EU Extends $1.2 Billion Loan to Ukraine

The European Union’s foreign policy chief says the EU will extend a 1 billion-euro ($1.2 billion) loan to struggling Ukraine.

 

Federica Mogherini, who was visiting the capital Kyiv on Monday, told reporters the loan should “support Ukraine’s economic stability and structural reforms.”

 

Ukraine is trying to improve its economy after years of inefficiency and corruption under the previous president, Viktor Yanukovych, and has been hit hard by the separatist conflict in the east.

 

While confirming the EU’s support for the Ukrainian government, Mogherini also signaled Europe’s growing wariness over the slow pace of much-touted reforms. She called on Kiev to set up an anti-corruption court as promised.

 

She also urged the government to comply with 2015 peace accords that called for a truce between government forces and Russia-backed separatists.

 

 

 

Economic Problems Prompt Iran to Cautiously Consider Change

Labor strikes. Nationwide protests. Bank failures.

In recent months, Iran has been beset by economic problems despite the promises surrounding the 2015 nuclear deal it struck with world powers.

Its clerically overseen government is starting to take notice. Politicians now offer the idea of possible government referendums or early elections. Even Supreme Leader Ayatollah Ali Khamenei acknowledged the depths of the problems ahead of the 40th anniversary of Iran’s Islamic Revolution.

“Progress has been made in various sectors in the real sense of the word; however, we admit that in the area of ‘justice’ we are lagging behind,” Khamenei said in February, according to an official transcript. “We should apologize to Allah the Exalted and to our dear people.”

Whether change can come, however, is in question.

​An economy run by the state

Iran today largely remains a state-run economy. It has tried to privatize some of its industries, but critics say they have been handed over to a wealthy elite that looted them and ran them into the ground.

One major strike now grips the Iran National Steel Industrial Group in Ahvaz, in the country’s southwest, where hundreds of workers say they haven’t been paid in three months. Authorities say some demonstrators have been arrested during the strike.

More than 3.2 million Iranians are jobless, government spokesman Mohammad-Bagher Nobakht has said. The unemployment rate is more than 11 percent.

Banks remain hobbled by billions of dollars in bad loans, some from the era of nuclear sanctions and others tainted with fraud. The collapse last year of the Caspian Credit Institute, which promised depositors the kinds of returns rarely seen outside of Ponzi schemes, showed the economic desperation faced by many in Iran.

​Or in security services’​ grip

Meanwhile, much of the economy is in the grip of Iran’s security services.

The country’s powerful Revolutionary Guard paramilitary force, which answers only Khamenei and runs Iran’s ballistic missile program, controls 15 to 30 percent of the economy, analysts say.

Under President Hassan Rouhani, a relatively moderate cleric whose government reached the nuclear accord, there has been a push toward ending military control of some businesses. However, the Guard is unlikely to give up its power easily.

Some suggest hard-liners and the Guard may welcome the economic turmoil in Iran as it weakens Rouhani’s position. His popularity has slipped since winning a landslide re-election in May 2017, in part over the country’s economic woes.

Analysts believe a hard-line protest in late December likely lit the fuse for the nationwide demonstrations that swept across about 75 cities. While initially focused on the economy, they quickly turned anti-government. At least 25 people were killed in clashes surrounding the demonstrations, while nearly 5,000 reportedly were arrested.

​A rare referendum?

In the time since, Rouhani has suggested holding a referendum, without specifying what exactly would be voted on.

“If factions have differences, there is no need to fight, bring it to the ballot,” Rouhani said in a speech Feb. 11. “Do whatever the people say.”

Such words don’t come lightly. There have been only two referendums since the Islamic Revolution. A 1979 referendum installed Iran’s Islamic republic. A 1989 constitutional referendum eliminated the post of prime minister, created Iran’s Supreme National Security Council and made other changes.

A letter signed by 15 prominent Iranians published a day after Rouhani’s speech called for a referendum on whether Iran should become a secular parliamentary democracy. The letter was signed by Iranians living inside the country and abroad, including Nobel Prize laureate Shirin Ebadi.

“The sum of the experiences of the last 40 years show the impossibility of reforming the Islamic Republic, since by hiding behind divine concepts … the regime has become the principal obstacle to progress and salvation of the Iranian nation,” read the letter, which was posted online.

But even among moderates in Iran’s clerical establishment, there seems to be little interest in such far-reaching changes, which would spell the end of the Islamic Republic. Hard-liners, who dominate the country’s security services, are adamantly opposed.

“I am telling the anti-Islamic government network, the anti-Iranians and those runaway counterrevolutionaries … their wish for a public referendum will never come true,” Tehran Friday prayer leader Ayatollah Ahmad Khatami said Feb. 15, according to the state-run IRNA news agency.

​Take responsibility

Yet there are signs that authorities realize that something will have to give. Khamenei’s apology in February took many by surprise, especially as the country’s true hard-liners believe he is the representative of God on earth.

Khamenei’s apology came after a letter from Mehdi Karroubi, an opposition activist who remains under house arrest, demanding that the supreme leader take responsibility for failures.

“You were president for eight years and you have been the absolute ruler for almost 29 years,” Karroubi wrote in the letter, which was not reported on by state media. “Therefore, considering your power and influence over the highest levels of state, you must accept that today’s political, economic, cultural and social situation in the country is a direct result of your guidance and administration.”

Iran’s former hard-line President Mahmoud Ahmadinejad, blamed by many for the country’s economic woes, has come out for early elections. He also demanded they be “free and fair,” while continuing his own campaign against Khamenei, whom he ignored in his attempt to run in the 2017 presidential election.

However, Ahmadinejad’s action drew immediate criticism, as his own widely disputed 2009 re-election sparked unrest and violence that killed dozens.

China: ‘No Winners in a Trade War’

China said Sunday it does not intend to ignite a trade war with the U.S. because the move would be disastrous for the entire world.

“There are no winners in a trade war,” Minister of Commerce Zhong Shan said on the sidelines of China’s annual parliamentary session.

“China does not wish to fight a trade war, nor will China initiate a trade war, but we can handle any challenge and will resolutely defend the interests of our country and our people,” Zhong said.

President Donald Trump signed proclamations Thursday imposing a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, with the new taxes set to go into effect this month.

​US, Japan, EU talk

Trade representatives for Japan and the European Union met with the U.S. trade representative Saturday in an effort to avoid a trade war over Trump’s new tariffs on aluminum and steel.

At the meeting in Brussels, U.S. Trade Representative Robert Lighthizer, EU Trade Commissioner Cecilia Malmstrom and Japanese counterpart Hiroshige Seko discussed the tariffs as part of a trilateral effort to combat unfair trade practices.

The EU said in a statement that both Brussels and Tokyo had serious concerns about the U.S. tariffs. Both powers, two of the biggest trade partners with the United States, have asked for exemptions from the tariffs.

After the meeting, Malmstrom tweeted, “No immediate clarity on the exact U.S. procedure for exemption … so discussions will continue next week.”

“I firmly and clearly expressed my view that this is regrettable,” Seko said at a news conference following the meeting. “… I explained that this could have a bad effect on the entire multilateral trading system.”

Saturday afternoon, Trump accused the EU of treating “the U.S. very badly on trade.” He said if they drop their “horrific barriers & tariffs on U.S. products… we will likewise drop ours,” he wrote in a tweet.

If they don’t, he warned the U.S. would tax European cars and other products.

​Exemptions unclear

On Friday, the European Union said it is not clear whether the bloc will be exempt from Trump’s steel and aluminum tariffs.

EU Trade Commissioner Malmstrom said Friday in Brussels, “We hope that we can get confirmation that the EU is excluded from this.”

Canada and Mexico were given specific exemptions from the tariffs for an indefinite period while negotiations continue on the North American Free Trade Agreement (NAFTA).

Brazil, South Korea and Australia have also asked for exemptions or special treatment.

Trump imposed the tariffs despite pleas from friends and allies who warned the new measure could ignite a trade war.

Trade Representatives From US, EU, Japan Discuss New Metal Tariffs

Trade representatives for Japan and the European Union met with the U.S. trade representative Saturday in an effort to avoid a trade war over President Donald Trump’s new tariffs on aluminum and steel.

At the meeting in Brussels, U.S. Trade Representative Robert Lighthizer, EU Trade Commissioner Cecilia Malmstrom and Japanese counterpart Hiroshige Seko discussed the tariffs as part of a trilateral effort to combat unfair trade practices.

The EU said in a statement that both Brussels and Tokyo had serious concerns about the U.S. tariffs. Both powers, two of the biggest trade partners with the United States, have asked for exemptions from the tariffs.

After the meeting, Malmstrom tweeted, “No immediate clarity on the exact U.S. procedure for exemption … so discussions will continue next week.”

Seko said at a news conference following the meeting, “I firmly and clearly expressed my view that this is regrettable. … I explained that this could have a bad effect on the entire multilateral trading system.” 

Saturday afternoon, Trump accused the EU of treating “the U.S. very badly on trade.” He said if they dropped their “horrific barriers & tariffs on U.S. products … we will likewise drop ours.”

If they don’t, he warned, the United States will tax European cars and other products.

On Friday, the European Union said it was not clear whether the bloc would be exempt from Trump’s steel and aluminum tariffs.

Malmstrom said Friday in Brussels, “We hope that we can get confirmation that the EU is excluded from this.”

Trump signed proclamations Thursday imposing a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, with the new taxes set to go into effect in two weeks. 

Canada and Mexico were given specific exemptions from the tariffs for an indefinite period while negotiations continue on the North American Free Trade Agreement.

Brazil, South Korea and Australia have also asked for exemptions or special treatment.

Trump imposed the tariffs despite pleas from friends and allies who warned the new measure could ignite a trade war.

US Tariffs Spark Fears of Trade Conflict in Asia

Several Asian nations that are major trading partners with the U.S. reacted strongly Friday to a U.S. decision to impose tariffs on metal imports, raising concerns of global trade conflicts.

China, a key target of U.S. trade concerns, said it was “resolutely opposed” to the U.S. tariff decision, with Japan warning of the impact on bilateral ties.

South Korea said it may file a complaint to the international trade dispute body, the World Trade Organization (WTO). South Korea is the third-largest steel exporter to the U.S. after Canada and Brazil.

Several Southeast Asian nations say they fear a wave of import dumping of steel and aluminum products.

U.S. President Donald Trump, turning aside warnings from economists and members within the Republican Party, signed an order Thursday for new tariffs of 25 percent on steel and 10 percent on aluminum imports to the U.S., saying the measures were necessary to protect U.S. industry.

Trump has exempted key exporters of steel and aluminum, Canada and Mexico, while negotiating changes to the North American Free Trade Agreement (NAFTA), and other countries such as Australia also may be spared.

