Venezuelan authorities arrested the acting president of Citgo, the U.S. subsidiary of state-owned Petroleos de Venezuela SA (PDVSA), along with five other senior executives Tuesday for alleged corruption.

Attorney General Tarek William Saab told a press conference that interim president Jose Pereira and other managers allegedly arranged contracts that put Citgo at a disadvantage. The company operates refineries in Illinois, Texas and Louisiana with a capacity of 749,000 barrels per day.

“They did it with total discretion, without even coordinating with the competent authorities,” Saab said. “This is corruption, corruption of the most rotten kind.”

The six were accused of misappropriation of public funds, association to commit crimes and legitimation of capital, among other crimes.

The other five detainees were identified as Tomeu Vadell, vice president of Refining Operations; Alirio Zambrano, vice president and general manager of the Corpus Christi Refinery; Jorge Toledo, Vice President of Supply and Marketing; Gustavo Cardenas, Vice President of Strategic Relations with Shareholders and Government, and Jose Luis Zambrano; Vice President of Shared Services.

Last month, a senior executive of PDVSA and a dozen officials were arrested for alleged embezzlement.

But members of the Venezuelan opposition argue that recent investigations do not demonstrate a genuine intention of the government to eradicate corruption, but only reflect internal struggles of PDVSA.

VOA Latin America contributed to this report.
…

The U.S. Justice Department is suing to stop AT&T’s multi-billion dollar bid to take over another communications giant, Time Warner, calling it illegal and likening it to extortion.

“The $108 billion acquisition would substantially lessen competition, resulting in higher prices and less innovation for millions of Americans,” a Justice Department statement said Monday.

“The combined company would use its control over Time Warner’s valuable and highly popular networks to hinder its rivals by forcing them to pay hundreds of millions of dollars more per year for the right to distribute those networks.”

CNN, HBO top Time Warner products

Time Warner’s products include CNN, HBO, TNT, The Cartoon Network, and Cinemax — these networks broadcast highly popular newscasts, movies, comedy and drama series, and sports.

AT&T and its subsidiary DirectTV distribute these programs, as well as others, thorough cable and satellite.

The Justice Department decries the possibility of AT&T not just controlling television productions, but also the means of bringing them into people’s homes.

In its lawsuit, it threw AT&T’s words right back at the communications giant, noting that AT&T recognizes that distributors with control over the shows “have the incentive and ability to use … that control as a weapon to hinder competition.”

It also cited a DirectTV statement saying distributors can withhold programs from their rivals and “use such threats to demand higher prices and more favorable terms.”

Assured transaction would be approved

AT&T’s CEO Randall Stephenson told reporters the Justice Department’s lawsuit “stretches the reach of anti-trust law to the breaking point.”

He said the “best legal minds in the country” assured AT&T that the transaction would be approved and said the government is discarding decades of legal precedent.

AT&T and Time Warner are not direct competitors, and AT&T says government regulators have routinely approved such mergers.

President Donald Trump has made no secret of his contempt for one of Time Warner’s crown jewels — CNN, the Cable News Network — because of his perception of CNN being a liberal biased provider of “fake news,” including direct attacks against his administration.

Trump vowed during last year’s presidential campaign to block the merger.

Stephenson called the matter “the elephant in the room,” saying he said he “frankly does not know” if the White House disdain for CNN is at the heart of the Justice Department lawsuit.

But he said a proposal that Time Warner sell-off CNN as part of a settlement with the Trump Justice Department would be a “non-starter.”
…

U.S. stocks are higher Monday as technology and industrial companies, banks and retailers all make modest gains. Drugmakers and other health care companies are trading lower. Companies that make opioid pain medications are down sharply after the government released a much higher estimate of the costs of the ongoing addiction crisis.

Keeping score

The Standard & Poor’s 500 index picked up 5 points, or 0.2 percent, to 2,584 as of 2:15 p.m. Eastern time. The Dow Jones industrial average gained 94 points, or 0.4 percent, to 23,452. The Nasdaq composite advanced 7 points, or 0.1 percent, to 6,789. The Russell 2000 index of smaller-company stocks edged up 6 points, or 0.4 percent, to 1,499.

Tech tie-up

Chipmaker Marvell Technology Group said it will buy competitor Cavium for $6 billion in the latest deal in the semiconductor industry. Cavium climbed $7.48, or 9.9 percent, to $83.31 and it is up 22 percent over the last two weeks on reports Marvell would make a bid. Marvell rose $1.02, or 5 percent, to $21.31.

Other technology companies climbed as well. IBM added $2.01, or 1.3 percent, to $150.98 and Applied Materials picked up $1.12, or 2 percent, to $57.61. Cisco Systems gained 55 cents, or 1.5 percent, to $36.45.

Retail rising again

Retailers continued to move higher. They climbed last week following solid quarterly reports from Wal-Mart, Gap and Ross Stores. That’s given investors hope that shoppers are ready to spend more money. Home improvement retailer Home Depot rose $2.68, or 1.6 percent, to $170.42 and clothing company PVH rose $2.90, or 2.2 percent, to $136.02. Sporting goods retailer Hibbett Sports, after a 15-percent surge Friday, added $1.85, or 10.8 percent, to $18.95.

General electric slide

Industrial companies rose, as 3M gained $2.56, or 1.1 percent, to $231.92 and Boeing added $2.39 to $264.65.

General Electric missed out on those gains as investors continued to wonder about the company’s direction. On Sunday, the Wall Street Journal said that directors with energy and financial backgrounds, as well as GE’s two longest-tenured directors, are likely to leave the board as it shifts its focus away from those industries. The company said earlier this month that it will reduce the number of directors to 12 from the current 18.

GE lost 24 cents, or 1.3 percent, to $17.97.

Drugmaker downturn

A White House group said the opioid drug epidemic cost the U.S. $504 billion in 2016, far larger than other recent estimates, and companies that make those pain medications traded sharply lower.

Last year a separate estimate said the crisis cost the country $78.5 billion in 2013, including lost productivity and health care and criminal justice spending. The Council of Economic Advisers said the new figure reflects the worsening crisis and that earlier figures didn’t calculate deaths or include the use of illegal drugs.

Teva Pharmaceutical Industries fell 77 cents, or 5.6 percent, to $13.07 and Allergan gave up $3.78, or 2.2 percent, to $171.10. Endo International lost 26 cents, or 3.5 percent, to $7.28. Insys Therapeutics shed 20 cents, or 3.6 percent, to $6.18. Executives including Insys’ founder and its former CEO have been charged with offering kickbacks to doctors to get them to prescribe its fentanyl spray Subsys. Its stock traded above $40 in mid-2015.

Merck-y future?

Merck stumbled after Genentech, a unit of Swiss drugmaker Roche, reported positive results from a study of its drug Tecentriq as a primary treatment for lung cancer. Genentech said patients who were given Tecentriq as part of their treatment regimen were less likely to die or see their cancer get worse.

The results could affect sales of Merck’s drug Keytruda and Bristol-Myers Squibb’s Opdivo. Merck fell $1.10, or 2 percent, to $54.10 and Bristol-Myers Squibb lost 66 cents, or 1.1 percent, to $60.63.

Energy

Benchmark U.S. crude fell 50 cents to $56.05 a barrel in New York. Brent crude, which is used to price international oils, dropped 67 cents, or 1.1 percent, to $62.05 a barrel in London.

Currencies

The dollar rose to 112.64 yen from 112.13 yen late Friday. The euro slipped to $1.1737 from $1.1796 after a group of German political parties couldn’t agree to form a government, which might mean new elections are on the way. A weaker euro is good for companies that export a lot of products, and the German DAX was up 0.7 percent while France’s CAC 40 rose 0.5 percent. The FTSE 100 in Britain added 0.2 percent. In Japan, the Nikkei 225 index lost 0.6 percent and South Korea’s Kospi shed 0.3 percent. Hong Kong’s Hang Seng index added 0.2 percent.

Bonds

Bond prices edged lower. The yield on the 10-year Treasury note rose to 2.37 percent from 2.35 percent.

Metals

Gold slumped $21.20, or 1.6 percent, to $1,275.30 an ounce. Silver sank 53 cents, or 3.1 percent, to $16.84 an ounce. Copper gained 3 cents to $3.09 a pound.
…

Fed Chair Janet Yellen says she will leave the U.S. central bank’s board when her successor is sworn in early next year.

Jerome Powell was chosen by President Donald Trump to head the Federal Reserve when Yellen’s term expires. Powell must be confirmed by the U.S. Senate before he can take office, but analysts say his approach to managing interest rates is similar to Yellen’s. She is credited with managing the economy in ways that boosted recovery from the 2007 recession and cut unemployment in half.

In her resignation letter to Trump, Yellen said she is “gratified that the financial system is much stronger than a decade ago.” She also noted “substantial improvement in the economy since the crisis.”

