US, Mexican Unions to File NAFTA Complaint Over Labor Bill

U.S. and Mexican unions will formally complain to the U.S. Labor Department on Thursday that Mexico continues to violate NAFTA’s weak labor standards, a move that they hope will persuade U.S. negotiators to push for stronger rules.

The AFL-CIO told Reuters that it and Mexico’s UNT were filing the complaint with the U.S. office that oversees the labor accord attached to the North American Free Trade Agreement as U.S., Canadian, and Mexican negotiators met in Montreal to try to modernize the 1994 trade pact.

The complaint, seen by Reuters, argues that Mexico’s proposed labor law amendments to implement constitutional reforms will violate the North American Agreement on Labor Cooperation. It seeks efforts from the United States to prevent the measures from being implemented and to demand changes to bring Mexico into compliance.

“Simply by promoting this bill, which aims to undermine the constitutional reforms, the government of Mexico brazenly violates the central obligations of the NAALC – namely to ‘provide high labor standards’ and to ‘strive to improve those standards,’” the AFL-CIO and Mexico’s UNT National Workers Union said in the complaint.

 Talks to overhaul the trade deal have been dogged by U.S. threats to withdraw from the pact, but the foreign ministers of Mexico and Canada on Thursday struck an upbeat note on future negotiations.

A key complaint is that NAFTA has failed to lift chronically low Mexican wages that have steadily drawn U.S. and Canadian factories and jobs to Mexico.

The trade pact has also allowed lower health and safety standards in Mexican factories to persist, but violations of the NAFTA labor cooperation agreement are not enforceable through trade sanctions.

The U.S. Trade Representative’s office has made steep demands on automotive content to reverse job migration, but its labor proposals have disappointed unions and many Democratic Party lawmakers. The proposals stuck largely to language that Mexico and Canada previously agreed to in the Trans-Pacific Partnership, a trade deal the Trump administration has abandoned.

“What the USTR put on the table is not acceptable and won’t get the job done,” said Celeste Drake, the AFL-CIO’s trade and globalization policy specialist.

She said past complaints to the Labor Department regarding Mexico’s violation of the labor cooperation pact have not led to major change and this one may be no different, but it aims to influence the negotiations by drawing attention to Mexico’s weak record on worker rights as negotiators discuss labor issues in Montreal.

“It gives ammunition at the negotiating table to U.S. and Canadian negotiators to say, ‘Your violations on NAFTA are not in the past, they’re not over with.’”

A USTR spokeswoman could not be immediately reached for comment.

Thus far, Canada led the call for higher labor standards in the talks, including making a proposal that the United States revise its so-called right-to-work laws in many southern states that help to limit the spread of unions in manufacturing.

Puerto Rico Warns of 11 Percent GDP Drop in new Fiscal Plan

Puerto Rico’s governor submitted a revised fiscal plan overnight Thursday that estimates the U.S. Caribbean territory’s economy will shrink by 11 percent and its population drop by nearly 8 percent next year.

The proposal doesn’t set aside any money to pay creditors in the next five years as the island struggles to restructure a portion of its $73 billion public debt. The original plan had set aside $800 million a year for creditors, a fraction of the roughly $35 billion due in interest and payments over the next decade.

The five-year plan also assumes Puerto Rico will receive at least $35 billion in emergency federal funds for post-hurricane recovery and another $22 billion from private insurance companies.

Some analysts view that assumption as risky given that the U.S. Treasury Department and U.S. Federal Emergency Management Agency recently told Puerto Rico officials that they are temporarily withholding billions of dollars approved by Congress last year for post-hurricane recovery because they felt the island currently had sufficient funds.

A spokesman for Gerardo Portela, director of the island’s Fiscal Agency and Financial Advisory Authority, said he was not immediately available for comment.

The plan does not call for layoffs or new taxes. Instead, Gov. Ricardo Rossello once again called for labor and tax reforms and the privatization of the island’s power company to help generate revenue and promote economic development amid an 11-year recession. He noted that nearly half of the island’s 3.3 million inhabitants lived in poverty prior to the hurricane and that Puerto Rico still faces an 11 percent unemployment rate. Nearly half a million people have fled for the U.S. mainland in the past decade in search of jobs and a more affordable cost of living.

“We must work as a government to prevent this from happening, and that’s what we’re focused on,” he said.

Rossello said an original $350 million cut to the island’s 78 municipalities will not be immediately imposed as they struggle post-hurricane. Instead, he said they will receive more money than usual in upcoming years.

Rossello also called for reducing several taxes, including an 11.5 percent sales-and-use tax to 7 percent for prepared food. More than 30 percent of power customers remain in the dark more than four months after Hurricane Maria, forcing many to spend their dwindling savings on eating out.

A federal control board overseeing Puerto Rico’s finances has to approve of the plan, which it envisions doing by Feb. 23.

“The Oversight Board views implementing structural reforms and investing in critical infrastructure as key to restoring economic growth and increasing confidence of residents and businesses,” Natalie Jaresko, the board’s executive director, said in a statement Thursday. “Our focus in certifying the revised plans will be to ensure they reflect Puerto Rico’s post-hurricane realities.”

 

A Girl, a Stranger, and a Quest for Justice in China

The young woman, new to the grind of Chinese factory life, knew the man who called himself Kalen only by the photo on his chat profile. It showed him with a pressed smile holding a paper cup in a swank skyscraper somewhere late at night.

Yu Chunyan and her friends didn’t know what to make of him. Some thought his eyes were shifty. Others said he looked handsome in a heroic sort of way.

Yu was among the doubters. The daughter of factory workers, Yu paid her way through college by working in factories herself. She and thousands of other students had toiled through the summer of 2016 assembling iPhones at a supplier for Apple Inc., but they hadn’t been paid their full wages.

Kalen was offering to help – and asking nothing in return.

This struck Yu as suspicious. If there was one thing she had learned in her 23 years it was this: “There’s no free lunch.”

Disputes like these often don’t go well for workers in China. But over the years, suicides and sweatshop scandals have pushed some companies, like Apple, to reconsider their approach to workplace fairness.

Today, a growing number of brands, including Apple, Nike Inc., Gap Inc., Levi Strauss & Co., and the H&M Group prioritize transparency and take public responsibility for conditions throughout their global supply chains. Labor rights groups like the one Kalen worked for, China Labor Watch, can play a useful watchdog role for these companies, by helping them understand what’s really going on at their suppliers.

But not everyone has embraced this new approach.

When China Labor Watch confronted Ivanka Trump’s brand with charges of labor abuses at its Chinese suppliers, her company refused to engage. It made no public effort to investigate the allegations: forced overtime, pay as low as $1 an hour, and crude verbal and physical abuse – including one incident in which a man was hit in the head with the sharp end of a high-heeled shoe.

Ivanka Trump, who still owns but no longer closely manages her namesake brand, stayed silent. Neither she nor her brand would comment for this story.

Unlike Apple, her brand doesn’t publish the identities of its manufacturers. In fact, its supply chains have only grown more opaque since the first daughter took on her White House role.

But as the summer of 2016 was ending, Yu Chunyan had no idea she was about to get an education in geopolitics and corporate social responsibility. She wanted one thing only: her wages. And she saw one way to get them: The stranger with the odd English name.

Kalen and China Labor Watch would link Yu not just to Apple, but ultimately, to the daughter of the President of the United States. Their intersecting stories highlight the contrasting approaches Apple and Ivanka Trump’s brand have taken to workplace fairness – and the impact those decisions have had on the ground in China.

It would take Yu more than a year to discover who Kalen really was.

No help came

When Yu was still a baby, her parents went to work at a factory in one of the southern boomtowns of Guangdong province. As a child, entire years passed without a visit from her mother or father.

This was an ordinary enough fate in China, and Yu grew up bouncing between her grandparents’ homes in central China’s Henan province.

