As South Korea’s new leadership works toward easing long strained inter-Korean relations, U.S. experts are eyeing the country’s conciliatory overtures to the Kim Jong Un regime, worried that a possible resumption of the Kaesong Industrial Complex could provoke discord with the Trump administration.

Shortly after South Korean President Moon Jae-in named Cho Myoung-gyun to be his North Korea point man on June 13, Cho, who played a key role in launching the now-stalled economic cooperation project, told reporters, “Operations at the Kaesong Industrial Complex should be restored. I will speak after thoroughly looking into the details.” 

That statement caused a flurry of criticism in Washington, with many analysts saying reviving activities at the complex possibly could hurt Washington-Seoul relations and diminish their alliance coordination. Seoul closed the complex in February 2016 as punishment for the regime’s nuclear test and long-range rocket launch.

“Reopening the Kaesong Industrial Complex is very problematic from Washington’s perspective,” Sue Mi Terry, a former CIA analyst who specializes in North Korea, told VOA’s Korean Service.

Launched in 2004 to enhance cooperation between the two Koreas, the jointly run industrial complex in Kaesong, just north of the border, has reportedly provided $100 million a year in wages to 54,000 North Korean workers and contributed almost $2 billion in trade for Pyongyang.

Terry said any conciliatory action that translates into significant financial benefits for Pyongyang contradicts Washington’s North Korea policy, which is focused on thwarting the Kim regime’s nuclear weapons program by severing all possible revenue streams that fund it. 

“We don’t know where the money is going,” Terry said. “It could be contributing to North Korea’s WMD (weapons of mass destruction) missile program. There is no evidence that it’s not.”

Thomas Countryman, who served in the Obama administration as assistant secretary of state for international security and nonproliferation, said restarting Kaesong’s activities would not only reward Kim for the continued provocations, but also throw cold water on international efforts.

“It would be inconsistent with the [U.N. Security Council] resolutions if not in the letter, then in the spirit,” Countryman said. “There is simply no way that [South Korea] could convince China to have a strict enforcement of the U.N. resolutions, if South Korea is reopening a complex that provides tens of millions of dollars of hard currency every year to the North Korean regime.” 

Formerly the Obama White House coordinator for arms control and WMD, Gary Samore of the Belfer Center at Harvard University said Seoul should be more strategic and use Kaesong as a bargaining chip in response to or as part of a deal with Pyongyang to take steps toward limiting and eventually eliminating its nuclear activities.

“It would be a big mistake to resume the Kaesong Industrial Park without getting something in return,” Samore said. “So if Kim Jong Un agrees to some limits on nuclear and missile activity — for example, a freeze on testing — then I think one response that [South Korea] could make would be to resume the Kaesong Industrial Park, with the understanding that the facility would be suspended if Kim Jong Un resumed nuclear and missile testing.”

Negotiations on Pyongyang’s nuclear program have been in limbo for almost a decade, with Washington and Seoul ratcheting up economic pressure and a stubborn Pyongyang persisting with weapons development. But since Moon took office last month, he appears to be easing conditions for talks with the North.

“I make it clear that we will open dialogue without a precondition” should North Korea stop launching missiles and testing nuclear devices, Moon said Thursday at an event marking the 2000 inter-Korean summit.

But when President Donald Trump’s top diplomat Rex Tillerson led a U.N. Security Council special meeting in April, he rejected negotiations with Kim, saying North Korea “must take concrete steps to reduce the threat that its illegal weapons programs pose to the U.S. and our allies before we can even consider talks.” Those steps would be dismantling its nuclear and missile programs.

Moon Chung-in, South Korea’s special presidential advisor for foreign and security affairs, commented at an event in Washington Friday that his president proposed “scaling down” the Washington-Seoul joint military drills if North Korea “suspends its nuclear and missile activities.”

The State Department downplayed the significance of the comments.

“We understand these views are the personal views of Mr. Moon and may not reflect official ROK govern policy,” said Bureau of East Asian and Pacific Affairs spokesperson Alicia Edwards in an email to VOA.

A senior official at the South Korean presidential office said the advisor did not coordinate with the president’s office on the proposal.

This report originated on VOA Korean.
…

The U.S. Supreme Court on Monday handed a victory to Chevron Corp. by preventing Ecuadorean villagers and their American lawyer from trying to collect on an $8.65 billion pollution judgment issued against the oil company by a court in Ecuador.

The justices turned away an appeal by New York-based lawyer Steven Donziger, who has spent more than to two decades trying to hold Chevron responsible for pollution in the Ecuadorean rain forest, of lower court rulings blocking enforcement in the United States of the 2011 judgment.

While not disputing that pollution occurred, San Ramon, California-based Chevron has said it is not liable and that Donziger and his associates orchestrated the writing of a key environmental report and bribed the presiding judge in Ecuador.

U.S. District Judge Lewis Kaplan in Manhattan barred enforcement of the judgment in 2014, citing the corruption used to obtain it. The New York-based 2nd U.S. Circuit Court of Appeals last year upheld Kaplan’s decision, citing “a parade of corrupt actions” by Donziger and his associates, including coercion and fraud, culminating in the bribe offer.

The 2nd Circuit found that Chevron’s $8.646 billion judgment debt was “clearly traceable” to corrupt conduct by the legal team representing the villagers from the area affected by the pollution.

The lengthy legal battle with Chevron has been waged in several countries and was documented in “Crude,” a 2009 documentary film. The plaintiffs have said they plan to continue efforts to enforce the judgment in other countries, regardless of the outcome in the United States.

The saga was drawn extensive media attention over the years, with a succession of reporters given tours by both sides of the affected sites on the edge of the Amazonian jungle near the town of Lago Agrio. The plaintiffs also touted the backing of several celebrities including actors Mia Farrow and Danny Glover.

Donziger and representatives of residents of the Lago Agrio region have sought to force Chevron to pay for water and soil contamination caused from 1964 to 1992 by Texaco, which Chevron acquired in 2001. Chevron has said a 1998 agreement between Texaco and Ecuador absolved it of further liability.

Donziger’s crusade began to unravel when Chevron noticed a deleted scene in the “Crude” documentary, released in 2009, showing Donziger working with supposedly neutral experts in preparing a report for the Ecuadorean court.

Chevron was then able to get access to out-takes and other material related to the documentary via court order. Chevron cited this evidence when it filed its lawsuit in 2011 seeking to block enforcement of the judgment, saying Donziger’s actions violated U.S. anti-racketeering law.

Donziger has also tried to enforce the judgment in Canada, Brazil and other countries where Chevron operates.

 
…

The U.S. Supreme Court on Monday tightened rules on where injury lawsuits may be filed, handing a victory to corporations by undercutting the ability of plaintiffs to bring claims in friendly courts in a case involving litigation over the Bristol-Myers Squibb Co. blood-thinning medication Plavix.

The justices, in an 8-1 ruling, threw out a lower court decision allowing hundreds of out-of-state patients who took Plavix to sue the company in California. State courts cannot hear claims against companies that are not based in the state when the alleged injuries did not occur there, the justices ruled.

The court last month reached a similar conclusion in a separate case involving out-of-state injury claims against Texas-based BNSF Railway Co.
…

Climate change, trade and terrorism were highlighted Monday at a Beijing meeting of foreign affairs officials from Brazil, Russia, India, China and South Africa, known collectively as the BRICS nations.

The five nations are seeking to further align their views on key issues at a time when President Donald Trump is withdrawing the U.S. from multilateral arrangements such as the Paris climate accords and the Trans-Pacific Partnership trade deal.

Chinese Foreign Minister Wang Yi said China in the coming year would look to “expand with more broad and wide-ranging cooperation in areas such as trade and commerce and investment.”

Together the BRICS countries account for roughly 40 percent of the world population and 20 percent of the global economy. All five countries are members of the G20, although their economic prospects have declined somewhat amid crises in Brazil and South Africa and the effect of sanctions lodged against Russia by the West.

South African Foreign Minister Maite Nkoana-Mashabane pointed to climate change as a major concern.

“There is one climate and for future generations we must employ every effort at our disposal to reverse the effects of climate change,” she said.

Nkoana-Mashabane also pointed to the need to form joint efforts to fight terrorism, sentiments reflected by Vijay Kumar Singh, an Indian External Affairs official.

“It is important to enhance BRICS security in counterterrorism matters,” Singh said.

Leaders of the five nations are due to meet for a summit in the southeastern Chinese city of Xiamen in September.
…

When Wal-Mart Stores Inc. bought online retailer Jet.com for $3 billion last year, it marked a crucial moment — the world’s largest brick-and-mortar retailer, after years of ceding e-commerce leadership to arch rival Amazon, intended to compete.

On Friday, Amazon.com Inc. countered. With its $14 billion purchase of grocery chain Whole Foods Market Inc., the largest e-commerce company announced its intention to take on Wal-Mart in the brick-and-mortar world.

The two deals make it clear that the lines that divided traditional retail from e-commerce are disappearing and sector dominance will no longer be bound by e-commerce or brick-and-mortar,  but by who is better at both.

Amazon’s purchase of Whole Foods also brings disruption to the $700 billion U.S. grocery sector, a traditional area of retailing that stands on the precipice of a ferocious price war.

German discounters Aldi and Lidl are battling Wal-Mart, which controls 22 percent of the U.S. grocery market, with each vowing to undercut whatever price the others offer.

