British lawmakers are denouncing Prime Minister Theresa May’s latest proposal to withdraw from the European Union (EU) amid growing demands from her own Conservative Party for her resignation.

May said on Tuesday a bill she plans to present to Parliament next month would include a provision to vote on whether to hold a second referendum to leave the EU, a key demand of many opposition lawmakers.

May also offered closer trading arrangements with the EU as another incentive in what she called a “last chance” opportunity to finalize a Brexit deal.

Speaking before the House of Commons on Wednesday, May implored lawmakers to support her bill, warning a rejection would lead to “division and deadlock.”

May said her withdrawal bill would be disclosed Friday so that lawmakers would have time to study it.

Legislators previously spurned May’s exit deal three times and her latest attempt to win support faces an uphill fight. She plans to ask lawmakers to vote on the bill again during the week of June 3.

Members of May’s own Conservative Party accused her of relenting to pro-EU demands while opposition Labour Party lawmakers rejected her latest plan as too little too late.

On Tuesday, May said after Parliament votes on the measure, she will establish a timetable for her departure as leader of the Conservative Party and as prime minister.

A growing number of Conservative Party members, however, are pressing her to cancel the vote and step down sooner.

May is likely to face even more pressure when the results of this week’s European Parliament elections are released, as the Conservative Party is expected to suffer heavy losses.

The election will be held in Britain on Thursday, but the results won’t be announced until all European countries have finished voting late Sunday.

British citizens voted in a referendum to leave the EU three years ago and the country was scheduled to leave the EU on March 29, but the 28-nation bloc extended the deadline until October 31.

 
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Celebrity chef Jamie Oliver’s restaurant chain in Britain has filed for bankruptcy protection, closing 22 of its 25 eateries and leaving some 1,000 people out of work.

The remaining outlets, two Jamie’s Italian restaurants and a Jamie’s Diner at Gatwick Airport outside London, will stay open, the financial firm KPMG, which will oversee the process, said in a statement Tuesday.

Oliver said on Twitter he was “devastated that our much-loved UK restaurants have gone into administration,” a form of bankruptcy protection, and thanked people “who have put their hearts and souls into this business over the years.”

​Oliver gained fame as “The Naked Chef” on television, which aired in dozens of countries, after premiering in Britain some 20 years ago.  The television success was followed by a number of cookbooks. The restaurant chain included Jamie’s Italian, Jamie Oliver’s Diner and Barbecoa steakhouses.

Five branches of the Australian arm of Jamie’s Italian have also been sold and another put into administration.

Oliver’s restaurants started to lose revenue in 2016. Business got so bad for the restaurant group that Oliver injected millions of dollars of his own money in an effort to turn the tide. 

“The current trading environment for companies across the casual dining sector is as tough as I’ve ever seen,” Will Wright, an administrator at KPMG, said in a statement. “The directors at Jamie Oliver Restaurant Group have worked tirelessly to stabilize the business against a backdrop of rising costs and brittle consumer confidence.”

Other British chains have also had to close outlets.  Earlier this year, cafe chain Patisserie Valerie was forced to close 70 outlets, at the cost of 920 jobs.

Celebrity chefs in the U.S. have also fallen on hard times. Thomas Keller closed Bouchon in Beverly Hills in 2017, saying it couldn’t remain profitable. That same year, Guy Fieri closed Guy’s American Kitchen and Bar in New York’s Times Square and Daniel Boulud closed DBGB Kitchen and Bar in New York, saying it didn’t get enough business during the week.
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The Trump administration is considering payments of $2 per bushel for soybeans, 63 cents per bushel for wheat and 4 cents per bushel for corn as part of a package of up to $20 billion to offset U.S. farmers’ losses from the trade war with China, Bloomberg reported on Tuesday.

Caitlin Eannello, spokeswoman for the National Association of Wheat Growers, said that 63 cents per bushel for wheat is the number the organization has been hearing for the next round of U.S. trade aid. “That is the number that we’ve been hearing, she told Reuters.

Those payments would exceed the rates paid last year to farmers in a similar aid package.

President Donald Trump earlier this month directed the Department of Agriculture to work on a new aid plan for farmers as Washington and Beijing intensified their 10-month-old trade war by raising tariffs on each other’s goods.

Agriculture Secretary Sonny Perdue last week said the new aid package was likely to be $15 billion to $20 billion, exceeding the up to $12 billion in aid rolled out last year to farmers. Most of it was likely to be direct payments, sources told Reuters.

A spokeswoman for the Department of Agriculture said the details of the aid package would be released soon, without commenting on the reported payment rates. One lobbyist source said the plan was likely to be announced this week.

The USDA spokeswoman added that the aid was designed to avoid skewing planting decisions. “Farmers should continue to make their planting and production decisions with the current market signals in mind, rather than some expectation of what a trade mitigation program might or might not look like,” she said in emailed comments to Reuters.

However, the aid was seen encouraging more soy planting at a time when supplies are already at record-high levels.

“That [proposed $2 bean payout] is a pretty enticing carrot, and that tells me that they [farmers] are going to try to get as many bean acres in as possible, at the expense of corn,” said Matt Connelly, analyst at the Hightower Report in Chicago.

“The reason is beans [futures] went south is, they saw that $2 a bushel, and that will entice them to plant beans until the July 4th weekend.”

Chicago Board of Trade soybean futures turned lower on the report on worries that farmers would plant more of the crop. Top importer China continues to shun U.S. soybeans.

The administration last year paid $1.65 per bushel for soybeans, 14 cents per bushel for wheat and 1 cent per bushel for corn.

Negotiations between the United States and China have soured dramatically since early May, when Chinese officials sought major changes to the text of a proposed deal that the Trump administration says had been largely agreed.

The dispute between the world’s two largest economies has cost billions, roiled global supply chains and rattled financial markets. American farmers, who helped carry Trump to his surprise 2016 election win, have been among the hardest hit.

Bloomberg, citing anonymous sources, said growers of other commodities were also to receive payments in this year’s aid package, but it did not provide rates. It said the plan could change as Trump could make adjustments.

The Trump administration wants any trade deal with China to include purchases of more than $1.2 trillion worth of American products, including agricultural commodities and industrial goods.
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The Portuguese economy is resisting the prevailing gloom in Europe.

Activity remained strong, with GDP rising by 0.5% in the first quarter, or 1.8% at an annual rate, compared with 1.2% in the euro zone, forecasts Brussels.

Following the trend of 2018, Portugal’s good economic health comes mainly from private consumption fueled by rising wages and employment dynamics. The preliminary data, says the national statistics institute, “reflect a significant acceleration in investment.”

The government deficit has fallen from 7.2% of GDP to 0.5% of GDP since 2014, and the unemployment rate from a peak of 17.9% in early 2013, to about 6% currently.

“The tourism sector has been the largest driver of the export recovery in Portugal,” Ben Westmore, the head of the Portugal desk in the Economics Department of the OECD, confirmed to VOA.

These numbers make Portugal the darling of international financial institutions. The head of the International Monetary Fund, Christine Lagarde, praised Portugal’s economic recovery recently in Lisbon. “Portugal and the Portuguese people deserve huge credit for their efforts, for which they should be proud,” Lagarde said.

Low wages

Despite the spectacular recovery and the fall of unemployment, a sense of precariousness and low wages are everywhere in Portugal. The minimum wage is only $669 (€600) per month — a number that has not prompted the return of many young adults, who left during the crisis. Between 2008 and 2014, 120,000 people left Portugal per year. Twenty percent were highly skilled workers, according to professor Joao Miguel Trancoso Lopes.

This sociologist undertook a study and interviewed many of them to understand their motivations to stay abroad or come back in their country.

“They do not feel Portugal is full of opportunities. The low wages are a real hurdle for them. They look for better jobs, outside of the country. Unlike the previous generations, the young Portuguese leaving abroad do not dream of returning home,” he explained to VOA.

This professor used to be paid $3,345 (€3,000) per month before the crisis. Today, he earns $2,901.99 (€2,600) per month. The health care system is another sector that was heavily targeted for budget cuts during the crisis.

Bruno Maia is a neurologist in Lisbon. He acknowledges the current government took some measures to lift the burden, such as hiring of doctors and nurses.

“The damages made to our health care system are so pronounced that these new jobs do not compensate what was lost during the crisis. It is not enough. Problems are accumulating and we are struggling,” he underscores to VOA. For example, Maia says non-emergency procedures, like an MRI, could take up a year to be performed in Portugal.

Besides these issues, Antonio Costa, the Socialist prime minister who vowed in 2015 to overturn austerity, remains popular in Portugal. His party and its allies likely will win the coming European elections on May 26.