The first extraordinary thing that happened to Yu was her high school entrance exam. She aced it, despite her middling grades, scoring even higher than the known overachievers in class.

The shock of her accomplishment gave Yu a soaring sense of her own potential. She raced to tell her mother.

“Oh,” was her mother’s stony response.

Yu’s test score opened the possibility, unsettling to her parents, that she would not marry young, produce grandchildren and start earning money for the family.

Her parents regarded aspiration warily: Excellence would only lead to inflated expectations. Just the sort of thing, her parents feared, that could crush a person. Better to remain where you are, bound by a certain, riskless horizon.

Yu did not agree. “As long as I want something, I will get it,” she decided.

Her parents let her stay in school, but if Yu wanted to go to college, she would have to pay her own way.

And so she did. She enrolled in a college in Henan province. Ultimately, she wanted to do something creative, like design; in the meantime factory jobs weren’t a bad way to make money.

In July 2016, Yu took her place on the assembly line at Jabil Inc.’s Green Point factory in Wuxi, a city near Shanghai. She spent her 12-hour shift snapping the back cover of the iPhone 7 into a mold and passing it down the line.

“It seems simple,” Yu said. “But if you work the whole day doing this your hands will be really tired. Normally, it’s a job for a man.”

Her group’s production quota kept going up, climbing from 2,000 to 50,000 units a day, Yu said. She got dizzy. Her hands hurt. She thought: “When will it be over?”

In August 2016, she quit, ignoring admonitions that her pay would be docked 500 yuan ($79, at today’s rates) for leaving early.

Yu made the 12-hour train trip back to school in Henan and on Sept. 10, her final paycheck hit her bank account. It was an ugly surprise. She was 1,100 yuan short of the 4,930 yuan she expected. Her salary was supposed to cover her tuition. Now it didn’t.

“I was furious,” she said. “I thought that no matter what I would get my money back.”

She called the factory and the labor broker who had gotten her the job only to be informed of a range of surprising fees, some legitimate, others not.

Yu called the labor union at Green Point for help. “Useless,” she said. She called the local labor bureau, but no one picked up.

On Chinese social media, Yu found a chorus of despair as other students – the children of farmers, factory and construction workers – vented about being stiffed on WeChat, QQ and Weibo.

“Everyone had an attitude like, ‘Well, it has nothing to do with me,'” said Zhuang Huaqian, an electrical engineering student at Hunan University of Technology, who spent the summer assembling iPhones in a moon suit of dust-free clothing.

The head of one of the labor brokers in the dispute, Ding Yan, said his company had done nothing wrong. “Wages are our bottom line. We will never underpay them,” he said. “I wouldn’t risk this brand.”

Frustrated, the students took their case to the press. A few articles appeared detailing their complaints, but Yu and another student said postings began to disappear. Were they being censored, they wondered?

The local government published an article on an official Weibo account that said authorities acted swiftly and more than 2,100 students had been repaid. The post included complaint hotlines workers could call.

Chen Jianbin, head of Wuxi’s labor security supervision unit, said his team had to sort through verbal contracts, informal intermediaries and fake complaints apparently lodged by people paid to smear competing labor agencies.

“We were trying our best to help,” said Chen. “Those students’ lives were not easy.”

But many students hadn’t gotten their money back.

Beneath their fury was growing desperation. Every lever of redress they had tried failed them. They had appealed for help to forces they thought they could believe in – society, the government – but no help came.

‘The world is full of good people’

There was, however, one guy, who did offer help. He called himself Kalen.

Kalen had worked in a phone factory himself, 13 years earlier, polishing cheap landline phones for a Chinese brand at a factory in Shenzhen. Back then, he didn’t realize he was being underpaid until he wandered into the office of a local labor rights group one day and learned that he wasn’t earning the legal minimum wage.

That knowledge electrified him. He devoured books about labor rights in the group’s reading room as he prepared his case. Two months later, he won 3,000 yuan in back pay through a local arbitration panel.

Kalen wondered how many other workers out there were like him, ignorant of their rights. He quit his factory job and dedicated himself to teaching workers how to use China’s laws to protect themselves.

Kalen brought his evidence-based approach to China Labor Watch, a group many of the students had never heard of before. He told them about the group’s past work with Apple suppliers and taught them how to calculate what they were owed. He admonished them to be honest as he gathered details about working hours and pay from over 200 workers.

“Seek truth from facts,” he wrote them on QQ.

In September, China Labor Watch asked Apple to intervene. The company sent a local team to investigate, reporting that 2,501 students had received back wages.

But many said they still hadn’t been fully paid.

When Kalen asked for a volunteer to write a letter to Apple, Yu was torn: Could she get kicked out of school for speaking out?

“It was so hard for me to make this money,” she said. “As long as there was a little bit of hope left I wanted to try.” She stayed up past midnight writing down everything that had happened.

On Sept. 28, Li emailed Yu’s letter to Apple.

Five days later, Apple wrote back: It had done further investigation and would ensure workers got paid for their day of training and extra work during meal breaks.

“Jabil invested hundreds of hours of staff time to contact approximately 17,000 employees,” Eric Austermann, Jabil’s vice-president of social and environmental responsibility wrote in an email to AP. “Although often lacking an email address, phone number, or other standard contact information, Jabil located all but about 5 percent of these employees, all of whom have been paid in full.”

The workers received over 2.7 million yuan ($426,000, at today’s rates), according to Jabil Green Point and an October 2017 email from Apple to China Labor Watch.

Apple declined to the comment on the case.

The students’ payments came in a few hundred or thousand yuan at a time. This was money for school, for food, a way to stay out of debt. By the end of October, Yu had gotten back everything she was owed.

She was impressed. She amended the letter she had written for Kalen, turning it into a testimonial and a statement of personal intent. China Labor Watch posted it on its website.

“Due to this experience, I am confident that the world is full of good people, people who make selfless contributions,” Yu wrote. “I wish to join a public interest organization. I wish to help others.”

But China was changing. Hundreds of human rights lawyers and activists had been swept up in a crackdown against perceived threats to the ruling Communist Party. Those with foreign ties, like China Labor Watch, were viewed with particular suspicion.

Yu had yet to grasp the perils of her growing idealism.

It could have been me

After Chinese New Year, Yu moved to Shanghai, a city she had only seen in pictures, to take a job at an interior design company. In March 2017, five months after she’d received her back pay from the factory, Yu reconnected with Kalen on WeChat.

Kalen told her China Labor Watch might need people to work undercover.

China Labor Watch was closing in on factories that made Ivanka Trump merchandise, including Ganzhou Huajian International Shoe City Co.

But the thought of returning to the grind of factory life was more than she could stomach.

“I needed to push myself forward,” she said. She wanted to learn English, dress better, lose weight.

China Labor Watch ultimately sent two men to work undercover. The group obtained a video of a manager berating a worker for apparently arranging shoes in the wrong order.

“If I see them f—ing messed up again,” the manager yells, “I’ll beat you right here.” Another worker was left with blood dripping from his head after a manager hit him with the sharp end of a high heeled shoe, according to three eyewitnesses who spoke to the AP.

The Huajian Group, which runs the factory in Ganzhou, denied all the allegations as “completely not true to the facts, taken out of context, exaggerated.” In April, China Labor Watch laid out its initial findings in a letter to Ivanka Trump at the White House.

She did not respond.

Over the years, Samsung Electronics Co. Ltd., Gap Inc., Target Corp., Wal-Mart Stores Inc. and other companies took China Labor Watch seriously enough to respond to criticisms or meet Li in person, according to emails and meeting notes reviewed by AP. Walt Disney Co. severed its relationship with at least one supplier after China Labor Watch exposed poor working conditions.

“We did an investigation on Apple because Apple is a big American company,” Li said. “If Apple changes, the other companies will follow. Now Ivanka is the most famous person among all these companies. If she can change, the other companies will too.”

But that plan backfired.