The stakes are highest for Wal-Mart. Amazon’s move aims at the heart of the Bentonville, Arkansas-based retail giant’s business — groceries, which account for 56 percent of Wal-Mart’s $486 billion in revenue for the year ending Jan. 31. With the deal, Whole Foods’ more than 460 stores become a test bed with which Amazon can learn how to compete with Wal-Mart’s 4,700 stores with a large grocery offering that are also within 10 miles (16 km) of 90 percent of the U.S. population.

Amazon is expected to lower Whole Foods’ notoriously high prices, enabling it to pursue Wal-Mart’s customers. The push comes as Wal-Mart is headed in the opposite direction — going

after Amazon’s higher-income shoppers with a recent string of acquisitions of online brands such as Moosejaw and Modcloth and on Friday, menswear e-tailer Bonobos.

Wal-Mart may be ready. In preparation for the grocery price war, Wal-Mart in recent months has cut grocery prices, improved fresh food and meat offerings, modernized shelving and lighting

in its grocery aisles, and expanded its online grocery pickup service.

Marc Lore, the Jet.com founder who now runs Wal-Mart’s e-commerce business after selling a startup to Amazon, told Reuters in an interview that Amazon’s move does not change Wal-Mart’s game plan. “We’re playing offense,” he said.

Wal-Mart is offering curbside pickup of online grocery purchases at 700 locations, with 300 more planned by year end.

It also is testing same-day fresh and frozen home delivery from 10 of its stores. “We see an opportunity to do a lot more of that,” Lore said.

Roger Davidson, who oversaw Wal-Mart’s global food procurement and now is president of Oakton Advisory Group, said the deal will reduce Wal-Mart’s brick-and-mortar advantage.

“I think this acquisition is a concern,” he said.

Some industry observers say Amazon will find it difficult to use Whole Foods to pull away Wal-Mart shoppers because the two stores appeal to different customers. But Michelle Grant, head of retailing at market research firm Euromonitor, said Amazon could use an obscure part of the Whole Foods portfolio — Whole Foods 365 — to lure Wal-Mart shoppers.

Whole Foods 365 offers private-label goods and lower prices than typical Whole Foods stores, and is targeted at younger, value-conscious shoppers. Amazon could provide the financial

capital and tactical ability to build that into something big.

“That [Whole Foods 365] may become a big problem for Wal-Mart,” Grant said.

Amazon, which reported $12.5 billion in cash and equivalents and a free cash flow of $10.2 billion in the year ended March 31, has plenty to spend. Wal-Mart reported $6.9 billion in cash

and equivalents and $20.9 billion in free cash flow at its year ended Jan. 31.

Brittain Ladd, a former senior manager at Amazon who worked on its brick-and-mortar strategy, said Amazon will use Whole Foods to test concepts for the grocery store of the future.

Ladd, who left Amazon in March, said Amazon will seek to eliminate checkout lines by using technology that automatically scans goods as customers add them to their shopping carts. It

will select merchandise based on Amazon’s vaunted customer data, and potentially expects the use of technology to change prices during the course of a day.

Amazon declined comment on competition with Walmart but spokesman Drew Herdener said in a statement the company has no plans to cut jobs or use technology in development at its

Seattle Amazon Go store to automate jobs of cashiers.

Ladd, who helped with AmazonFresh’s global expansion and now is a supply chain consultant, said an Amazon-owned Whole Foods also likely will offer in-car pickup of online purchases, and

home delivery from Whole Foods stores, add pharmacies and showcase Amazon devices inside the stores.

“Amazon will reduce prices and change the assortment of products carried in Whole Foods stores to attract a larger customer base,” said Ladd. “Kroger and Wal-Mart will be impacted as their customers will defect to Amazon.”
…

A key part of House Republicans’ plan to overhaul the way corporations pay taxes is on life support, leaving lawmakers scrambling to save one of President Donald Trump’s biggest priorities and increasing the chances the GOP will simply pass a tax cut instead of overhauling the tax code.

A proposed tax on imports is central to the GOP plan to lower the overall corporate tax rate. It would generate about $1 trillion over the next decade to finance the lower rates without adding to the deficit. It would also provide strong incentives for U.S.-based companies to keep their operations in the United States and perhaps persuade companies to move overseas operations to the U.S.

But the tax faces strong opposition from retailers, automakers and the oil industry, and a growing number of congressional Republicans have come out against it. They worry that it will increase the cost of imports, raising consumer prices.

Import tax

Majority Leader Mitch McConnell, R-Ky., says there probably aren’t enough votes to pass the import tax in the Senate — not a single Republican senator has publicly endorsed it. And a powerful group of House conservatives says it’s time to dump the idea.

“The sooner we acknowledge that and get on with a plan that actually works and actually can build consensus, the better off we will be,” said Rep. Mark Meadows, R-N.C., chairman of the conservative Freedom Caucus.

Even one of the biggest backers of the new tax says he is open to other ideas.

Rep. Kevin Brady, R-Texas, has pushed the tax as chairman of the powerful House Ways and Means Committee. He still says it’s the best way to promote economic growth and domestic jobs, but he has softened his stance on alternatives.

“I’m still confident that we’re going to stay at the table until we solve that problem, which is how do we stop U.S. jobs from continuing to leave the United States,” Brady said. “We’re going to remain open to the best ideas on how we do that.”

On Tuesday, Brady proposed gradually phasing in the tax over five years to give corporations time to adjust.

It wasn’t received well by opponents.

“Forcing consumers to pay more so that some profitable companies can operate tax-free is no better of an idea in five years than it is today,” said Brian Dodge of the Retail Industry Leaders Association.

What next?

But if the import tax is dead, then what?

“I would never declare anything dead until there was a fully formed alternative,” said Rohit Kumar, a former tax counsel to McConnell who now heads PwC’s Washington tax office. “I think that’s one of the big challenges that Republicans are struggling with right now.”

Thirty-one years after the last tax overhaul, there is widespread agreement that the current system is too complicated and picks winners and losers, compelling companies to make decisions based on tax implications instead of sound business reasons.

The goal — for now — is to simplify the tax code and make it more efficient in a way that does not add to the federal government’s mounting debt. That means some would pay more and some would pay less, a heavy political lift among politicians who have deep political and practical disagreements.

Lawmakers also are trying to overhaul taxes on individuals, which raises another set of big challenges.

“It’s easier to get a coalition to cut taxes,” said Mark Mazur, a former Treasury official under President Barack Obama. “And if the conversation is, `how long do they last and how deep are the tax cuts,’ each party knows how to do that conversation. It’s not like you’re asking for a huge lift.”

The new import tax, which is called a border adjustment tax, would radically change the way corporations are taxed. Under current law, corporations pay a top tax rate of 35 percent on their profits. But the tax code is filled with so many exemptions, deductions and credits that most corporations pay a much lower rate.

Proposal

Under the proposed system, American companies that produce and sell their products in the U.S. would pay a new 20 percent tax on the profits from these sales. However, if a company exports a product, the profits from that sale would not be taxed by the U.S.

Foreign companies that import goods to the U.S. would also have to pay the tax, and they would not be able to deduct the cost of the imported good as a business expense.

Republicans in Congress and at the White House have been meeting behind closed doors for weeks to come up with viable alternatives. Democrats have been largely excluded from the talks, leaving Republicans with little room for error.

“I still think that Republicans, out of pure political necessity, if nothing else, are likely to find a way to get some sort of tax bill to the president’s desk for his signature,” Kumar said.

Whether it’s genuine tax reform or simply a tax cut “is still very much in question right now,” he added.
…

U.S. farm groups criticized President Donald Trump’s decision to retreat from his predecessor’s opening toward Cuba, saying it could derail huge increases in farm exports that totaled $221 million last year.

A trade delegation from Minnesota, one of the largest U.S. agriculture states, vowed to carry on with its planned visit to Cuba next week. 

“We’re going to continue to beat the drum and let them (the Trump administration) know that trade is good for agriculture,” said Kevin Paap, a farmer in the delegation.

Trump signed a presidential directive Friday rolling back parts of former President Barack Obama’s opening to the Communist-ruled country after a 2014 diplomatic breakthrough between the two former Cold War foes.

Farm groups saw the move as a step backward in what had been an improving trade relationship between the two countries, which are 90 miles (145 kms) apart, even though agriculture is not directly targeted.

U.S. law exempts food from a decades-old embargo on U.S. trade with Cuba, but cumbersome rules on how transactions were executed have made deals difficult and costly.

Since Obama’s detente, substantial headway has been made with shipments of U.S. corn and soybeans to Cuba soaring 420 percent in 2016 from a year earlier to 268,360 tons, U.S. Department of Agriculture data shows.

Through the first four months of 2017, total shipments of U.S. grain and soy were 142,860 ton, up from 49,090 tons during the same period of 2016.

While the quantities are dwarfed by total U.S. exports — nearly 56 million ton of corn alone last year — the added volumes were welcome as farmers face a fourth year of languishing grain prices and crimped incomes.

“At a time when the farm economy is struggling, we ask our leaders in Washington not to close doors on market opportunities for American agriculture,” Wesley Spurlock, president of the National Corn Growers Association, said in a statement.

The group sees an opportunity for $125 million more a year in trade to Cuba.

Trump’s move could cut off near-term sales and stymie economic development that would drive longer-term demand growth, said Tom Sleight, president of the U.S. Grains Council, a grain trade development organization, in a statement.