“Euroskepticism, which grew a lot during the crisis, it is not as important today. We do not expect a defeat as the Socialist Party is popular in Portugal,” Andre Freire, a political science professor at Lisbon University Institute, told VOA.

Portugal has 21 seats at the European Parliament.
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Trump administration sanctions against Huawei have begun to bite even though their dimensions remain unclear. U.S. companies that supply the Chinese tech powerhouse with computer chips saw their stock prices slump Monday, and Huawei faces decimated smartphone sales with the anticipated loss of Google’s popular software and services. 

The U.S. move escalates trade-war tensions with Beijing, but also risks making China more self-sufficient over time.

Here’s a look at what’s behind the dispute and what it means.

What’s this about?

Last week, the U.S. Commerce Department said it would place Huawei on the so-called Entity List, effectively barring U.S. firms from selling it technology without government approval. 

Google said it would continue to support existing Huawei smartphones but future devices will not have its flagship apps and services, including maps, Gmail and search. Only basic services would be available, making Huawei phones less desirable. Separately, Huawei is the world’s leading provider of networking equipment, but it relies on U.S. components including computer chips. About a third of Huawei’s suppliers are American. 

Why punish Huawei?

The U.S. defense and intelligence communities have long accused Huawei of being an untrustworthy agent of Beijing’s repressive rulers — though without providing evidence. The U.S. government’s sanctions are widely seen as a means of pressuring reluctant allies in Europe to exclude Huawei equipment from their next-generation wireless networks. Washington says it’s a question of national security and punishment of Huawei for skirting sanctions against Iran, but the backdrop is a struggle for economic and technological dominance. 

The politics of President Donald Trump’s escalating tit-for-tat trade war have co-opted a longstanding policy goal of stemming state-backed Chinese cyber theft of trade and military secrets. Commerce Secretary Wilbur Ross said last week that the sanctions on Huawei have nothing to do with the trade war and could be revoked if Huawei’s behavior were to change.

​The sanctions’ bite

Analysts predict consumers will abandon Huawei for other smartphone makers if Huawei can only use a stripped-down version of Android. Huawei, now the No. 2 smartphone supplier, could fall behind Apple to third place. Google could seek exemptions, but would not comment on whether it planned to do so.

Who uses Huawei anyway?

While most consumers in the U.S. don’t even know how to pronounce Huawei (it’s “HWA-way”), its brand is well known in most of the rest of the world, where people have been buying its smartphones in droves.

Huawei stealthily became an industry star by plowing into new markets, developing a lineup of phones that offer affordable options for low-income households and luxury models that are siphoning upper-crust sales from Apple and Samsung in China and Europe. About 13 percent of its phones are now sold in Europe, estimates Gartner analyst Annette Zimmermann.

That formula helped Huawei establish itself as the world’s second-largest seller of smartphones during the first three months of this year, according to the research firm IDC. Huawei shipped 59 million smartphones in the January-March period, nearly 23 million more than Apple.

Ripple effects

The U.S. ban could have unwelcome ripple effects in the U.S., given how much technology Huawei buys from U.S. companies, especially from makers of the microprocessors that go into smartphones, computers, internet networking gear and other gadgetry.

The list of chip companies expected to be hit hardest includes Micron Technologies, Qualcomm, Qorvo and Skyworks Solutions, which all have listed Huawei as a major customer in their annual reports. Others likely to suffer are Xilinx, Broadcom and Texas Instruments, according to industry analysts.

Being cut off from Huawei will also compound the pain the chip sector is already experiencing from the Trump administration’s rising China tariffs.

The Commerce Department on Monday announced an expected grace period of 90 days or more, easing the immediate hit on U.S. suppliers. It can extend that stay, and also has the option of issuing exemptions for especially hard-hit companies.

Much could depend on whether countries including France, Germany, the U.K. and the Netherlands continue to refuse to completely exclude Huawei equipment from their wireless networks.

The grace period allows U.S. providers to alert Huawei to security vulnerabilities and engage the Chinese company in research on standards for next-generation 5G wireless networks.

It also gives operators of U.S. rural broadband networks that use Huawei routers time to switch them out.

​Could this backfire?

Huawei is already the biggest global supplier of networking equipment, and is now likely to move toward making all components domestically. China already has a policy seeking technological independence by 2025.

U.S. tech companies, facing a drop in sales, could respond with layoffs. More than 52,000 technology jobs in the U.S. are directly tied to China exports, according to the Computing Technology Industry Association, a trade group also known as CompTIA.

What about harm to Google?

Google may lose some licensing fees and opportunities to show ads on Huawei phones, but it still will probably be a financial hiccup for Google and its corporate parent, Alphabet Inc., which is expected to generate $160 billion in revenue this year. 

The Apple effect

In theory, Huawei’s losses could translate into gains for both Samsung and Apple at a time both of those companies are trying to reverse a sharp decline in smartphone sales.

But Apple also stands to be hurt if China decides to target it in retaliation. Apple is particularly vulnerable because most iPhones are assembled in China. The Chinese government, for example could block crucial shipments to the factories assembling iPhones or take other measures that disrupt the supply chain.

Any retaliatory move from China could come on top of a looming increase on tariffs by the U.S. that would hit the iPhone, forcing Apple to raise prices or reduce profits.

What’s more, the escalating trade war may trigger a backlash among Chinese consumers against U.S. products, including the iPhone. 

“Beijing could stoke nationalist sentiment over the treatment of Huawei, which could result in protests against major U.S.technology brands,” CompTIA warned. 
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The U.S.-China trade war has not spared European companies in China. More than one-third of them are feeling a direct impact on their businesses and fear the situation will worsen in the coming weeks.

“They [European companies] are feeling more anxious than they felt last year, rising tensions such as the trade tensions that we are facing currently that don’t seem to be on the point of being sorted out quickly,” European Chamber Vice President Charlotte Roule told VOA.

The trade conflict has come on top of several other problems faced by European companies in China.

“Macroeconomic challenges such as the Chinese economic slowdown and global economic slowdown are worrying them,” Roule said.

In a survey conducted last January and released Monday, the European Chamber of Commerce in China reported the trade war has impacted 25% of its members engaged in U.S.-bound exports from their operations in China.  

Since January, the United States has since expanded its tariff measures against China-made goods, while Beijing has announced its own set of retaliatory measures. These moves would affect a larger number of European companies, including those that import products from the U.S.

Significantly, the survey showed that only five percent of the chamber’s member companies see the trade tussle as an opportunity for themselves.

Intertwined relations

The trade war involves two countries at the political level, but has impacted other businesses with overlapping interests and intertwined connections across regions and industry segments.

Nick Marro, an analyst at the Economic Intelligence Unit, cited the example of China-based joint ventures between European and China companies engaged in producing electronic components. They will be hit by Washington’s decision to raise taxes on goods made in China. Similarly, U.S.-based European companies exporting to China would be affected.

“Trade wars are very complicated. You can’t isolate these effects to one or two countries,” Marro said.

The extent of the trade war’s impact varies from one industry sector to another, said Jacob Gunter, the chamber’s policy and communications coordinator.  But Gunter said there is considerable fear that the impact might prove to be widespread and severe.

“European companies share many of the U.S.’ concerns, but strongly oppose the blunt use of tariffs,” according to the chamber.

The trade war was ranked fourth among the concerns of European companies when the survey was taken last January. But the companies were more concerned about the economic slowdown in China and the world, besides the rising labor cost in China.

“European firms confront the same challenges facing their U.S. rivals, such as local protectionism or burdensome administrative processes. And developments in the trade war to date have yielded little immediate progress on these issues,” said Marro.

Even without the trade war, European companies face considerable difficulties due largely to regulatory controls and inadequate implementation of market access rules made by the central government in Beijing.

Chamber members presented a bleak outlook of the business situation in China in the coming years.  About 47% of those surveyed said they expect regulatory obstacles to actually increase in the next five years.

The survey reported that business optimism on growth over the next two years dropped from 62% in 2018 to 45% in 2019.

Joining hands

Analysts said China will increasingly try to woo the European Union and its markets in order to protect itself from aggressive U.S. trade actions.  But the bloc is undecided on what stance to take, because any move in favor of China would not be lauded in Washington.

“The EU is kind of in a difficult position. People are pushing the EU to choose the U.S. or China. I think the EU is choosing the EU,” Gunter said. “The EU is taking necessary measures to protect its own interest and expand business relations with China,” he said.

“There is an opportunity for China and the EU to work together. As far as the trade conflict is concerned, it should try to mediate the conflict, instead of taking sides,” he said.

