The International Monetary Fund warned world economic leaders on Saturday that a recent wave of trade tariffs would significantly harm global growth, a day after U.S. President Donald Trump threatened a major escalation in a dispute with China.

IMF Managing Director Christine Lagarde said she would present the G-20 finance ministers and central bank governors meeting in Buenos Aires with a report detailing the impacts of the restrictions already announced on global trade.

“It certainly indicates the impact that it could have on GDP [gross domestic product], which in the worst case scenario under current measures … is in the range of 0.5 percent of GDP on a global basis,” Lagarde said at a joint news conference with Argentine Treasury Minister Nicolas Dujovne.

In the briefing note prepared for G-20 ministers, the IMF said global growth might peak at 3.9 percent in 2018 and 2019, while downside risks have increased because of the growing trade conflict.

Her warning came shortly after the top U.S. economic official, Treasury Secretary Steven Mnuchin, told reporters in the Argentine capital there was no “macro” effect yet on the world’s largest economy.

Long-simmering trade tensions have burst into the open in recent months, with the United States and China — the world’s largest and second-largest economies — slapping tariffs on $34 billion worth of each other’s goods so far.

The weekend meeting in Buenos Aires comes amid a dramatic escalation in rhetoric on both sides. Trump on Friday threatened tariffs on all $500 billion of Chinese exports to the United States.

Mnuchin said that while there were some “micro” effects, such as retaliation against U.S.-produced soybeans, lobsters and bourbon, he did not believe that tariffs would keep the United States from achieving sustained 3 percent growth this year.

“I still think from a macro basis we do not see any impact on what’s very positive growth,” Mnuchin said, adding that he was closely monitoring prices of steel, aluminum, timber and soybeans.

G-7 allies

The U.S. dollar fell the most in three weeks on Friday against a basket of six major currencies after Trump complained again about the greenback’s strength and about Federal Reserve interest rate increases, halting a rally that had driven the dollar to its highest level in a year.

Mnuchin will try to rally G-7 allies over the weekend to join the United States in more aggressive action against China, but they may be reluctant to cooperate because of U.S. tariffs on steel and aluminum imports from the European Union and Canada, which prompted retaliatory measures.

Mnuchin said he would tell G-7 allies that the Trump administration was ready to make a trade deal with them and had placed a high priority on completing the North American Free Trade Agreement (NAFTA) with Mexico and Canada.

“If Europe believes in free trade, we’re ready to sign a free-trade agreement,” he said, adding that a deal would require the elimination of tariffs, nontariff barriers and subsidies.

“It has to be all three issues.”

French Finance Minister Bruno Le Maire, however, said at the G-20 meeting that the European Union could not consider negotiating a free-trade agreement with the United States unless Washington withdrew its steel

and aluminum tariffs first.

Le Maire said there was no disagreement between France and Germany over how and when to start trade talks with the United States. Both agreed Washington needs to take the first step by eliminating tariffs, he said.

Previous session

The last G-20 finance meeting in Buenos Aires in late March ended with no firm agreement by ministers on trade policy, except for a commitment to “further dialog.”

German Finance Minister Olaf Scholz said he would use the meeting to advocate for a rules-based trading system, but that expectations were low.

“I don’t expect tangible progress to be made at this meeting,” Scholz told reporters on the plane to Buenos Aires.

The U.S. tariffs will cost Germany up to 20 billion euros ($23.44 billion) in income this year, according to the head of German think-tank IMK.

Bank of Japan Governor Haruhiko Kuroda said he hoped the debate at the G-20 gathering would lead to an easing of retaliatory trade measures.

“Trade protectionism benefits no one involved,” he said. “I think restraint will eventually take hold.”​

​Protests

Host country Argentina is one of the world’s most closed economies, after a string of populist leaders implemented tariffs and restrictions on foreign capital to protect domestic industry. Market-friendly President Mauricio Macri has removed many of those barriers, generating popular backlash as factory

employment has nosedived.

A currency crisis this year prompted Argentina to seek IMF financing, a political risk for Macri since many Argentines blame Fund-imposed austerity for making its 2001-02 economic collapse worse. Opposition politicians led a protest against Lagarde’s presence on Saturday.

“This deal will mean a tougher, more severe adjustment for working people,” said Nicolas del Cano, a lawmaker for the Socialist Workers’ Party, calling for a national strike to “defeat” the IMF deal.

Lagarde said on Saturday that Argentina was “unequivocally” making progress on its deficit reduction targets agreed to as part of the $50 billion deal.
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Iran’s Supreme Leader Ayatollah Ali Khamenei on Saturday backed President Hassan Rouhani’s suggestion that Iran may block Gulf oil exports if its own exports are stopped and said negotiations with the United States would be an “obvious mistake.”

Rouhani’s apparent threat earlier this month to disrupt oil shipments from neighboring countries came in reaction to looming U.S. sanctions and efforts by Washington to force all countries to stop buying Iranian oil.

“(Khamenei) said remarks by the president … that ‘if Iran’s oil is not exported, no regional country’s oil will be exported,’ were important remarks that reflect the policy and the approach of (Iran’s) system,” Khamenei’s official website said.

Iranian officials have in the past threatened to block the Strait of Hormuz, a major oil shipping route, in retaliation for any hostile U.S. action.

Khamenei used a speech to foreign ministry officials on Saturday to reject any renewed talks with the United States after President Donald Trump’s decision to withdraw from a 2015 international deal over Iran’s nuclear program.

“The word and even the signature of the Americans cannot be relied upon, so negotiations with America are of no avail,” Khamenei said.

It would be an “obvious mistake” to negotiate with the United States as Washington was unreliable, Khamenei added, according to his website.

The endorsement by Khamenei, who has the last word on all major issues of state, is likely to discourage any open opposition to Rouhani’s apparent threat.

Khamenei also voiced support for continued talks with Iran’s European partners in the nuclear deal which are preparing a package of economic measures to offset the U.S. pullout from the

accord.

“Negotiations with the Europeans should not be stopped, but we should not be just waiting for the European package, but instead we should follow up on necessary activities inside the country [against U.S. sanctions],” Khamenei said.

France said earlier this month that it was unlikely European powers would be able to put together an economic package for Iran that would salvage its nuclear deal before November.

Iran’s oil exports could fall by as much as two-thirds by the end of the year because of new U.S. sanctions, putting oil markets under huge strain amid supply outages elsewhere in the world.

Washington initially planned to totally shut Iran out of global oil markets after Trump abandoned the deal that limited Iran’s nuclear ambitions, demanding all other countries to stop buying its crude by November.

But it has since somewhat eased its stance, saying that it may grant sanction waivers to some allies that are particularly reliant on Iranian supplies.