At the end of May, three China Labor Watch investigators were arrested, accused of illegally using secret cameras and listening devices.

One of them was investigator Hua Haifeng. Police had warned Hua to drop the Huajian investigation, but he pushed ahead anyway, Li said.

A wiry man not easily moved to alarm, Hua seemed to accept fear as the cost of his decision to live his life as an expression of his values.

In more than a decade working on labor rights in China, Hua had helped thousands of workers get back money they were owed, all the while half-wondering when he’d be forced to stop.

Now that he had, Hua, 36, was cut off from his wife and two young children.

Inside the Ganzhou City Detention Center, Hua shared a toothbrush with strangers. Locked in a cell so crowded there weren’t enough wooden boards to sleep on, Hua stretched out at night on a concrete floor next to a bucket that served as the toilet for around 20 men. The men added water and soap, hoping the bubbles might somehow take the stench out of human waste. It didn’t work.

It was the first time in China Labor Watch’s 17-year history that its investigators had been arrested. Police raided the group’s Shenzhen office and carried away computers and documents, Li said.

From his office in New York, Li worked frantically to get the men out of jail. He was convinced the shift in fortune was due to the target of their inquiry: a brand owned by the daughter of the U.S. president. But he had no proof.

Ivanka Trump – and her brand – said nothing about the arrests.

Where is Kalen?

Days after the arrest, Yu Chunyan took a new job at a design company in Shanghai, but something lingered from her experience at the Green Point factory. “I’d prefer work that can help more people,” she said.

She got a friend request from China Labor Watch’s Li Qiang. She messaged Kalen to check Li out.

Kalen never replied. She wondered what had happened to him.

On June 5, the U.S. State Department called for the immediate release of the three China Labor Watch investigators.

China’s Ministry of Foreign Affairs responded that other nations “have no right to interfere with our judicial sovereignty.” State-owned media reported that the trio had tried to steal trade secrets and sell them overseas.

Li Qiang wrote to Ivanka Trump at the White House on June 6, describing what he called “extreme working conditions” in her supply chain. “Your words and deeds can make a difference in these workers’ lives,” he wrote.

He got no reply.

Her brand has called its supply chain integrity “a top priority,” but also maintains that its suppliers are overseen by licensees – companies it contracts with to make tons of Ivanka Trump handbags, shoes and clothes.

The brand said its shoes had not been produced at the Huajian factory since March, though China Labor Watch obtained an April production schedule for nearly 1,000 pairs of Ivanka Trump shoes due in May.

In late June, after 30 days in jail, the three China Labor Watch investigators were released on bail. Hua carried his son in his arms as he walked out of a police station in Ganzhou.

Hua declined to be interviewed for this story. His lawyer said police ordered him not to speak with the media. His bail conditions dictated that he must check in weekly with police and cannot travel without permission. That, plus the cloud of criminal suspicion that clung to him in his small hometown, made it hard to get a job.

In July, Hua asked police for permission to take a family vacation in the Wudang mountains, three hours away. After articles came out in the foreign press quoting Hua, half a dozen plainclothes policemen appeared at a restaurant where Hua was having dinner with his family and tapped him on the shoulder. The next morning they escorted him home, leaving his wife, Deng Guilian, to wander through Taoist temples alone with the kids.

With her husband out of work, Deng got a job selling drinks and snacks at a local karaoke parlor from 6 p.m. until 2 a.m. After her shift, she heads to a nearby dormitory where she and a female co-worker share a bed with a Snoopy headboard.

She gets three days off a month to see her four-year-old son, Bo Bo, and seven-year-old daughter, Chen Chen.

“They seem accustomed to not having their mom,” Deng said, flashing an uneasy smile.

Each Monday morning after dropping his kids at school, Hua makes the short drive past weedy lots and a factory spewing thick white smoke to check in with the local police in Nanzhang County.

At first they lectured him: Change careers. Don’t speak out. Live a normal life. Now, he usually just signs his name, his wife said, but it is clear that missteps can quickly draw the wrath of local authorities.

Police in Nanzhang County, Ganzhou city and Jiangxi province did not respond to requests for comment.

In October, Li Qiang again wrote to Ivanka Trump and her brand.

He said he got no response.

Ivanka Trump’s actions show “that she does not care about these workers who are making her products, and is only concerned with making profits,” Li said in an email. “As a public figure, she has the ability and resources to not only work on labor conditions at her own brand’s factories, but also to help improve labor conditions of the global supply chain as a whole. However, she did not use her influence to do these things.”

An ordinary person

Shortly after 6 p.m. on an October evening, Yu Chunyan left her office and walked through Shanghai’s former French Concession, the wealthy heart of China’s most prosperous city. She passed rows of thick plane trees, black against a darkening sky, and stepped into a discreet tea house.

Yu slid open the wooden door of a private room and peeked inside with a wide, nervous smile at the AP journalists she had agreed to meet. A chunky, colorless sweater hung off her body and her stocking feet poked out of white sandals despite the cold.

Yu slipped off her shoes and took a seat at the sunken table, doing her best to avoid the list of fancy teas glowing from a scrollable iPad menu. She began to talk about Kalen, and pulled out her phone to flip to their exchanges on WeChat.

There, in his tiny profile photo, was a familiar face.

“Do you know him?” she asked, surprised.

AP had been writing about him for months.

Kalen was Hua Haifeng.

Yu had no idea that her Kalen was the same Hua Haifeng who had been arrested while investigating Ivanka Trump suppliers. She listened, still and silent, to news of interrogations and surveillance, his son’s sudden nightmares, the jail and the bucket of urine.

Her eyes welled. Elegant cakes lay untouched in front of her.

An hour later, she sent a WeChat message to Kalen.

“Do you have to take risks to work in your industry?” she asked.

Risks depend on politics, he wrote her, and the conditions of the country you live in. “From the beginning, I expected something like this could happen,” he told her. “So it’s not about bad luck. It was going to happen sooner or later.”

“If you had another chance, would you do the same thing?” she asked.

“Yes,” he answered. Hua told Yu that he had to live a life that embodied his values. He tried to be encouraging. “I am not saying that everyone has to pay that high a price.”

But Yu had a sense that Hua had run up against forces neither of them could fully grasp, much less defeat. In her mind, she was recalibrating the risks of idealism.

“I wouldn’t be able to do it,” Yu said.

In late November, she left Shanghai to go back and live with her parents.

“I want to be an ordinary person,” she said. “I don’t want to get involved with controversial things.”

 

China Pledges to Further Open Up Economy at Davos

A top economic adviser and trusted aid of Chinese leader Xi Jinping has promised that reforms are coming to China this year and adds that some could even “exceed expectations.”

Speaking at a forum on the Chinese Economy at the World Economic Forum, Liu He said China would take steps to open up the banking, finance and insurance sector as well as the manufacturing and service sector and other measures.

“Many of our foreign friends have asked, you’ve made so many promises, but when will they be carried out? I can responsibly say that we will carry out these promises one after the other, the sooner, the better,” Liu said.

China has long promised to open up its markets to the world, but the slow pace of reform in some sectors and a playing field that is tilted heavily in the favor of state owned enterprises and forces players to hand over technology in exchange for market access has increasingly been the focus of criticism from foreign firms in recent years.

It was unclear from his remarks how some of that might change, but analysts note that what Liu has to say is important. Late last year, he was elevated to a seat on the 25-member politburo of the Communist Party of China. He is also widely expected to become China’s next vice premier in March with a portfolio that focuses on the economy.

He said that as China marks 40 years of opening its markets up to the world, reform measures fitting to commemorate and celebrate that occasion would be unveiled.

“The best way to celebrate is by offering up new and even deeper reforms,” Liu said. “The central government is currently reviewing what those measures will be, and I can responsibly say that some of those measures could exceed the expectations of the international community.”

In his remarks, Liu He said China would focus on continuing to open up in four areas: finance, manufacturing and services, boosting intellectual property right protection and expanding imports.