European companies said there is no sign of the Chinese government trying to make life easier for them, even after battling the United States in the trade conflict for 10 months.

Last January, most European companies told surveyors they have not changed their strategy owing to the trade war. But analysts said many of them will have to rethink the way they do business.

“European companies will seek to minimize their exposure to political risk by adopting their global supply chains, said Max Zenglein, head of economic research at the Mercator Institute for China Studies (MERICS) in Berlin.

“Export-oriented businesses, in particular at the lower end of the value chain, are likely to shift to other Southeast Asian nations. This is, however, a process that takes time,” he said.
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Ford plans to cut 7,000 jobs, or 10 percent of its global workforce, as part of a reorganization as it revamps its vehicle offerings, the company said Monday.

The reorganization will involve some layoffs and reassignments and should be complete by the end of August, a Ford spokeswoman said. Ford has been phasing out most sedan models in the United States as more consumers have opted for pickup trucks and sport utility vehicles.

The move, which began last year, will lead to 800 layoffs in North America in total, including about 500 this week, said Ford spokeswoman Marisa Bradley.

The company has yet to determine the specifics in other regions, she said.

“As we have said, Ford is undergoing an organizational redesign process helping us create a more dynamic, agile and empowered workforce, while becoming more fit as a business,” Bradley said.

“We understand this is a challenging time for our team, but these steps are necessary to position Ford for success today and yet preparing to thrive in the future.”

Ford had signaled it expected significant job cuts in April 2018 when it announced a plan to phase out several small models in North America. At the same time, the company is ramping up investment in electric cars and autonomous driving technology.

General Motors has also undertaken job cuts over the last year for similar reasons.

Shares of Ford dipped 0.4 percent to $10.25 in early trading.

 
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Vietnam and Europe could be swapping more pomelo fruit and Portuguese cheese soon if a new trade deal comes into effect, linking two regions that have been looking for an alternative to the trade tensions brought on by the United States.

The European Parliament is scheduled to discuss the trade deal on May 28, after years of negotiations between Vietnam and the European Union. The deal is significant not only because it facilitates exports, like tropical fruit, but also as it lays out commitments on human rights, labor unions, and protection of the environment. Critics, though, say the EU-Vietnam Free Trade Agreement would not really enforce human rights standards and would continue the offshoring of jobs that has left workers vulnerable.

For the EU, the deal is one more way to access Asia’s fast-growing economies, set a model for trading with developing countries, and hold Vietnam’s one-party state accountable on its promise to level the business playing field. 

For Vietnam, it is a chance to call itself a country open for business, with many trade deals, as well as raise quality standards to those expected by European customers. 

“It includes a lot of commitments to improve the business environment in Vietnam,” Le Thanh Liem, standing vice chair of the Ho Chi Minh City People’s Committee, said at a European Chamber of Commerce in Vietnam event.

Vietnamese officials often say that it helps to have an external factor to get difficult internal reforms over the finish line. For example it might be hard to convince conservatives to allow workers to form their own labor unions. But if there is an outside incentive, such as greater trade with the EU, that could bring conservatives on board. 

Labor unions were one concern for Europeans. Another is the loss of blue-collar jobs to Asia, including to Vietnam. European workers worry that as they take gig jobs, like food delivery, in place of their old stable jobs, there is less of a safety net through long-term employers or through tax-funded government programs. And there is one more concern raised through the trade deal:“We have some concerns about human rights in Vietnam, but that has been discussed,” Eurocham chair Nicolas Audier said at the chamber event. 

​Amnesty International reported this month that the number of Vietnam’s political prisoners jumped to 128 from 97 last year, despite the fact that Hanoi says it does not jail people for political reasons.

Some question if the EU is applying consistent standards as it moves toward the trade deal with Vietnam, even while punishing nearby Myanmar and Cambodia for human rights abuses. Brussels is pulling back its Everything But Arms scheme of preferential trade access for the two other countries, based in part on Cambodia’s crackdown on opposition politicians in the 2018 election and on Buddhist-majority Myanmar’s mass killing of the mostly Muslim Rohingya.

But both Vietnam and the EU want more trade options because a major trading partner, the United States, is turning away from the world economy. Washington pulled out of the Trans-Pacific Partnership trade deal in 2017, removing a key reason that Hanoi signed the deal, which was to get Vietnamese textile and garment companies more access to U.S. customers. Europe was also hit when Washington slapped tariffs on foreign steel and aluminum in 2018, and now it is threatening more import duties on European cars. 

So the EU and Vietnam are still working on their trade deal, and it is reflected in Prime Minister Nguyen Xuan Phuc’s schedule. He paid a visit to EU member states Romania and the Czech Republic in April, then hosted a state visit from Romania in May. Lobbying for the deal continued as he welcomed the Swedish crown princess this month, and he will return the courtesy, with the next trip on his calendar planned for Stockholm. 
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Huawei Technologies’ founder and chief executive said Saturday that the growth of the Chinese tech giant “may slow, but only slightly,” because of recent U.S. restrictions.  

In remarks to the Japanese press and reported by Nikkei Asian Review, Ren Zhengfei reiterated that the Chinese telecom equipment maker had not violated any law. 

“It is expected that Huawei’s growth may slow, but only slightly,” Ren said in his first official comments after the U.S. restrictions, adding that the company’s annual revenue growth might undershoot 20%.  

On Thursday, Washington put Huawei, one of China’s biggest and most successful companies, on a trade blacklist that could make it extremely difficult for Huawei to do business with U.S. companies. China slammed the decision, saying it would take steps to protect its companies. 

Trade, security issues

The developments surrounding Huawei come at a time of trade tensions between Washington and Beijing and amid concerns from the United States that Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied. 

A similar U.S. ban on China’s ZTE Corp. had almost crippled business for the smaller Huawei rival early last year before the curb was lifted. 

The U.S. Commerce Department said Friday that it might soon scale back restrictions on Huawei. 

Ren said the company was prepared for such a step and that Huawei would be “fine” even if U.S. smartphone chipmaker Qualcomm Inc. and other American suppliers would not sell chips to the company. 

Huawei’s chip arm HiSilicon said Friday that it had long been prepared for the possibility of being denied U.S. chips and technology, and that it was able to ensure a steady supply of most products. 

The Huawei founder said that the company would not be taking instructions from the U.S. government. 

“We will not change our management at the request of the U.S. or accept monitoring, as ZTE has done,” he said.

In January, U.S. prosecutors unsealed an indictment accusing the Chinese company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system. 

Ren’s daughter, Huawei Chief Financial Officer Meng Wanzhou, was arrested in Canada in December in connection with the indictment. Meng, who was released on bail, remains in Vancouver and is fighting extradition. She has maintained her innocence.  

Ren has previously said his daughter’s arrest was politically motivated.
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Senior Chinese diplomat Wang Yi told U.S. Secretary of State Mike Pompeo on Saturday that recent U.S. words and actions had harmed the interests of China and its enterprises, and that Washington should show restraint, China’s Foreign Ministry said. 

Speaking to Pompeo by telephone, Wang said the United States should not go “too far” in the current trade dispute between the two sides, adding that China was still willing to resolve differences through negotiations but that the nations should be on an equal footing. 

On Iran, Wang said China hoped all parties would exercise restraint and act with caution to avoid escalating tensions. U.S. State Department spokeswoman Morgan Ortagus said in a statement that Pompeo spoke with Wang and discussed bilateral issues and U.S. concerns about Iran, but she gave no other details. 

Tensions between Washington and Tehran have increased in recent days, raising concerns about a potential U.S.-Iran conflict. Earlier this week the United States pulled some diplomatic staff from its Baghdad embassy following attacks on oil tankers in the Persian Gulf. 

Harder line

China struck a more aggressive tone in its trade war with the United States on Friday, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course. 

The tough talk capped a week that saw Beijing unveil fresh retaliatory tariffs, U.S. officials accuse China of backtracking on promises made during months of talks, and the Trump administration level a potentially crippling blow against one of China’s biggest and most successful companies. The United States announced on Thursday it was putting Huawei Technologies Co. Ltd., the world’s largest telecom equipment maker, on a blacklist that could make it extremely hard to do business with U.S. companies.  

The U.S. Commerce Department then said on Friday that it might soon scale back restrictions on Huawei. It said it was considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment.” 

Potential beneficiaries of this license could, for example, include telecom providers in thinly populated parts of U.S. states such as Wyoming and Oregon that purchased network equipment from Huawei in recent years. 