Yellen is the first woman to lead the Fed, and was a member of its board of governors before taking the leadership role. Her term on the board does not officially expire until 2024, and she could have stayed on if she wished to do so.

Candidate Trump criticized Yellen during his campaign, but praised her work after he became president.

Yellen has served as vice chair of the Fed, president of the Federal Reserve Bank of San Francisco, and head of President Bill Clinton’s Council of Economic Advisers. She has researched and taught economics at the University of California at Berkeley.
…

Opioid drug abuse, which has ravaged parts of the United States in recent years, cost the economy as much as $504 billion in 2015, White House economists said in a report made public on Sunday.

The White House Council of Economic Advisers (CEA) said the toll from the opioid crisis represented 2.8 percent of gross domestic product that year.

President Donald Trump last month declared the opioid crisis a public health emergency. While Republican lawmakers said that was an important step in fighting opioid abuse, some critics, including Democrats, said the move was meaningless without additional funding.

The report could be used by the Trump White House to urge Republicans in Congress – who historically have opposed increasing government spending – to provide more funding for fighting the opioid crisis by arguing that the economic losses far outweigh the cost of additional government funding.

Using a combination of statistical models, the CEA said the lost economic output stemming from 33,000 opioid-related deaths in 2015 could be between $221 billion and $431 billion, depending on the methodology used.

In addition, the report looked at the cost of non-fatal opioid usage, estimating a total of $72 billion for 2.4 million people with opioid addictions in 2015. Those costs included medical treatment, criminal justice system expenses and the decreased economic productivity of addicts.

The CEA said its estimate was larger than those of some prior studies because it took a broad look at the value of lives lost to overdoses. The CEA also said its methodology incorporated an adjustment to reflect the fact that opioids were underreported on death certificates.

“The crisis has worsened, especially in terms of overdose deaths which have doubled in the past ten years,” the CEA said.

“While previous studies have focused exclusively on prescription opioids, we consider illicit opioids including heroin as well.”

Opioids, primarily prescription painkillers, heroin and fentanyl, are fueling the drug overdoses. More than 100 Americans die daily from related overdoses, according to the U.S. Centers for Disease Control and Prevention.
…

Talks to update the North American Free Trade Agreement appeared to be in danger of grinding toward a stalemate amid complaints of U.S. negotiators’ inflexibility, people familiar with the process said on Sunday.

The United States, Canada and Mexico are holding the fifth of seven planned rounds of talks to modernize NAFTA, which U.S. President Donald Trump blames for job losses and big trade deficits for his country.

Time is running short to reach a deal before the March 2018 start of Mexico’s presidential elections, and lack of progress in the current round could put the schedule at risk.

“The talks are really not going anywhere,” Jerry Dias, president of Unifor, the largest Canadian private-sector union, told reporters after meeting with Canada’s chief negotiator on Sunday. “As long as the United States is taking the position they are, this is a colossal waste of time,” said Dias, who is advising the government and regularly meets the Canadian team.

Hanging over the negotiations is the very real threat that Trump could make good on a threat to scrap NAFTA.

Canada and Mexico object to a number of demands the U.S. side unveiled during the fourth round last month, including for a five-year sunset clause that would force frequent renegotiation of the trade pact, far more stringent automotive content rules and radical changes to dispute settlement mechanisms.

Calls for greater US flexibility

“Our internal view as of this morning is that if any progress is to be made, the United States needs to show some flexibility and a willingness to do a deal,” said a Canadian source with knowledge of the talks.

“We are seeing no signs of flexibility now,” added the source, who requested anonymity given the sensitivity of the situation. However, a NAFTA country official familiar with the talks said Canada had not yet submitted any counterproposals to the U.S. demands.

Dias said the United States was showing some signs of flexibility over its sunset clause proposal after Mexican officials floated a plan for a “rigorous evaluation” of the trade pact, but without an automatic expiration.

U.S. negotiating objectives that were updated on Friday appeared to accommodate the Mexican proposal, saying the revised NAFTA should “provide a mechanism for ensuring that the Parties assess the benefits of the Agreement on a periodic basis.”

Canada and Mexico are also unhappy about U.S. demands that half the content of North American-built autos come from the United States, coupled with a much higher 85 percent North American content threshold. Officials are due to discuss the issue from Sunday through the end of the fifth round on Tuesday, Flavio Volpe, president of the Canada’s Automotive Parts Manufacturers’ Association, said there was little chance of making substantial progress on autos in Mexico City, as the U.S. demands were still not fully understood.

“I don’t expect a heavy negotiation here,” he said in an interview on the sidelines of the talks.
…

Britain will submit its proposals on how to settle its financial obligations to the European Union before an EU Council meeting next month, finance minister Philip Hammond said on Sunday.

British Prime Minister Theresa May was told on Friday that there was more work to be done to unlock Brexit talks, as the European Union repeated an early December deadline for her to move on the divorce bill.

“We will make our proposals to the European Union in time for the council,” Hammond told the BBC.

Last week, May met fellow leaders on the sidelines of an EU summit in Gothenburg, Sweden, to try to break the deadlock over how much Britain will pay on leaving the bloc in 16 months.

She signaled again that she would increase an initial offer that is estimated at some 20 billion euros ($24 billion), about a third of what Brussels wants.
…

Brexit is still well over year away but two European cities on Monday will already be celebrating Britain’s departure from the European Union.

Two major EU agencies now in London — the European Medicines Agency and the European Banking Authority — must move to a new EU city because Britain is leaving the bloc. The two prizes are being hotly fought over by most of the EU’s other 27 nations.

Despite all the rigid rules and conditions the bloc imposed to try to make it a fair, objective decision, the process has turned into a deeply political beauty contest — part Olympic host city bidding, part Eurovision Song Contest.

It will culminate in a secret vote Monday at EU headquarters in Brussels that some say could be tainted by vote trading.

The move involves tens of millions in annual funding, about 1,000 top jobs with many more indirectly linked, prestige around the world and plenty of bragging rights for whichever leader can bring home the agencies.

“I will throw my full weight behind this,” French President Emmanuel Macron said when he visited Lille, which is seeking to host the EMA once Britain leaves in the EU in March 2019. “Now is the final rush.”

At an EU summit Friday in Goteborg, Sweden, leaders were lobbying each other to get support for their bids.

The EMA is responsible for the scientific evaluation, supervision and safety monitoring of medicines in the EU. It has around 890 staff and hosts more than 500 scientific meetings every year, attracting about 36,000 experts.

The EBA, which has around 180 staff, monitors the regulation and supervision of Europe’s banking sector.

With bids coming in from everywhere — from the newest member states to the EU’s founding nations — who gets what agency will also give an indication of EU’s future outlook.

The EU was created as club of six founding nations some 60 years ago, so it’s logical that a great many key EU institutions are still in nations like Germany, France and Belgium. But as the bloc kept expanded east and south into the 21st century, these new member states see a prime opportunity now to claim one of these cherished EU headquarters, which cover everything from food safety to judicial cooperation to fisheries policy.

Romania and Bulgaria were the last to join the EU in 2007 and have no headquarters. Both now want the EMA — as does the tiny island nation of Malta.

“We deserve this. Because as we all know, Romania is an EU member with rights and obligations equal with all the rest of the member states,” said Rodica Nassar of Romania’s Healthcare Ministry.

But personnel at the EMA and EBA are highly skilled professionals, and many could be reluctant to move their careers and families from London to less prestigious locations.

“You have to imagine, for example, for the banking authority, which relies on basically 200 very high-level experts in banking regulatory matters to move to another place,” said Karel Lannoo of the CEPS think tank. “First of all, to motivate these people to move elsewhere. And then if you don’t manage to motivate these people, to find competent experts in another city.”

As the vote nears, Milan and Bratislava are the favorites to win the EMA, with Frankfurt, and perhaps Dublin, leading the way for the EBA.

 
…

When it comes to cars, generally there are three options, there is gas, a gas-battery hybrid, or a full electric car. But for a fourth option, some car companies are banking on hydrogen as the fuel of the future. VOA’s Kevin Enochs reports.
…

When the heaviest rain of tropical storm Harvey had passed, Kathryn Clark’s west Houston neighborhood had escaped the worst. Then the dams were opened — a decision by the U.S. Army Corps of Engineers to prevent upstream flooding and potential dam failures by releasing water into Buffalo Bayou, just a few hundred feet from the end of Clark’s street.

When she and her husband returned to survey the damage later that week, they entered their two-story home by kayak in roughly three feet of water. In the kitchen, a snake slithered past.

Nothing like that had happened in the nearly 11 years the Clarks have lived there; it got Kathryn thinking about their long-term plans, including whether to rebuild.

“What if they decide to open the dams again?” she asked. “But if you don’t rebuild, you just walk away, and that is a big loss.”

The Clarks ultimately opted to reconstruct, a process that will take another half-year before they can move back in. Elsewhere in the city, the waiting will be longer.