The U.S. is the world’s largest importer of steel, totaling 35 million tons of raw material in 2017, with South Korea, Japan, China and India accounting for 6.6 million tons.

Global reaction

Thai economist Wisarn Pupphavesa, a senior adviser to the Thai economic think tank, the Thailand Development Research Institute (TDRI), called the tariff aiming to protect U.S. industry a “very bad situation.”

“The U.S. has been a leader in the multilateral system, the leader in the trade liberalization, and the U.S. played a most important role in writing all the rules that are governing the global market now. But now President Trump decided to break those rules … so this is a very bad situation,” Wisarn told VOA.

Economists at London-based Capital Economics said in a release Friday the major concern over U.S. steps to increase tariffs is they mark a “turning point in U.S. policy to a much broader and deeper shift toward protectionism.”

Malaysia’s Second International Trade and Industry Minister, Datuk Seri Ong Ka Chuan, says the government is monitoring the impact of the tariff increase, although steel and aluminum contributed to less than one percent of Malaysia’s total exports.

But Thailand’s Federation of Thai Industries (FTI) said the threat lies in import dumping of steel and aluminum to the Southeast Asian market.

FTI secretary general, Korrakod Padungjit, told local media there were several leading exporters — Taiwan, Japan, South Korea, India, China, Vietnam and Turkey — that may now target Southeast Asia.

The vice president of the ASEAN [Association of South East Asian Nations] Iron and Steel Council, Roberto Cola, told media that excess steel supplies from China would head to Southeast Asia.

High demand

Southeast Asia’s fast-growing economies, such as the Philippines and Vietnam, face a high demand for steel to meet growing infrastructure and development needs.

Japan at 11 percent and China at 14 percent are reported to be the largest Asian exporters of aluminum to the U.S. A shift in exports to Asia would put producers in South Korea, Indonesia, Vietnam and Thailand under competitive pressure.

Thanomsri Fongarunrung, an economist at the Bangkok-based Phatra Securities, said Thailand already was facing steel import “dumping” by China. She said another fear lies in indirect impacts from any escalation into “tit-for-tat” trade protection measures from other regions, such as the European Union (EU).

The EU already has said it will seek to impose tariffs on selected U.S. imports ranging from alcohol to motorbikes.

But the TDRI’s Wisarn says the economic growth in Southeast Asia in the past decade, with its focus on China, will shield the region from major moves by the U.S. to boost trade protectionism.

“East Asia [has] become the new growth core of the global economy. So the impact of the U.S. action, in fact, would have very little impact as far as East Asia is concerned,” he told VOA.

As a result, the role of the economies of China, Japan and South Korea, as well as Australia and New Zealand, will be enhanced by the U.S. decision.

Trade war

But analysts say the greater concern for regional trade and potential conflict lies ahead with a battle over intellectual property theft, especially targeting China.

Economists say the region’s economic growth potential could be hit by a trade war. The World Bank in a January assessment said growth in East Asia and Pacific is forecast at 6.2 percent in 2018, down slightly from 6.4 percent in 2017.

The World Bank, while upbeat, says “rising geopolitical tension, increased global protectionism” a tightening of global financial conditions, or a “steeper-than-expected” slowdown in major economies, including China, pose a downside risk to the regional outlook.

China Gears Up to Retaliate Against US Tariffs

China is gearing up to retaliate in response to stiff U.S. tariffs on steel and aluminum as Chinese industry associations urge authorities to take “resolute measures.” Retaliation from Beijing could contribute to a possible trade war between the world’s two biggest economies, analysts said.

China’s Ministry of Commerce has pledged to “firmly defend its legitimate rights and interests” and called for an end to the measures as quickly as possible.

In a statement posted on the website of the China Iron and Steel Association, the group appealed to the government in Beijing “to take resolute measures against imports of some U.S. products, including stainless steel, galvanized sheet, seamless pipe, coal, agriculture products and electronic products.”

While the possibility of retaliating over steel and hitting agricultural imports and other sectors has been mentioned previously, it was the first time that coal has been drawn into the brewing spat.

China’s increased imports of coal over the past year have given the U.S. industry a needed boost.

The group also said U.S. President Donald Trump’s decision to impose 25 percent tariffs on steel would impact the global industry and be met with opposition from more countries. The U.S. has already taken other actions impacting Chinese exports of aluminum, solar panels and washing machines in recent months.

The Trump administration has asked China to reduce the trade deficit by $100 billion and threatened several actions to force Beijing to listen. In 2017, the trade gap between the two countries stood at $375 billion; but, there are early indications that the deficit might be much higher this year. In January, the monthly trade deficit with China surged 16.7 percent, to $36 billion, its highest level since September 2015.

Flashpoints

Chinese Foreign Minister Wang Yi acknowledged growing concerns about a trade war, while indicating that Beijing was working on possible retaliatory actions.

“I would like to say that history has taught us that trade wars are never the solution,” he said at a recent press conference on the sidelines of China’s annual political meetings. “It will only hurt both sides, and China will surely make a justified and necessary response.”

The minister advocated a “calm and constructive dialogue as equals” in order to find “a mutually beneficial and win-win solution.”

The stakes are high for both sides, but there are limits to the amount of damage they can inflict without hurting their own economies, analysts note.

China has already launched a probe into imports of U.S. sorghum, a grain used in animal feed and liquor.

There are two other flashpoints on the horizon — an upcoming report on whether China deserves blame for the large-scale theft of intellectual property rights, and a decision on the issue of dubbing Beijing as a currency manipulator.

“They will retaliate; they’ve already signaled following Trump’s steel tariffs [announcement] last week that they are going to take some measures. I think it is just a question of what they are going to decide to do,” Gareth Leather, a senior Asia economist with Capital Economics, told VOA while discussing the Chinese leadership’s plans going forward.

He said Beijing is clever and will likely target sectors of the economy in a manner that hurts the administration at a political level, he said.

Political acupuncture

“I think the key one [target] is going to be the U.S. agriculture sector. It’s obviously a politically key area for them,” Leather said. “So, they will look at certain sectors such as orange juice from Florida, for example. They will look at which senators are from there and see whether they are pro-free trade or not.”

Following the announcement, the communist party-backed Global Times said in an editorial that Beijing should show it will not be cowed.

“It [China] must retaliate against U.S. tariffs that forcibly interfere with Sino-U.S. trade and violate World Trade Organization rules. China must show it won’t be bullied,” the editorial said.

Beijing is expected to target soybeans, one of the most valuable U.S. exports to China. China has also used its purchase of Boeing aircraft as a bargaining chip in trade negotiations in the past and might now threaten to shift its preference to Airbus.

Leather said China is also closely studying the coming U.S. midterm elections to fine-tune its attack if that is necessary.

“I suspect what they’ll do is they’ll look at plants in certain swing states that may be suffering but have Republican congressmen up for elections and probably target those,” he said.

While the Trump administration’s measures go into effect in about two weeks, they alone will not have a major impact on the Chinese economy. For now, China’s response is likely to be quite symbolic, Leather said, and the Chinese are not likely to ratchet up the pressure too much.

“I think the risk is, however, that if the U.S. does press ahead on further protectionist measures, which do specifically target China, then, I think, China will have to respond in a much more aggressive way, and then obviously risks all end up getting a lot worse,” he said.

Trade is not the only area that could be a factor going forward.

In a daily newsletter, Trivium China, a research group in Beijing, said news that Trump is expected to meet with North Korean leader Kim Jong Un soon [to discuss ending the North’s nuclear program] could have an impact as well.

“If Xi Jinping helps to facilitate that meeting, it might buy China some time; but, it would only be a temporary reprieve from Trump’s trade ire,” the newsletter noted.

Students Learn Real Skills, Earn Simulated Profits

Young people around the United States are creating virtual businesses that produce simulated products, which are marketed and sold for virtual money. Thirteen hundred students recently showcased their ventures, ranging from telecom firms to gourmet food providers, in Pasadena, California.

At what looked like a corporate trade show, students from Miguel Contreras Business and Tourism School in Los Angeles solicited customers for their tour company. Teacher Darrell Iki helped the students launch Big City Tours, which exists only in the classroom and online. The company stages virtual tours to different parts of Los Angeles, highlighting the city’s ethnic heritage, fashion or high-end shopping. A related virtual company sells travel gear.

Students from Century High School in Santa Ana, California, sell a hypothetical translation device geared toward travelers. 

It all starts with a business plan, according to Iki, as students are named to executive positions and learn to “work together, having a common goal in a potentially successful business.”

The students quickly realized that business is complicated, according to the head of the nonprofit group that works with schools around the country to impart skills through simulations. Thirteen thousand students go through the program each year.

“They’re running meetings, they’re networking, they’re meeting with professionals, they’re working with mentors,” said Nick Chapman of Virtual Enterprises International. The students showcase their companies at competitions, like this one in California. Similar virtual business programs exist in schools in 40 countries.

One student entrepreneur said he now understands the pressure of running a company, in this case a food firm called Taste of the World. He has overseen human resources and digital media for the virtual firm at Century High School in California.

“You really need to be hands-on with your employees and make sure your guys have strong communication,” said Miguel Santin. “Otherwise, the company just won’t prosper.”

Taste of the World is a subscription service that, at least in theory, sends snacks to subscribers through the mail.

“You sign up for three months, six months, a year, and you receive a snack box with trinkets and information about that company every single month throughout your subscription time,” said teacher Alan Gersten.

No real money changes hands.

“You would pay within our virtual economy,” Gersten said, “using virtual money in a web-based simulated banking system. All the kids in the program have bank accounts, so when they buy something, we give them a receipt.”

There’s a lot to learn, noted teacher Stephen Jarvis of the Elizabeth Learning Center in Cudahy, California. “It isn’t just selling something. It’s all the things that go on behind the scenes — creating documents, figuring out if you’re making money or losing money,” he said.

The money isn’t real, but the skills are, said a student entrepreneur with the virtual company Big City Tours, who won a scholarship to college.

“I went to the interviews, and being in this company has helped me really prepare my presentation skills and be able to talk to other people,” said student Catalina Garcia, who will start college this fall and hopes to become a doctor. She says the skills she gained in a virtual company have helped her, whether or not she starts her own company or works in the corporate sector.

Trump Signs Off on US Metals Tariffs, Exempts Canada and Mexico

U.S. President Donald Trump on Thursday signed companion proclamations slapping 25 percent tariffs on steel coming into the country and 10 percent tariffs on imported aluminum.

The across-the-board taxes are to go into effect in 15 days.

Amid fears that his action would ignite a trade war, Trump declared the dumping of steel and aluminum in the United States as “an assault on our country,” suggesting foreign producers relocate their facilities to America.

“If you don’t want to pay tax, bring your plant to the USA,” he said.

