Month: May 2018

The United States is escalating trans-Atlantic and North American trade tensions, imposing a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from the European Union, Canada and Mexico that will go into effect on Friday.

 

The move is prompting immediate retaliatory tariffs from the Europeans – expected to target such iconic American products as Harley Davidson motorcycles and Levi’s jeans, as well as Kentucky bourbon and Tennessee whiskey.

“We look forward to continued negotiations, both with Canada and Mexico on the one hand, and with the European Commission on the other hand, because there are other issues that we also need to get resolved,” U.S. Commerce Secretary Wilbur Ross told reporters in a telephone briefing on Thursday.

“This is a bad day for world trade,” responded European Commission President Jean-Claude Juncker, who announced there is “no choice” but to proceed with a World Trade Organization dispute settlement case and additional duties on numerous U.S. imports.

“We will defend the EU’s interests, in full compliance with international trade law,” Juncker added.

U.S. President Donald Trump has said the tariffs are needed for national security, claiming current trade deals harm U.S. companies and cost America jobs.

The U.S. also negotiated voluntary export limits from South Korea, Argentina, Australia and Brazil, said the commerce secretary.

The U.S. also negotiated quotas or volume limits on other countries such as South Korea, Argentina, Australia and Brazil instead of tariffs, Ross told reporters.

Ross, in Paris, interviewed after the announcement on CNBC, brushed off retaliatory moves by Europe on $3 billion worth of American goods, saying “it’s a tiny, tiny fraction of one percent” of trade.

Ross, a banker known for restructuring failed companies prior to joining Trump’s Cabinet, also predicted America’s trading partners “will get over this in due course.”

“The United States is taking on the whole world in trade and it’s not going to go well,” predicted Simon Lester, trade policy analyst at the libertarian Cato Institute.

‘Not very cataclysmic’

The U.S. trade action has spooked investors, sending key U.S. stock indexes down in Thursday morning trading.

The drop is “not very cataclysmic in any event,” responded Ross in the CNBC interview.

Reacting to that comment, Lester told VOA News that while “we’re not talking about the end of the world, that’s true, but it’s still bad for the economy.”

Expected higher prices for U.S. consumers on some products is only one side of the equation, according to Ross, who noted that steel and aluminum makers in the United States are adding employment and opening facilities as a result of the U.S. government action.

“You can create a few jobs, however, you’re going to lose more in the process” as consuming industries will be placed at a disadvantage of paying more for raw materials compared to their foreign competitors, according to Lester.

“We are deeply disappointed that the U.S. has decided to apply tariffs to steel and aluminum imports from the EU on national security grounds,” according to a statement from the British government. “The UK and other European Union countries are close allies of the U.S. and should be permanently and fully exempted from the American measures on steel and aluminum.”

The Confederation of British Industry, representing 190,000 businesses in the United Kingdom, immediately appealed to the EU to “avoid any disproportionate escalation” by taking retaliatory actions.

‘No winners’

“There are no winners in a trade war, which will damage prosperity on both sides of the Atlantic,” said CBI International Director Ben Digby in a statement. “These tariffs could lead to a protectionist domino effect, damaging firms, employees and consumers in the USA, UK and many other trading partners.”

 

Prior to Ross’ announcement, Germany’s foreign minister, Heiko Maas, declared “protectionism and isolation against free trade mustn’t regain the upper hand.”  

Maas spoke at a news conference on Thursday alongside his Chinese counterpart Wang Yi, saying neither Berlin nor Beijing had an interest in “turning back the clocks when it comes to trade policy.”

 

Wang stressed the importance of the two countries’ common interests when it comes to finance and security policies and said China would continue to open its markets for its trade partners.

 

German’s Chancellor Angela Merkel, during a visit to Lisbon, Portugal, on Thursday said the 28-nation European Union has made plain to the United States that such tariffs are incompatible with World Trade Organization rules.

 

Trump, in March, announced the United States would impose such tariffs but he granted an exemptions that expire Friday to the EU and other U.S. allies.

France’s finance minister, Bruno Le Maire, who met Ross earlier on Thursday, says the U.S. shouldn’t see global trade like the Wild West or the “gunfight at the OK Corral.”

 
…

When Oregon lawmakers created the state’s legal marijuana program, they had one goal in mind above all else: to persuade illicit pot growers to leave the black market.

That meant low barriers to entry that also targeted long-standing medical marijuana growers, whose product is not taxed. As a result, weed production boomed — with a bitter consequence.

Now, marijuana prices here are in free fall, and the craft cannabis farmers who put Oregon on the map decades before broad legalization say they are in peril of losing their now-legal businesses as the market adjusts.