​A sprawling concrete jungle

In early November, Texas Governor Greg Abbott told reporters that Texas will need more than $61 billion in federal aid, to help fund a reconstruction plan that he said would curtail damage from future coastal storms. However, he added, there will be more requests: “This is not a closed book.”

Hurricane Harvey, the costliest storm in U.S. history, will affect Houston for months, and years. Apart from tens of thousands of ongoing home rebuilding projects, civil construction is in the evaluation phase.

“With Katrina, it actually took them 12 years before FEMA [Federal Emergency Management Agency] made their final payment to the city of New Orleans,” said Jeff Nielsen, executive vice president of the Houston Contractors Association. “That’s how long it takes to really test and figure out where all the repairs and where all the damage occurred.”

Houston covers a landmass of 1,600 square kilometers, compared to New Orleans’ 900, and is much more densely populated. The impermeable concrete jungle experienced major runoff during the storm, and that translates to high civil construction costs in roads, bridges, water, sewage and utility lines that are difficult to determine.

WATCH: Post-Harvey Houston: Years Until Recovery, Unknown Costs

Nielsen explains to VOA the immensity of the task. 

“You may be driving down the road one day and, all of a sudden — boom — there is a 10-foot sinkhole underneath the road because there is a water line or a sewer line or a storm sewer line that runs underneath that road.

“There is no way to tell that that’s happening without going through and testing each and every line,” Nielsen said.

​Waiting, waiting

Rob Hellyer, owner of Premier Remodeling & Construction, says Houston has seen an uptick in inquiries for both flood and nonflood-related projects — good for business, but a challenge for clients.

“A lot of those people come to the realization that ‘If we want to get our project done in the next two or three years, we better get somebody lined up quick,’” Hellyer told VOA.

But industrywide, much of the workforce is dealing with flooding issues of their own, while simultaneously attempting to earn a living.

“It really has disbursed that labor pool that we have been using for all these years,” Hellyer said.

Labor shortages in construction-related jobs have long been a challenge despite competitive wages, according to Nielsen, who describes his field — civil construction — as less-than-glamorous.

“Outside, it’s hot. What could be more fun than pouring hot asphalt on a road?” he asked.

Networking barriers

With construction costs up and waiting periods long, the hands-on rebuilding effort is typically attractive for some lower-wage immigrant communities.

Among the city’s sizable Vietnamese population, though, that’s not exactly the case, said Jannette Diep, executive director of Boat People SOS Houston office (BPSOS), a community organization serving the area’s diaspora population.

“[Vietnamese construction workers] face not only a language barrier but that networking piece, because they’re not intertwined with a lot of the rules and regulations,” Diep said. “‘Well, how do I do the bid; what’s the process?’”

Overwhelmed with paperwork and often discouraged by limited communication skills in English, Diep says many within the industry opt to work only from within their own communities, despite more widespread opportunities across Greater Houston.

The same barriers apply to the Asian diaspora’s individual post-recovery efforts. BPSOS-Houston, according to Diep, remains focused on short-term needs — food, clothing, cleaning supplies — and expects the longer-term recovery to take two to three years, particularly in lower-income neighborhoods.

Love thy neighbor

Loc Ngo, a mother of seven and grandmother from Vietnam, has lived in Houston for 40 years, but speaks little English. In Fatima Village, a tightly knit single-street community of mobile homes — comprising 33 Vietnamese families — she hardly has to.

“They came to fix the home and it cost $11,000, but they’re not finished yet,” she explained, through her son’s translation. “The washer, dryer and refrigerator — I still haven’t bought them yet, and two beds!”

Across the street, the three-generation Le family levels heaps of dirt across a barren lot that’s lined by spare pipes and cinderblocks. They plan to install a new mobile home.

At the front end of the road is the village’s single-story church, baby blue and white, like the sky — the site of services, weddings, funerals and community gatherings.

Victor Ngo, a hardwood floor installer, typically organizes church events. But for now, his attention is turned to completing reconstruction of the altar and securing donations to replace 30 ruined benches.

“At first I had to spend two months to fix up my house, and now I finished my house, and I [have started] to fix up this church,” Ngo said. “So basically, I don’t go out there to work and make money. Not yet.”

In the village, made up largely of elders, Ngo stresses the importance of staying close to home to help with rebuilding, translation, and paperwork, at least for a while longer.

“We stick together as a community to survive,” he said.
…

Pro-trade Republicans in the U.S. Congress are growing worried that U.S. President Donald Trump may try to quit the NAFTA free trade deal entirely rather than negotiate a compromise that preserves its core benefits.

As a fifth round of talks to modernize the North American Free Trade Agreement kicked off in Mexico on Friday, several Republicans interviewed by Reuters expressed concerns that tough U.S. demands, including a five-year sunset clause and a U.S.-specific content rule, will sink the talks and lead to the deal’s collapse.

Business groups have warned of dire economic consequences, including millions of jobs lost as Mexican and Canadian tariffs snap back to their early 1990s levels.

“I think the administration is playing a pretty dangerous game with this sunset provision,” said Representative Charlie Dent, a moderate Republican from eastern Pennsylvania.

He said putting NAFTA under threat of extinction every five years would make it difficult for companies in his district, ranging from chocolate giant Hershey Co to small family owned manufacturing firms, to invest in supply chains and manage global operations.

Hershey operates candy plants in Monterrey and Guadalajara, Mexico.

Lawmakers’ letter

Nearly 75 House of Representatives members signed a letter this week opposing U.S. proposals on automotive rules of origin, which would require 50 percent U.S. content in NAFTA-built vehicles and 85 percent regional content.

They warned that this would “eliminate the competitive advantages” that NAFTA brings to U.S. automakers or lead to a collapse of the trade pact.

Representative Pete Sessions, a Texas Republican who has long been a supporter of free trade deals, said he disagreed with the Trump approach of “trying to beat someone” in the NAFTA talks. Texas is the largest U.S. exporting state with nearly half of its $231 billion in exports last year headed to Mexico and Canada, according to Commerce Department data.

“We need to offer Mexico a fair deal. If we want them to take our cattle, we need to take their avocados,” Sessions said.

Still, congressional apprehension about Trump’s stance is far from unanimous. The signers were largely Republicans, with no Democrats from auto-intensive states such as Michigan and Ohio signing.

Democratic support

Some pro-labor Democrats have actually expressed support for U.S. Trade Representative Robert Lighthizer’s tough approach.

“Some of those demands are in tune,” said Representative Bill Pascrell of New Jersey, the top Democrat on the House Ways and Means trade subcommittee.

“We don’t want to blow it up, Republicans don’t want to blow it up. But we want substantial changes in the labor, the environmental, the currency, on how you come to an agreement when there’s a dispute, and on problems of origin.”

Farm state Republicans are especially concerned that a collapse of NAFTA would lead to the loss of crucial export markets in Mexico and Canada for corn, beef and other products.

Senator Chuck Grassley of Iowa said Lighthizer in a recent meeting agreed that a withdrawal from NAFTA would be hard on U.S. agriculture, which has largely benefited from the trade pact.

U.S. agricultural exports to Canada and Mexico quintupled to about $41 billion in 2016 from about $9 billion in 1993, the year before NAFTA went into effect, according to U.S. Commerce Department data.

Grassley said, however, that Lighthizer’s approach was “taking everybody to the brink on these talks.”

Other Republicans are taking a wait-and-see approach to the talks.

Representative Frank Lucas of Oklahoma said he was willing to give Trump “the benefit of the doubt” on NAFTA talks, adding that farmers and ranchers in his rural district were strong Trump supporters in the 2016 election.

“The president’s a practical fellow. When push comes to shove, he understands the base,” Lucas said.
…

The head of Canada’s biggest private-sector union headed to Mexico’s Senate on Friday, promising to fight at the NAFTA trade pact talks for improved Mexican wages and free collective bargaining as a way of benefiting workers across North America.

The issue of tougher labor standards has emerged as a key sticking point in the talks to update the North American Free Trade Agreement, and has brought disparate groups of workers from across the region closer to U.S. populists.

“There will not be an agreement” until the Mexican team agrees to free collective bargaining, the elimination of so-called yellow unions that are dominated by employers, and fair wages for Mexican workers, Unifor President Jerry Dias said.

The event held in a side chamber of the Senate was organized by the umbrella organization Better Without Free Trade Agreements, which represents dozens of social organizations and unions.

Dias argued that low wages have not only hurt Mexican workers but have also prompted manufacturing jobs in Canada and the United States to leave for Mexico.

By including much tougher labor standards in an updated NAFTA, the issue could be dealt with head on, he said. “When you start talking about low wages, we can deal with that under the dispute mechanism as an unfair subsidy.”

The fifth round of talks NAFTA is being held in the upscale Camino Real hotel in Mexico City.