Trump was flanked in the Roosevelt Room by workers from those metals industries, some with hard hats in hand, as he signed the documents. Vice President Mike Pence, Treasury Secretary Steve Mnuchin, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer, and Trade and Industrial Policy Director Peter Navarro were also among those in the room.

After an outcry from lawmakers, some industry executives and foreign governments, Canada and Mexico are being given specific exemptions from the tariffs for an indefinite period while negotiations continue on the North American Free Trade Agreement (NAFTA).

“We’re giving Canada and Mexico sufficient time to address these issues at the request of the governments, but it’s not open-ended,” said a senior U.S. administration official. “The focus is on the broader security relationship, where we can address ensuring national security and eliminate any impairment whatsoever.”

Other countries which are considered allies of the United States — such as Australia — will also be given “satisfactory alternative means to address the threat” the Trump administration perceives to American steel and aluminum manufacturers, the official said.

“This is not a softening of our position in any way whatsoever,” insisted the administration official in a call with reporters that was conducted on the condition of not being named.

‘Freest-trading nation’

Opponents of Trump’s action see it as undermining the rules-based global trading system and using national security disguised as protectionism that will encourage other countries to resort to the same premise to protect their domestic markets.

The White House official rejected that argument Thursday, contending that the United States “is the freest-trading nation in the world” and arguing that the rules-based trading system, under the 23-year-old World Trade Organization with 164 member states, “is not working very well for the American people.”

Trump signed the proclamations just hours after 11 other countries formalized a revised agreement in Chile that reduces tariffs and cuts trade barriers among the member countries.

Known as the Comprehensive and Progressive Agreement (CPTPP), it replaces the Trans-Pacific Partnership (TPP) from which Trump withdrew the United States.

The countries joining in the TPP successor are Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore and Vietnam.

Trump boasted last week that trade wars “are good and easy to win” after his surprise announcement to levy the tariffs on the two metals.

“It’s a promise made, a promise kept,” the senior administration official said Thursday. “Nobody … should express any kind of surprise.”

National security argument

The Trump administration said that retaining a domestic steel and aluminum manufacturing capacity is a matter of national security to build everything from tanks to rockets, as well as critical infrastructure such as water treatment plants.

“This kind of action will maintain a workforce of skilled workers,” according to the administration official, adding, “the national security rationale is unassailable.”

The country’s “aluminum and steel industries are severely under threat, being weakened or, in the case of aluminum, being driven to extinction,” said the official.

The White House also is rebutting arguments the tariffs will lead to higher prices for American consumers and layoffs of workers in factories that will have to use higher-priced steel and aluminum.

Such reports are “hair-on-fire rhetoric” emanating from “lobbyists, politicians and swamp creatures,” the U.S. official said.

According to the White House, the tariffs will add up to 2 cents to a six-pack of soda or beer and increase the cost of a $330-million Boeing 777 jetliner by a mere $25,000.

The tariffs, according to the White House official, will see steel and aluminum makers restarting factories, significantly increasing production and hiring hundreds of workers.

China issue

As far as China, it is “not a significant exporter to the U.S. at this time,” according to the official. “The China problem is simply a massive, massive overcapacity that China has built up in both aluminum and steel.”

In planned U.S. discussions with Canada, Mexico and all other countries that produce steel, “we need to address global excess capacity,” the official said. “This is going to be a key part of one of the long-term objectives that the president has.”

Trump said trade discussions are ongoing with Beijing, but “I don’t know that anything’s going to come of that.”

At the end of the event, a reporter asked Trump about steel trans-shipments from China. He replied, “We’re going to stop the trans-shipping,” but then quickly added that if any such shipments are to continue, “it’ll cost a lot more money.”

Democratic Senator Sherrod Brown, from the Midwestern state of Ohio, told VOA, “China has continued to cheat by subsidizing land and energy and water and capital, and they will continue if we don’t draw a line.”

Trump should “have focused more on China and less on Canada and our trading partners that have played more fair,” Brown added.

Republican Senator John Cornyn of Texas told VOA he believes Trump has heard the voices who expressed concern about imposing the tariffs, but “the president’s got some pretty fixed ideas about trade, and obviously he ran on those and, I think, feels obligated to follow through on his campaign promises.”

Republican Senator Jeff Flake of Arizona said he is introducing a law to nullify the tariffs.

The chairman of the Senate’s finance committee, Republican Orrin Hatch of Utah, also criticized the presidential action, but expressed hope of working with the Trump administration to “mitigate the damage.”

House Speaker Paul Ryan, a Republican from Wisconsin, says he fears “unintended consequences” from the tariffs — namely, retaliation by targeted countries.

Peggy Chang at the White House and Mark Bowman on Capitol Hill contributed to this report.

European Central Bank: Trump Tariff Move ‘Dangerous’

Europe’s top monetary official criticized U.S. President Donald Trump’s proposal to put tariffs on steel and aluminum imports as a “dangerous” unilateral move.

Mario Draghi, the president of the European Central Bank, said that the “immediate spillover of the trade measures … is not going to be big.” But he said such disputes should be worked out among trade partners, not decided by measures initiated from one side.

“Whatever convictions one has about trade … we are convinced that disputes should be discussed and resolved in a multilateral framework, and that unilateral decisions are dangerous.”

Trump is expected to announce by the end of this week tariffs of 25 percent on steel and 10 percent on aluminum. Trump has long singled out China for being unfair in trade practices, but experts say the tariffs would hurt U.S. allies Canada and the European Union far more.

Draghi warned that unilateral moves like these tariffs could trigger retaliation — which the EU and China, among other, have already threatened.

The most important fallout, Draghi said, would be if tariffs raised fears about the economy. They could depress confidence among consumers and businesses, he said, which could weaken both growth and inflation.

Draghi also alluded to the kind of financial deregulation the U.S. is pursuing as a risk to the global economy. The U.S. Senate is considering a bill that would remove some of the banking safeguards imposed in the wake of the 2008 financial crisis and the collapse of investment bank Lehman Brothers. The bill is sponsored by Republican Sen. Mike Crapo of Idaho but has attracted several Democratic sponsors as well.

Draghi didn’t mention the bill specifically but said that the global financial crisis had been preceded by “systematic disruption of financial regulation in the major jurisdictions.” He said that while European regulators are not looking to ease back checks on the financial sector “massive deregulation in one market is going to affect the whole world.”

These uncertainties overshadowed a monetary policy announcement by the ECB, in which it hinted it is closer to withdrawing a key economic stimulus program.

The bank left unchanged its key interest rates as well as the size of its bond-buying stimulus program after its latest policy meeting. But in its statement it omitted an earlier promise that it could increase its bond-purchase stimulus in size or duration if the economic outlook worsens.

Draghi downplayed the step, saying it was a “backward-looking measure” that no longer fit today’s circumstances. Economic growth in the eurozone hit a strong annual rate of 2.7 percent in the fourth quarter, making the prospect of added stimulus remote.

The bank has said it will continue buying 30 billion euros ($37 million) in bonds per month through September and longer if needed — but has given no precise end date.

The eventual end of the stimulus will have wide-ranging effects. It could cause the euro to rise in value against other currencies, potentially hurting exporters, and it could bring higher returns on savings as well as stiffer borrowing costs for indebted governments in the 19-country eurozone. It should make it easier for people and companies to fund pension savings. But it could make richly valued stock markets less attractive relative to more conservative holdings.

The euro was volatile after the ECB’s statement, first jumping and then falling back to $1.2333 by end of day.

The stimulus program pushes newly printed money into the economy. That in theory should lower borrowing rates and raise inflation and growth. But while growth has bounced back, inflation has been slow to respond. It remains at 1.2 percent, stubbornly below the bank’s goal of just under 2 percent, the level considered best for the economy.

The bond purchases were started March 2015 to help the eurozone bounce back from troubles over government and bank debt in several member countries including Greece, Ireland, Portugal, Cyprus, Spain and Italy. The economy is now doing better, but the bank has moved cautiously in ending its crisis measures for fear of roiling recently volatile financial markets.

Trump Stands Firm on Steel, Aluminum Tariffs Despite Pushback

U.S. President Donald Trump is set to go ahead with his plan to impose tariffs of 25 percent on foreign steel and 10 percent on aluminum, but also vowed to remain flexible for specific countries. His comments came as 11 nations signed an expansive trade pact that aims to bring down trade barriers.

“I’m sticking with 10 and 25 [percent] initially,” Trump said Thursday before a Cabinet meeting at the White House. “I’ll have a right to go up or down depending on the country, and I’ll have a right to drop countries or add countries.”

Trump said he was staying the course to protect the American worker, even as he faced pushback from Republicans at home and threats of trade retaliation abroad.

The president is expected to sign a proclamation calling for the tariffs as early as Thursday, the same day 11 nations signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an expansive trade pact aimed at bringing down trade barriers.

U.S. media reported the White House was still finalizing details of Trump’s plan.

In an early morning tweet, Trump said he was looking forward to a Thursday afternoon meeting at the White House and the importance of protecting U.S. industries.

The White House said Mexico and Canada would be given a 30-day exception that could be extended.

Meanwhile, trade ministers from the 11 CPTPP signatories — including Canada, Mexico, Japan and Australia — met in Santiago, Chile. They signed the Asia-Pacific trade pact, a smaller, modified version of the Trans-Pacific Partnership (TPP), led and strongly backed by the Obama administration as a counterweight to China’s increasing influence in the region.

Trump withdrew from TPP shortly after taking office, arguing the deal shortchanges America and hurts the American worker.

Signatories to CPTPP said they will reaffirm and realize the TPP agreement, and also promote and enhance regional economic integration and trade liberalization. The deal aims to remove almost all tariffs among signing nations. The 11 members are Canada, Mexico, Japan, Australia, New Zealand, Malaysia, Vietnam, Singapore, Brunei, Chile and Peru.  

The TPP was the largest trade agreement in history when it was signed in February 2016. It was a centerpiece of the Obama administration’s “Pivot to Asia” and was seen as helping the United States lead other countries in a strategic bulwark to temper a rising China, the world’s No. 2 economy. The deal was never ratified by Congress. 

Response from home

Meanwhile, Trump’s decision to impose tariffs of 25 percent on steel and 10 percent on aluminum imports continues to face strong backlash from lawmakers. On Wednesday, a number of members of the House of Representatives sent a letter to the president, urging him to minimize negative consequences if he goes through with the tariff plan.

Republican Senator John Cornyn of Texas told VOA he believes Trump has heard their voices, but he said, “the president’s got some pretty fixed ideas about trade, and obviously he ran on those and, I think, feels obligated to follow through on his campaign promises.”

Cornyn said he hopes that “we’ll continue the conversation on things like NAFTA. I think rather than broad tariffs that apply to our friends and allies, we ought to be more targeted, if they are going to exist at all.”

