Amazon, Starbucks, Vulcan and other companies have pledged a total of more than $350,000 toward an effort to repeal Seattle’s newly passed tax on large employers intended to combat homelessness.

Just days after the Seattle City Council approved the levy, the No Tax On Jobs campaign, a coalition of businesses, announced it would gather signatures to put a referendum on the November ballot to repeal it. 

Amazon, Starbucks, Vulcan, Kroger and Albertsons each promised $25,000 to the effort last week, according to a report filed by the campaign. The Washington Food Industry Association pledged $30,000. 

Referendum backers will have to gather 17,632 signatures of registered Seattle voters by June 14 to get the measure on the ballot.

The so-called head tax will charge businesses making at least $20 million in gross revenues about $275 per full-time worker each year. The tax would begin in 2019 and raise about $48 million a year to build affordable housing and provide emergency homeless services.

Opponents say the Seattle measure is a tax on jobs and questioned whether city officials are spending current resources effectively. 

Worker and church groups and others praised the tax as a step toward building badly needed affordable housing in an affluent city where the income gap continues to widen and lower-income workers are being priced out.

The clash over who should pay to solve the city housing crisis that’s exacerbated by Seattle’s rapid economic growth featured weeks of tense exchanges, raucous meetings and a threat by Amazon, the city’s largest employer, to stop construction planning on a 17-story building near its hometown headquarters.

Amazon has resumed planning the downtown building, but the company remains “apprehensive about the future created by the council’s hostile approach and rhetoric toward larger businesses, which forces us to question our growth here,” said Drew Herdener, Amazon’s vice president for global corporate and operations communications. 

Four council members initially pitched an annual tax of $500 per full-time employee before a compromise proposal lowered the tax rate after they could not muster six votes needed to override a potential veto by Mayor Jenny Durkan. 

The mayor signed the head tax on May 16, saying “we must make urgent progress on our affordability and homelessness crisis.”

Seattle’s action came as cities around San Francisco consider business taxes to help offset issues created by the growth of tech companies. 
…

Starbucks Corp. on Wednesday revealed details of the employee anti-bias training program that will take place behind closed doors at 8,000 U.S. company-owned cafes on the afternoon of May 29.

Starbucks announced plans to shutter stores and corporate offices to train 175,000 employees after the controversial April 12 arrests of two black men, who were detained for hours after the manager of a Philadelphia Starbucks called police because they had not made purchases and refused to leave.

The arrests of Donte Robinson and Rashon Nelson, who were waiting to meet a friend, sparked protests and calls for a boycott of the coffee chain known for its diverse workforce and liberal stances on issues such as gay marriage.

Starbucks said the first training on May 29 “will serve as a step in a long-term journey to make Starbucks even more welcoming and safe for all.”

It will include videos featuring Starbucks executives such as Chief Executive Kevin Johnson, Executive Chairman and co-founder Howard Schultz, board member Mellody Hobson, hip hop artist Common, store managers and experts from the Perception Institute. Employees also will view a film called “You’re Welcome” by Stanley Nelson and participate in discussion and problem-solving sessions on identifying and avoiding bias in every day situations.

Starbucks said the long-term program is being designed and developed with input from researchers, social scientists, employees and other advisers.

Those partners include consultancy SY Partners — which worked with Starbucks to reinvent itself after a business crisis spawned by the “Great Recession”; the Perception Institute; Sherrilyn Ifill, president of the NAACP Legal Defense Fund; Bryan Stevenson, executive director of the Equal Justice Initiative; and Heather McGhee, president of public policy group Demos.

Since the Philadelphia incident, Starbucks has said it will allow people to sit in its cafes and use its restrooms without making a purchase. It also said it has outlined procedures for dealing with customers who are disruptive, using tobacco, drugs or alcohol or sleeping in its cafes. 
…

U.S. President Donald Trump said on Wednesday “a different structure” is needed in trade negotiations with China, but he did not provide further details on the kind of change he seeks.

“Our trade deal with China is moving along nicely,” Trump said in his Twitter post Wednesday morning, “but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion.”

The stock market reacted negatively after Trump cast doubt on trade negotiations with China but ultimately trimmed its losses, ending the day in the positive territory and gained 52.40 points, or 0.21 percent.  

Trump said on Tuesday he was neither pleased nor satisfied with how the recent trade talks with China went, but added, “They’re a start.” 

After two days of trade talks between the two countries in Washington last week, China agreed to “substantially reduce” the $375 billion annual trade surplus it has over the U.S. by buying more American goods, but there was no mention of any specific import and export targets in the statement agreed to by the two countries.

On Capitol Hill, concerns appear to be mounting on Trump’s approach to trade talks with China. 

Republican Senator John Cornyn of Texas cautioned Wednesday that the United States needs to remain “steely-eyed” and make sure “China isn’t playing us for fools.” 

