Chinese investment funds.”

Senator Dan Sullivan: China needs to play by rules we play by

 

Geo-economics

 

Daniel Twining, counselor and director of the Asia Program at the German Marshall Fund of the United States and an associate of the U.S. National Intelligence Council, thinks the U.S. economic power so far has not been sufficiently utilized to advance the nation’s overall strategic, political and economic interests. 

 

“The U.S. is used to this traditional foreign policy tool kit that involves the armed forces, the diplomatic corps and development (foreign aid), but there’s really a fourth link here, which is our economic statecraft,” he told VOA.

 

Twining said other major powers, including China, appear to be much more adept at what he called “geo-economics,” using trade and investment “quite actively” and “quite smartly” to advance overall national interests.“It may be smart for us to think more about our economic strategies in the world,” including acknowledging and adopting strategies accordingly based on the fact that “market forces are not working everywhere, including in an economy like China that is still somewhat closed or controlled in some respects.”

Daniel Twining: Market forces are not working everywhere

​

 

Forgoing short-term profit

 

A newly released report by Baker McKenzie put Chinese worldwide outbound investment at $200 billion in 2016, nearly half of which targeted assets in North America and Europe. 

 

According to Robert Shapiro, chairman of Sonecon and former U.S. Undersecretary of Commerce for Economic Affairs, the primary goal of China’s overseas investments does not lie in short-term profit but rather in gaining strategic advantage, and that means not necessarily in gaining immediate economic return.

Robert Shapiro: China playing the long game

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