For manufacturing, that would include shipping, rail transit and equipment manufacturing and reducing restrictions on foreign investment. On imports, Liu noted that last year China reduced tariffs on 187 products, cutting the average from 17.3 percent to 7.7 percent. He said such moves would continue.

In recent years, China has come under increasing criticism from the United States and other countries over its trade practices.

Automobile tariffs are one area of concern. Imported cars currently face a 25 percent tax coming into China, while Chinese automobiles that are shipped to the United States face a 2.5 percent tax.

In his speech Liu He repeated an earlier promise to gradually lower tariffs on imported automobiles, but gave no specifics on a possible timeline.

On the campaign trail, U.S President Donald Trump promised to put more pressure on China and as Beijing continues to delay on promised reforms, trade war clouds are looming.

Earlier this week, he announced heavy tariffs on solar panels and washing machines — a strike at China’s economy that some analysts argue is just the beginning.

Trump will speak on Friday at the meetings in Davos and here in China his appearance at the gathering is being used as a way of contrasting what some argue is a sharp difference in world views between the two countries.

A state-run Xinhua news agency commentary entitled “Shared Future or America First” argued that business leaders and policy makers at the meeting were facing a choice between a “Xi style collaborative approach” or Donald Trump’s “self-centered America First policy.”

The theme of this year’s meeting in Davos is “Creating a Shared Future in a Fractured World.” Xinhua said that with Britain’s Brexit and Trump’s America First policy “the bandwagon of globalization and integration has been put into reverse.”

The communist party-backed Global Times echoed similar sentiment in a piece entitled “ Community with shared future has broader appeal.” In that article, the paper said Trump’s “America First” policy “actually brings out the charm of the Chinese proposal of a community with shared future.” Adding that, “however hard it will be to build such a community, this will garner more support than becoming a selfish power.”

The idea of a community with a shared future was put forward by China last year, when Chinese President Xi Jinping became the first head of state to attend the forum.

When he speaks on Friday, President Trump will be the first U.S. leader to speak at the meeting since former president Bill Clinton.

 

Saving Lives by Taking the Guesswork Out of Snake Bites

An estimated 5 million people around the world are bitten by venomous snakes each year, and more than 100,000 victims die. In many cases the key to survival is anti-venom, but getting the right treatment can depend on knowing what kind of snake did the biting. Some new medical tech developed in Denmark is taking the guesswork out of the snake bite business. VOA’s Kevin Enochs reports.

North Korea Missile Threat Revives Talk of ‘Star Wars’

Scientists and NASA officials who spearheaded development of a space-based missile defense system in the 1980s are urging its revival to counter emerging nuclear threats from North Korea and other rogue states.

False alarms over a North Korean missile attack on Hawaii this month indicate how Pyongyang’s nuclear capability has taken center stage as America’s main security concern since the North Korean government’s recent testing of ICBMs capable of reaching the United States.

The controversial U.S. Space Defense Initiative (SDI), started under President Ronald Reagan, was often ridiculed as “Star Wars” by critics in the U.S. Congress and media who balked at its high cost.

Many also questioned its effectiveness against the Soviet Union’s massive and sophisticated nuclear arsenal.

​Back on the drawing board?

The program never got past the drawing board and was largely abandoned at the end of the Cold War.

“Everybody lost interest in SDI when the Soviet Union collapsed, but vast technological advances over the past 30 years and the emerging nuclear threat from North Korea revive its need and feasibility,” says Robert Scheder, a systems analyst with the RAND Corp. who designed the original model for space-based defense.

He conducted early simulations with a weapon system consisting of orbiting rockets equipped with sensor technology designed to intercept attacking missiles at the “boost phase,” or immediately after launch, before they can release decoys and countermeasures.

But there were significant technological shortcomings.

The fleet of satellite interceptor systems, also known as Brilliant Pebbles or Smart Rocks, could not entirely neutralize a Russian first strike involving thousands of nuclear warheads, according to Scheder.

They could, however, provide fail-safe protection against the threat now posed by North Korea, which can only launch a maximum of three or four missiles at a time, he told VOA in an interview from his home in Spain.

Critics: It’s still lacking

Thomas Roberts, a critic of space-based defense at the Center for Strategic and International Studies in Washington, says that even a small salvo of missiles could penetrate the space shield. 

“The enemy can first launch a decoy to make a gap through the interceptor shield and then launch a salvo through that gap, which the Pentagon cannot close fast enough,” Roberts said.

At least 1,600 killer satellites would be needed to fully cover the Earth, costing defense dollars that could be just as effectively spent in deploying more conventional interceptor missiles and launching more satellites to track, surveil and identify incoming enemy missiles.

The calculated $100 billion cost for placing thousands of Brilliant Pebbles in orbit would have absorbed the entire U.S. defense budget in the 1980s. 

“But the much smaller size of satellites and advances in miniaturization technology would limit the cost substantially in today’s terms,” Scheder said.

Commercially available space technology currently produced by Tesla and other contractors would also lower development costs and shorten deployment time, according to NASA experts.

The former SDI director, retired U.S. Air Force General James Abrahamson, has placed the current cost of Brilliant Pebbles at $20 billion. 

Roberts said it would be at least $70 billion.

​Congressional interest

SDI was shelved by President Bill Clinton and plans to revive it under successor George W. Bush were sidelined as counterterrorism and land wars in Afghanistan and Iraq took priority following the 9/11 terror attacks.

Growing concern with North Korea has moved the U.S. Congress to request new funding for space weapons research, according to a recent letter from the House Armed Services Committee to the White House.

The 2018 National Defense Authorization Act signed by President Donald Trump last month mandates the Missile Defense Agency to “begin research on space-based interceptors and re-establish the space test bed for demonstrating the relevant technologies.”

Abrahamson has said that the land-based anti-ballistic missile Terminal High Altitude Area Defense system, or THAAD, that currently employs Patriot surface-to-air batteries, cannot provide guaranteed protection against a rogue attack.

Simulations have shown that THAAD and the Navy’s AEGIS system have a 50 percent probability of intercepting ICBMs at terminal phases when they re-enter the atmosphere.

“They are tactical weapons designed to protect points in a set piece battle scenario,” Scheder said. But effective protection for entire countries or regions under threat by unstable regimes like Kim Jung Un’s can only be provided by satellite-operated area defense.

Questions remain

Critics of space-based weapons point to the possibility of satellite error in detecting a hostile launch.

Brilliant Pebbles impactors might also disintegrate upon re-entering the atmosphere in pursuit of an attacking missile before hitting it.

SDI proponents say that triangulations among Earth-based systems, mother satellites at upper orbits, and smart rocks at low orbit need to be tightened.

Scheder also says that the Smart Rock is a solid impactor designed to destroy a rocket with no explosive charge, so its collateral damage would be limited.

“An ICBM has about a 20-minute trajectory through space in which it’s vulnerable to a Smart Rock,” Scheder said. “Once it’s re-entered the atmosphere, land-based missiles have only seconds in which to hit it.”

Some weapon systems conceived for SDI, like laser or electromagnetic guns, could not provide adequate protection, according to the RAND expert.

Missiles can be painted to deflect laser rays and the heavy lift required for electromagnetic guns would complicate their placement in space.

There is a theoretical danger that a rogue nation or group with highly developed cyber war capacity could hack into a Brilliant Pebbles network and direct it against the U.S. or its allies.

But difficulties in countering a U.S. space shield could convince rogue powers of the futility of costly nuclear programs, according to Scheder.

He credits “Star Wars” with the Soviet Union’s decision to fold its arms race.

Mnuchin ‘Not Concerned’ About Short-term Value of Dollar

U.S. Treasury Secretary Steven Mnuchin says the U.S is “not concerned” about the value of the dollar in the short-term.

At a press briefing at the World Economic Forum on Thursday, Mnuchin said the short-term value of the dollar is dependent on many factors in what is a very liquid market.