Oregon regulators on Wednesday announced they will stop processing new applications for marijuana licenses in two weeks to address a severe backlog and ask state lawmakers to take up the issue next year.

​California takes heed

Experts say the dizzying evolution of Oregon’s marijuana industry may well be a cautionary tale for California, where a similar regulatory structure could mean an oversupply on a much larger scale.

“For the way the program is set up, the state just wants to get as many people in as possible, and they make no bones about it,” Hilary Bricken, a Los Angeles-based attorney specializing in marijuana business law, said of California. “Most of these companies will fail as a result of oversaturation.”

A staggering inventory

Oregon has nearly 1 million pounds (453,600 kilograms) of marijuana flower, commonly called bud, in its inventory, a staggering amount for a state with about 4 million people. Producers told The Associated Press wholesale prices fell more than 50 percent in the past year; a study by the state’s Office of Economic Analysis found the retail cost of a gram of marijuana fell from $14 in 2015 to $7 in 2017.

The oversupply can be traced largely to state lawmakers’ and regulators’ earliest decisions to shape the industry.

They were acutely aware of Oregon’s entrenched history of providing top-drawer pot to the black market nationwide, as well as a concentration of small farmers who had years of cultivation experience in the legal, but largely unregulated, medical pot program.

Getting those growers into the system was critical if a legitimate industry was to flourish, said Sen. Ginny Burdick, a Portland Democrat who co-chaired a committee created to implement the voter-approved legalization measure.

Lawmakers decided not to cap licenses; to allow businesses to apply for multiple licenses; and to implement relatively inexpensive licensing fees.

The Oregon Liquor Control Commission, which issues licenses, announced Wednesday it will put aside applications for new licenses received after June 15 until a backlog of pending applications is cleared out. The decision comes after U.S. Attorney Billy Williams challenged state officials to address Oregon’s oversupply problem.

“In my view, and frankly in the view of those in the industry that I’ve heard from, it’s a failing of the state for not stepping back and taking a look at where this industry is at following legalization,” Williams told the AP in a phone interview.

But those in the industry supported the initial decisions that led to the oversupply, Burdick said.

“We really tried to focus on policies that would rein in the medical industry and snuff out the black market as much as possible,” Burdick said.

​Consolidation

Lawmakers also quickly backtracked on a rule requiring marijuana businesses have a majority ownership by someone with Oregon residency after entrepreneurs complained it was hard to secure startup money. That change opened the door to out-of-state companies with deep pockets that could begin consolidating the industry.

The state has granted 1,001 producer licenses and has another 950 in process as of last week. State officials worry if they cut off licensing entirely or turn away those already in the application process, they’ll get sued or encourage illegal trade.

Some of the same parameters are taking shape in California, equally known for black-market pot from its Emerald Triangle region.

The rules now in effect there place caps only on certain, medium-sized growing licenses. In some cases, companies have acquired dozens of growing licenses, which can be operated on the same or adjoining parcels. The growers association is suing to block those rules, fearing they will open the way for vast farms that will drive out smaller cultivators.

Beau Whitney, senior economist at national cannabis analytics firm New Frontier Data, said he’s seeing California prices fall.

In contrast, Washington knew oversupply could draw federal attention and was more conservative about licensing. As the market matured, its regulators eased growing limits, but the state never experienced an oversupply crisis.

Colorado has no caps on licenses, but strict rules designed to limit oversupply allow the state to curtail a growers’ farm size based on past crop yields, existing inventory, sales deals and other factors.

Chain stores

In Oregon, cannabis retail chains are emerging to take advantage of the shake-up.

A company called Nectar has 13 stores around the state, with three more on tap, and says on its website it is buying up for-sale dispensaries too. Canada-based Golden Leaf Holdings bought the successful Oregon startup Chalice and has six stores around Portland, with another slated to open.

William Simpson, Chalice’s founder and Golden Leaf Holdings CEO, is expanding into Northern California, Nevada and Canada. Simpson welcomes criticism that he’s dumbing down cannabis the same way Starbucks brought coffee to a mass market.

“If you take Chalice like Starbucks, it’s a known quantity, it’s a brand that people know and trust,” he said.

Amy Margolis, executive director of the Oregon Cannabis Association, says that capping licenses would only spur even more consolidation in the long-term. The state is currently working on a study that should provide data and more insight into what lies ahead.

“I don’t think that everything in this state is motivated by struggle and failure,” she said. “I’m very interested to see … how this market settles itself and (in) being able to do that from a little less of a reactionary place.”

​Craft growers

For now, Oregon’s smaller marijuana businesses are trying to stay afloat.