 
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U.S. President Donald Trump on Friday dug in on his criticism of the Federal Reserve’s policy on raising interest rates, saying it takes away from the United States’ “big competitive edge,” and lamented the strength of the U.S. dollar.

Trump, in posts on Twitter, also accused the European Union and China of manipulating their currencies.

“China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge,” Trump wrote. “As usual, not a level playing field.”

After his posts, the U.S. dollar extended losses against the European Union’s euro, the Chinese yuan and Japanese yen.

Representatives for the Fed could not immediately be reached for comment.

Trump had already criticized the Fed’s interest rate policy in an interview on CNBC on Thursday, saying he was concerned higher rates could impact the U.S. economy.

Most economists believe the current economic climate, with the nation’s unemployment at historic lows and inflation at the Fed’s 2 percent target, justify recent interest rate rises and a strong U.S. dollar.

The issue also ties into the Trump administration’s current trade battles with China, Europe and others, as a strong currency tends to make a country’s exports more expensive, hurting exporters.
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President Donald Trump has indicated that he’s willing to hit every product imported from China with tariffs, sending U.S. markets sliding before the opening bell Friday.

 

In a taped interview with the business channel CNBC, Trump said “I’m willing to go to 500,” referring roughly to the $505.5 billion in goods imported last year from China.

 

The administration to date has slapped tariffs on $34 billion of Chinese goods in a trade dispute over what it calls the nation’s predatory practices.

 

Dow futures which had already been pointing modestly lower slid sharply after the comments were aired by CNBC early Friday, indicating triple-digit losses when the market opens.

 

The yuan dipped to a 12-month low of 6.8 to the dollar, off by 7.6 percent since mid-February.

 

There is already pushback in the U.S. from businesses that will take a hit in an escalating trade war.

 

Trump has ordered Commerce to investigate whether auto imports pose a threat to U.S. national security that would justify tariffs or other trade restrictions. Earlier this year, he used national security as a justification for taxing imported steel and aluminum.

 

Auto tariffs would escalate global trade tension dramatically: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts — figures that dwarf last year’s $29 billion in steel and $23 billion in aluminum imports.

 

In the same interview, taped Thursday at the White House, Trump broke with a long-standing tradition at the White House and voiced displeasure about recent actions at the U.S. Federal Reserve. Both political and economic officials believe that the central bank needs to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy.

 

Last month, the Fed raised its benchmark rate for a second time this year and projected two more increases in 2018. Its rate hikes are meant to prevent the economy from overheating and igniting high inflation. But rate increases also make borrowing costlier for households and companies and can weaken the pace of growth. In particular, the Fed’s most recent rate hikes could dilute some of the benefit of the tax cuts Trump signed into law last year.
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North Korea’s economy contracted at the sharpest rate in two decades in 2017, South Korea’s central bank estimated Friday, in a sign international sanctions imposed to stop Pyongyang’s nuclear and missile programs have hit growth hard.

Gross domestic product (GDP) in North Korea last year contracted 3.5 percent from the previous year, marking the biggest contraction since a 6.5 percent drop in 1997 when the isolated nation was hit by a devastating famine, the Bank of Korea said.

Industrial production, which accounts for about a third of the nation’s total output, dropped by 8.5 percent and also marked the steepest decline since 1997 as factory production collapsed on restrictions of flows of oil and other energy resources into the country. Output from agriculture, construction industries also fell by 1.3 percent and 4.4 percent, respectively.

“The sanctions were stronger in 2017 than they were in 2016,” Shin Seung-cheol, head of the BOK’s National Accounts Coordination Team said.

“External trade volume fell significantly with the exports ban on coal, steel, fisheries and textile products. It’s difficult to put exact numbers on those but it (export bans) crashed industrial production,” Shin said.

The steep economic downturn comes as analysts highlight the need for the isolated country to shift toward economic development.

Switch to economic construction

North Korean leader Kim Jong Un in April vowed to switch the country’s strategic focus from the development of its nuclear arsenal to emulating China’s “socialist economic construction.”

“As long as exports of minerals are part of the sanctions, by far the most profitable item of its exports, Pyongyang will have no choice but to continue with its current negotiations with the U.S. (to remove the sanctions),” said Kim Byeong-yeon, an economics professor at the Seoul National University with expertise in the North Korean economy.

North Korea’s coal-intensive industries and manufacturing sectors have suffered as the U.N. Security Council ratcheted up the sanctions in response to years of nuclear tests by Pyongyang.

China, its biggest trading partner, enforced sanctions strictly in the second half of 2017, hurting North Korea’s manufacturing sector.

Beijing’s suspended coal purchases last year cut North Korea’s main export revenue source while its suspended fuel sales to the reclusive state sparked a surge in gasoline and diesel prices, data reviewed by Reuters showed earlier.

2018 to be ‘a lot worse’

“This year will be a lot worse. Shrinking trade first hits the Kim regime and top officials, and then later affects unofficial markets,” said Kim at Seoul National University, adding that a reduction in tradable goods would eventually decrease household income and private consumption.

North Korea’s black market, or Jangmadang, has grown to account for about 60 percent of the economy, and is where individuals and wholesalers buy and sell Chinese-made consumer goods or agricultural products, according to the Institute for Korean Integration of Society.

China’s total trade with North Korea dropped 59.2 percent in the first half of 2018 from a year earlier, China’s customs data showed last week.

The BOK uses figures compiled by the government and spy agencies to make its economic estimates. The bank’s survey includes monitoring of the size of rice paddy crops in border areas, traffic surveillance, and interviews with defectors.

North Korea does not publish economic data.

North Korea’s Gross National Income per capita stands at 1.46 million won ($1,283.52), making it about 4.4 percent the size of South Korea’s, the BOK said.

Overall exports from North Korea dropped 37.2 percent in 2017, marking the biggest fall since a 38.5 percent decline in 1998, the BOK said Friday, citing data from the Korea Trade-Investment Promotion Agency.
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Chinese policymakers are pumping more liquidity into the financial system and channeling credit to small- and medium-sized firms, and Beijing looks set to further loosen monetary conditions to mitigate threats to growth from a heated Sino-U.S. trade war.

The world’s second-biggest economy has started to lose momentum this year as a government campaign to reduce a dangerous build-up of debt has lifted borrowing costs, hitting factory output, business investment and the property sector.

As an intensifying trade conflict raises risks to exporters and overall growth, many economists expect the central bank to further reduce reserve requirements in the coming months, on top of the three reductions made so far this year.

Benchmark rate unchanged

However, few see a cut in the benchmark policy rate this year, as authorities walk a fine line between keeping liquidity conditions supportive and preventing any destabilizing capital outflows that could put the skids on a fragile yuan currency.

On Wednesday, a source with direct knowledge of the matter said the People’s Bank of China (PBOC) plans to introduce incentives that will boost the liquidity of commercial banks.