In the longer-term, he said, the U.S. currency’s value will be determined by the underlying strength of the U.S. economy.

On Wednesday, Mnuchin sparked a big dollar sell-off when he said the recent fall in the value of the dollar was “good” for trade. The euro, for example, spiked to a three-year high.

Mnuchin insisted Thursday that his comment on the dollar was “balanced and consistent.”

Davos Elite Brace for Trump’s ‘America First’ Agenda

Donald Trump arrived at the World Economic Forum in the Swiss mountain resort of Davos on Thursday, the first serving U.S. president to attend since Bill Clinton in 2000.

Analysts say many delegates are braced for a clash of competing visions for the global economy.

Trump is expected to push his agenda of “America First,” which has seen the United States put tariffs on some imports and demand the restructuring of global trade deals. Other global powers, including Europe, China and Japan, are urging a renewed commitment to global free trade.

Organizers hope the summit will help reconcile the rival visions.

“We strongly believe in dialogue and I think the fact that the president of the U.S. is here also opens up for a discussion about more equitable globalization,” said Borge Brende, president of the World Economic Forum.

 

WATCH: Davos Elite Braced For Trump’s ‘America First’ Agenda

Speech Friday

But it is Trump’s attitude toward globalization, and by extension free trade, that is generating a tangible tension ahead of his speech that will close the summit Friday.

The president signed an order Tuesday imposing steep import tariffs on washing machines and solar panels, repeating his assertion that the current trade system is bad for America.

“These executive actions uphold the principle of fair trade and demonstrate to the world that the United States will not be taken advantage of anymore,” Trump told reporters at the White House.

​Modi sets the stage

India’s Prime Minister Narendra Modi gave the opening address to the forum. His message contrasted sharply with what will likely be Trump’s.

“Forces of protectionism are raising their heads against globalization. Their intention is not only to avoid globalization themselves but also want to reverse its natural flow,” Modi told delegates Tuesday.

His sentiments were shared by many other leaders at Davos, including America’s European allies and big economies like China and Japan.

Trump’s agenda?

So how will Trump’s “America First” agenda be received?

“It’s almost setting the agenda for a confrontation of some form,” said Inderjeet Parmar, professor of international politics at City University London.

“So, I think there’s going to be some anxiety, because there is a sort of changing character of the international system, or at least changing character of America’s engagement with it. And that’s having a knock-on effect on other states, which are beginning increasingly to see that it’s going to be a bit more competitive in the international order,” Parmar said.

On the campaign trail in 2016, Trump warned against the “false song of globalism.” Trump is to arrive in the spiritual heart of that globalism Thursday, with a message many fellow guests may not want to hear.

Chinese Company Convicted of Stealing Trade Secrets From US Firm

A federal jury in Wisconsin on Wednesday convicted a Chinese wind turbine company of stealing trade secrets, which nearly destroyed a U.S. manufacturer.

China’s Sinovel Wind Group does business in the United States.

“The theft of ideas and ingenuity is not a business dispute. It’s a crime and will be prosecuted as such,” U.S. Attorney Scott Blader said.

According to the government’s case against Sinovel, the company had an $800 million contract for products and services from Wisconsin-based American Superconductor (AMSC).

It said Sinovel conspired in 2011 with two company managers and a former AMSC employee to use computers in Austria to steal wind turbine technology and trade secrets from AMSC and install them on Sinovel turbines.

Sinovel never paid AMSC the $800 million.

Federal prosecutors said Sinovel’s crime cost AMSC dearly; investors dumped more than $1 billion in AMSC stock and about 700 workers lost their jobs, more than half of the company’s global workforce.

Sinovel will be sentenced in June.

US Safety Board to Probe Tesla Autopilot Crash

The U.S. National Transportation Safety Board has opened an investigation in an accident involving a Tesla car that may have been operating under its semi-autonomous Autopilot system. 

The board sent two investigators to Culver City, California, to learn whether the Autopilot was on and if so, how the car’s sensors failed to detect a firetruck stopped on a highway near Los Angeles on Monday. 

This is the second time the safety agency will look in to a crash involving Tesla’s Autopilot feature. 

In September, the NTSB determined that while the technology played a major role in the May 2016 fatal crash in Florida, the blame fell on driver errors, including overreliance on technology by an inattentive Tesla driver. 

The California driver said the Autopilot mode was engaged when the car struck the firetruck while traveling 104 kilometers per hour (65 mph). “Amazingly there were no injuries! Please stay alert while driving!,” the Culver City firefighters union said in a tweet.

Tesla wouldn’t say if Autopilot was working at the time of the Culver City crash, but said in a statement Monday that drivers must stay attentive when it’s in use. The company would not comment on the investigation.

Apple Will Give Users Control Over Slowdown of Older iPhones

Apple’s next major update of its mobile software will include an option that will enable owners of older iPhones to turn off a feature that slows the device to prevent aging batteries from shutting down.

The free upgrade announced Wednesday will be released this spring.

The additional controls are meant to appease iPhone owners outraged since Apple acknowledged last month that its recent software updates had been secretly slowing down older iPhones when their batteries weakened.

Many people believed Apple was purposefully undermining the performance of older iPhones to drive sales of its newer and more expensive devices. Apple insisted it was simply trying to extend the lives of older iPhones, but issued an apology last month and promised to replace batteries in affected devices at a discounted price of $50.

Despite Apple’s contrition, the company is still facing an investigation by French authorities, a series of questions from U.S. Senate and a spate of consumer lawsuits alleging misconduct.

Besides giving people more control over the operation of older iPhones, the upcoming update dubbed iOS 11.3 will also show how well the device’s battery is holding up. Apple had promised to add a battery gauge when it apologized to consumers last month.

Other features coming in the next update will include the ability to look at personal medical histories in Apple’s health app, more tricks in its augmented reality toolkit and more animated emojis that work with the facial recognition technology in the iPhone X.

Internet Access Booming in Least Developed Countries

The International Telecommunication Union reports hundreds of millions of people in the world’s poorest countries now have access to the Internet and mobile devices.

It is increasingly difficult to function in this modern digital world without access to the Internet, a smart phone or other digital device. A new report by the International Telecommunication Union finds e-banking, e-commerce and other actions in cyberspace are no longer just the purview of the rich world.

It says all 47 of the world’s Least Developed Countries are making huge strides in increasing their Internet access. The ITU says more than 60 percent of LDC populations are covered by a 3G network, referring to a third generation or advanced wireless mobile telecommunication technology.

It notes by the end of last year, about 700 million people in LDCs had subscriptions to mobile phones, with 80 percent of their populations living within range of a mobile cellular network. Given this progress, the ITU reports LDCs are on track toward achieving the U.N. Sustainable Development Goal on universal and affordable Internet access by 2020.

ITU spokeswoman Jennifer Ferguson-Mitchell tells VOA having access to the Internet and mobile phones has a positive impact on peoples’ lives. She says digital connectivity can provide valuable knowledge and information to populations around the world.

“It gives farmers access to information on crops, when to plant their crops, weather patterns that are happening. It provides access to online education to communities,” she said. “It can make micro and small and medium sized enterprises be able to compete with larger businesses.”

The lTU says universal and affordable Internet access can help LDCs leap-frog in areas such as education, health, government services, trade and can trigger new business opportunities. While this is positive, the report identifies lack of digital skills as a key barrier to Information Communication Technology and Internet use in LDCs.

The report calls on policy makers, industry leaders, and educators to work together to increase digital skills across the Least Developed Countries.

 

Touching Objects in Virtual Reality Is Now Possible

Virtual reality allows the user to enter a different world through sight and sound. Several researchers and companies are adding a third element to the virtual experience: the sense of touch.

Researchers in haptics, meaning the feeling of touch, are incorporating this sense into virtual reality with real-world applications. 