Democratic Senator Debbie Stabenow of Michigan warned, “It’s important we not only talk tough about China, but actually be tough with China.”

“I am really concerned about the president’s hemming and hawing over the last few days when it comes to China. I’m worried that President Xi [Jinping] is crafting a much better deal than President Trump,” Senate Minority Leader Chuck Schumer of New York said Tuesday.  

On trade with China, Schumer added that he is “closer to the president’s view” than he was to the views of former Presidents Barack Obama or George W. Bush.  

Republican Senator Marco Rubio of Florida, chairman of the Congressional-Executive Commission on China and a longtime critic of China, said Wednesday that the U.S. needs a “structural rebalance” of trade with China, not a “dollar rebalance.” 

In a Twitter post, Rubio said he has urged Trump to “follow his initial instincts on China,” and he also asked Trump to “listen to those who understand that a short-term trade deal that sounds good but poses long-term danger is a bad deal.”  

According to U.S. media reports, infighting between free-trade advocates and protectionists within Trump’s trade team has led to contradicting policy pronouncements and public statements on trade negotiations with China.

For example, U.S. Treasury Secretary Steven Mnuchin said the United States would hold off on imposing tariffs on China. But U.S. Trade Representative Robert Lighthizer said hours later the tariffs were still on the table. Earlier this month, White House trade adviser Peter Navarro, known for his protectionist views, reportedly feuded with Mnuchin on his approach to trade talks during their trip to Beijing.

The recent rounds of trade talks are aimed at avoiding a full-blown trade war between the United States and China.

In April, Trump imposed tariffs on $50 billion worth of Chinese goods, and the Chinese retaliated with tariffs of their own. Trump announced he had instructed the U.S. trade representative to consider whether tariffs on another $100 billion worth of Chinese goods would be appropriate following China’s announcement.

Michael Bowman contributed to this report.
…

Households are feeling more stable, small businesses are making money and many expect to expand and hire in the coming year, signs of continued optimism in two key parts of the economy, the Federal Reserve reported Tuesday in a pair of annual surveys.

Among more than 8,000 small businesses and more than 12,000 households covered in separate surveys late last year by the Fed and its 12 regional banks, the message was similar: economic conditions have been getting better and the expectation is for the good times to continue.

“We see a decided uptick” in the economic and credit conditions faced by small businesses, said one Fed official involved in the small business survey. “We are seeing improved business confidence and improved business performance,” with profitability and access to finance increasing in 2017, more than 70 percent of firms expecting revenue growth next year, and 48 percent expecting to add employees.

Among households, 74 percent of U.S. adults said they were financially comfortable or at least okay in 2017, four percentage points higher than in 2016 and 10 percentage points higher than the first survey year of 2013. Improvement was strongest in lower income households. The percentage of households that reported they were struggling financially fell to 7 percent from 9 percent last year.

The results from the surveys show that improvements in household and business conditions that took root under President Obama continued through the first year of the Trump administration.

Both findings are potentially significant for the economy’s future performance. Businesses with fewer than 500 employees generate perhaps 60 percent of new jobs, the New York Fed estimated in material released with the small business survey, and many report plans to expand in 2018.

Consumer spending, meanwhile, accounts for the bulk of U.S. gross domestic product, and strong household income growth in recent years has buoyed the economy overall.

“The mass of the consumer sector is in pretty good shape and that should continue,” Nathan Sheets, chief economist at PGIM Fixed Income said in an interview.

However, based on answers to a series of questions, about 2-in-5 adults faced what the Fed judged to be a “high likelihood of material hardship,” such as an inability to afford sufficient food, medical treatment, housing or utilities. About 4 in 10 said they could not meet an unexpected expense of $400 without carrying a credit card balance or borrowing from a friend.

Among the smallest firms, those with less than $100,000 in revenue, about 74 percent had trouble paying their bills, and a majority of those were either averse to borrowing or worried they would be turned down and so did not apply for credit.

But in overall the results for positive, said Fed officials.

Among firms that did apply for loans, for example, 46 percent received all they requested, compared to 40 percent last year. Nearly 60 percent wanted to use the money to expand. 
…

The Trump administration is preparing to publish on Thursday long-delayed proposed rule changes for the export of U.S. firearms, a State Department official said on Tuesday.

The rule changes would move the oversight of commercial firearm exports from the U.S. Department of State to the Department of Commerce.

The action is part of a broader Trump administration overhaul of weapons export policy that was announced in April.

Domestic gun sales drop

Timing for the formal publication of the rule change and the opening of the public comment period was unveiled by Mike Miller the acting secretary for the Directorate of Defense Trade Controls, the State Department’s body that currently oversees the bulk of commercial firearms transfers and other foreign military sales.

He was speaking at the Forum on the Arms Trade’s annual conference at the Stimson Center, a Washington think tank.