On Friday, Chinese Foreign Ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more trade negotiations, said China always encouraged resolving disputes with the United States through dialogue and consultations.
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U.S. diplomats warned Saturday that commercial airliners flying over the wider Persian Gulf faced a risk of being “misidentified” amid heightened tensions between the U.S. and Iran.

The warning relayed by U.S. diplomatic posts from the Federal Aviation Administration underlined the risks the current tensions pose to a region crucial to global air travel. It also came as Lloyd’s of London warned of increasing risks to maritime shipping in the region.

Concerns about a possible conflict have flared since the White House ordered warships and bombers to the region to counter an alleged, unexplained threat from Iran that has seen America order nonessential diplomatic staff out of Iraq. President Donald Trump since has sought to soften his tone.

Meanwhile, authorities allege that a sabotage operation targeted four oil tankers off the coast of the United Arab Emirates, and Iran-aligned rebels in Yemen claimed responsibility for a drone attack on a crucial Saudi oil pipeline. Saudi Arabia directly blamed Iran for the drone assault, and a local newspaper linked to the al-Saud royal family called on Thursday for America to launch “surgical strikes” on Tehran.

This all takes root in Trump’s decision last year to withdraw the U.S. from the 2015 nuclear accord between Iran and world powers and impose wide-reaching sanctions. Iran just announced it would begin backing away from terms of the deal, setting a 60-day deadline for Europe to come up with new terms or it would begin enriching uranium closer to weapons-grade levels. Tehran long has insisted it does not seek nuclear weapons, though the West fears its program could allow it to build atomic bombs.

The order relayed Saturday by U.S. diplomats in Kuwait and the UAE came from an FAA Notice to Airmen published late Thursday in the U.S. It said that all commercial aircraft flying over the waters of Persian Gulf and the Gulf of Oman needed to be aware of “heightened military activities and increased political tension.”

This presents “an increasing inadvertent risk to U.S. civil aviation operations due to the potential for miscalculation or misidentification,” the warning said. It also said aircraft could experience interference with its navigation instruments and communications jamming “with little to no warning.”

The Persian Gulf has become a major gateway for East-West travel in the aviation industry. Dubai International Airport in the United Arab Emirates, home to Emirates, is the world’s busiest for international travel, while long-haul carriers Etihad and Qatar Airways also operate here.

In a statement, Emirates said it was aware of the notice and in touch with authorities worldwide, but “at this time there are no changes to our flight operations.”

Qatar Airways similarly said it was aware of the notice and its operations were unaffected.

Etihad, as well as Oman Air, did not respond to a request for comment Saturday about the warning.

The warning appeared rooted in what happened 30 years ago after Operation Praying Mantis, a daylong naval battle in the Persian Gulf between American forces and Iran during the country’s long 1980s war with Iraq. On July 3, 1988, the USS Vincennes chased Iranian speedboats that allegedly opened fire on a helicopter into Iranian territorial waters, then mistook an Iran Air heading to Dubai for an Iranian F-14. The Vincennes fired two missiles at the airplane, killing all aboard the flight.

Meanwhile, Lloyd’s Market Association Joint War Committee added the Persian Gulf, the Gulf of Oman and the United Arab Emirates on Friday to its list of areas posing higher risk to insurers. It also expanded its list to include the Saudi coast as a risk area.

The USS Abraham Lincoln and its carrier strike group have yet to reach the Strait of Hormuz, the narrow mouth of the Persian Gulf through which a third of all oil traded at sea passes. A Revolutionary Guard deputy has warned that any armed conflict would affect the global energy market. Iran long has threatened to be able to shut off the strait.

Benchmark Brent crude now stands around $72 a barrel.

 
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The U.S. Commerce Department said Friday it may soon scale back restrictions on Huawei Technologies after this week’s blacklisting would have made it nearly impossible for the Chinese company to service its existing customers.

The Commerce Department, which had effectively halted Huawei’s ability to buy American-made parts and components, is considering issuing a temporary general license to “prevent the interruption of existing network operations and equipment,” a spokeswoman said.

Potential beneficiaries of the license could, for example, include internet access and mobile phone service providers in thinly populated places such as Wyoming and eastern Oregon that purchased network equipment from Huawei in recent years.

Temporary license

In effect, the Commerce Department would allow Huawei to purchase U.S. goods so it can help existing customers maintain the reliability of networks and equipment, but the Chinese firm still would not be allowed to buy American parts and components to manufacture new products.

The potential rule roll back suggests changes to Huawei’s supply chain may have immediate, far-reaching and unintended consequences.

The blacklisting, officially known as placing Huawei on the Commerce Department’s entity list, was one or two efforts by the Trump administration this week allegedly made in an attempt to thwart national security risks. In an executive order, President Donald Trump also effectively barred the use of its equipment in U.S. telecom networks.

The United States believes Huawei’s smartphones and network equipment could be used by China to spy on Americans, allegations the company has repeatedly denied.

Aggressive trade talks tone

The latest Commerce move comes as China has struck a more aggressive tone in its trade war with the United States, suggesting a resumption of talks between the world’s two largest economies would be meaningless unless Washington changed course.

A spokesman for Huawei, the world’s largest telecommunications equipment maker, did not immediately respond to a request for comment.

Out of $70 billion Huawei spent buying components in 2018, about $11 billion went to U.S. firms including Qualcomm, Intel Corp and Micron Technology Inc.

If the Commerce Department issues the license, U.S. suppliers would still need separate licenses to conduct new business with Huawei, which would be extremely difficult to obtain, the spokeswoman said.

The temporary general license would last for 90 days, she said, and would be posted in the Federal Register, just as the rule adding Huawei to the entity list will be published in the government publication Tuesday.

“The goal is to prevent collateral harm on non-Huawei entities that use their equipment,” said Washington lawyer Kevin Wolf, a former Commerce Department official.

The listing

The entity listing bans Huawei and 68 affiliates in 26 countries from buying American-made goods and technology without licenses that would likely be denied.

The entities list identifies companies believed to be involved in activities contrary to the national security or foreign policy interests of the United States.

In a final rule posted Thursday, the government tied Huawei’s entity listing to a criminal case pending against the company in Brooklyn, New York.

US indictment 

U.S. prosecutors unsealed the indictment in January accusing the company of engaging in bank fraud to obtain embargoed U.S. goods and services in Iran and to move money out of the country via the international banking system.

Huawei Chief Executive Officer Meng Wanzhou, daughter of the company’s founder, was arrested in Canada in December in connection with the indictment, a move that has led to a three-way diplomatic crisis involving the U.S., China and Canada.

Meng, who was released on bail, remains in Vancouver, and is fighting extradition. She has maintained her innocence, and Huawei has entered a plea of not guilty in New York.

Trump injected other considerations into the criminal case after Meng’s arrest when he told Reuters he would intervene if it helped close a trade deal.
…

The United States must show sincerity if it is to hold meaningful trade talks, China said on Friday, after U.S. President Donald Trump dramatically raised

the stakes with a potentially devastating blow to Chinese tech giant Huawei.

China has yet to say whether or how it will retaliate against the latest escalation in trade tension, although state media has taken an increasingly strident tone, with the ruling Communist Party’s People’s Daily publishing a front-page commentary that evoked the patriotic spirit of past wars.

China’s currency slid to its weakest in almost five months, although losses were capped after sources told Reuters that the central bank would ensure the yuan did not weaken past the key 7-per-dollar level in the immediate term.

The world’s two largest economies are locked in an increasingly acrimonious trade dispute that has seen them level escalating tariffs on each other’s imports in the midst of negotiations, adding to fears about risks to global growth and knocking financial markets.

Foreign ministry spokesman Lu Kang, asked about state media reports suggesting there would be no more U.S.-China trade talks, said China always encouraged resolving disputes between the two countries with dialog and consultations.

“But because of certain things the U.S. side has done during the previous China-U.S. trade consultations, we believe if there is meaning for these talks, there must be a show of sincerity,” he told a daily news briefing.

The United States should observe the principles of mutual respect, equality and mutual benefit, and they must also keep their word, Lu said, without elaborating.

On Thursday, Washington put telecoms equipment maker Huawei Technologies Co Ltd, one of China’s biggest and most successful companies, on a blacklist that could make it extremely difficult for the telecom giant to do business with U.S. companies.

That followed Trump’s decision on May 5 to increase tariffs on $200 billion worth of Chinese imports, a major escalation after the two sides appeared to have been close to reaching a deal in negotiations to end their trade battle.

‘Wheel of destiny’

China can be expected to make preparations for a longer-term trade war with the United States, said a Chinese government official with knowledge of the situation.

“Indeed, this is an important moment, but not an existential, live-or-die moment,” the official said.