The tariffs proposal has won support from some Democratic lawmakers in manufacturing states whose fortunes could be boosted by the tariffs protecting their metal industries.

Democratic Senator Sherrod Brown of Ohio said in an interview with VOA, “We’re a country that believes in the rule of law, and you enforce rules and you enforce laws. China has continued to cheat by subsidizing land and energy and water and capital, and they will continue if we don’t draw a line.”

Brown said he believes Trump “did the right thing” and he appreciated Trump being aggressive. However, he said he would have done it slightly differently. “I would have focused more on China and less on Canada and our trading partners that have played more fair,” he said.

VOA’s Michael Bowman contributed to this report.

AP Fact Check: Trump Citing Wrong Information on Trade

President Donald Trump is presenting a skewed picture of the decline of manufacturing in making his case for import penalties that could spark a trade war.

A look at his latest statement on the subject as he prepares to impose heavy tariffs on foreign steel and aluminum:

TRUMP: “From Bush 1 to present, our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars. Last year we had a Trade Deficit of almost 800 Billion Dollars. Bad Policies & Leadership. Must WIN again!” — tweet Wednesday.

THE FACTS: Trump persistently miscasts the trade balance, citing the U.S. deficit in goods and ignoring the U.S. surplus in services. The actual trade deficit last year was $566 billion.

As for manufacturing, Trump leaves out what is widely regarded as the main reason for the decline in factory jobs: automation and other efficiencies. Trade is certainly a factor as well.

He’s in the ballpark when referring to how many factory jobs have been lost since January 1989, when George H.W. Bush became president. The number he cites as 6 million is actually 5.5 million, according to the Labor Department.

What he doesn’t say, though, is that despite the loss of those 5.5 million factory jobs, the U.S. economy overall has added a net total of about 40.6 million jobs in that time. Incomes from those jobs have paid for the imported goods that have added to U.S. trade deficits.

Historical context

He also does not offer a larger historical context. The U.S. lost 1.6 million manufacturing jobs in the decade before Bush, a pace of decline only slightly lower than that during the 30-year period cited by Trump.

Factory jobs dropped during the severe downturns of the early 1980s, stayed fairly stable until about 2000, then dropped sharply. Economists are divided about why.

The big drop after 2000 roughly coincides with China’s entry into the World Trade Organization in December 2001, which meant U.S. manufacturers increasingly competed with China and gained an incentive to move factories there. Some economists put the most blame on technology.

Ball State University’s Center for Business and Economic Research, for instance, found in a 2015 study that trade accounted for just 13 percent of factory job losses, with technology devouring most of the rest.

Canada, Mexico to Be Temporarily Spared From US Tariffs on Metals

Canada and Mexico could be temporarily spared from tariffs on some metals that will be part of a proclamation that President Donald Trump is expected to sign as early as Thursday.

The Washington Post reports the two North American nations would get a 30-day exception and that other countries may also enjoy exemptions from the tariff proposed on steel and aluminum imports.

Sources at the White House also said Trump’s controversial tariff plan could be put into action at a signing ceremony at 3:30 p.m. EDT (2030 UTC) Thursday.

Reuters quoted a senior U.S. official saying the measures would take place about two weeks after Trump signs the proclamation.

Lawmakers urge caution

Meanwhile Wednesday, a number of members of the House of Representatives sent a letter to the president, urging him to minimize negative consequences if he goes through with the tariff plan.

The letter said “tariffs are taxes that make U.S. businesses less competitive and U.S. consumers poorer,” and “any tariffs that are imposed should be designed to address specific distortions caused by unfair trade practices in a targeted way while minimizing negative consequences in American businesses and consumers.”

The lawmakers went on to recommend that Trump exclude fairly traded products and products that do not pose a national security threat; announce a process for U.S. companies to petition for duty-free access to imports unavailable from U.S. sources; and allow exemptions for existing contracts for steel and aluminum purchases. They also recommended doing a short-term review of the effects of the tariffs on the economy to decide whether or not the approach is working.

The tariffs are expected to impose a duty of 25 percent on steel and 10 percent on aluminum imports that Trump says undermine U.S. industry with their low prices.

The comment that Canada and Mexico may be spared in the tariffs plan resulted in key stock indexes and the U.S. dollar paring losses in afternoon trading.

The Dow Jones industrial average, after falling more than 300 points during the session, closed off 83 points, a drop of one-third of 1 percent.

Market players say the Tuesday sell-off was sparked by the previous day’s announcement that the president’s chief economic adviser, Gary Cohn, was resigning. The former Goldman Sachs investment bank president had opposed the sweeping tariffs for foreign steel and aluminum.

‘Easy to win’

Trump boasted last week that trade wars “are good and easy to win” after his surprise announcement of the tariffs.

That has prompted widespread criticism from his Republican colleagues in Congress and America’s allies.

The president, according to staffers, acted on recommendations made by Commerce Secretary Wilbur Ross, formerly a billionaire investor, and Peter Navarro, an economist who is director of the White House National Trade Council.

Ross said the planned steel and aluminum tariffs were “thought through. We’re not looking for a trade war.”

The tariffs proposal has also won support from economic nationalists in the United States and some Democratic lawmakers in manufacturing states whose fortunes could be boosted by the tariffs protecting their metal industries.

‘Easy to lose’

The chief of the International Monetary Fund, Christine Lagarde, on Wednesday in a European radio interview, warned of a global trade war, predicting the U.S. tariffs could lead to “a drop in growth, a drop in trade, and it will be fearsome.”

Warning that there would be no victors in such a trade war, Lagarde urged “the sides to reach agreements, hold negotiations, consultations.”

European Council President Donald Tusk echoed Lagarde’s stance saying, “The truth is quite the opposite: Trade wars are bad and easy to lose. For this reason, I strongly believe that now is the time for politicians on both sides of the Atlantic to act responsibly.”

The European Commission, the executive arm of the 28-nation European Union, detailed retaliatory tariffs it plans to impose on prominent U.S. products if Trump carries out his plan to impose the metal tariffs, taxing Harley-Davidson motorcycles, bourbon, blue jeans, cranberries, orange juice and peanut butter.

Moody’s Investors Service said the planned tariffs “raise the risk of a deterioration in global trade relations.”

Trump said on Twitter that since former President George H.W. Bush was in the White House 30 years ago, “our Country has lost more than 55,000 factories, 6,000,000 manufacturing jobs and accumulated Trade Deficits of more than 12 Trillion Dollars.”

“Bad Policies & Leadership. Must WIN again!” Trump also said on Twitter.

Trump claimed the United States last year had a trade deficit of “almost 800 Billion Dollars,” significantly overstating the actual figure of $566 billion, which still was the biggest U.S. trade deficit in nine years.

A new report Wednesday said the U.S. trade deficit in January — the amount its imports exceeded its exports — reached $56.6 billion, the highest monthly total since October 2008.

Despite Widespread Pushback, Trump Finds Some Support for Tariff Plan

U.S. President Donald Trump’s plan to impose tariffs of 25 percent on steel and 10 percent on aluminum has met criticism from his Republican allies in Congress, many of whom worry the measures could trigger a trade war that damages U.S. businesses. But the president does have supporters among some Senate Democrats from states where voters are concerned about the long-term loss of American manufacturing jobs.

“This welcome action is long overdue for shuttered steel plants across Ohio and steelworkers who live in fear that their jobs will be the next victims of Chinese cheating,” Senator Sherrod Brown, a Democrat from Ohio, said in a statement released after the plan was announced. “If we fail to stand up for steel jobs today, China will come after other jobs up and down the supply chain tomorrow.”

American labor unions have also broadly favored Trump’s proposed tariffs, saying they have been complaining for years that foreign countries frequently subsidize their own steel industries, putting American competitors at a disadvantage. 

Economists have been mostly critical of the plan, saying that overall it will hurt American manufacturers, some of whom may be targeted by trading partners for retaliatory sanction. They argue that the benefits to steel and aluminum workers are outweighed by job losses among Americans in other industries. 

Tariffs in focus in special election 

A test of how much the issue is resonating with American voters comes next week, when voters in Pennsylvania’s 18th congressional district, vote in a special election to fill a vacated seat. 

Many voters are looking to the president to fulfill his campaign promise of protecting manufacturing jobs in America’s heartland.

The race for the seat left vacant by Rep. Tim Murphy’s sex scandal is coming down to the wire between Republican candidate Rick Saccone and Democrat Conor Lamb.

Saccone’s campaign endorsed Trump’s tariff plan in a statement, saying “If other countries aren’t playing by the rules and tariffs are needed to protect steel and aluminum jobs in Southwestern Pennsylvania, Rick would support those measures.”Pennsylvania’s Democratic Senator Bob Casey also voiced his support for the president’s plan in a Facebook statement Thursday.

“I commend the President for announcing his intent to take action to protect our steelworkers from countries, like China, that cheat on trade. I have repeatedly called on this and previous Administrations to aggressively enforce our trade laws. For years, foreign countries have been dumping steel into our markets and costing our workers their jobs and suppressing their wages,” he wrote.

But Trump’s plan to impose the new tariffs prompted White House Chief Economic Advisor Gary Cohn to resign Tuesday.

McConnell, Ryan concerned

Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan also expressed their concerns to the president, urging him to target the tariffs against specific countries to avoid a potential trade war.

U.S. Commerce Secretary Wilbur Ross told cable news network CNBC Wednesday the administration is not seeking a trade war. 

“We’re going to have very sensible relations with our allies,” said Ross. “We hope and we believe that at the end of the day, there will be a process of working with the other countries that are our friends.”

Trump dismissed concerns about a trade war during a joint press conference with the Swedish prime minister Tuesday.

“When we’re behind on every single country, trade wars aren’t so bad,” he told reporters. “In some cases we lose on trade plus we give them military where we’re subsidizing them tremendously. So, not only do we lose on trade, we lose on military.”

The administration is considering the new tariffs under a so-called “232 report.” It allows the president to impose trade quotes or tariffs if a probe finds imports threaten national security.

‘National security’

“It’s about our economy,” Vice President Mike Pence said of the need to enact tariffs, during a February meeting with lawmakers. “It’s about our national security.”

A March 7 Politico/Morning Consult poll of 2,000 registered voters, found that 65 percent of Republicans support the president’s plan.

White House Press Secretary Sarah Huckabee Sanders told reporters Wednesday the administration was still on pace to fully roll-out the tariffs at the end of this week.

Australia’s Central Bank Chief Slams US Tariffs

The head of Australia’s central bank is upbeat about domestic economic growth despite a disappointing end to last year, but fears the specter of a trade war calling threatened U.S. tariffs “highly regrettable.”

President Donald Trump intends to slap duties on imports of steel and aluminum, a pledge that has met with warnings of retaliation from the rest of the world and spooked financial markets.