“Neither of those outcomes is favorable for the U.S. ag sector or the Cuban people,” he added.

Paap said the United States should be doing more to encourage exports.

“It’s frustrating because we’ve made some advances and built those relationships,” he said. 
…

The key to success for ride-hailing providers like Uber is keeping drivers happy so they run their app, ensuring that enough cars respond to passenger demand.

Estonia upstart Taxify is hoping to win over drivers and take on Uber Technologies Inc., the industry leader, by offering a larger share of the profit.

Upstarts across the world, such as Lyft Inc. and Ola, are trying to catch Uber in the on-demand car-ride market by securing brand loyalty.

But Uber has gathered critical mass and reached a valuation of more than $60 billion in eight years, despite a lack of profits. It has kept rivals at bay, partly by offering incentives to drivers to stay online.

Taxify hopes to lure drivers

Taxify, a minnow compared with Uber, cannot afford these perks but believes that by taking a smaller share of fares, 15-20 percent compared with Uber’s 20-25 percent, it can steal market share from its San Francisco-based rival.

It also hopes that allowing drivers to take cash as well as credit card fares will also help it attract more passengers.

“Taxify’s biggest advantage is the focus on good service by treating the drivers and riders better than other platforms. This means having higher pay for drivers, thanks to lower fees,” Chief Executive Markus Villig told Reuters at Taxify’s headquarters in Estonia.

An Uber spokeswoman declined to comment but the company has said it had fare revenue of around $20 billion last year. Villig said Taxify generated fares worth “tens of millions of euros” each month. Taxify runs in just 25 cities in Europe and Africa, while Uber operates in nearly 600 cities worldwide.

Its basic business model is identical — both connect passengers with self-employed drivers. Many incumbent cab companies in Europe have developed apps to operate in a similar manner but most have focused on their domestic markets.

Markets not Uber dominated

But Taxify is unusual in launching in about 18 countries, mainly smaller markets in Eastern Europe and Africa, where Uber is absent or not yet dominant.

Uber usually takes market share by giving drivers money to sign on to its app, paying them even if they are not driving passengers. Then, as it becomes more popular with passengers, it withdraws the inducements. Analysts say Uber aims to build a customer franchise and stable of drivers to dominate the market.

“The way I see it, Taxify is cheaper than Uber,” said Tumelo Malatjie, 33, a former truck driver for a logistics firm turned full-time Taxify driver in Johannesburg. “Taxify takes 15 percent and Uber about 25 percent or 30 percent,” said Malatjie, who nonetheless is on a waiting list to become an Uber driver.

Taxify has avoided expensive head-to-head battles with its much larger rival but its model will soon be tested as Villig plans to launch in London, Uber’s biggest European market in the coming months.

“We are coming in as a second wave,” Villig said.

Small but growing

Founded 3½ years ago, Taxify has 140 staff worldwide, a third of whom are based in Estonia. It says it has 2.5 million active passengers in 18 countries. Uber says it has more than 12,000 people across the world and millions of passengers in 70 countries.

In Africa, Villig said Taxify has hired away 20 former Uber executives, helping its expansion in cities like Lagos, Cairo and Johannesburg.

The start-up has raised 2 million euros in outside financing from local venture capitalists. Like Uber, it is losing money, although it was “close to profitability for the past six months,” Villig said.

Uber reported in late May that its net loss, excluding employee stock options and other items, narrowed in the first quarter to $708 million, from $991 million in the fourth quarter.

Same challenges

Taxify and Uber face many of the same regulatory and commercial challenges.

Uber was dealt a major setback to its European ambitions in May when the lead advocate for Europe’s highest court said it should be regulated like a transport company rather than an online electronic intermediary.

Taxify could face the same legal treatment, which would make it more susceptible to new regulations being introduced by a growing number of European cities.

Similarly, bans on ride-sharing in cities such as Brno in the Czech Republic, apply to Taxify as much as Uber.

Uber has faced complaints from its drivers in London, France and the United States who were unhappy about compensation.

But Taxify has also had protests from drivers in Estonia unhappy at how the company had slashed fare rates. Villig declined to comment.

While analysts do not expect Uber to be dethroned by Taxify anytime soon, the Estonian company’s lower commission model may put pressure on Uber’s margins in countries where it is seeking to cut fares or increase its share of fares.
…

Colombia on Friday reached a deal with public school teachers to end a 37-day strike that has kept millions of children out of classes, amid criticism the government has failed to keep its promise to improve public education after a peace deal with Marxist rebels.

Union members participating in the nationwide walkout held near-daily marches, often blocking busy roads in the capital Bogota to demand more funding for school maintenance, supplies, student meals and salaries.

President Juan Manuel Santos says he is focused on combating inequality and improving education now that a peace deal with the Revolutionary Armed Forces of Colombia (FARC), an end of more than 52 years of war, is under way.

But educators said improvements are nowhere to be seen and their salaries, some as low as 1.8 million pesos per month (about $610), are not adequate compensation for work that requires extensive and expensive higher education.

“The government’s priority was always to reach an agreement that recognizes the work of teachers and the indispensable role of education in the development of the country and, at the same time, be responsible with public finances,” Education Minister Yaneth Ghia told reporters.

The deal, among other things, will improve salaries through progressive bonus payments and allow bigger union involvement in how money is spent on education, she said.

The powerful Colombian Federation of Education Workers (Fecode) union, which represents more than 350,000 teachers, agreed to the deal after meeting with Finance Minister Mauricio Cardenas.

“The president said the money that went to the war would go to education but now there’s no FARC, no guns and we don’t see the funds,” said high school teacher Jose Escobar, 36, earlier on Friday during a protest in Bogota’s main square.

Places at his school, Colegio German Arciniegas in Bogota’s poor Bosa neighborhood, are in such high demand that it has been impossible to implement the government’s goal of full-day classes, Escobar said. Instead, 4,800 students in grades nine through 11 attend half-day, or six hours.

Friday’s deal will push toward the aim of full-day study.

Santos has weathered a wave of strikes in recent weeks, reaching agreements to halt protests in the port city Buenaventura and a strike by public workers.

“If the government truly is working for peace, they need to start here,” said Adriana Tunjo, a fifth-grade teacher in southern Bogota, who like other protesters decried problems which included electricity outages and sporadic provision of meals.
…

From the president of Mozambique to the US Secretary of Commerce, greater US economic engagement in Africa is the dominant theme at this year’s business summit organized by the Corporate Council on Africa. VOA Correspondent Mariama Diallo was there and reports.
…

U.S. authorities moved on Thursday to seize a Picasso painting given to American movie star Leonardo DiCaprio and the rights to two Hollywood comedies, as they filed complaints to recover about $540 million they say was stolen from the 1Malaysia Development Berhad sovereign wealth fund.

The U.S. Justice Department filing was the latest legal action tied to alleged money laundering at the fund set up by Malaysian Prime Minister Najib Razak in 2009 to promote economic development. In the complaints, the department alleges more than $4.5 billion was taken from 1MDB by high-level fund officials and their associates.

“This money financed the lavish lifestyles of the alleged co-conspirators at the expense and detriment of the Malaysian people,” Kenneth Blanco, acting assistant attorney general, said in a statement. 1MDB could not be immediately reached for comment.

Najib has denied taking money from 1MDB or any other entity for personal gain, after it was reported that investigators traced nearly $700 million to bank accounts that were allegedly in his name.

The assets U.S. authorities are seeking to seize include the rights to Dumb and Dumber To, a 2014 comedy starring Jim Carrey, they allege was financed with tens of millions of dollars stolen from 1MDB, and the 2015 film Daddy’s Home, starring Will Ferrell. Last year, U.S. authorities moved to seize rights to the 2013 film The Wolf of Wall Street, which starred DiCaprio.

The three films were produced by Red Granite, a company founded by Najib’s stepson Riza Aziz. Red Granite said in a statement it was in discussions with the Justice Department “aimed at resolving these civil cases and is fully cooperating.”

U.S. authorities accuse Jho Low, a Malaysian financier, of laundering more than $400 million stolen from the fund through an account in the United States, where he and his friends used the money to pay for lavish parties, gambling and yachts.

Despite the civil allegations, U.S. authorities have not charged Low with any crime.

Low did not immediately respond to a request for comment sent to his Hong Kong-based company Jynwel Capital.

Artwork, Oscar for DiCaprio

Authorities said that in 2014 Low used $3.2 million diverted from a 1MDB bond sale to buy a Picasso painting for DiCaprio.

“Dear Leonardo DiCaprio, Happy belated Birthday! This gift is for you,” a friend of Low’s wrote in a note.

Low also used $9.2 million diverted from 1MDB bond sales to buy a collage made by the New York artist Jean-Michel Basquiat which was also given to DiCaprio. DiCaprio and Low signed a note in March 2014 absolving the star of “any liability whatsoever resulting directly or indirectly from these art-work,” according to the filings.

A spokesman for DiCaprio said in an emailed statement on Thursday the actor last July “initiated the return” of gifts he had received from financiers connected to the 1MDB case. The spokesman said DiCaprio also returned an Oscar won by actor Marlon Brando which was given to DiCaprio by Red Granite “to thank him for his work on The Wolf of Wall Street,” the statement said.

DiCaprio’s spokesman said the star accepted the gifts to raise funds in an auction for his environmental foundation.