“In the short term, the trade situation between China and the United States will be severe, and there will be challenges. Neither will it be smooth in the long run. This will spur China to make adequate preparations in the long term.”

The impact of trade friction on China’s economy is “controllable,” the state planner said on Friday, pledging to take countermeasures as needed, Meng Wei, a spokeswoman for the National Development and Reform Committee (NDRC), told a media briefing.

The South China Morning Post, citing an unidentified source, reported that a senior member of China’s ruling Communist Party said the trade war with the United States could reduce China’s 2019 growth by 1 percentage point in the worst-case scenario.

Wang Yang, the fourth-most senior member of the Communist Party’s seven-member Standing Committee, the top decision-making body, told a delegation of Taiwan businessmen on Thursday that the trade war would have an impact but would not lead to any structural changes, the paper said, citing an unidentified source who was at the meeting.

One company that says it has been making preparations is Huawei’s Hisilicon unit, which purchases U.S. semiconductors for its parent.

Its president told staff in a letter on Friday that the company had been secretly developing back-up products for years in case Huawei was one day unable to obtain the advanced chips and technology it buys from the United States.

“Today, the wheel of destiny has turned and we have arrived at this extreme and dark moment, as a super-nation ruthlessly disrupts the world’s technology and industry system,” the company president said in the letter.

The letter was widely shared on Chinese social media, gaining 180 million impressions in the few hours after it was published on the Weibo microblogging site.

“Go Huawei! Our country’s people will always support you,” wrote one Weibo user after reading the letter.
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A record number of 8.34 million university graduates are set to enter the Chinese job market this summer amid escalating trade tensions between Washington and Beijing.

Observers say that as China’s export-dependent economy braces for more hits from tariff hikes, which U.S. President Donald Trump recently imposed, the country’s job markets will be tighter for everyone including fresh graduates.

And the impact of a job mismatch among college graduates has long weighed on their actual employment rate at only 52% this year, according to a recent survey.

That means more than 4 million graduates will soon join the ranks of those unemployed, although many of them may opt to pursue higher education, the survey found.

Tightening job market

“Graduate employment has always been problematic in China. Given the current situation with the trade war, I think we should expect it to be even more so this year,” said Geoffrey Crothall, spokesperson at China Labor Bulletin.

“And there’s always been a mismatch between the expectations of graduates, the reality of the job markets and particularly the expectations of employers,” he added.

Graduates will either take longer to find a job or settle with one that has lower pay or poor career prospects, Crothall said.

Making matters worse, the number of job opportunities in China is on the wane as China tries to move away from labor-intensive industries, said Wang Zhangcheng, head of the Labor Economics Institute at the Zhongnan University of Economics and Law.

“The transformation of industrial structure and the U.S.-China trade war [is making the situation worse]. Also, China’s economy no longer grows at a fast pace. Instead, it has matured with mid- to low-paced growths. Under such circumstances, the demand for labor has declined,” Wang said.

“Plus, many jobs have been replaced by robots as a result of the development of artificial intelligence in the past two years. That surely adds pressure on job seekers,” he added.

Fewer jobs, more seekers

A recent report by Renmin University of China (RUC) and career platform Zhaopin.com found that the number of job seekers in China grew 31% year-on-year in the first quarter – the highest growth in workers since 2011 — while the number of job vacancies shrank by 11% at the same time.

China’s job market prosperity index has dropped to a record low since 2014, it concluded.

However, the latest available state statistics paint a slightly different picture.

Official data showed that China’s surveyed unemployment rate in urban areas stood at 5.2% in March, down 0.1 percentage points from February.

Analysts described the country’s job markets as “stable overall” although the surveyed unemployment rate in 31 major cities went up 0.1 percentage points month-on-month, to 5.1% in March – the highest since late 2016.

Still, China’s State Council has made “saving jobs” one of its top policy priorities since late last year, offering incentives for firms with no or few layoffs and subsidies for internships or on-the-job training.

And college graduates remain a focal point of the council’s employment stabilization plan, along with migrants and laid-off workers.

Distorted graduate employment

China used to boast a graduate employment rate of more than 90% as universities rushed graduates to sign so-called “tripartite employment agreements” with potential employers.

Any refusal may risk their chances of thesis defense or diplomas.

Such agreements are nonbinding on the employers to offer jobs, but distort the overall graduate employment rate, which has allowed universities to attract new students – a fraud that the Ministry of Education now forbids.

In a recent notice, the ministry has disallowed universities from withholding graduates’ degree certificates if they refuse to sign such agreements.

In spite of the ban, graduates still complain about “being forcefully employed.”

On Weibo, China’s Twitter-like microblogging platform, one user wrote, “Our school still forces you to sign the agreements. The career adviser calls every day, pulling a long face.”

Another student from Rizhao Polytechnic in Shandong province noted, “Those who have signed the agreements have completed their thesis defense while many of us who haven’t signed the agreements can do nothing but wait.”

One user urged that unless the government writes the ban into law and imposes penalties, no universities would comply.

Job mismatch

Another cause of concern for graduate employment is the long-standing mismatch between the knowledge and skills students have acquired from years of studies in universities, and the private sector’s actual job requirements, professor Wang said.

Given the shifts of production paradigms and “widening structural gaps in labor forces allocations, many of our universities have set up professional courses which may not keep up with the changing [requirements] of the labor markets. That leads to the scenario that many graduates may not find the right career fit for their skills,” the professor said.

As a solution, the education ministry has encouraged universities to focus on fundamentals by providing multifaceted cultivation of talents, so graduates leaving school will meet what different jobs require.
…

Juhyun Lee contributed to this report.

SEOUL — As U.S. President Donald Trump intensifies his trade battle with China, one of the hardest-hit countries could be South Korea.

Asia’s fourth-largest economy, South Korea is especially vulnerable to the tariff war because of its reliance on foreign trade — in particular, exports to its two biggest trading partners: China and the United States.

After U.S.-China trade talks broke down, Trump last week raised tariffs on $200 billion worth of Chinese imports, and threatened to do so with $300 billion more. China retaliated with tariffs on $60 billion of U.S. goods.

The trade war escalation, which rattled markets and threatened to hold back global growth, comes at an especially bad time for South Korea, whose economy unexpectedly contracted in the first quarter.

“South Korea is particularly vulnerable,” says Xu Xiao Chun, an economist who monitors South Korea for Moody’s Analytics. “It’s not inconceivable that you could see a second consecutive quarter of contraction of GDP, which would make it a technical recession.”

Trade war exacerbates tech woes

As the world’s leading producer of memory chips that go into consumer electronics, such as cellphones and computers, South Korea benefited from years of rapid and consistent growth in the global smartphone market.

But global demand for smartphones has plateaued. That, combined with a slowdown in China and sluggish global growth, has hurt South Korea’s export-driven economy.

In April, South Korea’s exports declined for the fifth consecutive month, falling 2% compared to the same period a year earlier.

“South Korea’s economy was already going down the wrong path… but the latest escalation in the trade war really puts a spanner (obstacle) in the works,” Xu said.

South Korea was always likely to be hurt by the U.S.-China trade war just by virtue of its proximity to China, its biggest trading partner and top export destination.

South Korea’s exports to China could be cut by about $1.3 billion a year, said An Sung-bae with the state-run Korea Institute for International Economic Policy.

But the U.S.-China tariffs also pose a more specific threat to South Korea’s crucial semiconductor industry.

Here’s how it works:

South Korea sends semiconductors to China, where they are placed into smartphones and other electronics. China then ships many of those assembled products to the United States.

Trump’s tariffs could drastically raise the price of those electronics. For example, the cost of an iPhone XS could go up by around $160 if Trump follows through on all his tariff threats, one analyst at Morgan Stanley estimated.

Those higher prices would result in fewer shipments of electronics from China to the United States. Which means South Korea would be selling a lot fewer semiconductors to China.

That could put a major dent in South Korea’s economy, since semiconductors make up nearly half of its total shipments to China.

“Companies that mainly target the Chinese market will suffer… and the South Korean export business relies heavily on the Chinese market,” said Mun Byung-Ki, a senior researcher at the Korea International Trade Association.

A bright spot?

But some analysts say the situation may not be that dire. One reason: even if South Korean exports to China decline, it may make up the gap by shipping more products to the United States — a situation that could potentially provide a major boom for South Korea’s tech industry.

Alex Holmes, a Singapore-based analyst at Capital Economics, says that already may be happening. Though South Korea’s overall export numbers are suffering, its shipments to the United States are growing, he says.