Reserve Bank of Australia (RBA) Governor Philip Lowe’s comments on Wednesday come as data showed growth in Australia’s A$1.8 trillion ($1.40 trillion) economy slowed last quarter as bad weather hit exports, although a pickup in spending helped it extend its 26-year run without recession.

Lowe slammed the tariffs on Wednesday at a business summit in Sydney, saying a tit-for-tat move from other countries would be very damaging.

“The recent announcement on tariffs by President Trump was highly regrettable,” Lowe said, strong words for a typically measured policymaker. “History shows protectionism is bad.”

Australia’s export-driven economy relies heavily on international trade and capital. It is particularly vulnerable to a U.S.-led trade war, which threatens the outlook for global growth and the demand for commodities.

Those concerns have been reflected in global financial markets, with investors dumping shares for the safety of gold, cash, the Japanese yen and Swiss francs.

The Australian dollar, considered a risky asset, has been volatile since the start of February, losing 3.6 percent that month alone.

On Wednesday, it slipped 0.6 percent to go as low as $0.7772, not far from a recent two-month trough of $0.7713. It was last down 0.4 percent at $0.7797.

To add to the uncertainty a key advocate for free trade in the White House announced his resignation on Wednesday, fanning fears Trump would go ahead with tariffs and risk a trade war.

Closer to home, Lowe sounded confident about the country’s future, saying the economy was moving in the right direction and signaling the next move in rates was likely up, not down.

Speed bump

Lowe’s confidence rests partly on unexpected strength in the domestic labor market and a synchronized upturn in global activity.

That helped offset a disappointing end to last year with official data showing annual economic growth slowed to 2.4 percent in the December quarter, from an upwardly revised 2.9 percent in third quarter.

Not all economists were as optimistic as Lowe.

“The outlook for business investment is better, but dwellings investment will probably continue to decline and consumption may weaken again soon,” said Paul Dales, Sydney-based chief economist at Capital Economics.

“So while the RBA believes that GDP growth will step up, we think another year of growth of about 2.5 percent is on the cards,” Dales added. “That partly explains why we doubt the RBA will raise interest rates until late in 2019.”

The RBA held rates at a record low 1.50 percent for a 17th straight meeting on Tuesday as inflation is still below its 2-3 percent target band.

The RBA sees only gradual progress in reducing unemployment and inflation. As a result, “the Board does not see a strong case for a near-term adjustment of monetary policy,” Lowe said.

The futures market reacted by pushing back the chance of a rate hike, with a 25 basis-point increase not fully-priced in until May 2019.

 

Drought-hit Kenyans Find Gold in Tea Trees – But for How Long?

At Sweet Waters, a village in central Kenya, Veronicah Nyambura stands under the hot sun between two fields. One is full of lush plants – but the other has crops so wilted that their leaves have curled up.

The green land is planted with tea tree, an Australian native that thrives in this semi-arid part of Kenya. Opposite is a field of maize, which suffers in years of poor rains and high temperatures.

“Maize is very disappointing. You plant but you’re never sure whether you’ll harvest anything,” said Nyambura, who has planted a quarter-acre of tea trees.

The 65-year-old said she harvests 900 kg of tea tree branches every six months from that bit of land. When it was planted to maize, she got about 270 kg of grain every nine months, she said.

Many farmers in this part of Laikipia County – like farmers in many parts of the world – cannot afford to buy seeds for alternative crops better suited to drought, so keep planting maize.

But Nyambura and about 800 other small-scale farmers were sold tea tree seedlings on credit by a company called Earthoil that also guaranteed to buy their harvest. Each seedling cost 3.5 Kenyan shillings, or about 3 cents.

Earthoil, which buys the branches for between 17 Kenyan shillings ($0.17) and 19 Kenyan shillings ($0.19) a kilogram, extracts the tea tree oil at its local distillery and exports it to British skin-care company, The Body Shop.

Dairy cows and a TV

To meet the demands of buyers, Martin Thogoto Mwambia, 68, uses mulch – not chemical fertilizers or pesticides – on his 1.75-acre tea tree farm in Ngarariga village, in neighboring Nyeri county.

“I am mulching them with cow-dung and dried leftovers of tea tree,” he said with a smile while rubbing the dirt off his hands.

The farmer said he has reaped a fortune from the crop, which means he does not have to spend his old age working in menial jobs.

“Handling 50,000 Kenyan shillings ($490) and sometimes 100,000 Kenyan shillings ($990) is a miracle to me. Tea tree has given me that privilege,” said Mwambia, who worked as a guard in a local firm before he began growing tea trees.

Prior to tea tree he grew maize – but even in good years he earned far less, he said.

“Sometimes when the drought is at its worst I would harvest a tin (a kilogram) or two,” said Mwambia who is now harvesting an average of 10,000 kgs of tea tree branches annually from his farm.

The proceeds have enabled him to buy two dairy cows, get connected to electricity and buy a television set.

“Life is better for us now. I am happy,” said his wife, Jane Gathigia.

The drought-tolerant tea trees come with the advantage of a ready market, the farmers said.

“Marketing maize is a headache. The prices fluctuate from time to time and farmers end up making losses,” said Alice Wanja, 42, at her quarter-acre tea tree farm at Sweet Waters, about 1.5 km from Nyambura’s home.

“There is nothing like that with tea tree. The buyer is already at the waiting end and the buying price is good,” she said.

Long-term risks

The Laikipia County project came about through a grant from the Global Environment Facility (GEF), administered by the United Nations Development Program (UNDP) and implemented by a local charity, Kenya Organic Agriculture Network (KOAN), which partnered with Earthoil.

Although projects of this kind guarantee farmers a reliable buyer, they do not necessarily offer security in the longterm since the buyer may go out of business or move elsewhere, warned Tom Nyamache, professor of economics at Turkana University College.

On the flip side, the buyer is also at risk of closing shop if the farmers’ productivity falls or fails completely, he said.

It is important that farmers plant an alternative crop that also can thrive in the changed climate conditions to serve as a fallback should their tea tree ventures fail, he said.

Earthoil’s project manager, Martin Wainaina, said there is such a big demand for tea tree oil that they are making aggressive plans to expand production.

The Body Shop wants 30 tons of oil from the firm each year, but Earthoil can currently only supply 8 tons, he said.

Expanding the pool of farmers is a challenge. The plants have to be grown near the distillery, as tea tree branches are bulky and difficult to transport, he said.

The tea tree thrives in the volcanic soil and high altitudes in this region near Mount Kenya, Wainaina said.

Expanding production to other parts of Kenya with similar arid and semi-arid climates will only be possible through research and investment in more tea tree processing, analysts say.

Nancy Chege, country program manager at GEF-UNDP, Kenya, said scaling up tea tree farming also would depend on continuing to look for new markets, both locally and internationally.

But “most (such) community projects … are usually sustainable because trade goes on even after the project (ends),” she said.

($1 = 101.1700 Kenyan shillings)

EU Tax Haven Blacklist Set to Shrink Further

European Union states are set to remove Bahrain, the Marshall Islands and Saint Lucia from a list of tax havens next week, leaving only six jurisdictions on it, an EU document shows.

The planned removals from the EU list drew criticism from an anti-corruption watchdog on Tuesday. The decision is also likely to bring more disapproval from lawmakers and activists who had strongly criticized a first delisting in January that cut the number of jurisdictions named to nine from 17.

The latest decision was taken by the EU Code of Conduct Group, which includes tax experts from the 28 member states, according to an EU document seen by Reuters.

EU finance ministers are expected to endorse the proposal at their regular monthly meeting in Brussels on March 13.

The jurisdictions that remain on the blacklist are American Samoa, Guam, Namibia, Palau, Samoa and Trinidad and Tobago.

Bahrain, the Marshall Islands and Saint Lucia are to be delisted after they made “specific commitments” to adapt their tax rules and practices to EU standards, the document says.

Those commitments are not public.

“This ever-decreasing list of tax havens will soon be so short it will be able to fit on a Post-it. It’s time for the EU to publish how it chooses which countries go on the list and why,” said Elena Gaita, of Transparency International EU, an anti-corruption watchdog.

Panama

In the last cut, EU governments decided to remove Barbados, Grenada, South Korea, Macau, Mongolia, Tunisia, the United Arab Emirates and Panama.

Panama’s delisting caused particular outcry. The EU process to set up a tax-haven blacklist was triggered by publication of the Panama Papers, documents that showed how wealthy individuals and multinational corporations use offshore schemes to reduce their tax bills.

Ministers said January’s delisting signaled that the process was working as countries around the world were agreeing to adopt EU standards on tax transparency.

All delisted countries have been moved to a “gray list,” which includes dozens of jurisdictions that are not in line with EU standards against tax avoidance but have committed to change their rules and practices.

These countries can be moved back to the blacklist if they fail to respect their undertakings.

Blacklist

Blacklisted jurisdictions could face reputational damage and stricter controls on their financial transactions with the EU, although no sanctions have been agreed by member states yet.

The blacklist was set up to discourage the use of shell structures abroad, which in many cases are legal but may hide illicit activities.

It took nearly a year for EU experts to screen an initial 92 jurisdictions around the world before identifying 17 in December that could favor tax avoidance.

EU countries were not screened. They were deemed to be already in line with EU standards against tax avoidance, although anti-corruption activists and lawmakers have repeatedly asked for some EU members such as Malta and Luxembourg to be blacklisted.

Tillerson: China’s Approach to Africa Encourages Dependency

Shortly before embarking on his first official visit to Africa, U.S. Secretary of State Rex Tillerson said Tuesday the U.S. is committed to building on a “strong foundation of U.S.-Africa relations” and accused China of “encouraging dependency” in its approach to Africa.

In his first speech describing the administration’s Africa policy, Tillerson said the U.S. is “eager” to lower barriers to trade and investment in Africa, whose largest trading partner by far is China. He added that the U.S. approach of “incentivizing good governance” contrasts sharply to China’s, “which encourages dependency, using opaque contracts, predatory loan practices and corrupt deals that mire nations in debt and undercut their sovereignty.”

Tillerson’s one-week, five-nation trip will focus on counterterrorism, promoting peace, good governance and trade and investment.

“Our country’s security and economic prosperity are linked with Africa’s like never before,” the top U.S. diplomat said before an audience at George Mason University just outside of Washington.

The trip comes two months after President Donald Trump triggered a wave of controversy when he reportedly referred to African nations as “s***hole countries” during an Oval Office meeting on immigration with a bipartisan group of senators.

The African Union, which represents 55 countries on the continent, demanded an apology from Trump. A group of African ambassadors to the United Nations also denounced Trump’s remarks, saying they were “outrageous, racist and xenophobic.”