These are aimed at encouraging banks to expand lending and increase their investment in bonds issued by corporations and other entities, such as local government financing vehicles (LGFVs).

The PBOC has also been ensuring ample liquidity by allowing commercial banks to tap its Medium-Term Loan Facility (MLF), especially lenders that have invested in bonds rated AA+ and below, the source said.

The improved cash conditions have been reflected in reduced short-term borrowing costs for banks, with the country’s key seven-day money rate at 2.6409 percent Thursday, 37 basis points lower than recent highs at the end of June.

Economy expansion slows

The combination of lower interbank rates and the push to boost bank support should help to ease financing pressures for weaker firms, analysts said.

“This should spell good news for lower-grade bond markets which have been suffering from a flight to quality-grade bonds, and some firms have subsequently found access to liquidity difficult,” analysts at Everbright Sun Hung Kai said in a note.

China’s economy expanded a slower-than-expected 6.7 percent in the second quarter, and June factory output growth weakened to a two-year low as the trade dispute with the United States intensified.

To be sure, markets don’t expect aggressive policy loosening, given Beijing’s broad deleveraging pledge and fears that doing so could hit the yuan and trigger a spike in capital outflows.

Trade war worries have already weighed on the yuan, which hit a one-year low on Thursday.

Focus on small, medium businesses

A key focus is on small- and medium-sized enterprises (SMEs), which account for 80 percent of all jobs in China, and have suffered from rising borrowing costs and a shrinking credit pool amid Beijing’s three-year-long crackdown on off-balance sheet financing and a corporate debt build-up.

A trader at a state-run copper smelter in southern China told Reuters his firm has resorted to selling inventory to raise cash in light of the tougher financing conditions.

“Banks give, but the cost has gone up,” said the trader, who declined to be identified as he was not authorized to comment on his firm’s finances.

While the PBOC did not respond to faxed questions about its plans, a Shanghai-based trader at an Asian bank said the bond market had seen a notable pick-up in the volume of trade of LGFV debt.
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The Trump administration wants to scrap automatic federal protection for threatened plants and animals, a move that would anger environmentalists but please industry.

A proposal unveiled Thursday would no longer grant threatened species the same instant protection given to endangered species. It would also limit what can be declared a critical habitat for such plants and animals.

Officials with the Interior Department and Fish and Wildlife Service said Thursday that they wanted to streamline regulations. They said current rules under the Endangered Species Act were inconsistent and confusing.

Deputy Interior Secretary David Bernhardt said the new rules would still be very protective of endangered animals.

“At the same time, we hope that they ameliorate some of the unnecessary burden, conflict and uncertainty that is within our current regulatory structure,” he told reporters.

But conservationists called the changes a “wrecking ball” and a gift to big businesses.

“They could decide that building in a species habitat or logging in trees where birds nest doesn’t constitute harm,” the Center for Biological Diversity’s Noah Greenwald said.

Industries such as logging, mining and oil drilling have long complained that the Endangered Special Act has stopped them from gaining access to new sources of energy and has stifled economic development.
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The financial leaders of the world’s 20 biggest economies meet in Buenos Aires this weekend for the first time since long-simmering trade tensions burst into the open when China and the United States put tariffs on $34 billion of each other’s goods.

The United States will seek to persuade Japan and the European Union to join it in taking a more aggressive stance against Chinese trade practices at the G-20 meeting of finance ministers and central bank presidents, according to a senior U.S. Treasury Department official who spoke on condition on anonymity.

But those efforts will be complicated by frustration over U.S. steel and aluminum import tariffs on the EU and Canada. Both responded with retaliatory tariffs in an escalating trade conflict that has shaken markets and threatens global growth.

“U.S. trading partners are unlikely to be in a conciliatory mood,” said Eswar Prasad, international trade professor at Cornell University and former head of the International Monetary Fund’s China Division. “[U.S.] hostile actions against long-standing trading partners and allies have weakened its economic and geopolitical influence.”

At the close of the last G-20 meeting in Argentina in March, the financial leaders representing 75 percent of world trade and 85 percent of gross domestic product released a joint statement that rejected protectionism and urged “further dialogue,” to little concrete effect.

Since then, the United States and China have slapped tariffs on $34 billion of each other’s imports and U.S. President Donald Trump has threatened further tariffs on $200 billion worth of Chinese goods unless Beijing agrees to change its intellectual property practices and high-technology industrial subsidy plans.

Trump has said the U.S. tariffs aim to close the $335 billion annual U.S. trade deficit with China.

U.S. Treasury Minister Steven Mnuchin has no plans for a bilateral meeting with his Chinese counterpart in Buenos Aires, a U.S official said this week.

Growth concerns

Rising trade tensions have led to concerns within the Japanese government over currency volatility, said a senior Japanese G-20 official who declined to be named. Such volatility could prompt an appreciation in the safe-haven yen and threaten Japanese exports.

Trump’s metals tariffs prompted trade partners to retaliate with their own tariffs on U.S. goods ranging from whiskey to motorcycles. The United States has said it will challenge those tariffs at the World Trade Organization.

The EU finance ministers signed a joint text last week that will form their mandate for this weekend’s meeting, criticizing “unilateral” U.S. trade actions, Reuters reported. The ministers will stress that trade restrictions “hurt everyone,” a German official said.

In a briefing note prepared for the G-20 participants, the International Monetary Fund said if all of Trump’s threatened tariffs — and equal retaliation — went into effect, the global economy could lose up to 0.5 percent of GDP, or $430 billion, by 2020.

Global growth also may have peaked at 3.9 percent for 2018 and 2019, and downside risks have risen due to the tariff spat, the IMF said.

“While all countries will ultimately be worse off in a trade conflict, the U.S. economy is especially vulnerable,” IMF Managing Director Christine Lagarde wrote in a blog post. “Policymakers can use this G-20 meeting to move past

self-defeating tit-for-tat tariffs.”

Trade is not on host country Argentina’s published agenda for the July 21-22 ministerial, which focuses on the “future of work” and infrastructure finance. But it will likely be discussed during a slot devoted to risks facing the global

economy, much as in March, according to an Argentine official involved in G-20 preparations, who asked not be named.
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The number of Americans filing for unemployment benefits dropped last week to its lowest point in more than 48 years as the labor market strengthens further, but trade tensions are casting a shadow over the economy’s outlook.

Other data on Thursday showed manufacturing activity in the mid-Atlantic region accelerated in July amid a surge in orders received by factories. But the Philadelphia Federal Reserve survey also showed manufacturers paying more for inputs and less upbeat about business conditions over the next six months.

Fewer manufacturers planned to increase capital spending, suggesting trade tensions, marked by tit-for-tat import tariffs between the United States and its trade partners, including China, Canada, Mexico and the European Union, could be starting to hurt business sentiment.