Complaints against 1MDB

Fraud allegations against 1MDB go back to 2009, the Justice Department said, and the fund is subject to money laundering investigations in at least six countries, including Switzerland and Singapore.

The complaints allege that officials at 1MDB, their relatives and other associates allegedly laundered the funds using complex transactions and shell companies with bank accounts located in the United States and abroad.

That allowed the origin, source and ownership of the funds to be hidden and ultimately passed through U.S. financial institutions, with the money being used to buy and invest in assets in the United States and overseas, according to the complaints.
…

The White House lacks a unified plan to increase the government’s borrowing cap as a likely September deadline is drawing near, said Mick Mulvaney, director of the Office of Management and Budget.

A failure by Congress to raise the debt ceiling could send dangerous shock waves through the global economy. The federal government could be at risk of defaulting on obligations such as interest payments on bonds as well as temporarily halting benefit programs.

The White House budget director suggested in an interview Thursday with reporters that neither the Trump administration nor Capitol Hill lawmakers had set their terms for an agreement.

“It’s fair to say we haven’t settled on a final way to address the debt ceiling any more than the Hill has,” Mulvaney said.

The former South Carolina congressman added that none of this was necessarily “unusual.”

Possible extension

Under the current borrowing restrictions, the government has already been taking extraordinary measures and will likely be unable to pay its bills at some point in September. But Congress still has a recess scheduled in August that could create time pressures. Private analysts say the debt ceiling deadline could be extended into October.

Mulvaney said he would like to see the debt ceiling raised in July.

But Trump administration officials still have yet to resolve internal differences on the best strategy to increase the legal cap on government debt, which already exceeds $19.8 trillion.

Mulvaney suggested he would like to have any increase in the borrowing authority be attached to other spending changes, a move that could attract Republican support but alienate Senate Democrats. President Donald Trump’s budget proposal seeks to beef up spending on the military and border security while cutting many social programs.

Treasury Secretary Steve Mnuchin has indicated he would like a “clean” bill to raise the debt ceiling, so it would not have to be tied to any spending changes, but Capitol Hill conservatives are resisting the idea.

“Secretary Mnuchin believes it needs to be clean. I think the vast majority of the Republican conferences would not agree,” said Representative Mark Meadows R-N.C., chairman of the Freedom Caucus, a group of strongly conservative House Republicans.

Mulvaney said Mnuchin would ultimately be in charge of handling the debt ceiling push “once we do settle on our formal policy, if we do.”

A 2011 standoff between Republicans and the Obama administration over the debt ceiling led to tighter controls on spending. That standoff was not resolved until the 11th hour and prompted Standard & Poor’s to impose the first-ever downgrade to the country’s credit rating.

Talks with lawmakers

The administration is also engaged in talks with House and Senate Republican leaders about what kind of increase they could possibly pass. Mulvaney said the issue was not a source of division inside the White House or the Republican Party.

The discussions involve whether the House should increase the debt limit enough to last through the 2018 election or the president’s first term.

“It would be foolish of us to come up with a policy devoid of having talked to the Hill,” Mulvaney said.

Congress also faces pressure to pass a budget in September for next fiscal year, as well as to address administration priorities that include a tax code rewrite and the proposed repeal of former President Barack Obama’s 2010 health insurance law.

Failure to pass spending bills could cause a government shutdown and cause nonessential government agencies to close. Trump suggested on Twitter last month that he might welcome a shutdown to help shake up the government.

Mnuchin told the Senate Budget Committee this week that “at times there could be a good shutdown,” though he cautioned it’s not the administration’s “primary objective.”

With action on the budget front otherwise stalled, the House Appropriations Committee on Thursday approved the first of 12 spending bills, an $89 billion measure that contains generous increases for veterans programs and Pentagon construction projects.

But the White House and its GOP allies — much less opposition Democrats — haven’t come up with an overall plan for implementing Trump’s promises to increase the Pentagon budget and advance more than $500 billion worth of annual domestic agency spending bills.
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The U.S. central bank raised its benchmark interest rate Wednesday amid concerns about sluggish growth, a slowdown in consumer spending and low inflation. But the head of the U.S. Federal Reserve says the one-quarter of 1 percent increase in the federal funds rate demonstrates the committee’s confidence in the overall health of the U.S. economy. Mil Arcega has more.
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The real estate firm owned by the family of Jared Kushner has withdrawn a request for a big tax break for one its buildings in Jersey City, New Jersey, the latest setback for the company in the area.

The Kushner Cos. sent a letter withdrawing its application for a 30-year break from city taxes for a planned two-tower project in the struggling Journal Square section of the city, Jersey City spokeswoman Jennifer Morrill said Wednesday. Opponents of the tax breaks marched downtown earlier this year and the city’s mayor recently came out against the Kushner request.

Jared Kushner was CEO of the family company before stepping down to become a senior adviser to his father-in-law, President Donald Trump.

Committed to area

Kushner Cos. spokesman James Yolles said the company is committed to the “much-needed investment” in that area of the city.

The loss of the tax break is the latest blow for the company in a city where it is major real estate developer.

The 79-story building, One Journal Square, gained attention last month after Jared Kushner’s sister, Nicole Kushner Meyer, mentioned her brother in a presentation in Beijing where she had hoped to attract Chinese investors in the building. Marketing material noted the “celebrity status” of her family.

Government ethics experts blasted the family for what they said was an attempt to profit off Jared Kushner’s position in Washington, and the Kushner Cos. canceled upcoming investor presentations in the country.

The company said Meyer wasn’t trying to use her White House ties to attract investors.

EB-5 visa program

The Kushner family is seeking 300 wealthy Chinese to invest a total of $150 million in One Journal Square. The family was trying to raise money through the EB-5 visa program that grants temporary U.S. residency to wealthy foreigners in exchange for investments of at least $500,000 in certain U.S. projects

The company also is in danger of losing another tax break for the building. The shared office space firm WeWork recently pulled out as anchor tenant. That has put in doubt a state tax break tied to WeWork.

Another project is off, too. The Kushner Cos. once considered bidding to develop a 95-acre industrial site along the Hackensack River in the city for housing, called Bayfront. Last month, it was revealed the family had withdrawn from those plans last year.

The Kusnher Cos. has said politics had nothing to do with its decision to withdraw from Bayfront, and that “economics of the deal” drove the move.

As for One Journal Square, company spokesman Yolles said the project will provide 4,000 construction jobs and $180 million in tax revenue for the city over 30 years.

Tax breaks an issue

Jersey City Mayor Steven Fulop, a Democrat, is running for re-election this fall, and tax breaks to developers have become a major issue.

Unlike neighboring Hoboken, Jersey City has granted dozens of tax breaks in recent years. Fulop had campaigned to reform the practice, but critics say he has done little.

Another Kushner property in the city overlooking the Hudson River got a five-year tax break soon after Fulop was elected mayor. That 50-story building has licensed the Trump name and is called Trump Bay Street. The building was also partly financed with EB-5 visa money from abroad.

The Kushner family owns or manages 20,000 apartments, 13 million square feet of office space and industrial properties in several states, including New York, New Jersey, Maryland and Illinois. 
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Fierce competition among car manufacturers requires constant search for ways to cut expenses without compromising safety and other standards. One of the areas with room for improvement is in manufacturing of car bodies, which could be made lighter but still strong enough to protect passengers. VOA’s George Putic visited the National Institute for Science and Technology, NIST, outside Washington, where everything starts with new ways of testing sheet metal.
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China’s three big Internet-driven companies, Alibaba, Tencent, and Baidu, are set to influence a vast section of the country’s business because they control data concerning the consumer and social behavior of millions of people. The awesome power comes from the government’s drive to develop a “big data” industry, which is thriving in China.

Several other players, including utilities like phone companies and retail chains, are also trying to dip into the newly discovered pot of money from buyers who need information to understand buying preferences of potential customers, and design their products and strategies in line with the data flows.

“It [big data] is an improvement to do [a] better job, but unfortunately your [consumer’s] lifeline is more and more dependent on these big three guys,” said Chiang Jeongwen, a professor of marketing at the China Europe International Business School.

Recent studies have shown that nearly 90 percent of China’s 731 million online users have made at least one online purchase, often involving the use of Baidu’s search facilities, e-commerce sites and third-party transactions using mobile phone apps.

Predicting trends

“People are buying things and using their third party payment systems. [That] information [is] also being captured by Tencent and Alibaba. That is huge because now they know both offline and online information of consumers,” said Chiang.

These companies own a wide range of businesses that makes it possible for them to gather both online and offline data that is generated when a customer uses a phone app to make payments at a physical shop.

Alibaba owns Alipay while Tencent runs the highly popular WeChat service which offers mobile payment options. Baidu is China’s biggest internet search engine and holds the kind of influence that Google does in other countries.

“They have diversified the services [that] they offer. Alibaba, they are big in e-commerce. The kind of data they generate comes from anything ranging from what you buy online to your bill payments, travel bookings you do with, for example, the Alipay app,” said Shazeda Ahmed, visiting academic in the technology and economics division of Mercator Institute of Chinese Studies.

“People use the same platforms to make purchases, so there is a sense of extreme power in this situation because you can do all of these on one platform,” she explained.

These companies have a very strong predictive power that comes from a vast store of historical data and real-time data that they are collecting from users of different services. “They kind of able to anticipate the next thing a user might want before the user himself is aware of it,” she said.