After more than a year since entering the White House, Trump still has not nominated a chief U.S. diplomat for Africa. And embassies in the Democratic Republic of Congo, Somalia, South Africa and in five other African countries remain without ambassadors.

Tillerson is scheduled to meet with top officials in the allied nations of Chad, Djibouti, Ethiopia, Kenya and Nigeria, some of which are helping in the battle against rebellions from jihadists linked to al-Qaida and Islamic State.

“To understand where the world is going, one must understand Africa is the future,” Tillerson said, noting Africa will be home this year to six of the world’s 10 fastest-growing economies and will have one-fourth of the world’s workforce by 2030.

Without partnerships to build infrastructure and achieve more economic development, Tillerson warned there will be “new ways for terrorists to exploit the next generation.” He said the administration is willing to collaborate with African countries to address the “drivers of conflict” and to build the “institutional law enforcement capacity of African nations.”

Tillerson also said the U.S. and African leaders “must work to find long-term diplomatic solutions” to regional conflicts “that cause so much human suffering.” He announced the U.S. will give $533 million in additional aid to alleviate famine and other needs caused by conflicts in Ethiopia, the Lake Chad Basin, Somalia and South Sudan.

“Greater stability will attract United States’ trade and investment with African nations,” he said.

Tillerson’s trip will overlap with Russian Foreign Minister Sergey Lavrov, who is scheduled to visit Ethiopia at the same time.

 

Trump Says He’s Committed to New ‘Fair’ Trade Pact With Canada, Mexico

The White House says that President Donald Trump, in a phone call with Canadian Prime Minister Justin Trudeau, has emphasized his commitment to a free trade agreement among the U.S., Canada and Mexico that is “fair to all three countries.”

The two leaders talked Monday in the midst of ongoing negotiations in Mexico City over revamping the 1994 North American Free Trade Agreement and days after Trump said he plans to impose a 25 percent tariff on steel imports to the U.S. and 10 percent on aluminum, both of which would hit Canada, a big exporter of the metals to the United States.

The White House said Trump noted that the “current agreement leaves the United States with a trade deficit,” although that is only true with regard to Mexico.  In 2016, the last year with complete government statistics, the United States reported it sent $12.5 billion more in goods and services to Canada than it imported, while it had a $55.6 billion trade deficit with Mexico.

Trump said Monday he is not backing down on his decision to impose the steep tariffs on steel and aluminum imports, despite growing pressure from political and diplomatic allies and U.S. companies to avert a policy that could spark a trade war.

Trump said on Twitter that Mexico and Canada could be exempted from the planned tariffs if a new and “fair” NAFTA is reached. He contended that the current agreement “has been a bad deal” for the U.S. with “massive relocation of companies & jobs.” He said Canada “must treat our farmers much better” and that Mexico “must do much more on stopping drugs from pouring into the U.S.”

​At one point, Trump said, “For many years, NAFTA has been a disaster. We are renegotiating NAFTA as I said I would, and if we don’t make a deal I will terminate NAFTA. But if I do make a deal which is fair to the workers and to the American people, that would be, I would imagine, one of the points that we’ll negotiate. It will be tariffs on steel for Canada and for Mexico.”

Beginnings of trade war?

Economist Gary Hufbauer of the Washington-based Peterson Institute for International Economics told VOA that people in Canada and Mexico see the Trump approach as bullying, and that their officials are less likely to make concessions that look like giving in to a bully.  He also said those asking Trump to back off the tariff plan are right to fear a trade war.

“Whether we get to a trade war will depend very much on the reacting of other countries,” Hufbauer said.  “The tariffs alone aren’t a trade war, but if other countries react by putting fairly strong restrictions on U.S. exports you can say we’re edging into a trade battle and it may escalate to a trade war.”

Trump’s decision to impose steep tariffs on steel and aluminum imports has drawn strong condemnation from some in his own Republican party and from U.S. trading partners around the world. Analysts warned the tariffs will hurt many U.S. allies.

In a rare break with the White House, House Speaker Paul Ryan and other key Republican lawmakers are trying to convince Trump to change his mind and not impose the tariffs. Ryan and the others say the tariffs would hurt consumers because they could lead businesses to impose higher prices and undercut any positive effect the recent Republican-approved tax cuts would have on the U.S. economy.

The motorcycle maker Harley-Davidson Inc. is headquartered in Ryan’s home state and is being targeted by Europe for possible retaliation for Trump’s plan to impose the steel and aluminum tariffs.

Ryan spokeswoman AshLee Strong said in a statement, “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”

Keeping campaign promise

White House Press Secretary Sarah Huckabee Sanders said the administration has a “great relationship” with Ryan, but “that doesn’t mean we have to agree on everything.” Sanders added, “The president has been committed and talked about this for many years, particularly on the campaign trail, and the people came out loud and clear and supported this president, therefore supporting the policies he campaigned on.”

Sanders said the administration is still finalizing the details of the measure, and she did not want to provide more information on the decision ahead of the final announcement.

Trump tweeted last Friday that “trade wars are good, and easy to win.” When asked to elaborate, Sanders said, “The president feels if we ended up in a trade war, the president is confident we will win, but that’s not the goal, the goal is to get free, fair, and reciprocal trade, and hope other countries will join him.”  

Trump told reporters he does not believe his plan to impose the aluminum and steel tariffs will spark a trade war.

VOA’s Victor Beattie contributed to this report.

BMW CEO: Car Tariffs Would Hurt US Jobs

Tariffs on car imports in the United States, if implemented, would hurt jobs in the world’s second-largest car market, the chief executive of German carmaker BMW said on Tuesday.

“Should we get tariff walls it would have an impact on jobs in the United States,” Harald Krueger said at the Geneva car show, adding that the company was in a better position there than its rivals because of its plant in South Carolina.

Trump on Saturday threatened European automakers with a tax on imports if the European Union retaliates against his plan to slap tariffs on aluminum and steel.

US Trade Representative Says Progress Slow at NAFTA Talks

If Mexico, the U.S. and Canada don’t renegotiate the North American Free Trade Agreement in two months, Washington might put the talks on the back burner until after a new Mexican president is elected or takes office, U.S. trade representative Robert Lighthizer said Monday.

 

He spoke after the seventh round of renegotiation talks wrapped up in Mexico City with little progress reported.

 

“The window is fairly short. It’s not like we can do this in my judgment, at the end of May and think we can get anything done,” Lighthizer said. “It’s not irrational to think you would have lower speed talks at some point, just to keep the talks going … and wait until after the elections,” referring to Mexico’s July 1 presidential election.

 

“The question is: ‘Til when? When do you start up — after the election, or do you start up after the new president is in place and has his own people in place,” Lighthizer said.

 

He said the latest talks produced agreement on only three of the 27 remaining NAFTA chapters, including health and sanitation, transparency and regulatory practices.

 

Lighthizer said progress had been slower than hoped, and noted it might be harder to get any deal through the U.S. Congress after November.

 

“There is some possibility that the Democrats will take over the Congress, and even if that doesn’t happen, they’ll be a different makeup of Congress for sure,” he said.

 

Since renegotiations began, agreement has been reached on only six of NAFTA’s 30 chapters, and big differences remain on issues like regional and U.S. content in autos, and dispute resolution panels.

 

The U.S. threw a new issue into the talks when President Donald Trump announced new duties on aluminum and steel imports — but then said Mexico and Canada would be exempted from the tariffs if NAFTA were successfully renegotiated.

 

Lighthizer denied that was a strong-arm tactic meant to exert additional pressure on Canada and Mexico.

 

“This is just a total coincidence,” he said regarding the timing of the new tariffs.

 

Nor was it a threat, Lighthizer said. “I certainly presented it as a positive thing … It’s my view that it’s an incentive to get a deal.”

 

Lighthizer said that “at this point our objective is still to have a trilateral agreement,” but noted that the Trump administration is “prepared to move on a bilateral basis” with either Canada or Mexico.

Angola’s Isabel dos Santos Denies Allegations of Graft at Oil Firm

Isabel dos Santos, the former head of Angola’s state-owned Sonangol oil company, is denying her successor’s allegations that she engaged in questionable business dealings related to the firm.

In a 13-page typed statement released late Sunday, Dos Santos – Africa’s richest woman, with a net worth that Forbes business magazine estimates at $2.6 billion – denounced what she called “slanderous” and “defamatory campaigns” against her.

Last week, Sonangol chair Carlos Saturnino reported that an internal audit showed a transaction of $38 million to a company based in Dubai; it had been approved by dos Santos shortly after she was removed from her post in November after roughly 16 months.

Dos Santos defended the transaction as a “totally legitimate” payment for consultancy services. She said she was fulfilling her legal obligations until her replacement could be sworn in, according to Reuters news service.

On Friday, Angola’s public prosecutor’s office acknowledged it was looking into Saturnino’s accusations.

Dos Santos had been appointed chair of Sonangol’s board by her father, Jose Eduardo dos Santos, Angola’s president from 1979 until last September. She was dismissed by his successor, President Joao Lourenco, who vowed to clean up Angola’s corruption-tainted economy.

The younger dos Santos’ goal was to restructure Sonangol, Reuters reported last November. In 2016, she had fired Saturnino from his job as the oil company’s production and exploration leader.   

The 2014 nosedive in global oil prices rocked Angola, where, according to the World Bank, oil accounts for a third of gross domestic product and more than 95 percent of the country’s exports. As she was leaving office, dos Santos told Sonangol staffers she had rescued the “nearly bankrupt” company by cutting costs, Reuters said.   

Judge, Police Help Oust Trump Hotels from Panama Property

Workers pried President Donald Trump’s name from signs outside his family company’s luxury hotel in Panama on Monday, as Trump’s executives were ousted from their management offices in a business dispute under orders from Panamanian officials. Trump’s security guards also left.

 

The end to a 12-day standoff over control of the property came early in the day when a Panamanian judicial official and police officers backed the hotel’s majority owner, Orestes Fintiklis, as he took possession of the offices. The Trump-affiliated management and security officials then left the 70-story, waterfront high-rise.

 

“This was purely a commercial dispute that just spun out of control,” said Fintiklis, a Miami-based private equity investor and head of the hotel owners’ association. “And today this dispute has been settled by the authorities and the judges of this country.”

 

The episode was a rare occasion when a foreign government has stood up against the operations of one of Trump’s family businesses, and it was unclear whether Trump might consider retaliating diplomatically. The Panamanian Embassy in Washington did not immediately respond to a request for comment. U.S. government officials referred questions to the Trump Organization, which did not respond to phone messages and emails requesting comment.

 

A Panamanian judicial official told The Associated Press a statement would come later in the day.

 

The Trump Hotel’s website had ceased offering direct bookings at the hotel by early Monday afternoon. “We apologize,” the site said. “There are no available rooms for your requested stay.”