The survey came on the heels of the Federal Reserve’s Beige Book report on Wednesday, showing manufacturers in all districts worried about the tariffs and reporting higher prices and supply disruptions, which they blamed on the new trade policies.

“Yesterday’s Beige Book and the recent decline in the investment intentions balance in the Philly Fed survey show that escalating trade tensions are starting to have a material impact on companies’ confidence about the future,” said Brian Coulton, chief economist at ratings agency Fitch.

Increase had been forecast

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 207,000 for the week ended July 14, the lowest reading since early December 1969, the Labor Department said. Economists polled by Reuters had forecast claims rising to 220,000 in the latest week.

The second straight weekly decline in claims, however, likely reflects difficulties in adjusting the data for seasonal fluctuations around this time of the year, when motor vehicle manufacturers shut assembly lines for annual retooling.

The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,750 to 220,500 last week.

The dollar firmed against a basket of currencies. Stocks on Wall Street were lower, while prices for U.S. Treasury securities rose.

​Worker shortage

The claims data covered the survey week for the nonfarm payrolls component of July’s employment report. The four-week average of claims dipped 500 between the June and July survey periods, suggesting solid job growth this month.

The economy created 213,000 jobs in June, with the unemployment rate rising two-tenths of a percentage point to 4.0 percent as more Americans entered the labor force, in a sign of confidence in their job prospects.

Federal Reserve Chairman Jerome Powell told lawmakers this week that with appropriate monetary policy, the job market will remain strong “over the next several years.”

The labor market is viewed as being near or at full employment. There were 6.6 million unfilled jobs in May, an indication that companies cannot find qualified workers.

That was reinforced by the Beige Book, which showed worker shortages persisting in early July across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, information technology professionals and truck drivers.

Thursday’s survey from the Philadelphia Fed showed its business conditions index jumped to a reading of 25.7 in July from 19.9 in June. The survey’s measure of new orders increased to 31.4 from a reading of 17.9 in June.

Prices paid index jumps

But its gauge of factory employment fell, as did the average workweek. Manufacturers also continued to report higher prices for both purchased inputs and their own manufactured goods. The survey’s prices paid index soared to 62.9 this month, the highest level since June 2008, from 51.8 in June. The index has risen 30 points since January. Sixty-three percent of manufacturers in the region reported paying more for inputs this month compared with 54 percent in June.

The price increases are likely related to tariffs on steel and aluminum imports, which were imposed by the Trump administration to protect domestic industries from what it says is unfair foreign competition.

Wednesday’s Beige Book mentioned a machinery manufacturer in the Philadelphia area who described the effects of the steel tariffs as “chaotic to its supply chain, disrupting planned orders, increasing prices and prompting some panic buying.”

The Philadelphia survey’s index for future activity decreased for the fourth straight month. Capital spending plans over the next six months also fell as did intentions to hire more factory workers. 

“Further escalation could create worse conditions and this remains a downside risk to the otherwise positive outlook over the next year,” said Adam Ozimek, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
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Commerce Secretary Wilbur Ross said Thursday it was “too early” to say if the United States would impose tariffs of up to 25 percent on imported cars and parts, a suggestion that has been met with harsh criticism from the industry.

The department opened an investigation in May into whether imported autos and parts pose a national security risk and was holding a hearing on the probe Thursday, taking testimony from auto trade groups, foreign governments and others.

Ross’ remarks came at the start of the public hearing, which he said was aimed at determining “whether government action is required to assure the viability of U.S. domestic production.”

A group representing major automakers told Commerce on Thursday that imposing tariffs of 25 percent on imported cars and parts would raise the price of U.S. vehicles by $83 billion annually and cost hundreds of thousands of jobs.

Automakers say there is “no evidence” that auto imports pose a national security risk, and that the tariffs could actually harm U.S. economic security.

They are also facing higher prices after tariffs were imposed on aluminum and steel.

The Alliance of Automobile Manufacturers, whose members include General Motors Co, Volkswagen AG and Toyota Motor Corp, warned on the impact of the tariffs.

“Higher auto tariffs will harm American families and workers, along with the economy” and “would raise the price of an imported car nearly $6,000 and the price of a U.S.-built car $2,000,” said Jennifer Thomas, a vice president for the group.

She noted that the U.S. exports more than $100 billion of autos and parts annually to other countries, while “there is a long list of products that are largely no longer made in the U.S., including TVs, laptops, cellphones, baseballs, and commercial ships.”

No automaker or parts company has endorsed the tariffs, and they have pointed to near-record sales in recent years.

Warnings

Jennifer Kelly, the United Auto Workers union research director, noted that U.S. auto production has fallen from 12.8 million vehicles in 2000 to 11.2 million in 2017 as the sector has shed about 400,000 jobs over that period, with many jobs moving to Mexico or other low-wage countries.

“We caution that any rash actions could have unforeseen consequences, including mass layoffs for American workers, but that does not mean we should do nothing,” she said, suggesting “targeted measures.”

Many firms that sell vintage vehicles also warned that the tariffs could devastate the industry because many older cars need parts that are only made outside the United States. Polaris Industries Inc warned that off-road vehicles could also be inadvertently covered by the tariffs.

A study released by a U.S. auto dealer group warned that the tariffs could cut U.S. auto sales by 2 million vehicles annually and cost more than 117,000 auto dealer jobs, or about 10 percent of the workforce.

President Donald Trump has repeatedly suggested he would move quickly to impose tariffs, even before the government launched its probe.

‘Tremendous retribution’

“We said if we don’t negotiate something fair, then we have tremendous retribution, which we don’t want to use, but we have tremendous powers,” Trump said Wednesday. “We have to — including cars. Cars is the big one. And you know what we’re talking about with respect to cars and tariffs on cars.”

The European Union, Japan, Canada and Mexico, along with many automotive trade groups, are among 45 witnesses scheduled to testify during the daylong hearing.

The Commerce Department said earlier this week it aimed to complete the investigation “within a couple months.”
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U.S. President Donald Trump said Thursday that he was not pleased about the U.S. Federal Reserve’s decision to increase interest rates.

“I’m not thrilled,” Trump said in a CNBC interview that aired Friday. His remarks followed two interest rate hikes this year and Fed suggestions of two more increases before the end of the year.

“Because we go up and every time you go up, they want to raise rates again. I don’t really — I am not happy about it,” he said. “But at the same time, I’m letting them do what they feel is best.”

Presidents rarely intervene in developments involving the Fed, which sets the benchmark interest rate. Higher interest rates make it more expensive to borrow money, which slows economic activity. The rate hikes are intended to keep inflation from damaging the economy. Earlier, during a severe recession, the Fed slashed interest rates nearly to zero in a bid to boost economic growth.