“What Mexico offers in this negotiation and to the rest of the world is cheap labor. That’s what Mexico puts on the table and how it presents itself as an attractive place for investments,” Senator Mario Delgado of the leftist Party of the Democratic Revolution told Reuters.

“It is a shame and it is unsustainable for Mexico. … Our salary policy is putting at risk the existence of the treaty,” said Delgado.

Mexican business leaders argue that integrating Mexico into North American supply chains has made the entire region more competitive. Recent studies have shown, however, that wages in Mexico have experienced significant downward pressure.

Given Mexico’s higher inflation rates, wages are now lower there in real terms than when NAFTA took effect, according to a report published in August by credit rating agency Moody’s.

While formally employed workers earn significantly more, the statutory minimum wage is a mere 80 pesos ($4.23) a day.
…

The Trump administration on Friday revised its negotiating objectives for revamping the North American Free Trade Agreement, largely to reflect the demands it has made in NAFTA talks on agriculture, intellectual property and investment.

The revised objectives are now in line with U.S. proposals to eliminate Canada’s import tariffs on dairy, poultry and egg products and to allow more protections for seasonal U.S. produce that is sensitive to imports from Mexico.

The U.S. Trade Representative’s office said it is keeping in place most of its NAFTA objectives, first published in July, including a first-ever goal of reducing U.S. trade deficits.

USTR Robert Lighthizer said that the revisions are aimed at keeping Americans informed about what the Trump administration is seeking in a revised NAFTA.

“If we are able to achieve these objectives, we will both modernize and rebalance NAFTA to better serve the interests of our workers, farmers, ranchers and businesses,” Lighthizer said in a statement.

The new objectives on investment and intellectual property rights add considerable detail, partly aimed at reflecting existing demands and partly aimed at setting precedents for future trade agreements.

On investment, the objectives now seek to provide “meaningful procedures for resolving investment disputes, while ensuring the protection of U.S. sovereignty and the maintenance of strong U.S. domestic industries.”

U.S. negotiators are seeking to allow countries to “opt in” to an investor-state dispute settlement mechanism and to eliminate panels that arbitrate anti-dumping disputes between NAFTA countries.

But the new objectives for NAFTA investment rules also seek to prohibit forced technology transfers and technology localization, a goal that seems more aimed at addressing U.S. complaints about Chinese investment practices.

On intellectual property, the new objectives specify that the USTR will seek U.S. equivalent standards on trademarks, patents, copyrights with some appropriate exceptions, undisclosed test or other data and trade secrets.

The wording on rules of origin goals was also slightly revised to conform with the U.S. demand that NAFTA-built cars and trucks contain 50 percent U.S.-specific content.

 
…

It’s been more than two months since Hurricane Harvey destroyed or damaged tens of thousands of homes across Houston and east Texas, and cleanup is expected to last 20 months, overtaking Hurricane Katrina as the most expensive rebuilding effort in U.S. history. Undocumented workers are part of the daunting task of reconstructing America’s fourth-largest city. VOA’s Ramon Taylor reports they are doing so despite multiple risks.
…

After more than a decade of making cars and SUVs — and, more recently, solar panels — Tesla Inc. wants to electrify a new type of vehicle: big trucks.

The company unveiled its new electric semitractor-trailer Thursday night near its design center in Hawthorne, California.

CEO Elon Musk said the semi is capable of traveling 500 miles on an electric charge and will cost less than a diesel semi considering fuel savings, lower maintenance and other factors. Musk said customers can put down a $5,000 deposit for the semi now and production will begin in 2019.

“We’re confident that this is a product that’s better in every way from a feature standpoint,” Musk told a crowd of Tesla fans gathered for the unveiling.

​One-fourth of transit emissions

The move fits with Musk’s stated goal for the company of accelerating the shift to sustainable transportation. Trucks account for nearly a quarter of transportation-related greenhouse gas emissions in the U.S., according to government statistics.

Musk said Tesla plans a worldwide network of solar-powered “megachargers” that could get the trucks back up to 400 miles of range after 30 minutes.

Tesla, Musk stretched

But the semi also piles on the chaos at Palo Alto, California-based company. Tesla is way behind on production of the Model 3, a new lower-cost sedan. It’s also ramping up production of solar panels after buying Solar City Corp. last year. Musk has said Tesla is also working on a pickup and a lower-cost SUV and negotiating a new factory in China. Meanwhile, the company posted a record quarterly loss of $619 million in its most recent quarter.

Musk, too, is being pulled in many different directions. He leads rocket maker SpaceX and is dabbling in other projects, including high-speed transit, artificial intelligence research and a new company that’s digging tunnels beneath Los Angeles to alleviate traffic congestion.

“He’s got so much on his plate right now. This could present another distraction from really just making sure that the Model 3 is moved along effectively,” said Bruce Clark, a senior vice president and automotive analyst at Moody’s.

Uncertain market

Tesla is venturing into an uncertain market. Demand for electric trucks is expected to grow over the next decade as the U.S., Europe and China all tighten their emissions regulations. Electric truck sales totaled 4,100 in 2016, but are expected to grow to more than 70,000 in 2026, says Navigant Research.

But most of that growth is expected to be for smaller, medium-duty haulers like garbage trucks or delivery vans. Those trucks can have a more limited range of 100 miles or less, which requires fewer expensive batteries. They can also be charged overnight.

Long-haul semi trucks, on the other hand, would be expected to go greater distances, and that would be challenging. Right now, there’s little charging infrastructure on global highways. Without Tesla’s promised fast-charging, even a midsized truck would likely require a two-hour stop, cutting into companies’ efficiency and profits, says Brian Irwin, managing director of the North American industrial group for the consulting firm Accenture.

Irwin says truck companies will have to watch the market carefully, because tougher regulations on diesels or an improvement in charging infrastructure could make electric trucks more viable very quickly. Falling battery costs also will help make electric trucks more appealing compared to diesels.

But even lower costs won’t make trucking a sure bet for Tesla. It faces stiff competition from long-trusted brands like Daimler AG, which unveiled its own semi prototype last month. 

Fleet operators want reliable trucks, and Tesla will have to prove it can make them, said Michelle Krebs, executive analyst with the car shopping site Autotrader.
…

The Venezuelan government and its state-owned oil company PDVSA have officially defaulted on billions of dollars’ worth of bonds, the latest chapter of the country’s deep financial collapse.

 The International Swaps and Derivatives Association, a group of banks and brokers that determines whether an entity like Venezuela has failed to make on-time payments on its debts, voted Thursday to say that Venezuela had defaulted.

The vote will trigger what is known as a “credit event” on securities like credit default swaps, which investors buy as a type of insurance against a potential default. The 15-member group must now decide how it will settle the swaps.

Two rating agencies — Fitch and Standard & Poor’s — already determined this week that Venezuela’s government was in default.

PDVSA bonds were trading at 26.5 cents on the dollar, compared with roughly 30 cents back in September, according to FactSet.  

Venezuela’s debt skyrocketed to over $120 billion under the late President Hugo Chavez as the government spent heavily on social programs while oil prices were high. About half its debt is in the form of dollar-denominated bonds.

A drop in oil prices and mismanagement crushed the economy, leading to widespread shortages of food and other basics amid triple-digit inflation.

At a meeting with investors Monday, Vice President Tareck El Aissami tried to assure creditors that the country’s debts will continue to be paid. But those in attendance said they learned of no concrete plans for reorganizing the debt.

 
…

Businesses striving to stamp out slavery from their supply chains should not dismiss struggling suppliers but train them to improve the lives of workers, and technology can play a part, leading companies including Apple and Walmart said on Wednesday.

In recent years modern-day slavery has increasingly come under the global spotlight, putting ever greater regulatory and consumer pressure on firms to ensure their supply chains are free of forced labor, child labor and other forms of slavery.

From cosmetics and clothes to shrimp and smartphones, supply chains are often complex with multiple layers across various countries – whether in sourcing the raw materials or creating the final product – making it hard to identify exploitation.

As companies delve deeper into their supply chains to examine workers’ conditions, they should not punish suppliers who violate human rights but help them raise standards and work more efficiently, said Paula Pyers of U.S. tech giant Apple.

“We are loathe to terminate a business relationship in cases of violations,” Pyers, Apple’s head of supplier responsibility, told the Thomson Reuters Foundation’s annual Trust Conference, which focuses on slavery and women’s empowerment.

“We want to teach and train suppliers to make them better,” said Pyers, adding that Apple has helped more than 11.5 million workers to learn their rights, and returned at least $28 million to 35,000 employees forced to pay fees to obtain their jobs.

Turning to tech

About 25 million people globally were estimated to be trapped in forced labor in 2016, according to the International Labor Organization (ILO) and rights group Walk Free Foundation.

With consumers increasingly conscious of slave labor and willing to pay more for ethically sourced goods, big brands should lead by example to inspire their suppliers to get into line, and also to boost profits, said Jan Saumweber of Walmart.