 

The judicial intervention resolved the most contentious part of the dispute between Trump’s hotel business and Fintiklis, who sought to take physical control of the property on behalf of the hotel owners. Though the owners tried to fire Trump’s company last year, the Trump Organization had disputed the termination as legally invalid. As part of his fire sale purchase of 202 of the hotel’s 369 units, Fintiklis signed a February 2017 agreement not to challenge Trump’s management contract — a deal the Trump Organization considers binding.

 

Fintiklis quickly changed course after the deal closed in August, arguing that alleged mismanagement by Trump’s staff and the deterioration of the Trump brand rendered keeping the property in Trump hands impossible. In late December, Trump’s management team ran off a team of Marriott hotel executives visiting the property at Fintiklis’ invitation.

“Our investment has no future so long as the hotel is managed by an incompetent operator whose brand has been tarnished beyond repair,” Orestes wrote to his fellow hotel owners in a January email obtained by the AP.

 

The most recent and intense feuding began Feb. 22, when Fintiklis came to the property with termination notices for Trump’s management team. Trump hotel officials turned away Fintiklis and his entourage, refusing to let him check into any of his private equity fund’s 202 hotel rooms.

 

A legal complaint filed by Fintiklis said that, late that same evening, he and others in his party witnessed Trump’s management team destroying hotel documents, which Trump officials have denied.

 

For more than a week, Trump’s hotel business staved off efforts by Fintiklis and his allies to gain control of the property, with rival security teams skirmishing over physical control of key infrastructure. That included the administrative offices and the hotel’s closed caption security system, which was housed in the condo association within the same building. Grainy footage of the encounter obtained by the AP shows Trump security officials shoving a representative of the condo owners’ association and a brawl in a stairwell between opposing security guards.

 

Initially invited by Trump’s managers, the Panamanian police repeatedly visited the hotel to keep the peace. At least one Trump security official was taken off the property in handcuffs, though a police source told the AP he was not arrested.

Trump officials denounced Fintiklis’ efforts to take control of the property as “thug-like, mob-style tactics” and pledged in a February statement they would not give in to “bullying and the use of force.” Until litigation and arbitration involving the property was concluded, Trump officials said, they had no intention of leaving.

 

While Trump staffed up with additional security — stationing guards at the hotel’s administrative offices for more than one week — the fight for physical control of the hotel ended quietly with the intervention by Panamanian authorities. Trump security officials exited the property on their own accord, leaving the hotel’s administrative office vacant.

 

The whereabouts of the Trump hotel management team could not be immediately determined, but Fintiklis declared the fight over.

 

“Today Panama has made us proud,” Fintiklis said, adding that he intended to apply for Panamanian citizenship. Though Fintiklis has generally declined to comment on the dispute, he appeared to gloat Monday. Sitting at the piano in the hotel’s lobby, surrounded by reporters and news cameras, he played “Accordeon,” a Greek song celebrating that country’s fight to overthrow a fascist regime.

 

Within two hours, a man using a hammer and a crowbar began stripping Trump signage from a stone plaque in front of the building.

Washington Braces for Possible Trump-Induced Trade War

Washington is bracing for the start of a possible trade war between the United States and its closest allies and biggest commercial partners and a radical departure from America’s trading posture of the last seven decades. VOA’s Michael Bowman reports, the Trump administration is not backing down from last week’s announcement of looming tariffs on foreign-made steel and aluminum, with further details expected in coming days

China Doesn’t Want Trade War, but Says It Will Respond if Necessary

China has added its voice to a growing chorus of concern about the rising threat of a trade war and tariffs that U.S. President Donald Trump is expected to impose on steel and aluminum imports later this week.

 

A top Chinese diplomat says that while Beijing does not want a trade war with Washington, it will defend its interests if necessary.

 

Speaking at a press conference ahead of China’s annual legislative meetings, Vice Foreign Minister Zhang Yesui also gave assurances that the rise of world’s second largest economy and a rise in military spending was no cause for alarm.

 

“China does not want a trade war with the Untied States, but we will absolutely not sit idly by and watch as China’s interests are damaged,” Zhang said.

 

Tit for tat

Last week, the U.S. president announced plans to slap tariffs of 25 percent on steel and 10 percent on aluminum imports.

 

China is a key country Washington is aiming to target with the tariffs, but the decision also has sparked a global backlash with leaders of other affected nations such as Canada and Europe, which are warning they, too, are prepared to take countermeasures.

 

Analysts have said that if President Trump follows through on his pledges to get tough with China on trade, Beijing could respond by targeting the airline and agricultural sectors, even focusing on communities in the United States where support for the president was strong during the 2016 election.

 

Zhang, who also is serving as the rotating spokesperson of the National People’s Congress (NPC) said the best way to improve trade is to open up markets further and expanding the “pie of cooperation.”

 

“If policies are made on the basis of mistaken judgments or assumptions, it will damage bilateral relations and bring about consequences that neither country wants to see,” Zhang said.

 

Rising concerns about a trade war are likely to be a hot topic during the annual political meetings. China’s Premier Li Keqiang will deliver a government work report on Monday to the NPC during its opening session. That speech may highlight Beijing’s concerns as it forecasts the government outlook for the economy in 2018.

 

Moderate increase

The report also will provide details about another closely watched item, China’s military spending.

 

Zhang said China will see a moderate increase in its military budget this year, but argued that was to make up for a shortfall from previous years, upgrade equipment, and improve training and living conditions at the grassroots level for troops, among other reasons.

Zhang did not say how much of a percentage increase China might see this year in its defense spending, but he stressed that the country’s military does not threaten anyone.

 

Analysts tell VOA that spending could grow by about 10 percent, but they note that the real figure is perhaps much larger.

 

“China’s defense budget takes up a smaller share of its gross domestic product [GDP] and national fiscal expenditure than other major world countries. Its military spending per capita is also lower than other major countries,” he said.

 

Last year, China disclosed that it spent nearly $165 billion on its military about one-fourth of what the United States plans to spend on defense this year.

 

China model

Despite assurances, China’s broader strategic intentions are still something that Washington and other countries in the region watch closely.

 

Under Xi Jinping’s leadership, China has begun assuming a bigger role on the global stage and has launched several initiatives of its own, including a massive trillion-dollar trade and infrastructure project called the “Belt and Road” initiative.

During this year’s annual meetings, China’s communist party aims to solidify its self-proclaimed position as the only political organization qualified to rule the country, with the passage of 21 constitutional amendments.

 

One key amendment in the package is a proposal to scrap restrictions regarding the number of terms the president can serve in office. The proposal paves the way for Xi to become China’s president indefinitely, although state media denies Xi will be granted tenure for life.

When asked, Zhang did not respond to the question of whether the changes would give Xi lifelong tenure. He only said that the amendments would help unify the country’s leadership under Xi as China’s “core leader.”

 

The proposal, along with China’s growing ambitions to showcase what it calls the China model or “China Solution” has led to concerns that Beijing’s communist leaders will seek to spread their model of rule.

 

Zhang said that each country has its own development path and model, and Beijing will not import models from other countries, nor will it export its own.

 

“We will not ask other countries to copy China’s practices, but of course if some countries are interested in learning China’s experiences and practices, we are ready and willing to share our experiences with them,” Zhang said.

 

Zhang added that China will not impose anything on others and has no intention of overthrowing the existing international order or trying to start again.

 

EU Aims to Tax Internet Giants at ‘Two to Six Percent’: France

The EU will soon unveil a plan for taxing major internet companies like Amazon and Facebook by imposing a levy of two to six percent on revenues in every country where they operate, French finance minister Bruno Le Maire said Sunday.

“The range will be from two to six percent; but closer to two than to six,” Le Maire told the Journal du Dimanche newspaper.

The European Commission has said it will present by end March an overhaul of its tax rules, which currently allow US digital economy giants to report their income from across the bloc in any member state.

That leads them to pick low-tax nations like Ireland, the Netherlands or Luxembourg, depriving other nations of their share of the revenue even though they may account for more of a company’s earnings.

“The heads of these companies know themselves that this system can’t continue,” Le Maire said.

Critics say the tax-avoidance strategies used by the tech titans known as GAFA — Google, Amazon, Facebook and Apple — deprive EU governments of billions of euros while giving them an unfair advantage over smaller rivals. 

The Organisation for Economic Cooperation and Development says such strategies cost governments around the world as much as $240 billion (195 billion euros) a year in lost revenue, according to a 2015 estimate.

Asked if the proposed rate might be criticised as too low, Le Maire said: “I would rather have a law that can be implemented quickly instead of drawn-out negotiations.”

American tech giants appear to believe the European tax revamp is in the cards, with several already announcing pledges to pay more in each country where they operate as governments step up their fiscal demands.

Amazon said last month that it had settled a major tax claim in France and that it would start declaring all its earnings in the country.

Trump Threatens to Tax European-built Cars as Trade War Rhetoric Builds

President Donald Trump threatened on Saturday to impose a tax on European cars if the European Union chooses to retaliate against his plans to place tariffs on imported steel and aluminum.

In a tweet Saturday morning, Trump said the U.S. had an “$800 Billion Dollar Yearly” trade imbalance because of “very stupid” trade deals and policies. He warned that if the EU increased “tariffs and barriers” against American-made products, “we will simply add a Tax on their Cars.”

Presently, the U.S. imposes a 2.5 percent tariff on European-built cars and Europe imposes a 10 percent tariff on U.S.-built cars.

Earlier this week, Trump announced that he plans sometime in the coming week to impose tariffs of 25 percent on steel and 10 percent on aluminum imports. He said the tariffs would be in effect for a long period of time.

Trump’s tweet Saturday appeared to be in response to European Commission President Jean-Claude Juncker’s warning that the EU could respond by taxing quintessentially American-made products, such as bourbon whiskey, blue jeans and Harley-Davidson motorcycles.

Juncker told German media Friday that he does not like the words “trade war.” “But I can’t see how this isn’t part of warlike behavior,” he said.

Trump had tweeted earlier in the day: “Trade wars are good, and easy to win.”

Trump’s announcement, made during a meeting with steel and aluminum industry executives at the White House, led a sharp drop in the U.S. markets and sparked concerns of a trade war Friday.

China, Canada respond

Later Friday, China warned about the “huge impact” on global trading if Trump proceeds with his tariff plans.

Wang Hejun, head of China’s commerce ministry’s trade remedy and investigation bureau, said in a statement the tariffs would “seriously damage multilateral trade mechanisms represented by the World Trade Organization and will surely have huge impact on normal international trade order.” 

The Chinese official added, “If the final measures of the United States hurt Chinese interests, China will work with other affected countries in taking measures to safeguard its own rights and interests.”

China ranks 11th among the countries that export steel to the U.S. 