Trump expressed frustration in the interview that the central bank’s actions could disrupt U.S. economic expansion.

Trump sought to give the economy a boost when he signed into law a major tax cut late last year. The law cut the corporate rate from 35 percent to 21 percent and lowered taxes on individual incomes as well.
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Luxury air travel faster than the speed of sound: A US start-up is aiming to revive commercial supersonic flight 50 years after the ill-fated Concorde first took to the skies.

Blake Scholl, the former Amazon staffer who co-founded Boom Supersonic, delivered the pledge this week in front of a fully-restored Concorde jet at the Brooklands aviation and motor museum in Weybridge, southwest of London.

The company aims to manufacture a prototype 55-seater business jet next year but its plans have been met with scepticism in some quarters.

“The story of Concorde is the story of a journey started but not completed — and we want to pick up on it,” Scholl said at an event that coincided with the nearby Farnborough Airshow.

“Today … the world is more linked than it’s ever been before and the need for improved human connection has never been greater.

“At Boom, we are inspired at what was accomplished half a century ago,” he added, speaking in front of a former British Airways Concorde.

Boom Supersonic’s early backers include Richard Branson and Japan Airlines, and other players are eyeing the same segment.

Speaking to AFP at Farnborough on Wednesday, Scholl indicated that the air tickets could be beyond the reach of some.

“What we’ve been able to do thanks to advances in aerodynamics and materials and engines is offer a high speed flight for the same price you pay in business class today,” he said. 

He said this works out to around $5,000 (4,300 euros) round-trip across the Atlantic.

“Now I know that might sounds like a lot, because it is, but it’s actually the same price you pay for a lay flat bed on airlines today,” he said.

‘Baby Boom’

Boom Supersonic’s aircraft, dubbed Baby Boom, is expected by the company to fly for the first time next year.

The company is making its debut at Farnborough and hopes to produce its new-generation jets in the mid-2020s or later, with the aim of slashing journey times by half.

The proposed aircraft has a maximum flying range of 8,334 kilometres (5,167 miles) at a speed of Mach 2.2 or 2,335 kilometres per hour.

If it takes off, it would be the first supersonic passenger aircraft since Concorde took its final flight in 2003.

The Concorde was retired following an accident in 2000 in which a Concorde crashed shortly after takeoff from Paris, killing 113 people.

“The one accident that did happen on Concord actually happened on the runway,” Scholl told AFP on Wednesday.

“It had nothing to do with high-speed flight so there’s no actual barrier to creating a highly safe, efficient supersonic airplane and we have super high standards for safety.

“We’ll be going through the same safety testing process that every other aircraft goes through and the FAA (US Federal Aviation Administration) and EASA (European Aviation Safety Agency) will not let our airplane fly unless we pass a very high safety bar.”Some analysts meanwhile remain sceptical over the push back into supersonic, with consumer demand booming for cheap low-cost carriers.

“Supersonic is not what passengers or airlines want right now,” said Strategic Aero analyst Saj Ahmad.

Ahmad said supersonic jets were “very unattractive” because of high start-up development costs, considerations about noise pollution and high prices as well as limited capacity.

‘Untried and untested’

Independent air transport consultant John Strickland noted supersonic travel was unproven commercially.

“If there is an economic downturn or something happens where the market for business class traffic drains away, then you have nothing else left to do with that aircraft,” Strickland said.

“I think it’s going to be some time before we see whether it can establish a large viable market … in the way that Concorde never managed to do.”

These concerns have not stopped interest from other players.

US aerospace giant Boeing had last month unveiled its “hypersonic” airliner concept, which it hopes will fly at Mach 5 — or five times the speed of sound — when it arrives on the scene in 20 to 30 years.

And in April, NASA inked a deal for US giant Lockheed Martin to develop a supersonic “X-plane.”
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China bolstered ties with the European Union this week with more large markets in the pipeline to keep its exports healthy as the United States levies import tariffs, analysts say.

 

At the 20th China-EU leaders’ meeting Monday in Beijing, Chinese President Xi Jinping said his country stands ready to promote bilateral economic development. Premier Li Keqiang noted at the summit China had recently cut import tariffs on autos, medicine and consumer goods from the EU.

 

The 28-member European Union, including some of the world’s wealthiest countries, received $437 billion in exports with China last year, which accounted for 20 percent of the bloc’s total shipments from overseas.

 

Officials in Beijing have also pledged to ease trade friction with India this year.

 

“The EU is the second largest trading partner to China,” said Felix Yang, an analyst with the financial advisory firm Kapronasia in Shanghai. “While Trump’s tariffs hit the prospects of the Chinese economy, the EU is becoming a more important market for China.”

 

A reserve in case of trade war

 

China and the United States have headed toward what economists call a “trade war” for much of the year. U.S. President Donald Trump believes China trades unfairly, giving it a $375 billion trade surplus in 2017.

 

This month Trump approved import tariffs of 25 percent on more than 800 Chinese products. The taxes, already in effect, hit Chinese goods worth about $34 billion. Trump has threatened tariffs on goods worth another $450 billion, and China’s commerce ministry said it would make a “necessary counterattack.”

China counts the United States as its No. 1 trading partner, but major markets such as the EU, India and Southeast Asia are high on the list. The summit on Monday with EU leaders should help China solidify EU trade, economists say.

 

“You have to explore opportunities to grow your next largest set of trading partners, and this is where it’s really all about,” said Song Seng Wun, an economist with the private banking unit of CIMB in Singapore. “In case the trade fight with the U.S. were to escalate, it’s good your trading relationship with your remaining partners can improve and hopefully over time pick up some of the slack.”

 

China will need Europe to buy technology that the United States might sell if relations were better, said Liang Kuo-yuan, president of Taipei-based think tank Polaris Research Institute. The threat of a trade war now “slows” China’s acquisition of tech for R&D, he said.

 

“If they can’t develop their own, they would still look for Western technology,” Liang said. “At that point, the EU becomes a major source. If the route to Europe hasn’t been blocked, then the slowdown wouldn’t be so slow.”

 

The European Union will avoid a trade war, European Council President Donald Tusk said after the summit. But the bloc that has its own trade deficit with China advocates new global trade rules and World Trade Organization reforms.

 

Europe, like the United States, worries about China’s protection of technology and other intellectual property rights. In April the EU brought a case to the World Trade Organization against Chinese legislation that it said “undermines the intellectual property rights” of European companies.

The EU wants to “bravely and responsibly reform the rules-based international order,” Tusk was quoted saying on the EU’s website. “This is why I am calling on our Chinese hosts… to jointly start this process from a reform of the WTO.”

 

China voiced support for the WTO reforms at the Monday summit, the European side said in a statement.