That’s particularly the case for Korean electronics that fall under U.S. tariffs. Those tariffed goods have well out-performed non-tariffed items, Holmes says, “which suggests that U.S. companies have already switched suppliers as a result of tariffs.”

The increased shipments to the United States almost cover the equivalent hit South Korea has taken as a result of the tariffs, Holmes adds.

Manufacturing shift?

The tariffs could also have a long-term impact on manufacturing in Asia, as companies shift their production bases away from China as a way to shield themselves from the trade war.

A growing number of Asian companies, including some South Korean memory chipmakers, have already begun shifting their manufacturing centers to fast-growing and cheaper countries in Southeast Asia.

“If South Korea wants to find cheaper factories in say Vietnam or one of the ASEAN countries, it could make its money back or potentially even grow more than it would have if it relied on Chinese manufacturing,” Xu said. “But those sort of actions take a lot of time, a lot of capital, and there is a lot of risk involved.”

With no end in sight to the U.S.-China trade tensions, it’s a pattern that could be repeated, threatening China’s reputation as a low-cost production base.

“The knock-on effect of this trade war will be to locate a lot more production capabilities in other countries in Asia,” Xu said.
…

Executives from major global retailers played down the threat to employment in stores from artificial intelligence and automation on Thursday and pledged more training to help staff adopt more high-value tasks as machines take over their work.

Retail is one of the largest employers in many developed economies and experts have predicted automation puts millions of low-skilled jobs in the sector at risk, particularly as the introduction of self-checkouts makes cashiers redundant.

“Technology can liberate people from repetitive tasks,” Barbara Martin Coppola, chief digital officer at Swedish furniture giant IKEA, told Reuters on the sidelines of the World Retail Congress, an annual industry gathering.

“These jobs are not gone. We are believers in the talent we have in our house and we look to repurpose it into more fulfilling tasks.”

Martin Coppola said IKEA needs far fewer people to select the goods displayed on the firm’s website, known as online merchandising, as algorithms get more sophisticated. But these people can be trained in digital marketing instead.

“It is important to see technology as an enabler and not to let it be at the expense of human beings and the planet,” she said.

Walmart, the world’s biggest private employer with 2.2 million staff, has been adding self check-outs and announced last month that it would be rolling out automated shelf scanners, to check product availability, and cleaning robots.

“Cleaning the floor is not a thing that brings a person fulfillment,” said Tom Faitak, Walmart’s senior manager for AI, robotics and automation, adding that automating repetitive tasks gives staff more time to help customers.

“Robots are not fantastic at interacting with people,” he said. “Robots are good at doing the same task over and over, not finding an item on the shelf.”

Walmart staff who are freed up from some repetitive tasks are increasingly being redeployed to pick orders placed online and prepare them for curbside pickup.

Consultants McKinsey estimate that 53 percent of activities in retailing are automatable, particularly in stock management and logistics. It predicts that next generation automated grocery stores could see the number of labor hours for inventory and stocking cut by two thirds.

Walmart and Kroger – the biggest U.S. supermarket chain — say they are committed to developing their store workers so they are not left behind.

Walmart offers training to tens of thousands of associates through an “Academy” program, while Kroger launched a new scheme last year to promote continued education, from high school certificates to doctorates.

Kroger Chairman and Chief Executive Rodney McMullen, who started out as a store clerk at the chain and had his college education supported by the company, noted that U.S. unemployment was at its lowest for decades, pushing automation.

“Part of it is because you just can’t find people,” he said, noting that the company was creating higher-paid jobs in software engineering as it seeks to modernize the business. The Cincinnati-based company has built robot-aided warehouses and is trying out self-driving vehicles to improve delivery.
…

U.S. homebuilding increased more than expected in April and activity in the prior month was stronger than initially thought, suggesting declining mortgage rates were starting to provide some support to the struggling housing market.

Land and labor shortages, however, continue to constrain builders’ ability to construct more lower priced houses. This segment has experienced an acute shortage of inventory, holding back home sales. Investment homebuilding has contracted for five straight quarters.

Housing starts rose 5.7% to a seasonally adjusted annual rate of 1.235 million units last month, driven by gains in the construction of both single- and multi-family housing units, the Commerce Department said on Thursday. Groundbreaking was also likely boosted by drier weather in the Midwest.

Data for March was revised up to show homebuilding rising to a pace of 1.168 million units, instead of falling to a rate of 1.139 million units as previously reported.

The government revised the seasonally adjusted data back to January 2014. The unadjusted series will be revised in July.

Building permits rose 0.6% to a rate of 1.296 million units in April. Building permits had declined for three straight months. Permits for single-family housing, however, fell for a fifth straight month, likely reflecting the supply challenges.

Economists polled by Reuters had forecast housing starts would increase to a pace of 1.205 million units in April.

The 30-year fixed mortgage rate has dropped to 4.10% from a peak of about 4.94% in November, according to data from mortgage finance agency Freddie Mac. Decreasing mortgage rates reflect a recent decision by the Federal Reserve to suspend its three-year monetary policy tightening campaign.

Strong labor market

Relatively cheaper home loans and a strengthening labor market, characterized by the lowest unemployment rate in nearly 50 years, are underpinning demand for housing. In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 212,000 for the week ended May 11.

The robust job market should underpin the economy as the boost from the White House’s $1.5 trillion tax cut package fades and President Donald Trump’s escalating trade war with China disrupts supply chains at factories, which are already struggling with an inventory bloat that has cut production.

A survey on Wednesday showed confidence among homebuilders rose to a seven-month high in May. While lower borrowing costs are boosting demand, builders said they “continue to deal with ongoing labor and lot shortages and rising material costs that are holding back supply and harming affordability.”

The housing market has been mired in a soft patch since last year. Investment in homebuilding contracted at a 2.8% annualized rate in the first quarter.

Prices of U.S. Treasuries fell after the release of the data while the dollar rose to a session high against a basket of currencies. U.S. stock index futures were trading higher. Last month, single-family homebuilding, which accounts for the largest share of the housing market, increased 6.2% to a rate of 854,000 units. Single-family homebuilding surged in the Midwest, which had suffered flooding in prior months. Single-family starts also rose in the Northeast and West, but fell in the South, where the bulk of homebuilding occurs.

Permits to build single-family homes dropped 4.2% to a rate of 782,000 units in April.

Starts for the volatile multi-family housing segment advanced 4.7% to a rate of 381,000 units last month. Permits for the construction of multi-family homes rebounded 8.9% to a pace of 514,000 units last month.
…

Turkey needs to put a comprehensive and credible economic plan in place if it is to avoid another cut to sovereign credit rating, a senior Moody’s sovereign analyst said on Thursday.

New analysis from the rating agency shows Turkey’s recession, the slump in the lira, upcoming refinancing pressures and dwindling reserves have pushed it to right near the top of its worldwide external vulnerability index.

“Failure to put forward a credible broad-based plan to address the structural issues, and in the near-term dampen the market volatility pressure on the lira…that would be a pressure point from a rating perspective,” Moody’s Managing Director of Sovereign Risk, Yves Lemay, told Reuters.

Moody’s downgraded Turkey to Ba3 – three rungs into junk territory – last August, but it also kept it on a ‘negative’ outlook which is a warning that another cut could happen in 12-18 months.

It gives it some time and one of Turkey’s main plusses is that it has a low debt-to-GDP level of about 30 percent, but the likelihood is that an economic plan would be laid out after Istanbul’s mayoral elections have been re-run on June 23.

“For us, the critical issue is whether this administration has the capacity to move aside the political issues and focus on the economic needs of the country,” Lemay said, adding that the repeat of the Istanbul vote had underscored concerns.

“It is another manifestation of the domestic political risk in this instance, and the weakening of the institutions of the country.”

With regards to the drop in currency reserves, he added: “When we look at the size of what [sovereign and bank debt] is coming due in the next year against the size of the reserves, it is a signal of significant vulnerability.”

“The amount of reserves is very much insufficient to refinance the external obligations.”

Moody’s calculates the Turkish government’s interest payments rose 30.4% in nominal terms last year and almost 50% in the first three months of 2019 due to the weak lira and a rise in payments.

As a result it expects interest payments to increase to around 8.2% of the government’s revenue in 2019 from only 5.9% in 2017, “eroding” the government’s fiscal strength.
…

The costs seem to be mounting in the U.S. from President Donald Trump’s tit-for-tat trade tariff war with China, both for farmers whose sales of crops to China have been cut and U.S. consumers paying higher prices for imported Chinese products.

The government said Wednesday that to date it has paid out more than $8.5 billion to American farmers to offset their loss of sales to China and other trading partners because of foreign tariffs imposed by Beijing and other governments.