A newly formed group will launch an ad campaign this fall to tell Oregonians why they should pay more for mom-and-pop cannabis. Adam Smith, who founded the Oregon Craft Cannabis Alliance, believes 70 percent of Oregon’s small growers and retailers will go out of business if consumers don’t respond.

“We could turn around in three to four years and realize that 10 to 12 major companies own a majority of the Oregon industry and that none of it is really based here anymore,” he said. “The Oregon brand is really all about authenticity. It’s about people with their hands in the dirt, making something they love as well as they can. How do we save that?”
…

President Donald Trump’s administration is planning to impose tariffs on European steel and aluminum imports after failing to win concessions from the European Union, a move that could provoke retaliatory tariffs and inflame trans-Atlantic trade tensions.

The tariffs are likely to go into effect on the EU with an announcement by Friday’s deadline, according to two people familiar with the discussions. The administration’s plans could change if the two sides are able to reach a last-minute agreement, said the people, who spoke on condition of anonymity to discuss internal deliberations.

Trump announced in March the United States would slap a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, citing national security interests. But he granted an exemption to the EU and other U.S. allies; that reprieve expires Friday.

​Europe bracing

Europe has been bracing for the U.S. to place the restrictions even as top European officials have held last-ditch talks in Paris with American trade officials to try to avert the tariffs.

“Realistically, I do not think we can hope” to avoid either U.S. tariffs or quotas on steel and aluminum, said Cecilia Malmstrom, the European Union’s trade commissioner. Even if the U.S. were to agree to waive the tariffs on imported steel and aluminum, Malmstrom said, “I expect them nonetheless to want to impose some sort of cap on EU exports.”

European officials said they expected the U.S. to announce its final decision Thursday. The people familiar with the talks said Trump could make an announcement as early as Thursday.

U.S. Commerce Secretary Wilbur Ross attended meetings at the Organization for Economic Cooperation and Development in Paris on Wednesday, and U.S. Trade Representative Robert Lighthizer joins discussions in Paris on Thursday.

The U.S. plan has raised the threat of retaliation from Europe and fears of a global trade war — a prospect that is weighing on investor confidence and could hinder the global economic upturn.

​

If the U.S. moves forward with its tariffs, the EU has threatened to impose retaliatory tariffs on U.S. orange juice, peanut butter and other goods in return. French Finance Minister Bruno Le Maire pledged that the European response would be “united and firm.”

Limits on cars

Besides the U.S. steel and aluminum tariffs, the Trump administration is also investigating possible limits on foreign cars in the name of national security.

“Unilateral responses and threats over trade war will solve nothing of the serious imbalances in the world trade. Nothing,” French President Emmanuel Macron said in an impassioned speech at the Organization for Economic Cooperation and Development in Paris.

In a clear reference to Trump, Macron added: “These solutions might bring symbolic satisfaction in the short term. … One can think about making voters happy by saying, ‘I have a victory, I’ll change the rules, you’ll see.’”

But Macron said those “who waged bilateral trade wars … saw an increase in prices and an increase in unemployment.”

Tariffs on steel imports to the U.S. can help local producers of the metal by making foreign products more expensive. But they can also increase costs more broadly for U.S. manufacturers who cannot source all their steel locally and need to import the raw material. That hurts the companies and can lead to more expensive consumer prices, economists say.

Ross criticized the EU for its tough negotiating position.

“There can be negotiations with or without tariffs in place. There are plenty of tariffs the EU has on us. It’s not that we can’t talk just because there’s tariffs,” he said. He noted that “China has not used that as an excuse not to negotiate.”

But German Economy Minister Peter Altmaier insisted the Europeans were being “constructive” and were ready to negotiate special trade arrangements, notably for liquefied natural gas and industrial goods, including cars.

WTO reforms

Macron also proposed to start negotiations between the U.S., the EU, China and Japan to reshape the World Trade Organization to better regulate trade. Discussions could then be expanded to include other countries to agree on changes by the end of the year.

Ross expressed concern that the Geneva-based World Trade Organization and other organizations are too rigid and slow to adapt to changes in global business.

“We would operate within (multilateral) frameworks if we were convinced that people would move quickly,” he said.

Ross and Lighthizer seemed like the odd men out at this week’s gathering at the OECD, an international economic agency that includes the U.S. as a prominent member.

The agency issued a report Wednesday saying “the threat of trade restrictions has begun to adversely affect confidence” and tariffs “would negatively influence investment and jobs.”
…

Malaysia and China are looking to re-balance ties as the new government of Prime Minister Mahathir Mohammad seeks to renegotiate billions of dollars of Chinese backed infrastructure spending, with the goal of reducing the country’s national debt.

China is Malaysia’s leading foreign direct investor at over $3.38 billion, ahead of the U.S., Japan and Singapore, with major infrastructure deals negotiated during the previous government of Najib Razak.