Reuters first reported on the proposed rule changes in September as the Trump administration was preparing to make it easier for American gun makers to sell small arms, including assault rifles and ammunition, to foreign buyers.

Domestic gun sales have fallen significantly after soaring under President Barack Obama, when gun enthusiasts stockpiled weapons and ammunition out of fear that the government would tighten gun laws.

A move by the Trump administration to make it simpler to sell small arms abroad may generate business for gun makers American Outdoor Brands and Sturm, Ruger & Company in an industry experiencing a deep sales slump since the election of President Donald Trump.

Remington recovers from bankruptcy

Remington, America’s oldest gun maker, filed for bankruptcy protection in March, weeks after a shooting at a high school in Parkland, Florida, killed 17 people and triggered intensified campaigns for gun control by activists. Remington emerged from bankruptcy last week.

The expected relaxing of rules could increase foreign gun sales by as much as 20 percent, the National Sports Shooting Foundation has estimated. As well as the industry’s big players, it may also help small gunsmiths and specialists who are currently required to pay an annual federal fee to export relatively minor amounts of products.
…

U.S. President Donald Trump said Tuesday “there is no deal” yet to lift the seven-year ban on the sale of American-made components to the giant Chinese telecommunications company ZTE, but that there might be a settlement as part of ongoing trade talks between the world’s two biggest economies.

Trump told reporters at the White House that he could envision a $1.3 billion fine against ZTE for violating the U.S. ban on trading with Iran and North Korea, the replacement of ZTE’s management and board of directors and imposition of “very, very strict security” to prevent the theft of U.S. intellectual and national security secrets.

“We caught them doing bad things,” he said.

Trump said Chinese President Xi Jinping asked him to look into the fate of ZTE after the firm said it had to shut its production because the U.S. banned sale of American-made components ZTE uses to manufacture an array of technology products until 2025. Trump said he also heard protests from the U.S. companies selling goods to ZTE.

Trump declared he was “not satisfied” with the state of U.S.-China trade talks after last week’s negotiations in Washington. China agreed to “substantially reduce” the $375 billion annual trade surplus it has over the U.S. by buying more American goods, but there was no mention of any specific import and export targets in the statement agreed to by the two countries.

U.S. Commerce Secretary Wilbur Ross is headed to China next week for further trade talks.

Trump commented on the ZTE case as U.S. news accounts quoted officials as saying a deal was near.

His suggestion of a $1.3 billion fine was slightly more than the $1.2 billion penalty the U.S. imposed last year on ZTE after uncovering its trade ban violations.

On Sunday, White House economic adviser Larry Kudlow said, “Do not expect ZTE to get off scot-free. Ain’t going to happen.”

Congressional opposition

But some U.S. lawmakers voiced opposition to settling the case.

U.S. Sen. Marco Rubio, who lost the 2016 Republican presidential nomination to Trump, contended that Washington had “surrendered” to Beijing. The Florida lawmaker said he would try to block it.

“Making changes to their board and a fine won’t stop them from spying and stealing from us. But this is too important to be over. We will begin working on veto-proof congressional action,” Rubio said on Twitter.

Senate Democratic Leader Charles Schumer said, “The proposed solution is like a wet noodle,” contending ZTE’s technology devices threaten to steal U.S. national security secrets.

Rescuing ZTE

Trump last week called for rescuing ZTE “to get back into business, fast.” He said “too many jobs in China” were being lost after the U.S. banned the sales of American-made components to ZTE. The U.S. leader said, “Commerce Department has been instructed to get it done!”

While some U.S. officials said the penalties against ZTE — the fine and the ban on sale of U.S. components until 2025 — were a law enforcement action, Trump linked the issue to ongoing trade and tariff disputes with China. The two countries over the weekend called off the threat of imposing higher tariffs on billions of dollars of each other’s exports while their negotiations continue.

Meanwhile, China announced Tuesday that on July 1 it will cut tariffs on most imported cars from 25 percent to 15 percent, still well above the 2.5 percent levy the U.S. imposes on cars imported from overseas.

The announcement by China’s finance ministry follows a pledge by Xi last month to lower the import duties and to ease foreign ownership restrictions for the Chinese auto industry.

Trump repeatedly has mentioned the 25 percent automobile tariff as a key trade barrier between the two countries.

On Monday, Trump said new trade between China and the U.S. will especially benefit U.S. farmers.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” he said on Twitter.
…

Glancing constantly at his rear view mirror, truck driver “El Flaco” journeys the highways of Mexico haunted by the memory of when he was kidnapped with his security detail by bandits disguised as police officers two years ago.

Back then, El Flaco, who spoke on condition of anonymity for fear of reprisals, was beaten, blindfolded and taken to a house near Mexico City where his captors threatened to kill him. Three days later he managed to escape and flee.

Today he travels with a machete and a satellite tracking device in his cab that can pinpoint him in emergencies.