 

India and Southeast Asia

 

China’s commerce minister said in April his country would keep working with India to ease trade differences caused by market access issues — resulting in a deficit for India.

Southeast Asia might be next for lighter treatment, Song said. China and the 10-member Association of Southeast Asian Nations are finishing talks on a 16-nation Regional Cooperation Economic Framework, a trade pact that some see as an antidote to the Trans Pacific Partnership deal that Trump exited in 2017.

 

Eventually other countries may join China in facing the United States as many expect trade problems, said Zhao Xijun, associate dean of the School of Finance at Renmin University of China. A tariff battle with China could spill into other parts of Asia, and Trump has rattled other countries with an “America First” policy that’s often regarded abroad as protectionist.

 

China’s trade ties with Japan, South Korea, India and Southeast Asia will “continuously be promoted,” Zhao said. Those countries link to the same supply chain with its own “rules” that cannot be broken by a single country, he said.

 

“It’s not such a simple matter,” Zhao said. “The supply chain has its own rules. It’s not something the American government can break because it says it wants to break it.”
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Boeing has received a $3.9 billion contract to build two 747-8 aircraft for use as Air Force One by the U.S. president, due to be delivered by December 2024 and painted red, white and blue, officials said on Tuesday.

The Pentagon announced the decision on Tuesday, saying Seattle-based Boeing’s previously awarded contract for development work had been expanded to include design, modification and fielding of two mission-ready presidential 747-8 aircraft.

The contract followed the outlines of the informal deal reached between Boeing and the White House in February. That agreement came after President Donald Trump objected to the $4 billion price tag of a previous Air Force One deal, complaining in a Twitter post that “costs are out of control” and adding “Cancel order!”

The White House said in February the new deal would save taxpayers more than $1.4 billion, but those savings could not be independently confirmed.

Air Force budget documents released in February for fiscal year 2019 disclosed a $3.9 billion cost for the two-aircraft program. The same 2018 budget document, not adjusted for inflation, showed the price at $3.6 billion.

The Boeing 747-8s are designed to be an airborne White House able to fly in worst-case security scenarios, such as nuclear war, and are modified with military avionics, advanced communications and a self-defense system.

A congressional official briefed on Tuesday about the deal indicated it was little changed from the informal agreement reached in February, calling for two 747-8 aircraft to be built for $3.9 billion and delivered by December 2024.

Trump told CBS in an interview that aired on Tuesday that the new model Air Force One would be updated on the inside and have a different exterior color scheme from the current white and two shades of blue dating back to President John F. Kennedy’s administration.

“Red, white and blue,” Trump said. “Air Force One is going to be incredible. It’s going to be the top of the line, the top in the world. And it’s going to be red, white and blue, which I think is appropriate.”
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European Commission President Jean-Claude Juncker will visit U.S. President Donald Trump in Washington on July 25 to discuss strained trade ties. “President Juncker and President Trump will focus on improving transatlantic trade and forging a stronger economic partnership,” the Commission said in a statement on Tuesday that announced the date.

The United States imposed import tariffs on EU steel and aluminum at the start of June and has also threatened to increase duties on EU cars.

Trump met Juncker last week in Brussels during a meeting of the NATO military alliance, firing off a Twitter salvo on the eve of his visit.

“The European Union makes it impossible for our farmers and workers and companies to do business in Europe (U.S. has a $151 billion trade deficit), and then they want us to happily defend them through NATO, and nicely pay for it. Just doesn’t work!”

EU officials have been trying to lower expectations over what Juncker and Trade Commissioner Cecilia Malmstrom can achieve in Washington, noting Trump’s rejection of many European arguments at last month’s G-7 summit in Canada.

However, with Trump threatening to target the politically and economically more sensitive car industry, the Commission, which conducts trade negotiations for all 28 EU states, is hoping to at least give Trump pause for thought.

“If we can instill some second thoughts even, that would be a success,” an EU official said. “Is he really comfortable launching a $100-billion trade war over cars?”
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Egypt on Tuesday announced the names of the first five state companies that will offer shares this year as part of a plan to boost public finances through minority offerings on the Cairo exchange.

The companies are Alexandria Mineral Oils Company, Eastern Tobacco, Alexandria Container and Cargo Handling, Abou Kir Fertilizers, and Heliopolis Housing, a cabinet statement said.

The state owns swathes of Egypt’s economy, including three of its largest banks, much of its oil industry as well as its real estate sector.

Egypt in late-2016 kicked off an ambitious three-year $12 billion IMF loan program tied to tough economic reforms that have included deep subsidy cuts and tax hikes.

The IMF has urged Cairo to reduce the role of its public sector in order to clear room in the economy for private sector growth.

The cabinet statement did not specify the exact timing of the share offerings or the size of the stakes to be offered, but the government has said previously that the stakes would range from 15-30 percent and begin in the coming months.

Egypt earlier this year said it plans to offer stakes in a total of 23 state companies to raise 80 billion Egyptian pounds ($4.5 billion) over the next two-and-a-half years.

The list includes companies already traded on the exchange, such as the five named on Tuesday, as well as others that will hold an initial public offering. ($1 = 17.8500 Egyptian pounds)
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The EU is set to fine US internet giant Google several billion euros this week for freezing out rivals of its Android mobile phone system, sources said, in a ruling that risks fresh tensions with Washington.

Competition Commissioner Margrethe Vestager is expected to say on Wednesday that Google abused its dominant position in the market by making tie-ups with phone makers like South Korea’s Samsung and China’s Huawei.

The long-awaited decision comes as fears of a transatlantic trade war mount due to President Donald Trump’s shock decision to impose tariffs on European steel and aluminum exports.

Two European sources told AFP the fine would be “several billion euros” without giving further details. EU rules say Google could be fined up to 10 percent of parent company Alphabet’s annual revenue, which hit $110.9 billion in 2017.

“The fine is based on the length of the infraction, but also on whether anti-trust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not,” said another source close to the matter.

The European Commission, the 28-nation EU’s executive arm, refused to comment.

Denmark’s Vestager has targeted a series of Silicon Valley giants in her four years as the 28-nation European Union’s anti-trust chief, winning praise in Europe but angering Washington.

The case against Android is the most significant of three complaints by the EU against the search titan, which has already been hit with a record-breaking 2.4-billion-euro fine in a Google shopping case.

Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant’s dominance of Internet search across Europe, where it commands about 90 percent of the market.

‘Financial incentives’

In the Android file, the European Commission has accused Google of requiring mobile manufacturers such as Samsung and Huawei to pre-install its search engine and Google Chrome browser on phones, and to set Google Search as the default, as a condition of licensing some Google apps.

Google Search and Chrome are as a result pre-installed on the “significant majority” of devices sold in the EU, the commission says.

The complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.

Google also gave “financial incentives” to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

Vestager’s other scalps include Amazon and Apple.