Trump last year pledged up to $12 billion in aid to farmers — chiefly soybean, wheat and corn growers, and those who raise pigs. Trump says he could ask Congress for another $15 billion if U.S. farmers continue to be hurt by China’s tariffs of as much as 25%  on U.S. agricultural imports.

The U.S. had been shipping $12 billion worth of soybeans a year to China, but Beijing’s imposition of the tariff severely cut down on the U.S. exports as China bought the beans from other countries.

Trump said Tuesday on Twitter, “Our great Patriot Farmers will be one of the biggest beneficiaries of what is happening now. Hopefully China will do us the honor of continuing to buy our great farm product, the best, but if not your Country will be making up the difference based on a very high China buy. This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us. The Farmers have been ‘forgotten’ for many years. Their time is now!”

White House economic adviser Larry Kudlow acknowledged to a television interviewer last weekend that “to some extent” U.S. consumers will bear the brunt of higher costs on Chinese goods after Trump’s tariffs have been levied on the imported goods.

Trade Partnership Worldwide, a Washington economic consulting firm, estimates in a new study the typical American family of four people would pay $2,300 more annually for goods and services if Trump imposes a 25% tariff on all Chinese imports, as he says he is considering.

Such higher tariffs would hit an array of Chinese-produced consumer goods — clothing, children’s toys, sports equipment, shoes and consumer electronics — that are widely bought by Americans.

If that does not happen, but the existing U.S. tariffs remain in place, the research group says the average U.S. family would pay $770 in higher costs each year.

The U.S. imported almost $540 billion in Chinese goods in 2018, while the U.S. exported $120 billion, a trade imbalance that Trump is seeking to even out with imposition of the tariffs. The U.S. exported almost $59 billion in services to China, while importing only $18 billion, but services are not directly affected by tariffs.
…

Ford Motor Co plans to start production of new luxury Lincoln models in China for that market as they are launched, starting with the new Corsair later this year, to benefit from lower costs and avoid the risk of tariffs, a top executive said Monday.

“It’s a huge, huge opportunity for Lincoln because we see China as ground zero for Lincoln given the size of the market and how well the brand has been received,” Chief Financial Officer Bob Shanks said at a Goldman Sachs conference in New York.

Ford has lower levels of localized production than rivals General Motors Co or Volkswagen AG, who make more vehicles in China for Chinese consumers, benefiting from lower labor and material costs, and avoiding tariffs in the burgeoning trade war between the United States and China.

Shanks said all new Lincoln models, with the exception of the Navigator assembled in Louisville, Kentucky, will also be produced in China.

He declined to say how much Ford will save through localized production.

Ford has been struggling to revive sales in China, the automaker’s second-biggest market. Ford sales slumped 37 percent in 2018, after a 6 percent decline in 2017.

Shanks said that all of the problems the automaker experienced in China last year were related to the Ford brand, not Lincoln, which is popular with Chinese customers.
…

The typical routines of life on a family farm carry a heavier burden these days for Pam Johnson.

“First thing I do is make a pot of coffee,” she told VOA in an interview in one of the cavernous sheds that contain her green and yellow John Deere farming equipment. Once she has that coffee, she “(goes) to the computer and look at what grain prices have done overnight and usually do a gut clutch, because they’ve been going down. They’re at five-month lows.”

Driven there in part by retaliatory tariffs imposed by one of the largest importers of U.S. soybeans – China.

Johnson and her husband are proud sixth-generation farmers but say they are dealing with some of the harshest economic conditions of their lives.

“We’re all tightening our belts,” she says.

The ongoing trade dispute between the United States and China, initially sparked by U.S. tariffs on imported aluminum and steel, is now impacting most farms across the country. 

As U.S. farmers head to the fields to plant this spring, they are facing a potential sixth consecutive year of declining farm income, because of international tariffs that have depressed prices for their grain products as well as increased costs for the materials to produce and store them.

​Short-term concern over U.S. trade policy is turning into long-term fear for farmers, who face uncertainty over congressional support for a new trade agreement with Canada and Mexico, and the impact of China’s retaliatory tariffs on U.S. grain exports. 

“We hear it may be out to 2025 before we see some of those markets come back to us, if they ever do,” Johnson said. “I think that’s the thing that hurts the most is, what is the damage being done that is irreparable?”

It is damage her son Ben Johnson, the seventh generation in the family business, may eventually have to deal with.

“All farms are going to suffer because of this,” he explained. “There’s a difference between ‘making it’ and flourishing.”

The Johnsons feel there is a growing disconnect between farmers and the rest of the American workforce, fueled by politicians increasingly hostile to trade policies the agricultural industry depends on.

“We need as much trade as we can and to be openly trading with as many places as we can,” Ben Johnson says. “It’s no different to any business – you want as many customers as you can. And to intentionally discourage them is frustrating.”

Neither Johnson nor his mother voted for President Donald Trump in the 2016 presidential election, largely because if his trade positions, they say. 

​Nothing that has happened since the election has eased Pam Johnson’s concerns.

“Saying that ‘I’m a tariff man’ and that ‘trade wars are easy to win’ concerns me,” she says, quoting comments the president has made. “There are still a lot of farmers who still support President Trump. I think there are more seeds of doubt being planted as we look forward into 2019 and no resolution and the light at the end of the tunnel seems to be getting dimmer about getting these things done.”

Politics aside, Pam Johnson admits success for her family business is closely tied to U.S. trade policy.

“I don’t want to see President Trump fail in these trade endeavors. We all need him to make this work so that all of us win,” she says.

A win her son Ben says can’t come soon enough.

“We’ve already missed the peak soybean export season, so in a way, it’s already too late… I guess it’s never too late, but before now would have been great,” he says.

While negotiations continue, the Trump administration says it is actively working on a new financial assistance program to help farmers weather the continuing trade storm.
…

For sale: waterfront property with sweeping views of the Atlantic Ocean. Waves erode beach regularly. Flooding gets worse every year. Saltwater damage to lawn.

Asking price: anyone’s guess.

Some research suggests rising sea levels and flooding brought by global warming are harming coastal property values. But other climate scientists note shortcomings in the studies, and real estate experts say they simply haven’t seen any ebb in demand for coastal homes.

So how much homeowners and communities should worry, and how much they should invest in remedies, remains an open question.

Nancy Meehan, 71, is considering putting her coastal condo in Salisbury up for sale this year, but she worries buyers will be turned off by the winter storms that churn the seas beside the summer resort town. Her home has been largely spared in the nearly 20 years she’s lived there, she said, but the flooding appears to be worsening along roads and lower properties.

‘My life savings’

“All my life savings is in my home,” Meehan said of the four-bedroom, two-bathroom condo, which she bought for $135,000. “I can’t lose that equity.”

Nearby, Denis Champagne can’t be sure that rising seas are hurting his waterfront home’s value. The three-story, four-bedroom home has views of a scenic marsh, has been renovated and is blocks from the ocean — yet was assessed around $420,000.

“Do I feel that it should be worth more than that?” Champagne said recently in his sun-soaked living room. “I mean, I’m biased, but where can you find this for that price — anywhere?”

Community relies on real estate taxes

A drop in home values could shatter a community like Salisbury, which relies almost exclusively on beachfront real estate taxes to fund schools, police and other basic services, researchers warn. And, they say, families could face financial ruin if they’ve been banking on their home’s value to help foot the bill for pricey college tuitions or retirement.

“People are looking at losing tens of thousands of dollars of relative value on their homes,” said Jeremy Porter, a data scientist for the First Street Foundation, which describes itself as a “not-for-profit organization of digitally driven advocates for sea level rise solutions” on its Facebook page. “Not everyone can sustain that.”

Still, home prices in coastal cities have been rising faster than those of their landlocked counterparts since 2010, according to data provided by the National Association of Realtors.

And waterfront homes are still generally more expensive than their peers just one block inland, said Lawrence Yun, the association’s chief economist.

“The price differential is still there,” he said. “Consumers are clearly mindful that these climate change impacts could be within the window of a 30-year mortgage, but their current behavior still implies that to have a view of the ocean is more desirable.”

One $16 billion estimate

A nationwide study by the First Street Foundation suggests climate change concerns have caused nearly $16 billion in lost appreciation of property values along the Eastern Seaboard and Gulf Coast since 2005.

The study singles out Salisbury as the hardest-hit community in Massachusetts. Coastal homes there would be worth $200,000 to $300,000 more if not for frequent tidal flooding and powerful coastal storms, the study suggests. Champagne’s property, for example, would be worth about $123,000 more, according to Flood iQ, a property database the group has developed.