Truckers covering Mexico’s vast territory often move in convoys to reduce the risk of robberies, which in 2017 almost doubled to nearly 3,000. Some drive with armed escorts traveling alongside them. Others remove the logos from their trucks.

Companies like brewer Grupo Modelo, a unit of AB InBev, and the Mexican subsidiary of South Korea’s LG Electronics have stepped up efforts to protect their drivers, deploying sophisticated geo-location technology and increasing communication with authorities.

The problem is part of a wider Latin American scourge of highway robbery that acts as a further drag on a region long held back by sub-par infrastructure.

“Roads are getting more and more dangerous, you try not to stop,” the 50-year-old El Flaco said, as he drove in the central state of Puebla, the epicenter of highway freight theft.

“Since I was kidnapped, I’ve gotten into the habit of looking in the mirror, checking car number plates, looking at who’s gone past me,” he added. “I look at everything.”

On the most dangerous roads, like those connecting Mexico City with major ports on the Gulf of Mexico and the Pacific, it is almost certain that one in every two truckers will be held up, a study by U.S.-based security firm Sensitech showed.

While no official data on losses exist, insurers paid out almost $100 million in 2016 to crime-hit cargo operators, up 4.5 percent on 2015, Mexican insurance association AMIS says.

The true sum is likely far higher: only one in three loads is insured due to the cost, according to industry estimates.

More than 80 percent of goods are transported by road and rail in Mexico, and the thefts are hurting competitiveness at a time the country is seeking to diversify trade and tap new sources of business.

Fuels, food and beverages, building materials, chemicals, electronic goods, auto parts and clothing are all top targets, Sensitech said.

Competition squeeze

Upon taking office in December 2012, President Enrique Pena Nieto promised to get a grip on gang violence and lawlessness.

But after some initial progress, the situation deteriorated and murders hit their highest level on record last year.

Highway robberies of trucks fell through 2014. But they almost doubled in 2015 to 985, hit 1,587 in 2016 and reached 2,944 last year.

The government has responded by stepping up police patrols in affected areas and lengthening prison sentences for freight robbery to 15 years. But robberies are still rising and most are not even reported due to the arduous bureaucratic process involved, Sensitech says.

“It’s hurting productivity and competitiveness,” said Leonardo Gomez, who heads a transportation national industry body.

Some drivers are armoring cabs in trucks made by companies like U.S. firm Kenworth, an expensive move that still only covers a tiny fraction of the almost 11 million trucks crisscrossing Latin America’s second-largest economy.

Last year, 53 trucks were armored against high-caliber weapons, up 40 percent from 2016, according to the Mexican Association of Automotive Armorers.

Attacks are not confined to roads. Some 1,752 robberies were recorded on railways last year, official data show. Criminals have also become more sophisticated.

They are turning to high-caliber weapons and employ devices to block Global Positioning Systems (GPS) to prevent trucks communicating their whereabouts, experts say.

Previously, companies that suffered robberies were generally able to recover their vehicles. Not any more.

“It’s not just the goods they want, it’s the trucks too,” said Carlos Jimenez of Mexican insurance association AMIS.
…

U.S. President Donald Trump says American farmers will be big beneficiaries of more trade with China.

“Under our potential deal with China, they will purchase from our Great American Farmers practically as much as our Farmers can produce,” Trump said Monday on Twitter.

In another comment, he said China “has agreed to buy massive amounts of ADDITIONAL Farm/Agricultural Products – would be one of the best things to happen to our farmers in many years!”

The U.S. leader said one result of talks with China last week in Washington is barriers to U.S.-Chinese trade and tariffs on each country’s exports will “come down for (the) first time.”

President Trump’s tweets come a day after U.S. Treasury Secretary Steven Mnuchin announced the two nations have agreed to back away from imposing tough new tariffs on each other’s exports, after reaching a deal Saturday for Beijing to buy more American goods to “substantially reduce” the huge trade deficit with the United States.

Mnuchin told Fox News the world’s two biggest economic powers “made very meaningful progress and we agreed on a framework” to resolve trade issues. “So right now we have agreed to put the tariffs on hold while we try to execute the framework,” he said.

China’s state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington this past week, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”

China’s state-run news agency Xinhua quoted Vice Premier Liu He, who led Chinese negotiators in trade talks in Washington, as saying, “The two sides reached a consensus, will not fight a trade war, and will stop increasing tariffs on each other.”

Explainer: What is a Trade War?

Negotiations to continue

Liu said the agreement was a “necessity;” but, he added, “At the same time, it must be realized that unfreezing the ice cannot be done in a day; solving the structural problems of the economic and trade relations between the two countries will take time.”

Trump had threatened to impose new tariffs on $150 billion worth of Chinese imports and Beijing had responded that it would do the same on American goods.