French company Go Touch VR created a device called VRtouch that straps onto the fingertips. The device applies varying pressure to the fingertips that correlates to what the user is seeing, touching and lifting in the virtual world. 

“That will open enormous possibilities,” said Eric Vezzoli, co-founder of Go Touch VR.

Applications for the touch device include allowing users to undergo training in a safe virtual environment.

WATCH: Virtual reality with touch

​Vezzoli said strapping three of the VR touch devices on each hand — the thumb, forefinger and middle finger — are ideal.

“We can use up to six fingers. Why? Because three fingers are enough to manipulate light objects. For example, if you’re writing, you use just three fingers. But (in) VR, there’s no mass, there’s no weight. So, just three fingers is just enough,” Vezzoli said.

Training in virtual reality with the sense of touch may include surgical preparation in a medical procedure or learning in an industrial setting. A different application can be found in the advertising world.

“You can, for example, visit an apartment — virtual apartment. You can open a cabinet. You can touch the bed — feel its softness, and that generates a physical connection with the buyer that can increase the chance of sale,” said Vezzoli.

The company’s clients include the carmaker BMW. Go Touch VR hopes its haptic device will interest content producers, major corporations and the military, as virtual reality is more widely used in the real world.

New Nicotine Delivery System Part of FDA’s Anti-Smoking Campaign

The United States Food and Drug Administration will be talking about alternatives to cigarette smoking as it deliberates whether to approve a new product offered by tobacco companies that delivers nicotine to the user without burning tobacco. The American Lung Association reports that cigarette smoking rates in the U.S. are at historically low levels. A little over 15 percent of Americans smoke.

Cigarette Smoking Rates in US Reach Historic Lows

The American Lung Association says fewer Americans smoke cigarettes now than before tobacco control policies were put in place. 

In its annual report, the ALA says smoking rates among adults and teens are at historic lows. On average, just over 15.5 percent of American adults and eight percent of high school students smoke cigarettes.

The association gets its data from the Centers for Disease Control and Prevention which show the smoking rate declined from 20.9 percent in 2005 to 15.5 percent in 2016. Still, CDC data shows that nearly 38 million American adults continue to smoke. 

“The good news is that these data are consistent with the declines in adult cigarette smoking that we’ve seen for several decades. These findings also show that more people are quitting, and those who continue to smoke are smoking less,” according to Corinne Graffunder, director of the CDC’s Office on Smoking and Health quoted in a news release from the CDC. 

Yet, the American Lung Association finds that certain groups and regions in the United States are disproportionately impacted by tobacco use and exposure to second-hand smoke. Thomas Carr, the ALA’s Director of National Policy who wrote the 2018 report “The State of Tobacco Control,” said poorer Americans, those who are less educated, Native Americans and some ethnic groups have smoking rates that are close to 30 percent or higher. 

“The tobacco industry advertises more to some of these groups and more heavily than others, and you will find in low-income areas, there are sometimes a bigger concentration of tobacco stores and that kind of thing.”

There’s also peer pressure, and when friends or parents smoke, teens tend to take up the habit. Studies show that most people who smoke start before they are 18. Some start as young as age 11 according to The Campaign for Tobacco-Free Kids. Carr calls it a pediatric disease. “It starts in your teens and then once you’re hooked, you can’t get off of it.”

The lung association is pushing states to raise the age where young people can legally purchase cigarettes to 21, the minimum age in the United States for purchasing alcohol. The thought is that if middle and high school students can’t get cigarettes, they are less likely to start smoking. “It cuts off access to people 15 to 17 years old. A lot of times they’ll go to their friends who are 18 (and still) in high school, but they’re not as likely to hang around with people who are 19 or 20 or 21.” So far five states — California, Oregon, Maine, Hawaii and New Jersey have raised the age to 21. 

The lung association issues an annual report to help promote state and federal regulations to make it easier for people who smoke to quit and to help those who don’t smoke not to start. 

Trump Administration Prepares Flurry of Trade Moves

The Trump administration is set to announce a raft of trade decisions over the next months, ranging from curbs on foreign imports of steel and aluminum to steps to clamp down on China’s alleged theft of intellectual property.

U.S. President Donald Trump has stressed his “America First” agenda in his first year in office and called for fairer, more reciprocal trade. He has blamed globalization for ravaging American manufacturing jobs as companies sought to reduce labor costs by relocating to Mexico and elsewhere.

Imported washing machines, solar panels

In its first major trade decision of the year, the administration slapped steep tariffs on imported washing machines and solar panels, boosting Whirlpool Corp. and dealing a setback to the renewable energy industry.

Monday’s decision imposed a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50 percent tariff on machines above that number. The tariff declines to 16 percent and 40 percent respectively in the third year.

The move punishes Samsung Electronics, which recently began washer production in South Carolina, and LG Electronics, which is building a plant in Tennessee.

The U.S. Solar Energy Industries Association on Tuesday warned that Trump’s move to slap 30 percent tariffs on imported panels would kill tens of thousands of jobs, raise the cost of going solar and quash billions of dollars of investment.

South Korea could push back by launching a complaint through the Geneva-based World Trade Organization, but that is likely to take years. Seoul could also raise it during current negotiations with the United States on modifying the U.S.-South Korea free-trade agreement, known as KORUS.

Steel

The U.S. Commerce Department sent its recommendations on ways to curb foreign steel imports to the White House on January 11. The report followed Trump’s decision, made several months after he took office, to open a Section 232 investigation (from Section 232 of the Trade Expansion Act of 1962) into whether steel imports threaten U.S. national security.

Trump has 90 days to decide on any potential action. He has promised that any actions will protect steelworkers from imports. Curbing excess steel production in China, which now supplies half of the world’s steel, would be a key goal of any action. Broad tariffs could, however, also affect steelmakers in Europe, Japan, South Korea and Turkey.

It is unclear when the decision on steel imports will be announced.

Aluminum

The Commerce Department has sent Trump the results of its national security investigation into aluminum imports. That Section 232 probe could see broad import restrictions imposed on lightweight metal. The White House has been debating whether to order broad tariffs or quotas on steel and aluminum, pitting administration officials who favor aggressive restrictions against those who favor a more cautious approach to avoid a run-up in prices.

It is unclear when Trump will make his decision.

​Intellectual property

Trump and his trade advisers are currently considering penalizing China under Section 301 of the 1974 trade law for its alleged theft of American intellectual property.

The 301 investigation would allow Trump to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.

Trump told Reuters in an interview on January 17 that he was considering imposing a big “fine” against China, but he did not elaborate on his answer.

U.S. businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms that have stolen ideas and software or forced them to turn over intellectual property as part of doing business in China.

A White House official told Reuters January 19 that Trump was particularly focused on the 301 investigation because it was “systemic” and covered a large swath of American businesses.

China could retaliate by weighing whether the actions are in line with WTO rules while ratcheting up pressure on U.S. businesses — for example, by buying from a European company such as Airbus instead of Boeing.

AI Can Read! Tech Firms Race to Smarten Up Thinking Machines

Seven years ago, a computer beat two human quizmasters on a Jeopardy challenge. Ever since, the tech industry has been training its machines even harder to make them better at amassing knowledge and answering questions.

And it’s worked, at least up to a point. Just don’t expect artificial intelligence to spit out a literary analysis of Leo Tolstoy’s War and Peace any time soon.

Research teams at Microsoft and Chinese tech company Alibaba reached what they described as a milestone earlier this month when their AI systems outperformed the estimated human score on a reading comprehension test. It was the latest demonstration of rapid advances that have improved search engines and voice assistants and that are finding broader applications in health care and other fields.

The answers they got wrong — and the test itself — also highlight the limitations of computer intelligence and the difficulty of comparing it directly to human intelligence.

Error! Error!

“We are still a long way from computers being able to read and comprehend general text in the same way that humans can,” said Kevin Scott, Microsoft’s chief technology officer, in a LinkedIn post that also commended the achievement by the company’s Beijing-based researchers.