Trading in data

The expansion of big data has given rise to serious concerns about the privacy of millions of people, who reveal both their transaction information and facets of social behavior through social media.

China has seen the rise of a black market for data. Data sellers offer a wide range of data on a targeted person, business or community by cracking into official databases and privately run sites.

But Chinese officials insist the government has put in place strong safeguards.

“There is a very strong firewall built before the big data center was established,” Zhang Bin, a senior official of the main big data center established by the Chinese government in Guiyang city. “We also made strict policy to control the data leaks from the government, so these are the two ways to protect information not to be leaked to the private companies for illegal use.”

The government has established a big data exchange center in Guiyang to encourage private and state-run companies to trade in data in a transparent manner, and help the industry find out the real price of the information. The center has come in for some praise by foreign companies who visited it but some questions remain unanswered.

“Having a legitimate place to trade data is an idea, but how does an exchange ensure that the data controllers has to requisite rights to sell data and it’s not breach of privacy?” Gagan Sabharwal, director of the National Association of Software and Service Companies in India, said after a recent visit.
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Panama’s business community on Tuesday cheered the Central American country’s decision to establish full diplomatic ties with China and ditch Taiwan, hoping to deepen links with a key customer of the nation’s shipping canal.

Although there was regret at the cost to Taiwan, an ally of various Central American nations, there was broad support for President Juan Carlos Varela’s decision to throw his lot in with China, whose growing global ambitions contrast with U.S. President Donald Trump’s isolationist rhetoric.

“I’m sure it wasn’t an easy decision, given the long-term links we’ve had with Taiwan, but nonetheless, [China] is a global superpower, the world’s No. 2 economy, the second biggest user of the canal – and so we think this is a positive development that will result in more business and investment in Panama,” said Inocencio Galindo, president of Panama’s Trade, Industry and Agriculture chamber.

The diplomatic U-turn comes as China attempts to position itself as a defender of free trade in the face of the “America First” policy of Trump, who was elected in November 2016.

Chinese officials also celebrated the news.

Wang Weihua, the permanent representative in the Office of China-Panama Trade Development and Beijing’s top representative in the country, said various attempts had been made over the years without success to establish formal ties.

Late last year, more advanced talks began with Varela’s team that concluded only this week, said Wang, who added he was involved in the discussions.

China is interested in Panama for its strategic location, and as a trade and logistics hub, he added.

“China has made a big bet on Latin America, where it has strategic investments, and Panama, which didn’t have diplomatic relations, was losing out on those advantages,” he said in an interview. “Now Panama will be able to enjoy what our country can offer it in various sectors.”

Almost a fifth of the cargo crossing the isthmus last year went to or from China, which has been taking an increasing interest in the Panama Canal.

In March, the canal’s administrator, Jorge Quijano, said Chinese state firms were considering developing land around the waterway, which was recently expanded.

A spokesman for the canal said Quijano would address the implications of the diplomatic change for commerce on Thursday.

Bright Future

Taiwanese economic aid has helped support Central America, a region in the United States’ backyard that relies heavily on agriculture and struggles with law and order.

Its remaining allies were guarded about what the future held for their ties with Taiwan, which China considers a renegade province.

Panama’s foreign minister, Isabel de Saint Malo, said Varela had expressed an interest a decade ago in establishing ties with China. She hoped the move would lead to trade, investment and tourism opportunities, especially for “exporting more goods from Panama to China.”

According to Panamanian statistics, total trade between Panama and China was worth $1.1 billion in 2016 – roughly 12 times the value of the nation’s commerce with Taiwan. Chinese exports accounted for the vast majority of it.

Alvin Weeden, a former comptroller of Panama, said the decision to break ties with Taipei in favor of Beijing would boost business and should have been taken years ago, given Panama’s reliance on global trade and Chinese shipping.

“Every day, Taiwan is more isolated,” he said, adding he did not expect the move to hurt Panama’s ties with the United States, the top canal customer. “This is a reality that’s happening, a geopolitical reality.”

Octavio Vallarino, a partner of Desarrollos Bahia, a local real estate firm, said he hoped direct flights would soon be established between the two countries, and that the commercial real estate market would be bolstered by arriving Chinese firms.

Sara Pardo, president of Panama’s hotel association, said the accord could help make travel between the two countries easier.

“This is definitely going to strengthen the economy,” she said.
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Mexico’s ancient civilizations cultivated crops such as maize, tomatoes and chilies for thousands of years before the Spanish conquerors arrived — and now those native plants could hold the key to sustainable food production as climate change bites, said a leading ecologist.

José Sarukhán Kermez, who helped set up Mexico’s pioneering National Commission for the Knowledge and Use of Biodiversity (CONABIO), said that analyzing the genetic variability of traditional crops, and supporting the family farmers who grow most of the world’s food offered an alternative to industrial agriculture.

“We don’t need to manipulate hugely the genetic characteristics of these [crops] … because that biodiversity is there — you have to just select and use it with the knowledge of the people who have been doing that for thousands of years,” said Sarukhán, CONABIO’s national coordinator, in a telephone interview.

The emeritus professor and former rector of the National University of Mexico (UNAM) recently won the Tyler Prize for Environmental Achievement, often referred to as a “Nobel for the Environment.”

Making use of the knowledge held by indigenous groups is “absolutely essential,” Sarukhán told the Thomson Reuters Foundation.

That requires working with a wide range of people, from local cooks to small-scale farmers, especially in states like Oaxaca and Chiapas in the south of Mexico where indigenous farmers have a strong traditional culture, he said.

“They haven’t gone to university, and they don’t have a degree — but they damn well know how to do these things,” he said.

For example, they discover and incorporate new knowledge as they exchange seeds with peers from different areas.

Key is funding

CONABIO is hoping to win some $5 million in funding from the Global Environment Facility for a five-year project worth more than $30 million to speed up research into indigenous crops.

The aim is to enrich the commission’s vast online database of biodiversity, with a view to influencing national agricultural policy, said Sarukhán.

CONABIO’s information on the genetic adaptability of native plants will enable scientists to develop new lines that can tolerate wetter or more arid conditions as the climate changes, he said.

Highlighting the potential of climate-adapted native crops, Sarukhán said around 60 types of maize are grown across Mexico, from the coast to 3,000 meters (9,843 feet) above sea-level, while only a handful of species are sold commercially.

Forest protection

With Mexico’s hugely varied ecosystems and biodiversity under threat, the ecologist urged a greater focus on schemes to boost local incomes rather than giving grants to encourage people to maintain vast swaths of the country’s forest.

Projects like growing organic coffee in Oaxaca’s forests or ecotourism in Chiapas are helping provide communities with a decent income and an incentive to protect the environment, he said.

Rural and indigenous communities own 60 to 70 percent of all Mexico’s forests and natural ecosystems, he noted.

“That is the patrimony they have — they don’t have anything else to live on,” Sarukhán explained. “There are ways in which you can combine the sustainable management of the forest with more attractive incomes for the owners of the forest.”
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The World Bank on Tuesday approved financing worth more than $500 million for Afghanistan to support a string of projects to boost the economy, help improve service delivery in five cities and support Afghan refugees sent back from Pakistan.

The bank said the six grants, including donor money, worth some $520 million would help the Afghan government “at a time of uncertainty when risks to the economy are significant.”

The international troop withdrawal, which began in 2011, and political uncertainties have impacted Afghanistan’s economy, while a worsening security situation has added to budget pressures, the World Bank said.

“The package will help Afghanistan with refugees, expand private-sector opportunities for the poor, boost the development of five cities, expand electrification, improve food security and build rural roads,” the World Bank said in a statement.

In May, a World Bank report said economic growth in the country was likely to pick up this year but not enough to provide jobs needed by its growing population.

The largest chunk of the package, some $205.4 million, will go toward supporting communities affected by refugees returning from Pakistan, the World Bank said. Some 800,000 Afghans have been sent back from Pakistan and Iran, many of them left to rely on subsistence income in rural areas or low-paid work in towns.

In addition, $100 million will support reforms and business development for the poor; $20 million will go to improving services in five provincial capital cities; $29.4 million will help establish wheat reserves and improve grain storage; and $60 million will boost electricity in the western Herat province.
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The World Bank on Tuesday approved a $500 million loan to support Tunisia’s budget, a government official for the North African country said on Tuesday.

The funding followed the release by the International Monetary Fund of a delayed $320-million tranche of Tunisia’s IMF loan, after the government agreed to speed up economic reforms.

Praised as a model of democratic transition following its 2011 uprising to oust autocrat leader Zine El-Abidine Ben Ali, Tunisia has so far mostly failed to deliver on planned economic reforms to help create jobs and cut public deficits.

In a statement, the World Bank said the funding would support economic reforms to improve the business environment and boost investor confidence, as well as help expand access to finance.

“Along with supporting the implementation of the new competition and investment laws, this development policy loan will help the government’s efforts to improve the efficiency of public investments and promote greater participation of the private sector through public-private partnerships,” said Abdoulaye Sy, the bank’s senior economist for Tunisia.
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The United States is weighing imposing sanctions on countries that do business with North Korea and looking for ways to revive strained relations with Russia, U.S. Secretary of State Rex Tillerson said on Tuesday.

At a committee hearing, he also defended President Donald Trump’s plans for steep reductions in U.S. spending on diplomacy and foreign aid. Senators from both major parties charged that such cuts would ultimately hurt America.