Canada is the United States’ biggest foreign source of both materials.

Canadian Prime Minister Justin Trudeau said Friday that Trump’s tariff plans were “absolutely unacceptable.” He said he is prepared to “defend Canadian industry” and warned the tariffs would also hurt U.S. consumers and businesses by driving up prices.

The director of the World Trade Organization, Roberto Azevedo, responded coolly, saying, “A trade war is in no one’s interests.” 

Trump spent Friday defending his threat to impose the tariffs, saying potential trade conflicts can be beneficial to the United States.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump wrote in a post on the social media site Twitter. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore – we win big. It’s easy!” 

A Japanese government official told VOA that Tokyo “has explained several times to the U.S. government our concerns,” but declined to comment further on any ongoing discussions with Washington.

“While we are aware of the president’s statement, we understand that the official decision has not been made yet,” the Japanese official said. “If the U.S. is going to implement any measures, we expect the measures be WTO-rules consistent.” 

China on Friday expressed “grave concern” about the matter. 

Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.” 

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports.

Hoping to Raise Real Cash, Marshall Islands Creates Virtual Money

The tiny Marshall Islands is creating its own digital currency in order to raise some hard cash to pay bills and boost the economy.

The Pacific island nation said it became the first country in the world to recognize a cryptocurrency as its legal tender when it passed a law this week to create the digital “Sovereign,” or SOV. In the nation of 60,000, the cryptocurrency will have equal status with the U.S. dollar as a form of payment.

Venezuela last month became the first country to launch its own cryptocurrency when it launched the virtual Petro, backed by crude oil reserves. The Marshall Islands said the SOV will be different because it will be recognized in law as legal tender, effectively backed by the government.

​Israeli partners

The Marshall Islands is partnering with Israeli company Neema to launch the SOV. It plans to sell some of the currency to international investors and spend the proceeds.

The Marshall Islands says the SOV will require users to identify themselves, thus avoiding the anonymity that has kept bitcoin and other cryptocurrencies from gaining support from governments.

“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD (U.S. dollar),” said President Hilda Heine in a statement. “It is another step of manifesting our national liberty.”

The Marshall Islands is closely aligned with the U.S. under a Compact of Free Association and uses the dollar as its currency. Under the compact, the U.S. provides the Marshall Islands with about $70 million each year in assistance. The U.S. runs a military base on Kwajalein Atoll.

Lawmakers passed the cryptocurrency measure Monday following five days of heated debate. It’s unclear when the nation will issue the currency.

Leaders hope the SOV will one day be used by residents for everything from paying taxes to buying groceries.

Initial offering: 24 million

The law states that the Marshall Islands will issue 24 million SOVs in what it calls an Initial Currency Offering. Half of those will go to the government and half to Neema.

The Marshall Islands intends to initially sell 6 million SOVs to international investors. It says it will use the money to help pay the budget, invest in projects to mitigate the effects of global warming, and support those people still affected by U.S. nuclear testing.

The country also intends to hand out 2.4 million SOVs to residents.

Neema Chief Executive Barak Ben-Ezer said the SOV marked a new era for cryptocurrency.

“SOV is about getting rid of the excuses” for not shifting to digital assets, he said in a statement. He said it solved a huge problem with cryptocurrencies, which haven’t previously been recognized as “real” money by banks, regulators and the U.S. Internal Revenue Service.

Some lawmakers expressed concern about the large amount of the new currency that would go to the Israeli company, while others argued the country had urgent needs and the cash would help.

Jehan Chu, the Hong Kong-based co-founder of blockchain platform Kenetic, said he thought it was an amazing move by the Marshall Islands and was the way of the future.

“Physical currency is going by the wayside as an antiquated, obsolete form of transacting,” he said.

But Chu added that he didn’t think the currency would hold much appeal for international investors or be particularly valuable outside the Marshall Islands.

And many people in the Marshall Islands and beyond remain skeptical of cryptocurrencies.

Bank of England Governor Mark Carney this week said a global speculative mania had encouraged a proliferation of the currencies, and that they needed to be held to the same standards as the rest of the financial system.

“The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles … reliant in part on finding the greater fool,” Carney said in a speech to the Scottish Economics conference in Edinburgh.

AP Fact Check: Is a Trade War ‘Easy to Win?’

In agitating for a trade war, President Donald Trump may have forgotten William Tecumseh Sherman’s adage that “war is hell.”

The Civil War general’s observation can be apt for trade wars, which may create conditions for a shooting war.

A look at Trump’s spoiling-for-a-fight tweet Friday:

TRUMP: “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”

THE FACTS: History suggests that trade wars are not easy.

The president’s argument, in essence, is that high tariffs will force other countries to relent quickly on what he sees as unfair trading practices, and that will wipe out the trade gap and create factory jobs. That’s his motivation for announcing that the U.S. will impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports.

The record shows that tariffs, while they may help certain domestic manufacturers, can come at a broad cost. They can raise prices for consumers and businesses because companies pass on at least some of the higher costs of imported materials to their customers. Winning and losing isn’t as simple a matter as tracking the trade gap.

The State Department’s office of the historian looked at tariffs passed in the 1920s and 1930s to protect farms and other industries that were losing their markets in Europe as the continent recovered from World War I. The U.S. duties hurt Europe and made it harder for those countries to repay their war debts, while exposing farmers and consumers in the U.S. to higher prices. European nations responded by raising their tariffs and the volume of world trade predictably slowed by 1934.

The State Department says the tariffs exacerbated the global effects of the Great Depression while doing nothing to foster political or economic cooperation among countries. This was a diplomatic way of saying that the economic struggles helped embolden extremist politics and geopolitical rivalries before World War II.

Nor have past protectionist measures saved the steel industry, as Trump says his tariffs would.

The United States first became a net importer of steel in 1959, when steelworkers staged a 116-day strike, according to research by Michael O. Moore, a George Washington University economist. After that, U.S. administrations imposed protectionist policies, only to see global competitors adapt and the U.S. share of global steel production decline.

China Joins Chorus, Warns of ‘Huge Impact’ of Trump’s Tariff Plan 

China has warned about the “huge impact” on global trading, if U.S. President Donald Trump proceeds with his plans to impose 25 percent tariffs on imported steel and 10 percent on imported aluminum products.

Wang Hejun, head of China’s commerce ministry’s trade remedy and investigation bureau, said in a statement late Friday the tariffs would “seriously damage multilateral trade mechanisms represented by the World Trade Organization and will surely have huge impact on normal international trade order.”

The Chinese official added, “If the final measures of the United States hurt Chinese interests, China will work with other affected countries in taking measures to safeguard its own rights and interests.”

Allies weigh in

Meanwhile earlier Friday, Canadian Prime Minister Justin Trudeau said Trump’s tariff plans were “absolutely unacceptable.”

Trudeau said Friday he is prepared to “defend Canadian industry.” Canada is the United States’ biggest foreign source of both materials. He warned that the tariffs would also hurt U.S. consumers and businesses by driving up prices.

The European Union was also stung by Trump’s plan, as evidenced by European Commission President Jean-Claude Juncker’s warning that the EU could respond by taxing quintessentially American-made products, such as bourbon whiskey, blue jeans and Harley-Davidson motorcycles.

Juncker told German media Friday that he does not like the words “trade war.” 

“But I can’t see how this isn’t part of warlike behavior,” he said.

Trump had tweeted earlier in the day: “Trade wars are good, and easy to win.”

The director of the World Trade Organization, Roberto Azevedo, responded coolly, saying, “A trade war is in no one’s interests.”

Currency markets 

The currency market responded with a drop in the value of the U.S. dollar against most other major currencies. It ended the day at its lowest level against the yen in two years. The euro gained a half-percent against the dollar Friday.

And the Dow Jones Industrial Average finished the trading week with its fourth decline in as many days, ending at 24,538.06. The Nasdaq and S&P 500, however, rose slightly after a three-day losing streak.

Trump spent Friday defending his threat to impose the tariffs, saying potential trade conflicts can be beneficial to the United States.

A Japanese government official told VOA that Tokyo “has explained several times to the U.S. government our concerns,” but declined to comment further on any ongoing discussions with Washington.

“While we are aware of the president’s statement, we understand that the official decision has not been made yet,” the Japanese official said. “If the U.S. is going to implement any measures, we expect the measures be WTO-rules consistent.”

Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.”

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports.

Canada, Europe, WTO React Negatively to Trump’s Threats on Steel, Aluminum Imports

“Absolutely unacceptable” were the words Canadian Prime Minister Justin Trudeau used to describe U.S. President Donald Trump’s statement that he plans to impose 25 percent tariffs on imported steel and 10 percent on imported aluminum products.

Trudeau made the comment Friday, adding that he is prepared to “defend Canadian industry.” Canada is the United States’ biggest foreign source of both materials. He warned that the tariffs would also hurt U.S. consumers and businesses by driving up prices.

The European Union was also stung by Trump’s plan, as evidenced by European Commission President Jean-Claude Juncker’s warning that the EU could respond by taxing quintessentially American-made products, such as bourbon whiskey, blue jeans and Harley-Davidson motorcycles.

Juncker told German media Friday that he does not like the words “trade war.” “But I can’t see how this isn’t part of warlike behavior,” he said.

Trump had tweeted earlier in the day: “Trade wars are good, and easy to win.”

The director of the World Trade Organization, Roberto Azevedo, responded coolly, saying, “A trade war is in no one’s interests.” 

The currency market responded with a drop in the value of the U.S. dollar against most other major currencies. It ended the day at its lowest level against the yen in two years. The euro gained a half-percent against the dollar on Friday.

And the Dow Jones Industrial Average finished the trading week with its fourth decline in as many days, ending at 24,538.06. The Nasdaq and S&P 500, however, rose slightly after a three-day losing streak.

Trump spent Friday defending his threat to impose the tariffs, saying potential trade conflicts can be beneficial to the United States.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump wrote in a post on the social media site Twitter. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore — we win big. It’s easy!” 

A Japanese government official told VOA that Tokyo “has explained several times to the U.S. government our concerns,” but declined to comment further on any ongoing discussions with Washington.

“While we are aware of the president’s statement, we understand that the official decision has not been made yet,” the Japanese official said. “If the U.S. is going to implement any measures, we expect the measures be WTO-rules consistent.” 

China on Friday expressed “grave concern” about the matter. 

Trump said Thursday the tariffs of 25 percent on steel and 10 percent on aluminum imports will be in effect for a long period of time. He said the measure will be signed “sometime next week.” 

In 2017, Canada, Brazil, South Korea and Mexico accounted for nearly half of all U.S. steel imports. That year, Chinese steel accounted for less than 2 percent of overall U.S. imports. 

 William Gallo, Fern Robinson, Wayne Lee contributed to this report

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