Mnuchin and White House economic adviser Larry Kudlow said U.S. Commerce Secretary Wilbur Ross would soon go to Beijing 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 United States has signaled it wants to trim the deficit by $200 billion annually, but no figure was mentioned in the agreement reached over the weekend.

Philip Levy, senior fellow on the global economy at the Chicago Council on Global Affairs, tells VOA that while the U.S. and China have for now avoided a tariff war, the outcome of the trade talks remains unclear.

“I think the Trump administration will crow about the fact that they arranged for some additional sales. That really wasn’t the issue. It may have been in their minds, but in terms of what is in the national interest, it wasn’t,” he said.

Levy says the result is a managed trade solution that still does not answer the fundamental question of how a state-dominated economy the size of giant China fits into the global system. 

But Kudlow said there has been a lot of progress.

“You can see where we’re going next. As tariffs come down, the barriers come down, there will be more American exports,” he told ABC television, saying any agreement reached will be “good for American exports and good for Chinese growth.”

ZTE

One contentious point of conflict between the U.S. and China is the fate of ZTE, the giant technology Chinese company that has bought American-made components to build its consumer electronic devices.

The U.S. fined ZTE $1.2 billion last year for violating American bans on trade with Iran and North Korea. ZTE, however, said recently it was shutting down its manufacturing operations because it could no longer buy the American parts after the U.S. imposed a seven-year ban on the sale of the components.

Trump, at the behest of Chinese President Xi Jinping, a week ago “instructed” Commerce Secretary Ross to intervene to save the company and prevent the loss of Chinese jobs.

Even so, Kudlow said, “Do not expect ZTE to get off scot free. Ain’t going to happen.”

Ira Mellman and Kenneth Schwartz contributed to this article.
…

China’s state media are playing up what it says is a trade war truce and de-escalation in tensions after negotiators from Washington and Beijing agreed to hold off on tariffs and “substantially reduce” the U.S. trade deficit. However, economists and business leaders argue that there is more to managing the relationship than balancing imports and exports.

State media in China are focusing heavily on the argument that Beijing did not give any ground and adopting their own take on the deficit question — focusing instead the country’s pledge to boost imports from the United States.

An editorial in the China Daily entitled “Sino-US agreement benefits both countries and the world” said that: “For China, ‘significantly increasing’ imports of U.S. goods and services, such as agricultural and energy products, will help meet its development needs and the desires of Chinese consumers.”

The editorial added that, “despite all the pressure, China didn’t “fold” as U.S. President Donald Trump observed. Instead, it stood firm and expressed its willingness to talk.”

An editorial in the party-backed Global Times said that while many may have noted what the joint statement said about reducing the U.S. deficit, that does not mean that the U.S. has won the trade talks. Instead, the piece said it was more a matter of learning to right an imbalance in the two countries’ trade systems.

The editorial called the now averted trade war a “historic period of difficult adjustment,” adding that “as one of the largest trade surplus countries in the world, China has learned from this dispute with the US.”

On news commentary boards, online response to agreement was mixed. Some argued the agreement was a sign that China had won. One commentator said: “America is just a paper tiger, there’s no need to be afraid.” Another: “Washington is weak in the knees.”

Many were pleased to see the two countries cooperating, agreeing that the decision was a “win-win.”

Others were not as certain. “Be careful, Trump will go back on his word,” wrote one person.

Despite state media’s rosy outlook about the agreement and confidence China had won online, huge differences between the two economies remain.

Lu Suiqi, an associate professor in economics at Peking University noted the agreement is just an incremental one and follow through will be key.

He said the focus on talks instead of brinkmanship was a positive development but not a guarantee of smooth sailing ahead.

“If any party fails to make good on its implementation, there may be renewed differences. And if these differences are hard to resolve, there’s still the possibility of putting the trade war back on,” Liu said.

Explainer: What is a Trade War?

Philip Levy, senior fellow on the global economy at the Chicago Council on Global Affairs told VOA the deal is not the worst outcome we could have had, it’s sort of the mediocre outcome many feared.

“This looks like they’re opting for some sort of managed trade solution that I don’t thing is good for either country, but it is better than a tariff war,” Levy said.

Much of what the statement said about longstanding trade differences was vague at best, some analysts note.

The joint statement said both sides agreed to encourage two-way investment and committed to creating a business environment for fair competition.

Since China joined the World Trade Organization in 2001, it has been promising and pledging to open up and many are growing tired of the talk. Over the past few years, a shift backwards toward a more central state-led economy has become more prominent.

And even as Chinese President Xi Jinping pledges to open up China’s economy further, he is asserting the party and state’s control and dominance over everything — including business.

Foreign companies’ frustration with rules in China that force the handover of sensitive technology and concerns about intellectual property persist. There is also concern about government subsidies in cutting edge industries and support for state-owned enterprises.