At the start Tillerson told lawmakers that North Korea had released Otto Warmbier, a U.S. university student held captive for 17 months, and the United States was seeking the release of three other detained Americans.

Washington has sought to increase economic and political pressure on Pyongyang because of its nuclear and ballistic missile programs. The North has conducted five nuclear tests and is believed to be making progress toward an intercontinental ballistic missile that could hit the United States.

Tillerson said Washington is discussing North Korea with all of its allies, and seeing some response from China, its biggest trading partner. He said North Korea would top the agenda at next week’s high-level talks between U.S. and Chinese officials.

Tillerson said the United States would have to work with other countries to deny North Korea access to basics such as oil and will have to consider whether to impose sanctions on those doing business with North Korea.

“We are in a stage where we are moving into this next effort of, ‘Are we going to have to, in effect, start taking secondary sanctions because countries we have provided information to have not, or are unwilling, or don’t have the ability to do that?'” Tillerson told the Senate Foreign Relations Committee.

Because the United States has no trade with the North, its strongest way to impose economic pressure is through “secondary sanctions” that threaten companies from third countries with losing access to the U.S. market if they deal with Pyongyang.

Ties With Russia at a Low

Asked whether the United States wanted to see an Iran-style global embargo to deny exports of petroleum and other products to North Korea, Tillerson said that this would only work if Russia and China, the North’s main suppliers, cooperated.

Tillerson repeated his view that U.S. relations with Russia were at an all time-low and still deteriorating. Ties have been strained by differences over Syria, Ukraine and allegations, denied by Moscow, of Russian efforts to influence the 2016 U.S. presidential election.

He said the administration was trying to find a way to re-establish a working relationship, notably on Syria.

It took years of diplomacy with Russia and China to achieve consensus among major powers to impose the sanctions on Iran and a similar result with the North seems unlikely given Beijing’s reluctance to destabilize its neighbors.

Asked if China had lived up to its pledges to crack down on the North, Tillerson said its actions had been “uneven,” but added: “They have taken steps, visible steps that we can confirm. We are in discussions with them about entities inside of China.”

The purpose of Tillerson’s appearance, his first of four congressional hearings this week, was to discuss the budget. In all, the Trump proposal cuts about 32 percent from U.S. diplomacy and aid budgets, or nearly $19 billion.

Committee members, including some of Trump’s fellow Republicans, spoke sharply against the plan. Republicans control both houses of Congress, which sets the federal government budget.

Separately, 16 retired senior generals and other ex-military officers said they would submit joint testimony to the Senate on Wednesday about the importance of foreign aid to national security.
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The Trump administration is proposing to curb the authority of the consumer finance watchdog created following the economic crisis as it drives toward easing restrictions on banks and financial institutions.

The Treasury Department issued Monday the first part of a review that was ordered by President Donald Trump in one of his earliest acts as president.

The report reviewing the Dodd-Frank financial oversight law also urges changes to rules for banks that were put in place under the 2010 law. The law aimed to restrain banks – which received hundreds of millions in taxpayer bailouts – from the kind of misconduct that many blamed for the crisis.

The law was enacted by President Barack Obama and Democrats in Congress to tighten regulation after the 2008-09 financial crisis that sparked the Great Recession that cost millions of Americans their jobs and homes.

Trump, however, has called Dodd-Frank a “disaster” that has crimped lending, hiring and the overall economy. He promised to do “a big number” on it.

“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth, and to create opportunities for all Americans to benefit from a stronger economy,” Treasury Secretary Steven Mnuchin said in a statement Monday.

The report outlines what it calls core principles of financial regulation – including overhauling the Consumer Financial Protection Bureau and having more “efficient” bank rules.

The CFPB oversees the practices of companies that provide financial products and services, from credit cards and payday loans to mortgages and debt collection. It has been a prime target of Republican lawmakers, who accuse it of regulatory overreach.

The new report urges Congress to remove the agency’s authority to supervise banks and financial companies, returning that power to other federal and state regulators, respectively. And it proposes enabling the president to remove the CFPB director at will without citing a cause for firing. That’s the subject of a battle now in federal court.

The CFPB’s structure and broad regulatory powers have led to “abuses and excesses,” and hindered consumer choice and access to credit, the report says.

The Treasury report comes a few days after the Republican-led House approved sweeping legislation to undo much of Dodd-Frank, repealing about 40 of its provisions. That was passed on a largely party-line vote of 233-186, but is unlikely to clear the Senate in its current form.

The administration’s report is narrower in scope and ambition than the House-passed legislation. It could provide a blueprint for regulators to rewrite the Dodd-Frank rules, as Trump continues to fill out his team of top financial overseers.

Mnuchin said in separate congressional testimony Monday that he expects to be able to work with the regulators on 70 to 80 percent of the proposed changes. But Congress would need to pass legislation to actually revamp the law – for example, to change the CFPB’s authority.

Among the banking rules, the new report focuses closely on the so-called Volcker Rule, established by Dodd-Frank to generally bar banks from trading for their own profit instead of for customers. The idea behind the rule was to prevent high-risk trading bets that could imperil federally insured deposits.

The report proposes exempting from the rule banks with less than $10 billion in assets and those that have over $10 billion with few trading assets. The House legislation would repeal it altogether.

So-called living wills, the plans that big banks must submit to regulators detailing how they would reshape themselves in the event of failure, should be required every two years instead of the current annual mandate, the report says.

Aaron Klein, a Treasury Department official in the Obama administration, said the proposed changes were unlikely to achieve the economic growth Trump is seeking.

“The financial regulatory system isn’t what is stopping 3 percent economic growth,” said Klein, now a fellow at the Brookings Institution. “If you’re looking in the wrong place, you’re not likely to find the answer.” Better for the administration to find ways to promote investment in the U.S., he suggested.

Klein said the changes proposed for the CFPB would inject more politics into financial regulation. He did see some positive ideas, however, such as increased coordination among financial regulators.

Bank industry groups, which had consulted with Mnuchin and other Treasury officials as they prepared the report, expressed approval of it Monday.

Looking outside Dodd-Frank, the report calls for a task force to reconsider the Community Reinvestment Act, a 1977 law designed to monitor banks’ practices in low-income and minority communities, such as new branch openings. Regulators can fine or sanction banks under the law when they find patterns of discrimination.

The law is widely promoted by Democratic lawmakers and community and civil rights groups.
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Britain’s descent into political crisis just days before Brexit talks begin has sapped confidence among business leaders and infuriated bosses who were already grappling with the fallout from the vote to leave the EU.

The failure by Prime Minister Theresa May to win a parliamentary majority in last week’s election has pushed the world’s fifth largest economy towards a level of political uncertainty not seen since the 1970s.

May called the election to secure a mandate for her vision of a “hard Brexit” – driving down migration by taking Britain out of the single market and the customs union. Instead, she got a hung parliament in which no single party has a majority. Business leaders demanded a re-think.

“The U.K. has had a reputation, earned over the generations, for stability and predictability in its government,” a senior executive at a multi-national company listed on the London FTSE 100 told Reuters on condition of anonymity. “That reputation in 12 months has been destroyed, truly destroyed. First by Brexit and now through this election.”

A survey by the Institute of Directors (IoD) found only 20 percent of its nearly 700 members were now optimistic about the British economy over the next 12 months, compared with 57 percent who were quite or very pessimistic.

The IoD survey, taken after the election, found a negative swing of 34 points in confidence in the economy from its previous survey in May.

“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could — if not addressed immediately — be disastrous for the U.K. economy,” said Stephen Martin, director general of the IoD.

The collapse in confidence, which follows a short-term drop after last year’s Brexit vote, coincides with a slowdown in the wider economy that has taken hold since the start of this year, as rising inflation pushes up the price of goods.

Figures from credit card firm Visa showed British consumers turned more cautious even before the shock election result, with households cutting their spending for the first time in nearly four years last month.

The Confederation of British Industry (CBI) warned there was now a risk businesses would cut back on investment which has largely held up since last year’s Brexit vote.

And the trade group that represents manufacturers, the EEF, said its members were having to navigate the most uncertain political territory in Britain for decades.

Both groups called on the government to rethink its approach to Brexit, saying the country needed tariff-free access to the single market and a steady flow of migrant workers.

Some executives hoped the political paralysis would lead to a ‘softer Brexit’, with access to markets prioritized over a clamp down on immigration.

“Here we are again: another bolt from the blue, a political earthquake that we didn’t think used to happen in the U.K.,” CBI Director General Carolyn Fairbairn said at a conference hosted by the Resolution Foundation. “But I do think there are opportunities in this, and it is an opportunity to refocus back on the economy to talk about jobs, growth, future prosperity.”

Having slid to its lowest for nearly two months against the dollar on Friday, the pound fell broadly again on Monday.

Left in limbo

Business executives warned the political uncertainty could be felt across a wave of sectors.

Leaders of the drugs industry warned of the hazards of government limbo at a critical time for the highly regulated sector as companies seek clarity on the rules that will govern their business after Brexit.

Andy Bruce, the CEO of Lookers, one of Britain’s biggest car dealerships, said the lack of a clear result meant the highly successful industry had now entered “uncharted waters” in terms of how many new cars it could sell.

And Martin Sorrell, CEO of WPP, the world’s largest advertising agency, told Reuters he feared increased economic uncertainty, which meant “weak investment and postponement of decision making.”