The main contract is a $14 billion (55 billion ringgit) East Coast Rail Link, as well as manufacturing, real estate and sovereign wealth fund bonds.

Carl Thayer, a professor of politics at Australia’s University of New South Wales, says Malaysia is seeking to move beyond anti-Chinese rhetoric that had been an undercurrent of the May 9 national polls.

Thayer said during the campaign Chinese investment in Malaysia was an issue, amid concerns Malaysia was excessively indebted to China.

“But Prime Minister Mahathir since the election has basically declared that the existing agreements will stand — that’s with any country. But there will be a review of these agreements with China. And the key project there seems to be the east coast rail line which is seen as a ‘white elephant’, costing a lot of money and not really delivering,” he said.

The East Coast Rail line is a key portion of Beijing’s Belt and Road initiative (BRI) infrastructure into South East Asia covering 688 kilometers connecting the South China Sea with the Thai Border.

The new government says the fresh negotiations are a bid to reduce the national debt burden, put at $251.32 billion (one trillion ringgit ) or 80 percent of national output (GDP).

Prime Minister Mahathir sees a need to reassess the projects and the Chinese investment strategy generally, especially depending on imported Chinese labor and technicians.

“We need to find out what benefit there is to us. To find out firstly the train is not going to be viable; secondly, its not benefiting Malaysia as much as we would like to see,” Mahthir told VOA.

“We don’t want to have a huge number of immigrants in Malaysia. Some of the Chinese companies have done that; that is not foreign direct investment,” he said.

WATCH: Mahathir Seeks to Implement Reforms

He said such projects as the rail link need to be scaled back in order to reduce the cost to renegotiate the loans and ensuring greater Malaysian participation.

“I think we will be able to convince [China] that some restructuring of the terms of the borrowing and the projects and all that will have to be done in order to reduce spending, in order to reduce the loans that we took from foreign countries,” Mahathir said.

In media reports Mahathir said he planned to scrap a 350 kilometer bullet train line from Singapore to the Malaysian capital of Kuala Lumpur.

The project, valued at around $20 billion, had attracted bidding interest from China, Japan and South Korea.

But Mahathir said this project “would be dropped” as it was unnecessary” and would “not earn a single cent.”

University of New South Wales’ Thayer expects China will be pragmatic in dealings with the new government.

“It’s got massive investments in Malaysia it would want to protect. China would roll with the punches and take the long view. Eventually that Malaysia — as I indicated — all the fundamentals are there to continue the relationship.”

“Trade is managed in Malaysia’s favor; substantial growing Chinese investment building infrastructure projects, some of which are needed, others maybe excessive, renewing, renegotiating the balance in that relationship, but not lurching to the U.S. camp,” Thayer said.

Both Mahathir and wealthy Malaysian businessman Robert Kouk, who sits on a powerful advisory panel to the Malaysian government, recently met China’s ambassador to Malaysia, Bai Tian. Mahathir later said Malaysia’s “strong ties with China will continue to flourish.”

James Chin, director of the South East Asia Institute at the University of Tasmania, says China’s Malaysian investments are also key to China’s regional strategic goals.

“Part of the reason China is such a big player in Malaysia is due to the geopolitical realities facing China. People do not realize that Malaysia is the only country in South East Asia that surrounds the South China Sea,” Chin said.

China has established disputed claims over much of the South China Sea.

But Bridget Walsh, based at the John Cabot University in Italy, said eventually Malaysia-China ties will return to a steady course.

“China is the regional global power in terms of economic issues, especially in South East Asia, and it is going to play a very big role and Malaysia is looking for new economic drivers,” Walsh said.

Walsh said outside infrastructure projects, China will look to other economic areas to continue a role in Malaysia’s economy. “And I think there are people in the system that understand that,” she said.

David Boyle contributed to this report.

 
…

 

U.S. Commerce Secretary Wilbur Ross said Wednesday a U.S.-European Union trade deal could still be reached even if the United States imposes tariffs on EU steel and aluminum imports.

EU and U.S. officials are holding last-minute negotiations two days before U.S. President Donald Trump decides to apply tariffs on Europe.

The threat of tariffs has increased prospects of retaliation and a global trade war that could hinder the global economy.

“There can be negotiations with or without tariffs in place,” Ross said at the Organization for Economic Cooperation and Development in Paris. “There are plenty of tariffs the EU has on us. It’s not that we can’t talk just because there’s tariffs.”

The Trump administration is also exploring possible limits on foreign auto imports, citing national security. 

The EU wants exemptions on steel and aluminum tariffs, which Trump hopes will benefit the U.S., or impose tariffs on U.S. peanut butter, orange juice and other products.