The test developed at Stanford University demonstrated that, in at least some circumstances, computers can beat humans at quickly “reading” hundreds of Wikipedia entries and coming up with accurate answers to questions about Genghis Khan’s reign or the Apollo space program.

The computers, however, also made mistakes that many people wouldn’t have.

Microsoft, for instance, fumbled an easy football question about which member of the NFL’s Carolina Panthers got the most interceptions in the 2015 season (the correct answer was Kurt Coleman, not Josh Norman). A person’s careful reading of the Wikipedia passage would have discovered the right answer, but the computer tripped up on the word “most” and didn’t understand that seven is bigger than four.

“You need some very simple reasoning here, but the machine cannot get it,” said Jianfeng Gao, of Microsoft’s AI research division.

Human vs. machine

It’s not uncommon for machine-learning competitions to pit the cognitive abilities of computers against humans. Machines first bested people in an image-recognition competition in 2015 and a speech recognition competition last year, although they’re still easily tricked. Computers have also vanquished humans at chess, Pac-Man and the strategy game Go.

And since IBM’s Jeopardy victory in 2011, the tech industry has shifted its efforts to data-intensive methods that seek to not just find factoids, but better comprehend the meaning of multi-sentence passages.

Like the other tests, the Stanford Question Answering Dataset, nicknamed Squad, attracted a rivalry among research institutions and tech firms — with Google, Facebook, Tencent, Samsung and Salesforce also giving it a try.

“Academics love competitions,” said Pranav Rajpurkar, the Stanford doctoral student who helped develop the test. “All these companies and institutions are trying to establish themselves as the leader in AI.”

Limits of understanding

The tech industry’s collection and digitization of huge troves of data, combined with new sets of algorithms and more powerful computing, has helped inject new energy into a machine-learning field that’s been around for more than half a century. But computers are still “far off” from truly understanding what they’re reading, said Michael Littman, a Brown University computer science professor who has tasked computers to solve crossword puzzles.

Computers are getting better at the statistical intuition that allows them to scan text and find what seems relevant, but they still struggle with the logical reasoning that comes naturally to people. (And they are often hopeless when it comes to deciphering the subtle wink-and-nod trickery of a clever puzzle.) Many of the common ways of measuring artificial intelligence are in some ways teaching to the test, Littman said.

“It strikes me for the kind of problem that they’re solving that it’s not possible to do better than people, because people are defining what’s correct,” Littman said of the Stanford benchmark. “The impressive thing here is they met human performance, not that they’ve exceeded it.”

Europe’s Recovery Rolls On — And So Does European Central Bank Stimulus

Europe’s economy is on a roll — raising the question of exactly when the European Central Bank will end its extraordinary stimulus efforts. Bank President Mario Draghi will be at pains this week to leave that point open.

No changes in stimulus settings or interest rates are expected at Thursday’s meeting of the bank’s 25-member governing council, which sets monetary policy for the 19 countries that use the euro.

Draghi’s post-meeting news conference, however, will be closely scrutinized for any hints of a change in the timetable for withdrawing a key stimulus component — a massive bond-buying program — later this year.

Here is a fast guide.

Where’s inflation?

Stubbornly low inflation is why Draghi and his ECB colleagues want to keep the stimulus program running.

The bank’s mission is to keep inflation consistently close to but below 2 percent. Usually that means fighting inflation, but in the case of this economic recovery, prices have been unusually slow to respond to a pickup in demand for goods. Annual inflation was just 1.4 percent in December. Excluding oil and food, it was even lower, at 0.9 percent. Meanwhile, the economy is expected to have grown 2.4 percent in 2017; unemployment has fallen from over 12 percent to 8.7 percent.

ECB officials say that eventually growth will lead to higher wages as unemployment falls and labor becomes scarcer. But inflation has taken its time to show up.

Stimulus settings

So Draghi has been urging patience. The bank lowered its bond purchases to 30 billion euros ($37 billion) a month at the start of the year, from 60 billion euros, and has said they will run at least through September — and longer if necessary. The purchases, started in March 2015, pump newly printed money into the economy, which should raise inflation and make credit easier to get.

Much of the speculation in markets has centered on whether the purchases will stop in September, or be continued, perhaps at a lower level. Draghi and the governing council majority have so far resisted stimulus skeptics on the board, such as Germany’s Jens Weidmann, who say it’s time to head for the exit from stimulus.

Promises, promises

A key point to watch is the wording the bank uses to manage expectations of its future actions. Right now, the bank has included wording in its policy statement that it could increase the bond purchases if necessary. Dropping that phrase would be a first step to prepare markets for an end to the stimulus. This week’s meeting might be too early for that tweak, but the wording is being watched in the markets.

The bank has also promised it won’t raise interest rates — its benchmark rate is currently zero — until well after the end of the bond purchases. That puts a first rate increase well into 2019.  

Why you should care

The withdrawal of the stimulus by the ECB and other central banks such as the U.S. Federal Reserve will have wide-ranging effects on the finances of ordinary people.

Higher interest rates will mean more return on savings accounts and an easier time funding private and public pension plans. They could also mean trouble for “zombie companies” that might not have any profits if they had to pay higher rates to borrow. Such bankruptcies would be painful in the short term, but would free investment for more profitable uses.

More interest earnings on conservative holdings such as bonds and time deposits would make riskier assets — like stocks — relatively less attractive, and ease the pressure on investors and savers to rummage for returns in riskier holdings.

Down, euro, down

Market reaction is a key concern for Draghi, particularly when it comes to the euro’s exchange rate. The euro has risen in the past several weeks, to around $1.22, in part because markets are anticipating an end to the stimulus. Monetary stimulus can weaken a currency, so investors are bidding the euro up on speculation that the stimulus might come to an earlier end due to the strong economy.

A stronger euro, however, can hurt Europe’s many exporters and further weaken inflation.

Here’s the take from analyst Florian Hense at Berenberg Bank: “The ECB should and will likely stop asset purchases after September: Recent hawkish comments, including the minutes of the last meeting, point in that direction.

“However, in order to not trigger a further appreciation of the euro, the ECB will likely change its communication only cautiously and gradually — and not in January already.”

Winners, Losers of Trump’s Solar Panel Tariff

President Donald Trump on Tuesday signed into law a steep tariff on imported solar panels, a move billed as a way to protect American jobs but which the solar industry said would lead to tens of thousands of layoffs.

The following are some questions and answers about the decision:

What impact will the decision have on the solar industry?

Trump has said the tariff will lead to more U.S. manufacturing jobs, by preventing foreign goods that are cheap and often subsidized from undercutting domestic products. He also expects foreign solar panel producers to start manufacturing in the United States.

“You’re going to have people getting jobs again and we’re going to make our own product again. It’s been a long time,” Trump said as he signed the order.

The main solar industry trade group, the Solar Energy Industries Association, has a different view: It predicts the tariff will put 23,000 people out of work in the panel installation business this year by raising product costs and thus reducing demand.

Research firm Wood Mackenzie estimated that over the next five years the tariffs would reduce U.S. solar installation growth by 10 to 15 percent. The United States is the world’s fourth-largest solar market after China, Japan and Germany.

Research firm CFRA analyst Angelo Zino said he expected any added manufacturing jobs would be “minimal” given the 18 months to two years it takes to build and ramp up a new production facility and the industry’s shift toward automation.

Who wanted the tariff?

The main beneficiaries of the tariff include U.S.-based solar manufacturers Suniva and SolarWorld.

Suniva filed for bankruptcy in April, days before it filed the petition for trade relief. The Georgia-based company argued it could not compete with the cheap imports that have caused panel prices to fall more than 30 percent since 2016. It was later joined in the petition by SolarWorld. They asked the Trump administration for the equivalent of a 50 percent tariff.