“Responsible sourcing is key towards our goal of being the most trusted retailer,” said Saumweber, senior vice president of responsible sourcing at Walmart, the world’s largest retailer.

She said Walmart has turned to technology to improve workers’ rights worldwide – from hotlines to a smartphone app in the style of TripAdvisor that allows Burmese migrants working in Thailand’s fishing industry to review their employers.

Speaking on a panel about best business practices to tackle modern slavery, several experts said cleaning up supply chains would only be sustainable if this resulted in greater profits.

“Investors can direct trillions of dollars to companies with strong human rights policies and clean supply chains,” said Jean Baderschneider, head of Global Fund to End Slavery, a public-private partnership seeking $1.5 billion to combat the crime.

“But it can’t be a case of charity or philanthropy – they need to see better returns through having clean supply chains.”

But firms’ efforts to tackle slavery, from codes of conducts to audits, are often lip service and deflect attention from a need for tougher measures, said Bobby Banerjee, professor of management at the University of London’s Cass Business School.

“The problem with CSR (corporate social responsibility) is that there is too much C, and not enough S or R,” he said.

“Forced labor is not an aberration, but a viable management practice … an outcome of the economic system we live in.”
…

U.S. President Donald Trump pushed Thursday for adoption of a wide-ranging overhaul of the country’s complex tax laws as he met with the majority Republican caucus in the House of Representatives shortly before a scheduled vote on the issue.

Republican leaders in the House have voiced optimism that they have enough votes to approve the changes that would cut the corporate tax rate from 35 percent, one of the higher rates in the world, to 20 percent and cut taxes for millions of middle-class taxpayers, but not everyone. The measure would add $1.5 trillion to the country’s long-term $20 trillion in debt.

Trump, without a major legislative victory in his first 10 months in office, has been urging Congress to adopt a tax overhaul by Christmas; but, the changes are controversial and no Democratic lawmakers have announced their support.

Senate’s plan

Republican leaders in the Senate are advancing their own tax plan, but its fate is uncertain, with Republicans only holding a 52-48 majority. Senator Ron Johnson of Wisconsin on Wednesday became the first Republican senator to announce his opposition to both the Senate and House versions of the changes because he said they do not cut taxes enough to help small businesses.

Democrats have opposed the Republican tax-cutting effort, which they say greatly benefits the country’s wealthiest taxpayers, without enough help for people who earn way less money. Virtually every U.S. taxpayer would be affected by the changes being considered, but the overhaul is in such a state of flux in Congress that individuals have been hard-pressed to determine whether they would get a tax cut or not.

Trump said on his Twitter account, “Tax cuts are getting close!”

But he disparaged opposition Democratic lawmakers for their lack of support, saying, “Why are Democrats fighting massive tax cuts for the middle class and business (jobs)? The reason: Obstruction and Delay!”

A key House Republican leader, Congressman Kevin Brady, said the House plan “represents a bold path forward that will allow us as a nation to break out of the slow-growth status quo once and for all.”

Obamacare mandate

Trump, however, has complicated his push for tax reform by asking that Congress include a provision that would end the requirement that most Americans buy health insurance or pay a fine if they do not. Congress already failed earlier this year to overhaul national health care policies championed by former President Barack Obama, a law commonly known as Obamacare.

Democratic lawmakers, and some Republicans, are opposed to attaching the health law change on buying insurance in the tax legislation, which if it is kept in the tax proposal, could imperil its passage, especially in the Senate.

While he was on his five-nation Asia trip, Trump tweeted, “I am proud of the (Republican) House & Senate for working so hard on cutting taxes (& reform.) We’re getting close! Now, how about ending the unfair & highly unpopular (individual) Mandate in OCare & reducing taxes even further?”

 
…

Republicans are muscling their massive tax bill through the House, with President Donald Trump urging them on to a critically needed legislative victory and GOP House leaders exuding confidence they have the votes.

But the tax overhaul hit a roadblock Wednesday as Sen. Ron Johnson of Wisconsin became the first Republican senator to say he opposes his party’s politically must-do tax legislation. That signaled potential problems for GOP leaders.

Passage of a similar package seemed assured Thursday in the House, where a handful of dissidents conceded they expected to be steamrolled by a GOP frantic to claim its first major legislative victory of the year.

“Big vote tomorrow in the House. Tax cuts are getting close!” Trump enthused in a tweet Wednesday night. “Why are Democrats fighting massive tax cuts for the middle class and business (jobs)? The reason: Obstruction and Delay!”

 Trump planned to visit House GOP lawmakers Thursday at the Capitol in what seemed likely to be a pep rally, not a rescue mission. Eager to act before opposition groups could sow doubts among the rank-and-file, Republican leaders were anxious to hand Trump the first crowning achievement of his presidency by Christmas.

The two chambers’ plans would slash the 35 percent corporate tax rate to 20 percent, trim personal income tax rates and diminish some deductions and credits — while adding nearly $1.5 trillion to the coming decade’s federal deficits. Republicans promised tax breaks for millions of families and companies that would have more money to produce more jobs.

“It represents a bold path forward that will allow us as a nation to break out of the slow-growth status quo once and for all,” said House Ways and Means Committee Chairman Kevin Brady, R-Texas, as his chamber debated the bill Wednesday.

Democrats charged the measures would bestow the bulk of their benefits on higher earners and corporations. In the Senate Finance Committee, they focused their attacks on two provisions designed by Republicans to increase revenue.

One would repeal President Barack Obama’s health law requirement that people buy coverage or pay a fine, a move the nonpartisan Congressional Budget Office projects would result in 13 million more uninsured people by 2027. The other would end the personal income tax cuts in 2026 while keeping the corporate reductions permanent.

“We should be working together to find ways to cut taxes for hardworking middle-class families, not taking health care away from millions of people just to give huge tax cuts to the largest corporations,” said Sen. Bill Nelson, D-Fla.

The Republican-led Finance panel was on track to approve its proposal by week’s end. It shut down Democrats’ initial efforts to modify the bill, voting along party lines against amendments aimed at protecting health care coverage for veterans or people with disabilities, mental illness or opioid addition if the insurance mandate is ended.

But with GOP leaders hoping for full Senate passage early next month, concerns harbored by Johnson and perhaps others would have to be addressed.

Republicans controlling the Senate 52-48 can approve the legislation with just 50 votes, plus tie-breaking support from Vice President Mike Pence. With solid Democratic opposition likely, they can lose just two GOP votes.

Besides Johnson, Republican Sens. Susan Collins of Maine, Jeff Flake of Arizona and Bob Corker of Tennessee have yet to commit to backing the tax measure.

Johnson complained the bills were more generous to publicly traded corporations than to so-called pass-through entities. Those are millions of partnerships and specially organized corporations whose owners pay levies using individual, not corporate, tax rates. While details of the House and Senate bills differ, many pass-through owners would owe more than 20 percent in taxes for much of their income.

“These businesses truly are the engines of innovation and job creation throughout our economy, and they should not be left behind,” Johnson said. But he left the door open to changes that would allow him to support the final version.

A small group of House Republicans largely from New York and New Jersey rebelled because the House plan would erase tax deductions for state and local income and sales taxes and limit property tax deductions to $10,000.

Their numbers seemed insufficient to derail the bill. Asked if they could stop it, Rep. Peter King, R-N.Y., shook his head and said, “I don’t think so.”

Repealing the health law’s individual mandate would save $338 billion over the coming decade because fewer people would be pressured into getting government-paid coverage like Medicaid. Senate Finance Committee Chairman Orrin Hatch, R-Utah, used the savings to make his bill’s personal tax reductions modestly more generous.

Ending the bill’s personal income tax cuts in 2026, derided by Democrats as a gimmick, was designed to pare the bill’s long-term costs. Legislation cannot boost budget deficits after 10 years if it is to qualify for Senate procedures barring bill-killing filibusters. Those delays take 60 votes to block, numbers Republicans lack.

The House measure would collapse today’s seven personal income-tax rates into four: 12, 25, 35 and 39.6 percent. The Senate would have seven rates: 10, 12, 23, 24, 32, 35 and 38.5 percent.

Both bills would nearly double the standard deduction to around $12,000 for individuals and about $24,000 for married couples and dramatically boost the current $1,000 per-child tax credit.

Each plan would erase the current $4,050 personal exemption and annul or reduce other tax breaks. The House would limit interest deductions to $500,000 in the value of future home mortgages, down from today’s $1 million, while the Senate would end deductions for moving expenses and tax preparation.

Each measure would repeal the alternative minimum tax paid by higher-earning people. The House measure would reduce and ultimately repeal the tax paid on the largest inheritances, while the Senate would limit that levy to fewer estates.