“There are fundamental questions about how a state dominated economy of that size fits into the global trading system. And I don’t think we’ve answered those questions,” said Levy.

Speaking at a gathering of former officials and business leaders in Beijing last week, Jeremie Waterman, the president of the China Center at the U.S. Chamber of Commerce, said that for businesses, market access is a bigger concern than trade imbalances.

“The focus of U.S Chamber of Commerce and our members really is on resolving the systemic issues, not on near term efforts to address the trade deficit,” Waterman said.

He added that focusing on opening markets and not closing them is best because it would address longstanding concerns about access in China. It could also help with the deficit.

Joyce Huang and Ira Mellman contributed to this report.
…

Washington is digesting China’s stated intention to purchase more American goods and reduce the trade imbalance between the two countries. VOA’s Michael Bowman reports, last week’s talks between U.S. and Chinese negotiators did not yield specific commitments from Beijing in dollar figures, sparking criticism from some lawmakers in Washington.
…

South Korea’s fourth-largest conglomerate, LG Group, said its Chairman Koo Bon-moo did Sunday.

Koo, 73, had been struggling with an illness for a year, LG Group said in a statement.

“Becoming the third chairman of LG at the age of 50 in 1995, Koo established key three businesses — electronics, chemicals and telecommunications — led a global company LG, and contributed to driving (South Korea’s) industrial competitiveness and national economic development,” LG said.

A group official said Koo had been unwell for a year and had undergone surgery. The official declined to be named because of the sensitivity of the matter.

Before its chairman’s death, LG Group had established a holding company in order to streamline ownership structure and begin the process of succession.

Heir apparent Koo Kwang-mo is from the fourth generation of LG Group’s controlling family. He owns 6 percent of LG Corp and works as a senior official at LG Electronics Inc.

The senior Koo’s funeral will be private at the request of the family, the company said.
…

The United States and China agreed to take measures to reduce the U.S. trade deficit in goods by having China purchase more American goods, particularly agriculture and energy products, according to a joint statement the two nations released Saturday.

“There was a consensus on taking effective measures to substantially reduce the United States trade deficit in goods with China,” the joint statement said.

“To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchases of United States goods and services. This will help support growth and employment in the United States.”

The statement concluded joint talks Thursday and Friday between the two countries, which included several U.S. Cabinet secretaries and China’s State Council Vice Premier Liu He.

President Donald Trump made reducing the U.S. trade deficit with China a key campaign promise.

The statement said that China would “advance relevant amendments to its laws and regulations” to allow for more American imports, including changes to patent laws.
…

India and the European Union have given the World Trade Organization lists of the U.S. products that could incur high tariffs in retaliation for U.S. President Donald Trump’s global tariffs on steel and aluminum, WTO filings showed Friday.

The EU said Trump’s steel tariffs could cost $1.5 billion and aluminum tariffs a further $100 million, and listed rice, cranberries, bourbon, corn, peanut butter, and steel products among the U.S. goods that it might target for retaliation.

India said it was facing additional U.S. tariffs of $31 million on aluminum and $134 million on steel, and listed U.S. exports of soya oil, palmolein and cashew nuts among its potential targets for retaliatory tariffs.

One trade official described the lists of retaliatory tariffs as “loading a gun,” making it plain to U.S. exporters that pain might be on the way.

India said its tariffs would come into effect by June 21, unless and until the United States removed its tariffs.

The EU said some retaliation could be applied from June 20.

Trump’s tariffs, 25 percent on steel and 10 percent on aluminum, came into force in March to strong opposition as many see the measures as unjustified and populist.

There were also objections that the tariffs would have little impact on China, widely seen to be the cause of oversupply in the market.

Trump justified the tariffs by claiming they were for U.S. national security, in a bid to protect them from any legal challenge at the WTO, causing further controversy.

Rather than challenging the U.S. tariffs directly, the EU and India, like China, South Korea and Russia, told the United States that they regarded Trump’s tariffs as “safeguards” under the WTO rules, which means U.S. trading partners are entitled to compensation for loss of trade.

The United States disagrees.
…

China has dropped an anti-dumping investigation and given long awaited approval for the sale of Toshiba’s memory chip business, in gestures that could suggest a thaw between Beijing and the U.S. as trade talks resumed in Washington.

The Commerce Ministry said Friday ended the probe into imported U.S. sorghum because it’s not in the public interest. A day earlier, Beijing cleared the way for a group led by U.S. private equity firm Bain Capital to buy Toshiba Corp.’s computer memory chip business.

The moves signaled Beijing’s willingness to make a deal with Washington amid talks between senior U.S. and Chinese officials aimed at averting a trade war between the world’s two biggest economies, analysts say.

“I think China is willing to make concessions,” said Wang Tao, chief China economist at UBS. “The Chinese stance has been very clear, that China wants to mute any trade dispute. But of course it doesn’t mean China would heed to all the demands the U.S. would place.”