“Now it seems that we could have no deal because of the short time fuse and lack of decisive government decision making, or a soft Brexit, the latter with more movement and membership of the single market,” he said.

Bankers, at the heart of London’s huge financial center, cautioned of the impact on takeover activity.

“So long as uncertainty is there I don’t see that as particularly positive for M&A in the short term,” Karen Cook, chairman of investment banking at Goldman Sachs said at the Reuters Global M&A summit.

Gareth Vale, marketing director at recruitment group Manpower, said its clients were very apprehensive, and had not yet fully grasped the impact that Brexit would have.

“I think the uncertainty around Brexit, and more recently the general election, has created a sense of almost inertia, which has prevented them from considering some of the bigger seismic shifts that are on the horizon.”
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The Trump administration has a backup plan to keep the government from defaulting on its financial obligations even if Congress misses an August deadline to raise the debt limit, Treasury Secretary Steven Mnuchin told a congressional panel Monday.

Mnuchin had previously set an August deadline for the federal government to avoid a catastrophic default. Mnuchin said he still prefers that Congress increase the government’s authority to borrow before lawmakers leave on a five-week break in August.

However, he said he is “comfortable” that the Treasury Department can meet the government’s financial obligations through the start of September. Private analysts say Mnuchin probably has even greater leeway.

“If for whatever reason Congress does not act before August, we do have backup plans that we can fund the government,” Mnuchin said without elaborating. “So I want to make it clear that that is not the timeframe that would create a serious problem.”

The federal government technically hit the debt limit in March, but Treasury has been using accounting steps known as “extraordinary measures” to avoid a default.

Shortly before Mnuchin testified, a Washington think tank projected that despite the slowdown in revenues, the government will have enough cash to pay its bills until October or November.

The Bipartisan Policy Center says that revenue results from this month’s quarterly tax payments could clarify the deadline, but for now it forecasts that Mnuchin has sufficient maneuvering room to keep the government solvent into the fall. The policy center says a big Oct. 2 payment into the military retirement trust fund could trigger default.

As of Friday, the Treasury had a cash balance of $148 billion, down from $204 billion a month ago. The national debt is nearly $20 trillion, including money owed to several federal programs.

Vote on debt limit

Raising the debt limit has become a politically-charged vote in Congress, even though economists believe that an unprecedented default would be catastrophic for the economy. Republicans, who control Congress and the White House, are struggling to come up with a strategy to raise the debt limit, with some GOP members demanding spending cuts in exchange for their vote.

But since Republicans have many members who simply refuse to vote for a debt increase, GOP leaders such as Speaker Paul Ryan of Wisconsin may have no choice but to seek help from Democrats, who are demanding that any debt limit hike be “clean” of GOP add-ons.

Lawmakers are trying to deal with the debt limit while at the same time a House panel is beginning work on spending bills to fund the government.

Republicans controlling the House are taking the first steps to approve President Donald Trump’s big budget increase for veterans’ health care and the Pentagon.

Spending bill

At stake is an $89 billion spending bill for the Department of Veterans Affairs and Pentagon construction projects that’s scheduled for a preliminary panel vote on Monday. The bill would give the VA a 5 percent budget hike for the budget year beginning in October as the agency works to improve wait times and correct other problems.

The Defense Department, meanwhile, would receive a $2 billion, 10 percent increase for military construction projects at bases in both the U.S. and abroad.

“This legislation includes the funding and policies necessary to deliver on our promises to our military and our veterans,” said House Appropriations Committee Chairman Rodney Frelinghuysen, a Republican from New Jersey.

Republicans are still struggling to come up with a broader budget that would dictate spending levels for other agencies. Trump has proposed sharp cuts to many domestic agencies and foreign aid as a means to pay for increases for the military. But many GOP lawmakers have already signaled that they disagree with Trump.

Under Washington’s arcane budget rules, lawmakers are first supposed to pass an overall fiscal blueprint called a budget resolution before tackling the annual round of spending bills. This year, that budget plan is also the key to unlocking action later this year on legislation to overhaul the tax code, a top GOP priority.

Instead, Republicans are split into three camps on spending: defense hawks who want even more money for the military than proposed by Trump; pragmatists who are defenders of domestic programs; and conservatives who agree with Trump’s plan to cut domestic agencies and deliver the proceeds to the Pentagon.

For now, those GOP divisions have meant an impasse for Trump’s overall budget and tax agenda.
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General Electric says Jeff Immelt is stepping down as CEO. John Flannery, president and CEO of the conglomerate’s health care unit, will take over the post in August.

The 61-year-old Immelt will stay on as chairman until his retirement from the position at the end of the year, with the 55-year-old Flannery stepping into the role after that.

In addition, Chief Financial Officer Jeff Bornstein was named vice chair.

GE said Monday that the moves were part of its succession plan.

Shares of General Electric Co. climbed more than 2 percent in premarket trading.

 
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The board of Uber was meeting Sunday to consider placing the CEO of the ride-hailing company on leave, according The New York Times and other news outlets.

The Times reported that three people with knowledge of the matter have confirmed that Uber’s board was meeting to consider recommendations from a law firm hired to review Uber’s corporate culture and that the board may decide to put CEO Travis Kalanick on temporary leave.

The newspaper said its sources requested anonymity because they were not authorized to speak for Uber.

Uber Technologies Inc. has been rocked by accusations that its management has fostered a workplace environment where harassment, discrimination and bullying are left unchecked.

Uber spokesman Matt Kallman said that he wasn’t sure the company would make a statement after the meeting.

Reuters and the tech blog Recode reported the board meeting earlier. The Wall Street Journal also was citing unnamed sources about the meeting.

Uber has hired the law firm of former Attorney General Eric Holder to review policies and recommend changes. A report by his firm, Covington & Burling, was expected to be made public soon.

Uber announced last week that it fired 20 employees for harassment problems.

Under CEO Kalanick, Uber has shaken up the taxi industry in hundreds of cities and turned the San Francisco-based company into the world’s most valuable startup. Uber’s valuation has climbed to nearly $70 billion.

Management style at issue

But Kalanick has acknowledged his management style needs improvement. The 40-year-old CEO said earlier this year that he needed to “fundamentally change and grow up.”

In February, former Uber engineer Susan Fowler wrote on a blog that she had been propositioned by her boss in a series of messages on her first day of work and that superiors ignored her complaints. Uber set up a hotline for complaints after that and hired the law firm of Perkins Coie to investigate.

That firm checked into 215 complaints, with 57 still under investigation.

Uber has been plagued by more than sexual harassment complaints in recent months. It has been threatened by boycotts, sued and subject to a federal investigation that it used a fake version of its app to thwart authorities looking into whether it is breaking local laws.

Kalanick lost his temper earlier this year in an argument with an Uber driver who was complaining about pay, and Kalanick’s profanity-laced comments were caught on video.

In a March conference call with reporters after that incident, board member Arianna Huffington expressed confidence that Kalanick would evolve into a better leader. But Huffington, a founder of Huffington Post, suggested time might be running out.

He’s a “scrappy entrepreneur,” she said during the call, but one who needed to bring “changes in himself and in the way he leads.”

The board meeting comes fresh on personal tragedy in Kalanick’s life. His mother was killed in late May after the boat she and her husband were riding in hit a rock. Kalanick’s father suffered moderate injuries.

The Wall Street Journal reported Sunday that Chief Business Officer Emil Michael is planning to resign as soon as Monday.

The company has faced high turnover in its top ranks. In March, Uber’s president, Jeff Jones, resigned after less than a year on the job. He said his “beliefs and approach to leadership” were “inconsistent” with those of the company.

In addition to firing 20 employees, Uber said Tuesday that it was hiring an Apple marketing executive, Bozoma Saint John, to help improve its tarnished brand. Saint John most recently was head of global consumer marketing for Apple Music and iTunes.
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U.S. Commerce Secretary Wilbur Ross is likely to impose a new sugar trade deal with Mexico even if final revisions to it fail to win support from the U.S. industry, trade lawyers and experts say.

After announcing a deal this week that would dramatically cut the amount of refined sugar that Mexico ships to the United States, officials from the two countries are working with their industries on final language that would govern its operation.

At issue is a new right of first refusal granted to Mexico to supply all U.S. sugar needs not met by domestic suppliers or other foreign quota holders.

A coalition of American sugar cane and beet farmers and a major refiner want a more explicit guarantee that the U.S. Department of Agriculture, not Mexican producers, will dictate what type of sugar fills that gap. They are worried that a flood of refined sugar will pour in, rather than the raw sugar needed to keep U.S. mills running.

Sugar, lumber issues

The final sticking point stands in the way of resolving a years-long dispute over Mexican access to the highly regulated U.S. sugar market, which is protected by a complex web of subsidies and rationed quotas for foreign producers.

The sugar industry is known for its sway in Washington. But its point of view on Mexican imports is not shared by sugar users such as confectioners and soda makers.

The Trump administration wants to clear away the sugar dispute and a lumber trade row with Canada before starting full-scale negotiations to revise the North American Free Trade Agreement.

An industry rarely objects to a government-negotiated settlement of its anti-dumping case, and U.S. sugar producers could do little to stop the Commerce Department from implementing a final deal after a two-week comment period, said Seattle-based trade lawyer William Perry, who previously worked at Commerce and the U.S. International Trade Commission.