The EU’s biggest ever punishment targeted Apple in 2016 when it ordered the iconic maker of iPhones and iPads to pay Ireland 13 billion euros ($16 billion) in back taxes that it had avoided by a tax deal with Dublin.

The EU has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump’s 2016 election campaign.

The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.

Transatlantic tensions are also high after Trump berated NATO allies over defense spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president’s pull-out from the Iran nuclear agreement and Paris climate deal.

 

 

 
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Amazon is hoping customers don’t see any more dogs, after early problems on Prime Day meant people trying to shop got only images of the cute canines delivering an apologetic message.

Amazon’s website ran into some early snags Monday on its much-hyped Prime Day, an embarrassment for the tech company on the shopping holiday it created.

Shoppers clicking on many Prime Day links after the 3 p.m. ET launch in the U.S. got only images of dogs — some quite abashed-looking — with the words, “Uh-oh. Something went wrong on our end.” People took to social media to complain that they couldn’t order items.

By about 4:30 p.m., many Prime Day links were working, and Amazon said later Monday that it was working to resolve the glitches.

In an email to The Associated Press, it said “many are shopping successfully” and that in the first hour of the 36-hour Prime Day in the U.S., customers ordered more items than in the same time frame last year.

Still, the hiccups could mute sales and send shoppers elsewhere during one of Amazon’s busiest sales periods that’s also a key time for it to sign up new Prime members. Shoppers have lots of options, as many other chains have offered sales and promotions to try to capitalize on the Prime Day spending.

Analyst Sucharita Mulpuru-Kodali at Forrester Research called the glitch a “huge deal.”

“This is supposed to be one of their biggest days of the year,” she wrote in an email. “I am shocked this caught them off guard. But I guess the lesson is to not have a big unveil during the middle of the day when everyone comes to your site all at once.”

Amazon, which recently announced that Prime membership would be getting more expensive, was hoping to lure in shoppers by focusing on new products and having Whole Foods be part of the process. It was also hoping parents would use the deals event to jump start back-to-school shopping.

Jason Goldberg, senior vice president of commerce at Publicis.Sapient, noted that the problems could turn off shoppers for a while, particularly those who planned to sign up for Prime membership.

“If you were planning to find Prime deals to lower the cost of back-to-school [purchases], you’re almost certainly going back to your traditional venue of choice,” he said.

Goldberg noted that it’s easy for Amazon to extend deals on its own devices and brands, but trickier for it to extend deals for its third-party sellers because they signed up for different promotional slots.

While Amazon doesn’t disclose sales figures for Prime Day, Deborah Weinswig, CEO of Coresight Research, had estimated that it will generate $3.4 billion in sales worldwide, up from an estimated $2.4 billion last year. Prime Day also lasts six hours longer than last year.

In Europe, Amazon employees were using Prime Day to draw attention to their complaints against the company. Unions in Spain said most of the company’s 2,000 permanent staff there were on a three-day strike on Tuesday.

Meanwhile, other retailers like Macy’s, Nordstrom, Best Buy, Walmart and Target have rolled out their own promotions, said Charlie O’Shea, lead retail analyst at Moody’s.

“Brick-and-mortar retailers know that they have little choice but to continue offering their own deep discounts, which is evident in the proliferation of Black Friday in July' deals that are being launched earlier each year, as well as variousprice match’ offers,” he said in a note earlier Monday.

Amazon created Prime Day in 2015 to mark its 20th anniversary, and its success has inspired other e-commerce companies to invent shopping holidays. Online furniture seller Wayfair introduced Way Day in April, becoming its biggest revenue day ever.

Prime Day also usually helps boost the number of Prime memberships. Amazon disclosed for the first time this year that it had more than 100 million paid Prime members worldwide. It’s hoping to keep Prime attractive for current and would-be subscribers after raising the U.S. annual membership fee by 20 percent to $119 and to $12.99 for the month-to-month option.

“It has been one of the best vehicles” for signing up members, said Goldberg.

 
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The head of Cambodia’s tax department, Kong Vibol, could face jail for lying to the Australian Securities and Investments Commission (ASIC) if sanctioned, the corporate regulator has told VOA.

A number of questions were raised about the shadowy business dealings of Kong and other powerful, politically connected Cambodians in an investigation aired by Al Jazeera’s program 101 East last week.

Kong, who as director-general of the General Department of Taxation clearly lives in Cambodia, falsely claimed to reside at a house in Melbourne in ASIC records seen by VOA.

ASIC Communication Manager Angela Friend told VOA in an emailed response that it was an offense to provide false information to the Australian corporate watchdog under the Corporations Act.

“A breach of this provision is punishable with 100 penalty units or imprisonment for 2 years, or both. The current value of a penalty unit is $210,” she wrote in the response.

She confirmed that under the same law the director of such a company must ordinarily reside in Australia but said ASIC “does not generally comment on whether it is investigating a particular matter”.

VOA has tried to contact Kong for days but has not been able to reach him. Kong falsely claimed in records for his company Panhariddh Pty. Ltd. to live in Noble Park, a suburb in Melbourne.

Dy Vichea, the deputy National Police chief and son-in-law of Prime Minister Hun Sen who Al Jazeera also alleged had lied about his residential address to ASIC, also could not be reached.

When grilled by Al Jazeera in an on camera interview about why he appeared to have lied to ASIC, Kong first claimed the business predated his working life in Cambodia.

After he was flatly told that was not true Kong then said he had transferred ownership of the company before finally declaring the firm had closed down “a long time ago”.

“I got nothing to do in Australia,” he said.

Kong was also grilled about a major petroleum company owned by his family that Cambodian government records showed failed to register for tax until 2017.

Repeatedly he asked how such records had been obtained and claimed both the ASIC register and the official Cambodian company registry were wrong, including the listed address for Bright Victory Mekong Petroleum Import Export Co., Ltd., which is Kong’s own house.

“We sold a long time ago. I think maybe they use my address before but they never been and I don’t know when they sold,” he told Al Jazeera.

Kong, the program said, owned millions of dollars worth of property in Australia as well and multiple businesses, despite earning a salary of less than $1,000 a month.

He also set up investment companies and trusts with an Australian couple who were soon after convicted of defrauding the Australian Tax Office of more than $1.8 million, the program said.

An affidavit believed to have been signed at the Australian embassy in Phnom Penh revealed that at one point he transfered $1.2 million to one of the same couple’s trusts.

The program also featured a former Cambodian government advisor, Kalyan Ky, who said she had warned the Australian Embassy in Phnom Penh and the government that senior Cambodian officials were laundering proceeds of criminal activity through Australia.

A spokesperson for Australia Department of Foreign Affairs and Trade who declined to be named said in an emailed response that the department referred any information about potential criminal conduct under Australian laws to relevant law enforcement bodies.