A White House official said China had offered to work to cut the trade deficit with the U.S. by $200 billion, while stressing that the details remained unclear. But China’s Foreign Ministry denied it.

“It’s untrue,” said spokesman Lu Kang. “The relevant discussion is still underway, and it is constructive.”

The Commerce Ministry said it was ending the anti-dumping probe and a parallel anti-subsidy investigation because they would have raised costs for consumers.

The U.S. is China’s biggest supplier of sorghum, accounting for more than 90 percent of total imports. China’s investigation, launched in February, had come as a warning shot to American farmers, many of whom support the Trump administration yet depend heavily on trade. They feared they would lose their largest export market for the crop, which is used primarily for animal feed and liquor.

The Commerce Ministry said that, “Anti-dumping and countervailing measures against imported sorghum originating in the United States would affect the cost of living of a majority of consumers and would not be in the public interest,” according to a notice posted on its website.

It said it had received many reports that the investigation would result in higher costs for the livestock industry, adding that many domestic pig farmers were facing hardship because of declining pork prices.

China’s U.S. sorghum imports surged from 317,000 metric tons in 2013 to 4.76 million tons last year while prices fell by about a third in the same period.

The ministry said any deposits for the preliminary anti-dumping tariffs of 178.6 percent, which took effect on April 18, would be returned in full.

The announcement came after President Donald Trump met at the White House with Chinese Vice Premier Liu He, the leader of China’s delegation for talks with a U.S. team headed by Treasury Secretary Steven Mnuchin.

Trump had told reporters earlier that he had doubts about the potential for an agreement. He also raised fresh uncertainty about resolving a case involving Chinese tech company ZTE, which was hit with a crippling seven-year ban on buying from U.S. suppliers, forcing it to halt major operations. Trump said the company “did very bad things” to the U.S. economy and would be a “small component of the overall deal.”

Song Lifang, an economics professor and trade expert at Renmin University, said haggling is currently underway.

“It’s time for both to present their demands, but it’s also a time to exhibit their bargaining chips,” said Song, adding that approval for the Toshiba deal, worth $18 billion, was “an apparent sign of thaw” amid a U.S. investigation into Chinese trade practices requiring U.S. companies to turn over their technology in exchange for access to China’s market.

The Trump administration has proposed tariffs on up to $150 billion in Chinese products to punish Beijing while China has responded by targeting $50 billion in U.S. imports. Neither country has yet imposed tariffs.
…

The European Commission is proposing that EU governments make direct money transfers to Iran’s central bank to avoid U.S. penalties, an EU official said, in what would be the most forthright challenge to Washington’s newly reimposed sanctions.

The step, which would seek to bypass the U.S. financial system, would allow European companies to repay Iran for oil exports and repatriate Iranian funds in Europe, a senior EU official said, although the details were still to be worked out.

The European Union, once Iran’s biggest oil importer, is determined to save the nuclear accord, that U.S. President Donald Trump abandoned on May 8, by keeping money flowing to Tehran as long as the Islamic Republic complies with the 2015 deal to prevent it from developing an atomic weapon.

“Commission President Jean-Claude Juncker has proposed this to member states. We now need to work out how we can facilitate oil payments and repatriate Iranian funds in the European Union to Iran’s central bank,” said the EU official, who is directly involved in the discussions.

The U.S. Treasury announced on Tuesday more sanctions on officials of the Iranian central bank, including Governor Valiollah Seif,. But the EU official said the bloc believes that does not sanction the central bank itself.

European Energy Commissioner Miguel Arias Canete will discuss the idea with Iranian officials in Tehran during his trip this weekend, the EU official said. Then it will be up to EU governments to take a final decision.

EU leaders in Sofia this week committed to uphold Europe’s side of the 2015 nuclear deal, which offers sanctions relief in return for Tehran shutting down its capacity, under strict surveillance by the U.N. nuclear watchdog, to stockpile enriched uranium for a possible atomic bomb.

Sanctions-blocking law

Other measures included renewing a sanctions-blocking measure to protect European businesses in Iran.

The Commission said in a statement it had “launched the formal process to activate the Blocking Statute by updating the list of U.S. sanctions on Iran falling within its scope,” referring to an EU regulation from 1996.

The EU’s blocking statute bans any EU company from complying with U.S. sanctions and does not recognize any court rulings that enforce American penalties. It was developed when the United States tried to penalize foreign companies trading with Cuba in the 1990s, but has never been formally implemented.

EU officials say they are revamping the blocking statute to protect EU companies against U.S. Iran-related sanctions, after the expiry of 90- and 180-day wind-down periods that allow companies to quit the country and avoid fines.

A second EU official said the EU sanctions-blocking regulation would come into force on August 5, a day before U.S.

sanctions take effect, unless the European Parliament and EU governments formally rejected it.