‘Never entirely happy’

While the industry could ask the International Trade Commission to overturn the settlement that suspends anti-dumping and anti-subsidy duty orders issued in 2014, chances for success look slim. The panel in 2015 rejected a challenge by two sugar refiners to the previous U.S.-Mexico pact.

“Petitioners are never entirely happy with suspension agreements like this,” Perry said. “They would rather have anti-dumping and countervailing duty orders with rates high enough to shut out imports.”

A Commerce spokesman said that Ross hoped the U.S. sugar industry would ultimately endorse the final agreement.

Willing to compromise

Gary Hufbauer, a trade expert at the Peterson Institute for International Economics, said the administration was probably willing to compromise on some industry-specific concerns to help reach its larger NAFTA goals of reducing U.S. trade deficits.

The U.S. sugar industry must probably present evidence of new Mexican dumping before going back to Commerce for more changes to the deal, said Daniel Pearson, a senior fellow of the libertarian Cato Institute and former International Trade Commission chairman.

“They would do well to take this agreement and run with it and see how it works,” Pearson said, noting that it raises prices and keeps U.S. refiners well-supplied with raw sugar.

Mexico OK with language

Mexico made major concessions to maintain its access to the lucrative U.S. market, agreeing to ship no less than 70 percent of its quota volume as raw sugar to U.S. refineries. It gave ground on nearly all of the U.S. producers’ demands.

American Sugar Alliance spokesman Phillip Hayes said the final hurdle should be easy to address by making clear that the USDA, not Mexico, can dictate the type and purity level of any additional imports.

But Juan Cortina, head of Mexico’s main sugar trade group, said there was no problem with the language because any additional needs would filled with raw sugar, as Mexican producers would have to keep higher inventories of that grade.
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French cosmetics and luxury goods group L’Oreal has started exclusive talks to sell The Body Shop business to Brazilian makeup company Natura Cosmeticos in a possible 1 billion euros ($1.1 billion) deal.

Earlier this year, L’Oreal had announced it was reviewing its strategy for The Body Shop, which it bought for 652 million pounds in 2006, and the sale of the business had attracted a wide range of bidders.

L’Oreal said on Friday it had received a firm offer from Natura Cosmeticos, and the proposed deal put an enterprise value (equity plus debt) of 1 billion euros on the four-decades-old beauty brand — an innovator in the mass marketing of cosmetics made without animal testing and with natural ingredients.

Founded in 1976 by British entrepreneur Anita Roddick, The Body Shop was a pioneer in its field but had since fallen victim to increased competition from newcomers offering similar products based on natural ingredients with no animal testing.

L’Oreal shares were up 0.7 percent in late session trading, as investors welcomed progress toward a deal and the price tag.

“It’s a good move, given that The Body Shop had been one of the least profitable parts of the L’Oreal business,” said Roche Brune Asset Management fund manager Gregoire Laverne.

Keren Finance fund manager Gregory Moore said the price tag had pleased L’Oreal investors, since earlier reports had stated it could be sold for around 800 million euros.

“The stock has reacted well to the news, because there were some people who thought it could be sold for less,” said Moore, whose firm owns L’Oreal shares in its portfolio.

Shares in Natura fell 2.4 percent on the Brazil stock exchange, with Natura saying it would take on loans to finance the deal.

Natura chief executive Joao Paulo Ferreira said The Body Shop would fit in well with Natura’s similar businesses, such as its Aesop brand.

L’Oreal shares are up around 10 percent so far in 2017, broadly in line with the CAC-40, with the stock having touched a record high earlier this month.
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Thanks to an explosion of bike share apps and providers, China is rediscovering its love of bicycles. In cities across the country and in the capital of Beijing, a colorful bike-share revolution is taking over on the streets, helping ease traffic snarls and keeping the air cleaner. It is also creating some problems.

China used to be called the “kingdom of bicycles,” and though cars have taken over in a major way, the growing popularity of bike-share apps seems to indicate two-wheelers are making a come back.

​Color revolution

For drab and dusty Beijing, the bike-share color revolution of yellows, oranges and blues is a welcome sight. People of all ages are enjoying the convenience the bikes provide, which combines cell phone technology, and GPS tracking in some cases, to help users find a ride.

Traveling by car across the sprawling, densely populated city is often a nightmare. Even distances of a few kilometers can take up to an hour when traffic is snarling.

Cheng Li, a bike-share user, said he has been driving his car less and using the metro more since he started using the service about six months ago.

“After I get off the metro, I usually have to walk another kilometer or two, so I’ll grab a bike share and go. It’s less stressful,” Cheng said.

For many, the convenience of cycling is its biggest attraction. Beijing’s city government has long had a bike-share program in place, but many of its bike-share stations were inconveniently located. Getting registered for the smart phone based apps is also much easier.

For Zhang Jian, the bike-share revolution is not only convenient, but nostalgic.

“Now, when we’re riding home from work, especially in the evening, when it’s not as rushed, it feels like we’re reliving the past,” Zhang said.

​Great Wall of bikes

But with a growing number of providers, competition is getting increasingly fierce. One key tactic of providers has been to flood the streets with bikes — so much so that sidewalks are almost blocked in some cases.

The surge of bikes has become a major headache for city governments. Users frequently leave bikes in the middle of the street or just dump them on the sidewalk blocking passageways in an already densely populated city.

In Beijing’s southern district of Daxing, authorities have been fighting the surge by seizing the illegally parked bikes that clog streets and metro exits, one transportation worker said.

“Bike sharing is really convenient, but no one is taking care of the problem of illegally parked bikes,” the worker said. Behind her are several thousand bikes that have been seized. It was unclear when or how they would be returned to the companies that made them.

“Since the Lunar New Year, the number of bikes has been growing rapidly. At least 10,000 bikes have been added to the streets (of Daxing) since then, and we’ve collected about a third of that total,” she said.

China’s two biggest operators, Ofo and Mobike, have deployed more than 3 million bikes in scores of cities across the country. And the numbers continue to grow.

Mobike aims to expand to 100 cities at home and abroad by the end of this year.

Bike hunters

While many complain the bike-share revolution has taken over city streets, some like Gao Xiaochao are taking matters into their own hands.

Gao is one of many who call themselves bike-share hunters. Bike-share hunters find and report stolen and vandalized bikes that users deliberately park outside their homes or inside gated communities. With some bike-share apps, riders can report illegally parked bikes or other problems the two-wheelers may have.

Gao uses his lunchtime to find, report and move illegally parked bikes.

“Bike hunting is like a game, a hobby, a way to get some exercise. It’s like a new way of living,” Gao said. “Sometimes, I spend two to three hours looking for illegally parked bikes and it’s just like talking a walk.”

Many like Gao are passionate about bike sharing and what it is doing to help transportation and the city’s notoriously smoggy air.

However, as complaints grow and competition gets increasingly cut-throat, they hope companies will do more to improve their service and not just focus on flooding the streets with bikes to edge out competitors.
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Ivanka Trump’s fashion brand sought to distance itself from a Chinese manufacturer that has come under scrutiny after activists investigating labor conditions there were detained, saying the company last made its products three months ago.

In a statement released Wednesday, the brand’s president, Abigail Klem, said Ivanka Trump shoes, which are made by licensing partner Mark Fisher, have not been produced since March at the Huajian Group factory where alleged labor abuses occurred. She added “our licensee works with many footwear production factories and all factories are required to operate within strict social compliance regulations.”

But it is unclear whether that was really the end of the relationship.

Undercover workers

China Labor Watch, a New York nonprofit, began scrutinizing Ivanka Trump supply chains more than a year ago, according to Li Qiang, the group’s executive director. Three China Labor Watch investigators went into Huajian Group factories undercover posing as workers in March, April and May of this year and found Ivanka Trump merchandise inside, Li said.

He said the investigators also found evidence of planned production, namely an April production schedule indicating pending orders for nearly 1,000 pairs of Ivanka Trump shoes due by the end of last month.

Now all three men are in jail, accused of using illegal recording devices to disrupt Huajian’s business. The U.S. State Department and Amnesty International have spoken out against the arrests. So far, Ivanka Trump and her brand have not.

Two days off a month?

China Labor Watch laid out its initial allegations in an April letter to Ivanka Trump. It said workers regularly put in more than 15 hours a day, with just two days off a month. It said most were paid by the piece, taking home just $363 a month for 300 hours of work, and that managers verbally abuse workers.

“China Labor Watch expects you, as an assistant to the president and an advocate for women’s rights, to urge your brand’s supplier factories to improve their conditions,” Li wrote in the letter. “Your words and deeds can make a difference in these factory workers’ lives.”

The Huajian Group says the undercover activists were out to steal trade secrets and denies the allegations of poor working conditions.

Global companies take a hit

Some argue that the arrest of independent monitors threatens to hamper the ability of global companies to adequately monitor their Chinese suppliers. China has rebuffed the State Department’s request to release the activists, saying the men will be dealt with under China’s own sovereign laws.

China has swept up hundreds of human rights lawyers and labor activists in recent years and has scrutinized groups with foreign ties, like China Labor Watch, much more closely.

Alicia Edwards, a State Department spokeswoman, said this week that the U.S. is concerned by “the pattern of arrests and detentions.” Labor activists, she added, are instrumental in helping American companies understand conditions in their supply chains and holding Chinese manufacturers accountable under Chinese law.

 
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