In another recent study, researchers at the University of Colorado Boulder’s School of Business found coastal properties most exposed to sea level rise sold, on average, for 7% less than equivalent properties the same distance from shore but not as threatened by the sea.

And in Florida’s Miami-Dade County, higher-elevation properties are appreciating faster than lower ones as companies and deep-pocketed buyers increasingly consider climate change risks, a study in the publication Environmental Research Letters found last year.

​Studies laudable, but may be flawed

The three studies are laudable because they attempt to quantify what the insurance industry and federal government had long suspected: that climate change is having tangible harm on home values, said S. Jeffress Williams, a scientist emeritus with the U.S. Geological Survey in Woods Hole, Massachusetts, who wasn’t involved with any of the research.

But Williams and other researchers note the First Street Foundation study uses sea-level rise predictions from the Army Corps of Engineers that are more dire than figures from the National Oceanic and Atmospheric Administration, which usually provides the go-to numbers for such studies.

The decision to use Army Corps projections has “minimal impact” on the study’s assessment of current property values since those figures are based on where flooding is already happening, but it does factor into the study’s future estimates, said Steven McAlpine, a data scientist for the foundation.

“We feel it is a reasonable projection,” he said.

The other two studies largely rely on data from Florida, which is so low and highly developed that in many ways it is an outlier, unaffiliated researchers point out. They also focus only on single-family homes, leaving out huge numbers of condos, high-rises and other multifamily properties.

Just build a seawall

In Salisbury, real estate broker Thomas Saab insists something is happening with home prices but is not sure whether climate change is behind it.

Two clients in the otherwise strong real estate market, he said, were recently forced to lower their asking prices by tens of thousands of dollars when prospective buyers voiced concerns about storm damage and risks.

“Do I worry prices are coming down? Sure,” Saab said. “Fewer buyers are willing to take the risk. People don’t want to live through nor’easter after nor’easter with no protection.”

He argues there’s a simple solution: Invest in sturdy seawalls as Hampton Beach, the lively resort town just over the border in New Hampshire, did generations ago.

“We can overcome any kind of rising seas if you just let us protect our properties,” Saab said. “Who cares about the climate change? You build a seawall and this whole discussion goes away.”
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Stocks climbed on Tuesday and clawed back a chunk of their losses from Monday’s rout, the latest whipsaw move as investors weigh just how badly the escalating U.S.-China trade war will hurt the economy. 

The day’s rally was nearly a mirror image of Monday’s plunge, when the S&P 500 had its worst day since early January, just not as severe: Technology companies led the way higher after bearing the brunt of the selling on Monday, Treasury yields rose modestly and gold gave back a bit of its gains. 

The S&P 500 rose 22.54 points, or 0.8%, to 2,834.41. It recovered nearly a third of its loss from Monday, and would now need to rise 3.9% to regain the record it set a couple weeks ago. The Dow Jones Industrial Average rose 207.06, or 0.8%, to 25,532.05, and the Nasdaq composite index jumped 87.47, or 1.1%, to 7,734.49. 

Of course, stocks are still lower than they were last week, following China’s pledge to raise tariffs on U.S. goods. Stocks also remain lower than they were on May 5, when President Donald Trump ignited this latest round of fear for markets by announcing on Twitter that the U.S. would raise tariffs on Chinese goods. 

Tuesday’s rally came after another round of morning Trump tweets on trade. He said, “When the time is right we will make a deal with China,” and he cited his “unlimited” respect for and friendship with China’s leader.

Investors are looking for a “place of equilibrium,” said Mark Hackett, chief of investment research for Nationwide Investment Management.

“My skepticism is that there’s really not a lot of news driving the rally,” he said. “It feels like an attempted recovery that may not have legs.”

‘Looking for path to progress’

In the meantime, any further hints of resolution on the trade dispute — or Twitter storms — could drive markets into their next swing. 

“We’re not counting on a full resolution,” said John Lynch, chief investment strategist at LPL Financial. “But, we’re looking for a path to progress.”

The worries about trade have shattered what had been a remarkably steady rise for stocks at the start of this year. As 2019 began, investors increasingly bet that a trade deal would happen, and the Federal Reserve said it would take a pause in raising interest rates, which helped the S&P 500 rocket to its best start to a year in decades. 

If the trade dispute gets worse, or lasts longer than many expect, it could hurt confidence among businesses and households. If that in turn drives spending lower, it would lead to lower economic growth and corporate profits. 

On Tuesday, at least, such worries eased. An index known as Wall Street’s “fear gauge,” which measures how much traders are paying to protect themselves from upcoming price swings for stocks, dropped 12.1%. A day earlier, it had spiked 28.1%. 

The VIX index remains higher than it’s been for much of the past five years, but fear is considerably lower than it was during the market sell-off late last year sparked by worries about a possible recession. 

Tech companies post gains

Investors also returned to stocks of tech companies, which may have the most to lose from a protracted U.S.-China trade battle because many of their customers and suppliers are abroad. Tech stocks in the S&P 500 jumped 1.6%, with semiconductor companies making particularly big gains. 

A day earlier, tech stocks had taken the market’s heaviest losses. 

On the flip side were utility stocks, which were the only one of the 11 sectors that make up the S&P 500 to fall. A day earlier, when all the fear in the market put an alluring spotlight on the utility sector’s steady profits and dividends, they had been the only S&P 500 sector to manage a gain. 

Other investments seen as safe harbors also dropped, such as U.S. government bonds. When a bond’s price falls, its yield rises, and the yield on the 10-year Treasury rose to 2.41% from 2.40% late Monday. It was at 2.45% at the end of last week. 

Gold is another investment that tends to do fade when investors are feeling more optimistic, and it fell $5.50 to settle at $1,296.30 per ounce. 

In overseas stock markets, European indexes gained. The French CAC 40 jumped 1.5%, the German Dax rose 1% and the FTSE 100 in London climbed 1.1%. Asian markets were mixed. The Hang Seng in Hong Kong dropped 1.5%, Japan’s Nikkei 225 fell 0.6% and South Korea’s Kospi ticked up 0.1%.

Silver jumps 4 cents

In the commodities markets, silver rose 4 cents to $14.81 per ounce, and copper gained a penny to $2.73 per pound.

Benchmark U.S. oil rose 74 cents to settle at $61.78 per barrel. Brent crude, the international standard, gained $1.01 to $71.24 a barrel. 

Natural gas rose 4 cents to $2.66 per 1,000 cubic feet, heating oil rose 2 cents to $2.06 per gallon and wholesale gasoline rose a penny to $1.98 per gallon. 

The dollar rose to 109.64 Japanese yen from 109.34 yen late Monday. The euro slipped to $1.1207 from $1.1231, and the British pound fell to $1.2905 from $1.2965. 
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A U.S. labor agency has concluded that ride-hailing company Uber Technologies Inc’s drivers are independent contractors and not its employees, which could prevent them from joining unions.

The National Labor Relations Board’s general counsel, in a memo released on Tuesday, said Uber drivers set their hours, own their cars and are free to work for the company’s competitors, so they cannot be considered employees under federal labor law.

San Francisco-based Uber in a statement said it is “focused on improving the quality and security of independent work, while preserving the flexibility drivers and couriers tell us they value.”

Uber shares were up 6.4 percent at $39.46 in late trading on the New York Stock Exchange.

The memo dated April 16 came in an NLRB case against Uber that has yet to reach the five-member board, which is independent of the general counsel.

Under the National Labor Relations Act, independent contractors cannot join unions and do not have legal protection when they complain about working conditions.

In January, President Donald Trump’s appointees to the NLRB adopted a new test making it more difficult for workers to prove they are a company’s employees.

Uber, its top rival Lyft Inc, and many other “gig economy” companies have faced scores of lawsuits accusing them of misclassifying workers as independent contractors under federal and state wage laws.

Employees are significantly more costly because they are entitled to the minimum wage, overtime pay and reimbursements for work-related expenses under those laws.

Uber, in a filing with the U.S. Securities and Exchange Commission last week, said it would pay up to $170 million to settle tens of thousands of arbitration cases with drivers who claim they were misclassified. Uber denied any wrongdoing, but said settling the cases was preferable to drawn-out litigation.

The company has agreed to pay an additional $20 million to end long-running lawsuits by thousands of drivers in California and Massachusetts.

The U.S. Department of Labor in a memo released last month said an unidentified “gig economy” company’s workers were not its employees under federal wage law because it did not control their work.

The company, which appeared from the memo to provide house-cleaning services, had a similar relationship with its workers as Uber does with drivers. The memo signaled a shift from the Obama administration, which maintained that most workers should be considered companies’ employees.
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