 
…

Zimbabwe’s economy has been hammered by political unrest, soaring inflation, a shortage of foreign cash, a trade deficit and many other problems. Residents say the economic turbulence has driven thousands of people out of the country and makes daily life challenging. But an economic analyst says Zimbabwe has an educated workforce and a battered-but-functional infrastructure that could boost agricultural production and manufacturing, and eventually bring recovery. VOA’s Jim Randle reports.
…

The Angolan economy is set to grow 1.1 percent this year as sub-Saharan Africa’s third-largest economy enjoys a mild recovery, the International Monetary Fund said Wednesday following a 10-day visit to the country.

But Ricardo Velloso, the Brazilian economist who led the visit, said macroeconomic imbalances remain that need to be tackled by the new government.

In a statement, he highlighted the wide spread between the parallel and official market exchange rates and a backlog of foreign exchange purchase requests in commercial banks as points of continuing concern.

Velloso said the team met members of the new government which it felt understood the challenges facing the economy, and gave a thumbs up to the administration’s six-month economic plan known as “Plano Intercalar.”

“The Plano Intercalar is adequately focused on the goals of stepping up fiscal consolidation efforts, introducing greater exchange rate flexibility, and improving governance and the business climate to promote faster and inclusive growth as well as economic diversification,” the statement said.

After nearly a decade of rapid growth, Angola slipped into recession last year as a fall in the price of oil led to a massive drop in government revenue and access to hard currency.

The official unemployment rate is at 25 percent, though likely in reality much higher, and a dollar fetches more than double the official rate on the black market.

President Joao Lourenco, who took office in September, has vowed to get the economy back on track promising to diversify away from oil and combat corruption.
…

Electric trucks are having a moment in the spotlight, but they won’t replace diesel-powered trucks in big numbers until they overcome costs and other limitations.

Tesla Inc. plans to unveil a semitractor-trailer this week, its first foray into trucking after more than a decade of making cars and SUVs. German automaker Daimler AG showed off its own electric semi last month and says it could be on sale in a few years. Truck rental company Ryder just added 125 all-electric vans made by California startup Chanje to its fleet.

“It’s kind of like the checkered flag is being waved,” said Glen Kedzie, energy and environmental counsel with the American Trucking Associations. “We’ve seen different fuels come and go, and electric has gotten to the front of the line.”

Battery cost is the key

As battery costs fall and more options enter the market, global sales of pure electric trucks are expected to grow exponentially, from 4,100 in 2016 to 70,600 in 2026, according to Navigant Research. Delivery companies, mail services and utilities will be among the biggest purchasers, and most of the growth will come from Europe, China and the U.S.

Most electric trucks on the road will be medium-duty vehicles like delivery vans or garbage trucks. They’re quiet and emission-free, and they can be plugged in and charged at the end of a shift. They’re ideal for predictable urban routes of 100 miles or less; a longer range than that requires more batteries, which are heavy and expensive.

One issue: Cost. A medium-duty electric truck costs about $70,000 more than equivalent diesel trucks, according to the consulting firm Deloitte. Buyers considering electrics have to weigh what they can save on fuel and maintenance costs, since electrics have fewer parts.

Heavy-duty trucks like electric semis have even further to go before they can be competitive with diesels. Some of those trucks are used for shorter routes, but to achieve a longer range of 300 miles, they require more batteries.

Electrification is expensive

Deloitte estimates electrification adds around $150,000 to the cost of a heavy-duty vehicle, or more than double the cost of some diesel tractor-trailers. Electric semi trucks will have the added problem of long charging times and little highway charging infrastructure.

“I see it being relevant but not ready for prime time,” Chanje CEO Bryan Hansel said of long-haul electric trucks. He thinks it will be five years or more before the battery technology and infrastructure can support cross-country electric trucking.

“It’s a big prize, but the physics haven’t caught up yet,” he said.

But analysts believe that will change. Battery costs are expected to fall significantly over the next decade as technology improves. Deloitte expects battery costs for trucks to fall from $260 per kilowatt-hour in 2016 to $122 in 2026. That would cut the cost of a 300 kWh battery pack — like the one in Daimler’s prototype semi — from $78,000 to $36,600.

In the meantime, regulations will drive interest in electric trucks. In the U.S., trucks must meet stricter emissions standards through 2027 under rules that went into effect last year. China is also tightening emissions standards. And several major cities, including Paris and Mexico City, have called for a ban on diesels by 2025 to improve air quality.

Incentives are also enticing companies to add electric trucks to their fleets. Companies that buy or lease vans from Chanje are eligible for an $80,000 voucher per vehicle from the state of California, for example. France pays out 10,000 euros ($11,669) to buyers who replace diesel vehicles with electric ones.

UPS has 300 electric trucks

Companies are also experimenting with electrics — and other alternatives, like natural gas — because they want to meet their own sustainability goals and figure out the optimal mix for their fleets. United Parcel Service, for example, has 300 electric trucks in its global fleet of 100,000 vehicles, mostly in the U.S. and Europe, said Scott Phillippi, UPS’s Senior Director of Maintenance and Engineering for international operations.

Many of UPS’s delivery routes require trucks to travel less than 100 miles per day, a range easily met by an electric truck, Phillippi said. He said electric trucks also help the company take advantage of incentives. UPS has set a goal of having 25 percent of its fleet be made up of alternative fuel vehicles by 2020, in part to encourage manufacturers to keep building and improving such trucks.

“The proof of concept time is over,” he said. “Everybody is starting to agree it’s not a matter of if, it’s a matter of when.”
…

Venice is planning to divert massive cruise liners. Barcelona has cracked down on apartment rentals.

Both are at the forefront of efforts to get a grip on “overtourism,” a phenomenon that can disrupt communities, imperil fragile buildings and harm the experience of travelers.

Tourism-phobia has become prevalent in popular destinations, particularly major cities in Europe where visitors often congregate at the same places at the same time.

Slogans such as “Tourists Go Home” and “Tourists Are Terrorists” have been heard, a clear sign of a backlash.

Taleb Rifai, Secretary General of the United Nations’ World Tourism Organization, spoke about the phenomenon at the World Travel Market, an industry meeting in London last week.

Rifai said tourism must be managed in a “sustainable and responsible” way that benefits communities.
…

Mexico will respond to U.S. demands for changes in content rules for autos and an automatic expiration clause in the NAFTA trade deal when negotiations on reworking the accord begin again this week, a top government official said on Tuesday.

A fifth round of talks to overhaul the North American Free Trade Agreement starts on Wednesday in Mexico City, notable for U.S. demands that the U.S. Chamber of Commerce has labeled “poison pills.”

Foremost among them are a 50 percent minimum U.S. limit in NAFTA automobile content, the scrapping of a key dispute mechanism and inclusion of a sunset clause that will terminate the pact after five years if it is not renegotiated.

The measures soured the mood among U.S., Mexican and Canadian negotiators when put forward last month, and Mexico’s economy minister, Ildefonso Guajardo, said his country would respond to the auto content and sunset clause plans.

“Those responses will be angled very logically toward what we’re hearing from the business world in Mexico and the United States,” Guajardo said at an event in Mexico City.

The three sides would explore what scope there was for narrowing their positions on that basis, he added.

Industry officials across the region have balked at the auto proposals, arguing they would add bureaucratic hurdles, be hard to enforce and could damage the competitiveness of the sector.

In addition to seeking to establish U.S. minimum thresholds, the team led by U.S. Trade Representative Robert Lighthizer has proposed raising the regional content requirement for NAFTA autos to 85 percent from 62.5 percent at present.

Viability

The coming round, which runs through Nov. 21, would seek to examine the viability of such ambitious targets, Guajardo said.

“It’s one thing for them to say ‘we want 85 percent regional value’ and another for them to explain how to achieve that technically, understanding how the industry works,” he said.

U.S. President Donald Trump has threatened to withdraw from NAFTA if he cannot rework it to the benefit of the United States, spooking investors and hurting the Mexican peso.

Mexican and Canadian officials have privately voiced skepticism about the prospect of negotiators making substantial progress on the most divisive issues during the current round.

That does not necessarily mean talks will be bad-tempered.

The White House is pushing for congressional approval of Trump’s planned tax cuts, and officials say that could help set a more measured tone for the round, lest trade disputes create friction with NAFTA-supporting Republican lawmakers.

If Trump makes headway on tax cuts, it is more likely to help NAFTA talks than harm them, said Bosco de la Vega, head of Mexico’s National Agricultural Council (CNA), a farming lobby.

“What we know from our U.S. counterparts is that they’re saying, ‘listen: we see that the future of [NAFTA talks] will depend on the success or failure of the tax reform.’ It will have a direct impact on NAFTA. How much? Who knows?” he said.

Meanwhile, Guajardo expressed confidence that negotiators could make progress on less divisive topics in Mexico City.

“There are some chapters we believe we can finalize this round,” he said, noting that talks on telecommunications and regulatory practices were advancing.
…

General Electric’s new Chief Executive John Flannery on Monday outlined steps that will turn the biggest U.S. industrial conglomerate into a smaller, more focused company, surprising some investors who sold the company’s shares to a five-year low.