In a speech at the OECD, French President Emmanuel Macron said Europe should stand its ground in the face of unilateral actions and warned against trade wars.

“Unilateral responses and threats over trade wars will solve nothing of the serious imbalances in world trade. Nothing,” he proclaimed.

In an apparent reference to Trump’s proposed tariffs, Macron said, “These solutions might bring symbolic satisfaction in the short term. …. One can think about making voters happy by saying, ‘I have a victory. I’ll change the rules. You’ll see.’” 

Macron also called on the EU, the U.S., China and Japan to draft a World Trade Organization reform plan for the G-20 summit in Argentina later this year.

“The new rules must meet the current challenges of world trade: massive state subsidies creating distortions of global markets, intellectual property, social rights and climate protection,” he said. 

But Macron’s multilateral approach has produced limited results to date, as Trump has withdrawn from the Paris Climate Accord and the Iran nuclear deal, and is threatening to disrupt trade relations between China, the EU and other economic powers.

 

 
…

China vows it will fight back if the United States goes through with plans to impose huge tariffs on Chinese goods.

President Donald Trump’s administration said in a statement Tuesday it planned to impose 25 percent tariffs on $50 billion of Chinese goods that contain “industrially-significant technology.” It said the proposed tariffs are in response to China’s practices with respect to technology transfer, intellectual property, and innovation.  

Chinese Foreign Ministry Spokeswoman Hua Chunying blasted the Trump administration’s apparent reversal Wednesday in Beijing. Hua warned the administration risked squandering its credibility in international relations with every “flip flop” and contradiction of its previous stance.

Hua stressed Beijing is not afraid of engaging in a trade war, and will take “forceful” measures if the tariffs are imposed.

The White House said it will announce the final list of covered imports by June 15, 2018, and the tariffs will be imposed shortly thereafter.

Trump announced in April he planned to impose tariffs on $150 billion worth of Chinese goods, and Beijing responded by declaring it will retaliate by imposing similar amount of tariffs of imported American goods.

After two rounds of trade talks aimed at avoiding a full-blown trade war, U.S. Treasury Secretary Steven Mnuchin announced the two sides had reached a deal for Chinato buy more American goods to “substantially reduce” the huge trade deficit with the United States.

The Trump administration said in its statement trade talks with China will continue and it will request China remove all of its many trade barriers, including non-monetary trade barriers, and that tariffs and taxes between the two countries be “reciprocal in nature and value.” 

China in violation

The Trump administration’s decision to take action is a result of an investigation conducted by the U.S. Trade Representative under Section 301 of the Trade Act of 1974 to determine whether Beijing’s trade practices may be “unreasonable or discriminatory” and that may be “harming American intellectual property rights, innovation or technology development.”After a seven-month investigation, the USTR found the policies were in violation.

U.S. Commerce Secretary Wilbur Ross is set to go to Beijing this week to negotiate on how China might buy more American goods to reduce the huge U.S. trade deficit with Beijing, which last year totaled $375 billion.
…

The U.S.-North Korea summit appears to be back on track, but Pyongyang is showing increased impatience at comments coming out of Washington that what leader Kim Jong Un really wants, even more than his nuclear security blanket, is American-style prosperity.

It’s a core issue for Kim and a message President Donald Trump shouldn’t ignore as they work to nail down their summit next month in Singapore.

Kim is as enthusiastic as Trump to see the summit happen as soon as possible, but the claim that his sudden switch to diplomacy over the past several months shows he is aching for U.S. economic aid and private-sector know-how presents a major problem for the North Korean leader, who can’t be seen as going into the summit with his hat in his hand.

The claim is also quite possibly off target. 

North Korea is far more interested in improving trade with China, its economic lifeline, and with South Korea, which it sees as a potential gold mine for tourism and large-scale joint projects. Getting the U.S. to back off sanctions so he can pursue those goals, along with the boost to his legitimacy and whatever security guarantees he can take home, is more likely foremost on Kim’s mind. 

Even so, the North’s perceived thirst for U.S. economic aid has consistently been the message coming from Trump and his senior officials. All Kim needs to do, they suggest, is commit to denuclearization and American entrepreneurs will be ready to unleash their miracles on the country’s sad-sack economy.

“I truly believe North Korea has brilliant potential and will be a great economic and financial nation one day,” Trump tweeted Sunday. “Kim Jong Un agrees with me on this.” 

Secretary of State Mike Pompeo has laid Washington’s road map out in more detail.

“We can create conditions for real economic prosperity for the North Korean people that will rival that of the South,” he said earlier this month in a televised interview. “It won’t be U.S. taxpayers. It will be American know-how, knowledge, entrepreneurs and risk-takers working alongside the North Korean people to create a robust economy for their people.” 