Suniva is majority-owned by Hong Kong-based Shunfeng International Clean Energy, and SolarWorld is the U.S. arm of Germany’s SolarWorld AG.

Suniva called the tariffs “necessary,” while SolarWorld said it was “hopeful they will be enough.”

Most other U.S. solar companies, including SunPower, which manufactures panels in Asia, and residential installer SunRun Inc. were opposed to the trade barrier — as were offshore manufacturers such as China’s JinkoSolar, which will be among the biggest losers.

Solar manufacturer and developer First Solar supported the tariffs, and is likely to be among the biggest beneficiaries. First Solar makes panels using cadmium telluride that are excluded from the trade case. The company has seen an increase in demand for its unique technology.

Will the tariff lead to a trade war?

China branded the move an “overreaction” that would harm the global trade environment.

“The U.S.’s decision … is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,” said Wang Hejun, the head of the commerce ministry’s Trade Remedy and Investigation Bureau. “China will work with other WTO [World Trade Organization] members to resolutely defend its legitimate interests in response to the erroneous U.S. decision.”

Trump dismissed worries of trade retaliation.

“There won’t be a trade war. It’ll only be stock increases for companies that are in our country,” he said.

How does the tariff fit into Trump’s energy policy?

If the tariff cools growth in the U.S. solar industry, it could help Trump’s effort to support the coal industry — which competes with renewable energy technologies for a share of the nation’s power generation market.

Trump campaigned on a promise to revive the ailing coal mining sector and boost U.S. production of other fossil fuels as a way to create jobs and bolster American influence overseas.

He has also downplayed the threat from global warming — an issue that led past administrations to throw their support behind emissions-free solar and wind energy development — rolling back climate change regulations and pulling the United States from a global pact to combat it.

Sao Paulo Shuts Parks as Yellow Fever Outbreak Kills 70

Sao Paulo closed its zoo and botanical gardens Tuesday as a yellow fever outbreak that has led to 70 deaths is picking up steam.

 

The big Inhotim art park, which attracts visitors from all over the world, also announced that all visitors would have to show proof of vaccination to be allowed in. The park said the measure was preventative and no case of yellow fever had been found there.

 

Cases of yellow fever have been rising in Brazil during the southern hemisphere summer rainy season, and health officials are planning to vaccinate millions of people in the coming weeks in the hopes of containing the outbreak.

Authorities did not say when the Sao Paulo zoo or nearby botanical gardens would reopen. The zoo said in a statement that a wild monkey was found dead last week in the park that contains the zoo and tests Monday confirmed it was positive for yellow fever.

According to figures put out by each state, 148 cases have been confirmed in the southeastern states of Minas Gerais, Sao Paulo and Rio de Janeiro. Of those, 69 people have died. A week ago, the Health Ministry had confirmed 34 cases and 19 deaths in those states; it also confirmed one case in the capital district that ended in death.

Sao Paulo has registered the most cases, with 81, and the World Health Organization recommended last week that foreigners planning to travel anywhere in the state be vaccinated for the mosquito-borne disease. Brazil’s own recommendations include only parts of the state.

Much of Brazil is considered at risk for the yellow fever, but last year it saw its largest outbreak of the disease in decades, including in areas not previously thought to be at risk. More than 770 people were infected, and more than 250 died. Minas Gerais was at the epicenter of that outbreak, and it declared a state of emergency last week.

 

Yellow fever typically causes fever, muscle pain and nausea; some patients also experience the jaundice from which the disease gets its name.

US Stresses Lebanon Must Cut Hezbollah from Financial System

Lebanon must cut Iran-backed Hezbollah from the financial sector, a U.S. official on combating illicit finance said Tuesday, two weeks after Washington began a new push to disrupt the militant group’s global financing routes.

On a two-day visit to Lebanon, the U.S. Treasury’s Assistant Secretary for Terrorist Financing Marshall Billingslea “urged Lebanon to take every possible measure to ensure [Hezbollah] is not part of the financial sector.”

Billingslea also “stressed the importance of countering Iranian malign activity in Lebanon,” a statement from the United States embassy in Lebanon said.

The Iran-backed, Shiite Hezbollah is classified as a terrorist group by Washington, but sits in Lebanon’s delicate national unity government.

U.S. officials say Hezbollah is funded not just by Iran but by global networks of people, businesses and money laundering operations.

The U.S. Hezbollah International Financing Prevention Acts of 2015 and 2017 aimed to sever the group’s funding routes and a number of people linked to Hezbollah are on sanctions lists.

The United States has had to balance its targeting of Hezbollah funding routes with the need to maintain Lebanon’s stability. Lebanese banking and political authorities have lobbied Washington to make sure its anti-Hezbollah measures do not destroy the banking system underpinning the economy.

In his meetings with President Michel Aoun, Prime Minister Saad al-Hariri and other banking and political figures, Billingslea said the U.S. government was committed to work with Lebanon to protect its financial system and support a “strong, stable and prosperous Lebanon.”

Billingslea also said Washington would help Lebanon protect its financial system from Islamic State and other militants.

Two weeks ago, the Trump administration set up a team to reinvigorate U.S. investigations into Hezbollah-linked drug trafficking.

Hezbollah leader Sayyed Hassan Nasrallah last week denied any involvement in drug trafficking and said Hezbollah had a very clear religious and moral stance which forbids drugs and drug trading.

NAFTA Negotiators Open Key Round of Talks; Trump Cites Progress

U.S., Canadian and Mexican officials opened a key round of negotiations to modernize NAFTA on Tuesday as President Donald Trump, who has regularly threatened to quit the trade pact, said the talks were going “pretty well.”

Trump, vowing to undo what he portrays as disastrous trade deals, has in recent days expressed different views of the North American Free Trade Agreement, stoking investor worries that one of the world’s largest trading blocs may be disrupted.

With time running out to address U.S. demands for major changes to the 1994 deal, officials met in a Montreal hotel for the sixth and penultimate round of talks, which are to conclude by the end of March to avoid a clash with Mexico’s elections.

“We have come to Montreal with a lot of new ideas, a lot of creative strategies to try to bridge some of the gaps in the negotiations,” Canadian chief negotiator Steve Verheul told reporters, adding that he had “high hopes” of progress.

Trump offers positive comment

Insiders say the Canadian and Mexican governments are prepared to be flexible on a U.S. demand that the amount of North American content in autos be boosted to qualify for duty-free status in NAFTA.

But Ottawa and Mexico City strongly oppose the proposal that autos produced on the continent should have 50 percent U.S. content. Differences also remain over how to address the U.S. push for changes to various dispute resolution mechanisms.

Trump, who has blamed NAFTA for the loss of U.S. jobs, told White House reporters on Tuesday the talks were going “pretty well.”

The Mexican peso immediately pared losses on his comments.

Mexico’s chief negotiator Ken Smith said he hoped progress could be made on less contentious areas such as telecommunications, anti-corruption and sanitary and phytosanitary measures.

Canada unsure about US

Many Canadian officials, however, are downbeat about the talks amid uncertainty over whether Washington really wants to negotiate.

“If you’re unsure where the other side wants to go it is really difficult to know what would please them unless you capitulate, and that’s not going to happen,” one person briefed on Ottawa’s negotiating stance said on condition of anonymity.

With NAFTA’s future up in the air, Canada is taking steps to diversify its trade. Canada currently sends 75 percent of its goods exports to the United States.

Canada joins TPP

Earlier on Tuesday, Canada and 10 other nations agreed to sign a reworked Trans-Pacific Partnership trade pact. The United States pulled out of an earlier version of that deal.

Paul Ashworth, chief North America economist at Canada Economics, said the TPP deal might give Canada “a slightly stronger hand to play in the current NAFTA negotiations.”

Canadian Prime Minister Justin Trudeau is currently attending the World Economic Forum meeting in Switzerland to drum up investment. Next month he will spend five days in India, which Canada sees as potentially a bigger trading partner.