Flannery’s plan to shrink GE’s multi-industry array of businesses was a reversal of the deal-driven empire building of his predecessors, Jeff Immelt and Jack Welch, and potentially a milestone in the decline of the conglomerate as a business strategy.

Other companies that once emulated the GE model of spreading bets among diverse industries are now unwinding their portfolios as well, something Immelt also did throughout his 16 years as CEO, even as he made acquisitions.

Flannery said he will pare GE down to three core businesses: power, aviation and healthcare. He will keep Immelt’s strategy of building software to complement GE’s machinery, albeit with a narrower focus and reduced budget.

For investors, Flannery’s decision to cut both the dividend and the 2018 earnings forecast by half added up to a whole that was less than they judged GE be worth last week.

GE shares fell to their lowest level in more than five years as investors worried the years-long overhaul would not pare down enough expenses or generate as much cash as they hoped. They closed off the day’s lows, down 7.2 percent to $19.02.

“They need to cut more cost,” said Scott Davis, an analyst at Melius Research. “GE is still a bloated company with duplicate costs up and down the organization.”

GE stock has effectively been dead money since September 2001, when Immelt took over, posting a negative total return even after reinvesting its juicy dividends. Once the most valuable U.S. publicly traded company, GE now has a market value of $168 billion, less than a fifth of Apple.

“You have pessimism around its portfolio of businesses mixed with a pretty harsh cut in the dividend,” said John Augustine, chief investment officer at Huntington Private Bank. “It took them years to get into this mess and it will take them several years to right the ship and get back into a stronger position.”

‘Soul of the Company’

Flannery, who took over as CEO on Aug. 1, said he was “looking for the soul of the company again” and would focus on “restoring the oxygen of cash and earnings to the company.”

He will cut its board to 12 from 18 members, and bring on three new directors early next year.

GE said it already has shed 25 percent of its corporate staff, meaning 1,500 jobs around the world, including some at its Boston headquarters. It is aiming to reduce overhead cost by $2 billion next year, half of that at its troubled power unit that sells electrical generation equipment.

The transition includes GE getting rid of at least $20 billion of assets through sales, spin-offs or other means.

GE will jettison businesses with “a very dispassionate eye,” Flannery said, keeping only units that offer growth, a leading market position and a large installed base.

GE said it would exit its lighting, transportation, industrial solutions and electrical grid businesses, all of which were widely expected, closing factories around the globe.

But it was vague about other disposals.

It plans to get rid of its 62.5-percent stake in oilfield services company Baker Hughes, only months after making the multi-billion dollar investment. Baker Hughes shares lost 3.2 percent.

Flannery offered no quick fixes for investors. He said power, one of the businesses GE would focus on, was “challenged,” but could be turned around in one to two years.

GE’s Digital unit, on which Immelt bet billions of dollars, would focus on selling apps to customers in its core businesses, Flannery said. He confirmed that the shift meant sales staff were being let go, as Reuters reported last week.

GE also will cut spending on the digital unit to $1.1 billion in 2018 from $1.5 billion in 2017. GE had previously said it would invest $2.1 billion in its digital unit in 2017, but that tally included money not tied to Predix, GE’s industrial-internet platform, GE said.

Flannery said there is “no retreat on the idea” of GE providing both applications and the Predix platform to connect industrial equipment to computers that can make machines run better. However, getting one of its key applications to run on Predix could take two more years.

Flannery added that some of its healthcare IT business, such as software for imaging and hospital staff scheduling, were still critical to the company and not likely to be divested.

Dividend Cut

The dividend cut, to 48 cents from 96 cents next year, is only the third in the company’s 125-year history and the first not during a broader financial crisis. It is expected to save about $4 billion in cash annually.

“This dividend cut will be a major disappointment to GE’s (roughly 40 percent) retail shareholder base,” said RBC Capital Markets analyst Deane Dray.

The cut will be the eighth-biggest dividend cut in history among S&P 500 companies, according to Howard Silverblatt, senior index analyst of S&P Dow Jones Indices. GE also had the biggest cut when it slashed its dividend by $8.87 billion in 2009, Silverblatt said.

GE forecast 2018 adjusted earnings of $1 to $1.07 a share, compared with its earlier estimate of $2 per share. Wall Street was expecting $1.16, according to Thomson Reuters I/B/E/S.

Industrial free cash flow will total just $6 billion to $7 billion next year, up from an estimated $3 billion in 2017, but far below earlier targets of $12 billion for 2017.

GE said the weak power business had largely prompted the dividend cut and lowered earnings forecast. Demand for new power plants will remain slow through 2019, Flannery predicted.

But GE also was to blame, he said.

“We did not manage the (power) business well,” he said. “That’s a fundamental change we need to make and that’s going to take some time. This is not a magic wand.”
…

Mexico’s government is preparing a macroeconomic response in case U.S. President Donald Trump makes good on threats to quit the North American Free Trade Agreement (NAFTA), an event which could wreak havoc on the Mexican economy and hurt the peso.

Mexico’s Foreign Minister Luis Videgaray said on Monday the government and central bank were preparing a plan to address the possibility of a future without NAFTA, but gave few details.

The government has said it is examining how it could adjust Mexican legislation to give investors certainty about their investments if the almost 24-year-old NAFTA collapses.

Underpinning some $1.3 trillion in annual trade between the United States, Canada and Mexico, NAFTA has been a central pillar of recent Mexican economic development. Nearly 80 percent of Mexican exports are shipped to the United States.

Trade negotiators from the United States, Mexico and Canada meet in Mexico City this week to continue talks on overhauling the accord, and Videgaray reiterated the government’s position that the expectation was that talks would ultimately succeed.

Mexico would continue to work on diversifying trade, protect foreign investment, review possible changes to tariff barriers, and prepare a macro-economic response from the finance ministry and the central bank, Videgaray added.

“These are the four lines a plan B must include,” he told Mexican radio. “We have to be prepared for all the scenarios and one of the scenarios is that the United States leaves the treaty, and as we have said, that is not the end of the world, the Mexican economy is much bigger than NAFTA.”

Separately, the International Monetary Fund said in a report on Monday that ending NAFTA would bring back World Trade Organization “most-favored nation” tariffs, which would disrupt Mexican-U.S. trade, and could crimp economic growth, dampen capital inflows and raise risk premia.

The IMF suggested that among various policy responses at Mexico’s disposal, “temporary foreign exchange interventions and liquidity provision could help smooth extreme volatility.”

Concerns that Trump could follow through on his threats to dump NAFTA have battered the Mexican peso in recent weeks.

Additionally, Mexico should continue to implement its structural reforms and boost efforts to diversify trading relationships, which would increase competitiveness and help economic growth over the medium-term, the IMF said.

The IMF sees Mexico’s economy growing 1.9 percent next year after projected expansion of 2.1 percent in 2017.
…

Promoted as needed relief for the middle class, the Senate Republican tax overhaul would increase taxes for some 13.8 million moderate-income American households, a bipartisan analysis showed Monday.

The assessment by Congress’ nonpartisan Joint Committee on Taxation emerged as the Senate’s tax-writing committee began wading through the measure, working toward the first major revamp of the tax system in some 30 years.

Barging into the carefully calibrated work that House and Senate Republicans have done, President Donald Trump called for a steeper tax cut for wealthy Americans and pressed GOP leaders to add a contentious health care change to the already complex mix.

Trump’s latest tweet injected a dose of uncertainty into the process as the Republicans try to deliver on his top legislative priority. He commended GOP leaders for getting the tax legislation closer to passage in recent weeks and then said, “Cut top rate to 35% w/all of the rest going to middle income cuts?”

That puts him at odds with the House legislation that leaves the top rate at 39.6 percent and the Senate bill as written, with the top rate at 38.5 percent.

Trump also said, “Now how about ending the unfair & highly unpopular individual mandate in (Obama)care and reducing taxes even further?”

Overall, the legislation would deeply cut corporate taxes, double the standard deduction used by most Americans, and limit or repeal completely the federal deduction for state and local property, income and sales taxes. It carries high political stakes for Trump and Republican leaders in Congress, who view passage of tax cuts as critical to the GOP preserving its majorities at the polls next year.

With few votes to spare, Republicans leaders hope to finalize a tax overhaul by Christmas and send the legislation to Trump for his signature.

The key House leader on the effort, Rep. Kevin Brady, said he’s “very confident” that Republicans “do and will have the votes to pass” the measure this week.

Brady, chairman of the House Ways and Means Committee, said he doesn’t expect major changes to the bill as it moves to a final vote in the House. Still, he said Trump’s call for removing the requirement to have health insurance as part of the tax agreement “remains under consideration.”

Trump and the Republicans have promoted the legislation as a boon to the middle class, bringing tax relief to people with moderate incomes and boosting the economy to create new jobs.