Pompeo suggested that Americans help build out the North’s energy grid, develop its infrastructure and deliver the finest agricultural equipment and technology “so they can eat meat and have healthy lives.”

Kim has emphatically not agreed to any of that. 

Under Trump’s “maximum pressure” policy, international sanctions on North Korea are stronger than ever. Sanctions relief would open the door for more trade with China, South Korea and possibly Russia – partners North Korea trusts more than it trusts Washington – and potentially unlock access to global financial institutions. 

The last thing Kim wants is to give up his nuclear weapons only to have his country overrun with American businessmen and entrepreneurs.

To Pyongyang’s ears, that scenario is less an offer than a threat. 

Despite its very real need for foreign investment, Kim’s regime has good reason to be wary of economic aid in general. Opening up to aid inevitably involves some degree of increased contact with potentially disruptive outsiders, calls for change, loosening of controls and restrictions – all of which could be seen as a threat to Kim’s near absolute authority.

North Korea’s message on that has been clear. 

Almost as soon as Pompeo started talking about his plan to rebuild North Korea’s economy, Kim Kye Gwan, the North’s first vice foreign minister, shot back that Pyongyang has no interest in that kind of help, saying, “We have never had any expectation of U.S. support in carrying out our economic construction and will not at all make such a deal in future, too.” 

State media unleashed another attack on the idea Sunday, calling Fox News, CBS and CNN “hack media on the payroll of power” for airing programs that featured U.S. officials talking about how large-scale, nongovernmental economic aid awaits North Korea if it moves toward verifiable and irreversible denuclearization.

The North’s media have been careful not to criticize Trump directly. 

But the issue is sensitive enough that the North has also stepped up its response in ideological terms, stressing the superiority of the socialist system and the value of independence, while warning against the underhanded scheming of the “imperialists,” which in North Korea speak is interchangeable with “Americans.”

“It is the calculation of the imperialists that they can attain their aims without firing a single shot if they make the people degenerate and disintegrate ideologically and foment social disorder,” said an editorial Sunday in the ruling party’s newspaper.

The commentary went on to call the capitalist way of life “ideological and cultural poisoning” and concluded, “Unless such poisoning is prevented, it would be impossible to defend independence and socialism and achieve the independent development of each country and nation.”
…

Starbucks, mocked three years ago for suggesting employees discuss racial issues with customers, asked workers Tuesday to talk about race with each other.

It was part of the coffee chain’s anti-bias training, created after the arrest of two black men in a Philadelphia Starbucks six weeks ago. The chain apologized but also took the dramatic step of closing its stores early for the sessions. But still to be seen is whether the training, developed with the NAACP Legal Defense and Education Fund and other groups, will prevent another embarrassing incident. 

“This is not science, this is human behavior,” said Starbucks Chairman Howard Schultz. He called it the first step of many.

The training was personal, asking workers to break into small groups to talk about their experiences with race. According to training materials provided by the company, they were also asked to pair up with a co-worker and list the ways they “are different from each other.” A guidebook reminds people to “listen respectfully” and tells them to stop any conversations that get derailed. 

“I found out things about people that I’ve worked with a lot that I didn’t know,” said Carla Ruffin, a New York regional director at Starbucks, who took the training earlier Tuesday and was made available by the company to comment on it. 

Ruffin, who is black, said everyone in her group said they first experienced bias in middle school. “I just thought that was pretty impactful, that people from such diverse backgrounds, different ages, that it was all in middle school.”

She said the training and discussion was needed: “We’re never as human beings going to be perfect.”

Starbucks declined to specify how much the training cost the company, though Schultz said it was “quite expensive” and called it “an investment in our people and the long-term cultural values of Starbucks.”

The chain also lost sales from closing early, but the late-in-the-day training sessions meant no disruption to the busier morning hours.

At the company’s Pike Place Market location in Seattle, commonly referred to as the original Starbucks, the store stopped letting people in at 1 p.m.

Trina Mathis, who was visiting from Tampa, Florida, was frustrated that she couldn’t get in to take a photo but said the shutdown was necessary because what happened in Philadelphia was wrong.

“If they haven’t trained their employees to handle situations like that, they need to shut it down and try to do all they can to make sure their employees don’t make that same mistake again,” said Mathis, who is black.

Others visiting the store questioned whether the training would make a difference or suggested it was overkill.

Anna Teets, who lives in Washington state, said the problem has been fixed and the company has dealt with the situation. “It’s been addressed,” she said.