“We strongly refute any claims that the Australian Government enables or condones illicit activities, or does not take allegations of corruption and other criminal conduct seriously,” the spokesperson said.

A man answering the phone of Cambodia’s Anti-Corruption Unit chief Om Yentieng said the number was incorrect.

The office of Kelly O’Dwyer, Australia’s Minister for Revenue and Financial Services, and the Australian Federal Police did not respond to VOA inquiries.

Preap Kol, Executive Director of Transparency International Cambodia, told VOA in an email that no one in Cambodia would dare question any wrongdoing by such high level officials

“Integrity among many public officials here in Cambodia are questionable. So they get used to being perceived that way. People here are powerless, so they would not even dare to ask such a question,” he said.

Kong’s claim that the Cambodia’s business registry was wrong was “hard to believe” he said, stressing though that he did not know the reality behind that situation.

“Cambodia does not have strict laws or regulations on conflict of interest like in many other countries. So it this is quite a normal practice here,” he said, adding it was inconceivable such practices would change under the current administration.

Hong Lim, a Cambodian/Australian MP in the parliament of the Australian State of Victoria, said some individuals exposed in the Al Jazeera report had spread fear of repercussions in Melbourne communities.

“These are the types of characters we are dealing with now in Melbourne,” he said.

Leng Len contributed to this report

 
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A former official at a Venezuelan state-run electric company pleaded guilty on Monday to U.S. charges that he participated in a scheme to solicit bribes in exchange for helping vendors win favorable treatment from state oil company PDVSA.

Luis Carlos De Leon Perez, 42, pleaded guilty in federal court in Houston to conspiring to violate the Foreign Corrupt Practices Act and to conspiring to commit money laundering, the U.S. Justice Department said.

He became the 12th person to plead guilty as part of a larger investigation by the Justice Department into bribery at Petroleos de Venezuela SA that became public with the arrest of two Venezuelan businessmen in December 2015.

The two men were Roberto Rincon, who was president of Tradequip Services & Marine, and Abraham Jose Shiera Bastidas, the manager of Vertix Instrumentos. Both pleaded guilty in 2016 to conspiring to pay bribes to secure energy contracts.

De Leon is scheduled to be sentenced on Sept. 24. His lawyers did not respond to requests for comment.

De Leon was arrested in October 2017 in Spain and was extradited to the United States after being indicted along with four other former Venezuelan officials on charges they solicited bribes to help vendors win favorable treatment from

PDVSA.

An indictment said that from 2011 to 2013 the five Venezuelans sought bribes and kickbacks from vendors to help them secure PDVSA contracts and gain priority over other vendors for outstanding invoices during its liquidity crisis.

Prosecutors said De Leon was among a group of PDVSA officials and people outside the company with influence at it who solicited bribes from Rincon and Shiera. De Leon worked with those men to then launder the bribe money, prosecutors said.

De Leon also sought bribes from the owners of other energy companies and directed some of that money to PDVSA officials in order help those businesses out, prosecutors said.

Among the people indicted with De Leon was Cesar David Rincon Godoy, a former general manager at PDVSA’s procurement unit Bariven. He pleaded guilty in April to one count of conspiracy to commit money laundering.

Others charged included Nervis Villalobos, a former Venezuelan vice minister of energy; Rafael Reiter, who worked as PDVSA’s head of security and loss prevention; and Alejandro Isturiz Chiesa, who was an assistant to Bariven’s president.

Villalobos and Reiter were, like De Leon, arrested in Spain, where they remain pending extradition, the Justice Department said. Isturiz remains at large.
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The United States launched five separate World Trade Organization dispute actions on Monday challenging retaliatory tariffs imposed by China, the European Union, Canada, Mexico and Turkey following U.S. duties on steel and aluminum.

The retaliatory tariffs on up to a combined $28.5 billion worth of U.S. exports are illegal under WTO rules, U.S. Trade Representative Robert Lighthizer said in a statement.

“These tariffs appear to breach each WTO member’s commitments under the WTO Agreement,” he said. “The United States will take all necessary actions to protect our interests, and we urge our trading partners to work constructively with us on the problems created by massive and persistent excess capacity in the steel and aluminum sectors.”

Lighthizer’s office has maintained that the tariffs the United States has imposed on imports of steel and aluminum are acceptable under WTO rules because they were imposed on the grounds of a national security exception.

Mexico said it would defend its retaliatory measures, saying the imposition of U.S. tariffs was “unjustified.”

“The purchases the United States makes of steel and aluminum from Mexico do not represent a threat to the national security,” Mexico’s Economy Ministry said in a statement.

“On the contrary, the solid trade relationship between Mexico and the U.S. has created an integrated regional market where steel and aluminum products contribute to the competitiveness of the region in various strategic sectors, such as automotive, aerospace, electrical and electronic,” the ministry added.

Lighthizer said last month that retaliation had no legal basis because the EU and other trading partners were making false assertions that the U.S. steel and aluminum tariffs are illegal “safeguard” actions intended to protect U.S. producers.
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Democratic Republic of Congo’s plan to drill for oil in national parks could leave thousands of farmers and fishermen who rely on the land in a struggle to survive, rights groups said Monday.

The central African country announced last month that it was taking steps toward declassifying parts of Virunga and Salonga national parks, both recognized as world heritage sites by the United Nations, to allow for oil exploration.

The parks, which together cover an area about the size of Switzerland, are among the world’s largest tropical rainforest reserves and home to rare species including forest elephants.

Allowing drilling in the parks would cause a loss of biodiversity, release huge amounts of carbon dioxide into the atmosphere and pollute water that thousands of local people use for fishing and farming, according to several rights groups.

Congolese state spokesman Lambert Mende told Reuters that the government will study the potential impact of oil drilling on local communities before they proceed.

The government has previously defended its right to authorize drilling anywhere in the country and said it is mindful of environmental considerations, such as protecting animals and plants, in the two national parks.

“There are lake-shore communities, especially in Virunga, that are very dependent on fishing and on the park’s integrity,” said Pete Jones of environmental advocacy group Global Witness.

“That really needs to be taken into account and doesn’t seem to be part of the debate that’s happening, which is a shame,” he told Reuters.

Conservation group World Wildlife Fund (WWF) also said it is concerned about the impact of oil drilling on at least 50,000 people who benefit from the fishing industry in Virunga, and tens of thousands more who farm on the outskirts of the parks.

“The risks of pollution are clear and present. The fishing industry would suffer considerably if it gets to that point,” said Juan Seve, WWF country director in Congo.

The oil industry would be unlikely to create local jobs since specialists would be brought in from abroad, he added.

The U.N.’s cultural agency UNESCO has previously said that oil exploration should not be conducted at world heritage sites.
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