“This bill is not a massive tax cut for the wealthy. … This is not a big giveaway to corporations,” Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, insisted as the panel had its first day of debate on the Senate measure.

Hatch also downplayed the analysis by congressional tax experts showing a tax increase for several million U.S. households under the Senate proposal. Hatch said “a relatively small minority of taxpayers could see a slight increase in their taxes.”

The committee’s senior Democrat, Sen. Ron Wyden of Oregon, said the legislation has become “a massive handout to multinational corporations and a bonanza for tax cheats and powerful political donors.”

Tax increase for some

The analysis found that the Senate measure would increase taxes in 2019 for 13.8 million households earning less than $200,000 a year. That group, about 10 percent of all taxpayers, would face tax increases of $100 to $500 in 2019. There also would be increases greater than $500 for a number of taxpayers, especially those with incomes between $75,000 and $200,000. By 2025, 21.4 million households would have steeper tax bills.

The analysts previously found a similar magnitude of tax increases under the House bill.

A group of more than 400 millionaires and billionaires, including prominent figures such as Ben and Jerry’s founders Ben Cohen and Jerry Greenfield, designer Eileen Fisher and financier George Soros, asked Congress to reject the GOP tax plan and not give cuts to the super-wealthy like themselves.

“We urge you to oppose any legislation that further exacerbates inequality,” they said in a letter made public Monday.

Neither bill includes a repeal of the so-called individual mandate of Barack Obama’s Affordable Care Act, the requirement that Americans get health insurance or face a penalty. Several top Republicans have warned that including the provision would draw opposition and make passage tougher.

Among the biggest differences in the two bills that have emerged: The House bill allows homeowners to deduct up to $10,000 in property taxes while the Senate proposal unveiled by GOP leaders last week eliminates the entire deduction. Both versions would eliminate deductions for state and local income taxes and sales taxes.

Senate Majority Leader Mitch McConnell, R-Ky., asked whether the Senate’s proposed repeal of the property tax deduction could bring higher taxes for some middle-class Americans, acknowledged there would be some taxpayers who end up with higher tax bills.

“Any way you cut it, there is a possibility that some taxpayers would get a higher rate,” McConnell told reporters after a forum in Louisville, Kentucky, with local business owners and employees. “You can’t craft any tax bill that guarantees that every single taxpayer in America gets a tax break. What I’m telling you is the overall majority of taxpayers in every bracket would get relief.”
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President Donald Trump is wrapping up 12-day, five-nation tour of Asia dominated by talks on the North Korea nuclear threat and bolstering trade.

After talks in Manila on Monday with the prime ministers of Australia and Japan, Trump promised to make a “major statement” on North Korea and trade when he returns to Washington this week. But he offered no details.

Trump’s meeting with Australia’s Malcolm Turnbull and Japan’s Shinzo Abe underscored the growing relationship between the three nations in the face of regional security issues. The top concerns include North Korea’s nuclear weapons and ballistic missile programs and countering China’s increasingly assertive maritime territorial claims.

“The key for us is to ensure very close trilateral cooperation so as to bring peace and stability on the ground,” said the Japanese leader, who has been displaying a united front against North Korea with Trump.

“We’ve got the same values and the same focus on ensuring that the North Korean regime comes to its senses and stops its reckless provocation and threats of conflict in our region,” Turnbull said. “Peace and stability have underpinned the prosperity of billions of people over many decades, and we’re going to work together to ensure we maintain it.”

Show of military force

A massive naval drill involving three U.S. aircraft carrier strike groups was underway in western Pacific waters as a show of force.

The U.S. naval vessels and aircraft were joined by elements of the South Korean navy and Japanese Maritime Self Defense Force.

The three leaders met on the sidelines of the Association of Southeast Asian Nations (ASEAN) summit. Trump said “big progress” had been made on trade but he did not offer further details.

​Meeting with Duterte

Earlier Monday, the U.S. leader met with Philippines’ President Rodrigo Duterte, who hosted the ASEAN summit. Trump said the two have “a great relationship” and described their talks as “very successful.”

A joint statement released by the U.S. and Philippines said the two leaders condemned Pyongyang’s “unlawful nuclear weapons and missile development” and urged all nations, including those in the region, “to voice their opposition to these threatening programs and to take steps to downgrade their diplomatic and economic engagement with North Korea.

During a joint appearance, reporters tried to query whether Trump had raised the issue of human rights with Duterte. Duterte, facing strong criticism from human rights groups internationally, replied, “Whoa, whoa. This not a press statement. This is the bilateral meeting.”

White House Press Secretary Sarah Huckabee Sanders later said of the meeting between Trump and Duterte:  “The conversation focused on ISIS, illegal drugs, and trade. Human rights briefly came up in the context of the Philippines’ fight against illegal drugs.”  

Duterte’s spokesman denied that.

“No, that issue was not raised,” Harry Roque said replying to a reporter’s question. “My understanding is he explained at length the Philippine policy on the war against drugs. And from the body language of the U.S. president, he seemed to be in agreement and he made an assurance that President Duterte has a friend in President Trump and he’s been an ally since he was elected into office.”

Sidestepping controversy

Earlier, as regional leaders gathered at a colorful ceremony to open the summit in Manila, Duterte sidestepped the controversy over his war on illegal drugs and its thousands of extrajudicial killings.

In opening remarks before the 17 other leaders at the summit’s plenary session, he called illegal drugs a “menace” that threaten “the very fabric of our society,” without mentioning methods of the response.

“I apologize for setting the tone of my statement in such a manner,” said Duterte. “But I only want to emphasize that our meetings for the next two days present an excellent opportunity for us to engage in meaningful discussions on matters of regional and international importance.”

The communique resulting from the talks is expected to announce that ASEAN will begin official negotiations for a code of conduct for the South China Sea, where several nations have conflicting territorial claims.

A number of countries have concerns about China’s increased militarization of disputed islands it controls.  

Anti-Trump protests

For a second day Monday several thousand militant protesters marched in Manila, clashing with riot police who responded with truncheons, water cannons and sonic alarms to keep the demonstration out of sight of the delegates at the ASEAN Summit, which is surrounded by a security cordon.  

Protesters burned an effigy of Trump on Monday. Some protesters pushed the police, organizer Renato Reyes told VOA News, who said “scores” of protestors had been injured and some had to be treated at an on-site clinic. The protesters shouted for Trump to leave and accused the United States, a former colonizer of the Philippines, of looking for overseas wars.

Local media reported 10 people were injured, including six police officers.

Trump has praised his hosts during the Asia tour, which included stops in Japan, South Korea, China, Vietnam and the Philippines.

 “It was red carpet like nobody, I think, has probably ever seen,” Trump told reporters.

Ralph Jennings and Kenneth Schwartz contributed to this report.
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Venezuela’s foreign debt renegotiation committee will meet with creditors at 2 p.m. (1800 GMT) on Monday at the government’s “White Palace” in downtown Caracas, the finance minister said on Saturday.

“Once again, we invite investors to register their participation in this meeting,” Simon Zerpa, who is also the finance boss of state oil company PDVSA but is on a U.S. sanctions list for alleged corruption, said in a Tweet.

Foreign investor sources had said Zerpa and committee head Tareck El Aissami, who is Venezuela’s vice president but also on a U.S. blacklist for alleged drug traffickers, would probably sit out the meeting to allay any fears about meeting them.

But Saturday’s exhortation by Zerpa, and the location of the meeting right opposite the Miraflores presidential palace, appear to indicate the meeting will not be a low-profile affair.

Socialist leader Nicolas Maduro’s move a week ago to summon bondholders for talks about “restructuring” and “refinancing” some $60 billion in bonds has spooked markets worried Venezuela is heading for a default amid U.S. financial sanctions.

President Donald Trump’s measures against the Maduro administration, which it accuses of being a “dictatorship” that has impoverished Venezuela’s 30 million people through corruption and incompetence, effectively bar U.S. banks from rolling over the country’s debt into new bonds.

Venezuela did, however, appear to be honoring its most recent debt payment: a $1.2 billion payment due on a bond from state oil company PDVSA. Two investors told Reuters they had finally received payment, albeit delayed.

It is unclear how widespread investor participation in Monday’s meeting in Caracas will be. U.S.-based creditors are not prohibited from attending the meeting, but are barred from dealings with officials like Zerpa and El Aissami.
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Emirates Airlines agreed to buy 40 Boeing 787-10s in a deal worth more than $15 billion.

The purchase was announced Sunday at the Dubai Air Show by the largest airline in the Middle East.

Deliveries of the wide-body, twin-engine planes are set to begin in 2022.

Boeing’s website says the aircraft typically carries 330 passengers with a range of 11,900 kilometers.  

The manufacturer says the 787 is 25 percent more fuel-efficient than the aircraft it replaces.

Also, Azerbaijan Airlines announced a $1.9 billion deal for more 787s, five to carry passengers and two more to haul freight.
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