The training was not mandatory, but Starbucks said it expected almost all of the 175,000 employees at 8,000 stores to participate and said they would be paid for the full four hours. Executives took the same training last week in Seattle.

Training in unconscious, or implicit, bias is used by many corporations, police departments and other organizations. It is typically designed to get people to open up about prejudices and stereotypes — for example, the tendency among some white people to see black people as potential criminals.

Starbucks said it would make its training materials available to other companies. Many retailers, including Walmart and Target, said they already offer some racial bias training. Nordstrom has said it plans to enhance its training after three black teenagers in Missouri were falsely accused by employees of shoplifting. 

In the Philadelphia incident, Rashon Nelson and Donte Robinson were asked to leave after one was denied access to the restroom. They were arrested by police minutes after they sat down to await a business meeting.

Video of the arrests were posted on social media, triggering protests, boycott threats and debate over racial profiling, or what’s been dubbed “retail racism.” It proved a major embarrassment for Starbucks, which has long cast itself as a company with a social conscience. That included the earlier, widely ridiculed attempt to start a national conversation on race relations by asking its employees to write “Race Together” on coffee cups. 

Starbucks said the Philadelphia arrests never should have occurred. Some black coffee shop owners in the city suggested black customers instead make a habit of patronizing their businesses. Amalgam Comics and Coffeehouse owner Ariell Johnson said she has called the police just once in the two years she has been open. She said that should happen only when there is a provocation or danger.

Nelson and Robinson settled with Starbucks for an undisclosed sum and an offer of a free college education. They also reached a deal with the city of Philadelphia for a symbolic $1 each and a promise from officials to establish a $200,000 program for young entrepreneurs.

The two men visited the company’s Seattle headquarters on Friday, Schultz said, to “see what Starbucks does every day.” He added that Starbucks CEO Kevin Johnson has agreed to mentor them. “I suspect this won’t be the last time they come,” Schultz said. 

Calvin Lai, an assistant professor of psychological and brain sciences at Washington University in St. Louis, said diversity training can have mixed effects.  

“In some cases it can even backfire and lead people who are kind of already reactive to these issues to become even more polarized,” Lai said.

One afternoon wouldn’t really be “moving the needle on the biases,” he said, especially since Starbucks has so many employees and they may not stay very long.

Starbucks said the instruction will become part of how it trains all new workers. Stores will keep iPads given out for Tuesday’s meetings and new videos will be added every month for additional training. 

Starbucks said it also plans to hold training at its stores in other countries.
…

Consumer confidence rebounded in May, but households were a bit pessimistic about their short-term income prospects even as they expected strong job growth to persist, which could restrain consumer spending.

The Conference Board said on Tuesday its consumer confidence index rose 2.4 points to a reading of 128.0 this month from a downwardly revised 125.6 in April. The index was previously reported at 128.7 in April.

“If consumers don’t step up their spending … then the growth outlook this year may disappoint on the weak side,” said Chris Rupkey chief economist at MUFG in New York.

U.S. financial markets were little moved by the data amid a deepening political crisis in Italy. The dollar rose to a 10-month high against the euro, while U.S. Treasury yields fell.

Stocks on Wall Street dropped, with the S&P 500 and Dow Jones Industrial Average touching near three-week lows.

The Conference Board’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, increased to 26.6 in May, the best reading since May 2001, from 22.7 in April.

That measure, which closely correlates to the unemployment rate in the Labor Department’s employment report, suggests that labor market slack continues to shrink.

But consumers were less upbeat about their short-term income prospects. The share of consumers expecting an improvement in their income fell to 21.3 percent this month from 21.8 percent in April. The proportion expecting a decrease rose to 8.2 percent in May from 7.9 percent in the prior month.

Buying plans drop

The weak income readings are despite massive tax cuts which the Trump administration claimed would boost paychecks for American workers. The $1.5 trillion tax cut package came into effect in January.

Consumers also showed a reluctance to commit to purchases of big-ticket items this month, with intentions to buy automobiles, houses and appliances declining. Consumer spending braked sharply in the first quarter and there are signs that it picked up early in the April-June period.

A separate report on Tuesday showed the S&P CoreLogic Case-Shiller composite index of home prices in 20 metropolitan areas increased 0.5 percent in March after rising 0.8 percent in February. House prices gained 6.8 percent in the 12 months to March after rising by the same margin in February.

The solid gains are at odds with recent data which had suggested a cooling in house prices. The Federal Housing Finance Agency reported last week that house prices edged up 0.1 percent in March from February.

The regulator’s index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae or Freddie Mac.

“While the weakness in the FHFA house price data raised some concerns that the trend in house price appreciation had started to shift lower, so far, the Case-Shiller data do not support that view,” said Daniel Silver, an economist at JPMorgan in New York.

The house price inflation is being fueled by an acute shortage of homes available for sale, which is hurting the housing market.
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In an effort to stem the outcry over the arrest of two black men at one of its stores, Starbucks will close 8,000 U.S. stores Tuesday afternoon for anti-bias training for its employees. 

On April 12, two black men went to a Philadelphia store and did not buy anything; instead, they told the store manager they were waiting for a friend to join them. They were asked to leave and an employee called police, which led to their arrest, prompting protests and accusations of racism. 

A video of the incident that was posted on social media became a major embarrassment for the coffee chain.

Soon after, Starbucks announced a policy change, welcoming anyone to sit in its cafes or use its restrooms, even if they don’t buy anything.

Previously, it was left to individual store managers to decide whether people could access Starbucks premises without making a purchase. 

“We are committed to creating a culture of warmth and belonging where everyone is welcome,” Starbucks said in a statement. 

The company has asked employees to follow established procedure when dealing with “disruptive behaviors,” and are still asked to call 911 in case of “immediate threat or danger” to customers or employees. 

The men who were arrested in April, settled with Starbucks earlier this month for an undisclosed sum and an offer of a free college education for each of them. 

They also reached a deal with the city of Philadelphia for a symbolic $1 each and a promise from city officials to set up a $200,000 program for young entrepreneurs.

 

 
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Starbucks will close more than 8,000 stores nationwide Tuesday to conduct anti-bias training, the next of many steps the company is taking in an effort to restore its tarnished diversity-friendly image.

 

The coffee chain’s leaders reached out to bias training experts after the arrest of two black men at a Philadelphia Starbucks last month.

 

The plan has brought attention to the little-known world of “unconscious bias training” used by corporations, police departments and other organizations. It’s designed to get people to open up about implicit biases and stereotypes in encountering people of color, gender or other identities.

 

A video previewing the training says it will include recorded remarks from Starbucks executives as well as rapper and activist Common. From there, the company says, employees will “move into a real and honest exploration of bias.”

 

 
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China told the World Trade Organization’s dispute settlement body on Monday that U.S. accusations that Beijing forced companies to hand over technology as a cost of doing business in China were groundless.

U.S. President Donald Trump has accused China of stealing American ideas and announced a plan for a $50 billion tariff penalty against Chinese goods.

Both sides launched legal complaints at the WTO over the issue earlier this year.

“There is no forced technology transfer in China,” Chinese Ambassador Zhang Xiangchen told the meeting, according to a copy of his remarks provided to Reuters.

“According to the U.S.’s view, China forces the U.S. companies to transfer technologies by imposing joint venture requirements, foreign equity limitations and administrative licensing procedures,” Zhang said.

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies.”

Zhang said the U.S. argument involved a “presumption of guilt.” The U.S. Trade Representative believed U.S. firms in China faced an obligation to hand over technology, while failing to produce a single piece of evidence.

Some of its claims were “pure speculation,” he said, adding that the USTR saw Chinese M&A activity as a Chinese government conspiracy.

‘Diligence and entrepreneurship’

Technology transfer was a normal commercial activity that benefited the United States most of all, he said, while Chinese innovation was driven by “the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property.”

Legal experts say Washington needs WTO backing to implement its tariffs as far as they relate to WTO rules, while China has rejected the tariff plan wholesale and resorted to WTO action to stop it.

Under WTO rules, if disputes are not settled amicably after 60 days, the complainant can ask for a panel of experts to adjudicate, escalating the dispute and triggering a legal case that takes years to settle.

The United States, which launched its complaint on March 23, could have used the dispute meeting on Monday to take that step. China could do so at next month’s meeting.

But since the dispute erupted, U.S.-China trade policy has been the subject of high-level bilateral talks. Trump tweeted cryptically that “our trade deal with China is moving along nicely” but that it probably needed a “different structure.”

The United States put China’s technology transfer policies on the agenda of Monday’s meeting, without elaborating. A copy of the U.S. remarks was not immediately available.
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New Zealand will slaughter more than 100,000 cows in an effort to eradicate a bacterial disease.

The government and agricultural leaders announced Monday that it will spend over $600 million over the next decade to rid the country of Mycoplasma bovis, which causes udder infections, pneumonia, arthritis and other illnesses. The bacteria is not a threat to humans, but can cause production delays on farms.

“This is a tough call,” said Prime Minister Jacinda Ardern. “But the alternative is to risk the spread of the disease across our national herd.”

Mycoplasma bovis has been detected on more than three dozen farms since it was first detected in New Zealand last year, leading to the slaughter of about 26,000 cattle. The country is the world’s largest exporter of milk and dairy products.

 
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