“This has a strong signaling value, it can be very useful to companies but it is ultimately a business decision for each company to make [on whether to continue to invest in Iran],” the official said.

Once Iran’s top trading partner, the EU has sought to pour billions of euros into the Islamic Republic since the bloc, along with the United Nations and United States, lifted blanket economic sanctions in 2016 that had hurt the Iranian economy.

Iran’s exports of mainly fuel and other energy products to the EU in 2016 jumped 344 percent to 5.5 billion euros ($6.58 billion) compared with the previous year.

EU investment in Iran, mainly from Germany, France and Italy, has jumped to more than 20 billion euros since 2016, in projects ranging from aerospace to energy.

Other measures proposed by the Commission, the EU executive, include urging EU governments to start the legal process of allowing the European Investment Bank to lend to EU projects in Iran.

Under that plan, the bank could guarantee such projects through the EU’s common budget, picking up part of the bill should they fail or collapse. The measure aims to encourage companies to invest.
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Switzerland’s government has requested a report into the risks and opportunities of launching its own cryptocurrency, a so-called “e-franc” that would use technology similar to privately launched coins like bitcoin but have backing of the state.

The lower house of the Swiss parliament must now decide whether to back the Federal Council’s request for a study into the subject, which has been discussed in Sweden.

Cryptocurrencies have drawn scrutiny from lawmakers and international governing bodies coming to grips with the technology’s rapid ascent. The coins use encryption and a blockchain transaction database designed to enable anonymous transactions that do not require centralized processing.

Other countries interested

Several countries have begun evaluating the viability of introducing their own state-backed digital currency, with Sweden’s Riksbank saying an e-crown might help counteract issues arising from declining cash use and help make payment systems more robust.

But existing digital currencies such as bitcoin have been hampered by extreme volatility, high-profile hacks and doubts about long-term viability. Venezuela has issued a state-backed coin, but major developed economies have so far steered clear.

The Bank of International Settlement in March warned central banks to think hard about potential risks and spillovers before issuing their own cryptocurrencies.

Swiss bank cautious

In Switzerland, if the proposal is approved, a study will be produced by the Swiss finance ministry. No timing has been given on when it would be published should the go-ahead be given.

Swiss lawmaker Cedric Wermuth, vice president of the Social Democratic Party, called for the study. In its response Thursday, the Swiss government, or Federal Council, backed the proposal to look into it, although it said there were hurdles.

“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc,” it said. “It asks that the proposal be adopted to examine the risks and opportunities of an e-franc and to clarify the legal, economic and financial aspects of the e-franc.”

The Swiss National Bank has so far been cautious on the issue. Private-sector digital currencies were better and less risky than any version that might be offered by a central bank, SNB governor Andrea Maechler said last month.
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The United States sought on Thursday to further choke off funding sources for Iranian-backed Hezbollah, imposing sanctions on its representative to Iran, as well as a major financier and his five companies in Europe, West Africa and the Middle East.

The U.S. Treasury said Mohammad Ibrahim Bazzi was a Hezbollah financier operating through Belgium, Lebanon and Iraq, and was a close associate of Gambia’s former president Yahya Jammeh, who is accused of acquiring vast wealth during his decades-long rule.

It also imposed sanctions on Hezbollah’s representative to Iran, Abdallah Safi Al-Din, who it said served as an interlocutor between Hezbollah and Iran on financial issues.

The department said it had blacklisted Belgian energy services conglomerate Global Trading Group; Gambia-based petroleum company Euro African Group; and Lebanon-based Africa Middle East Investment Holding, Premier Investment Group SAL Offshore and import-export group Car Escort Services. All were designated because they are owned or controlled by Bazzi, the Treasury said.

“The savage and depraved acts of one of Hezbollah’s most prominent financiers cannot be tolerated,” U.S. Treasury Secretary Steven Mnuchin said in a statement.

“This administration will expose and disrupt Hezbollah and Iranian terror networks at every turn, including those with ties to the Central Bank of Iran,” he said.

The sanctions are among a slew of fresh measures aimed at Iran and Hezbollah since U.S. President Donald Trump withdrew from the Iran nuclear deal last week.

U.S. Secretary of State Mike Pompeo is set to outline in a speech in Washington on Monday plans by the United States to build a coalition to look closer at what it sees as Iran’s “destabilizing activities,” spokeswoman Heather Nauert told reporters at the State Department.

In one of the biggest moves this week aimed at clamping down on Iran’s overseas operations, the Treasury sanctioned Iran’s central bank governor, Valiollah Seif.

On Wednesday, the United States, backed by Gulf States, imposed additional sanctions on Hezbollah’s top two leaders, Sayyed Hassan Nasrallah and Naim Qassem.
…

The United Nations is forecasting that the global economy will expand by more than 3 percent this year and next year — but it warns that increasing risks could trigger “a shock to investment and trade” and a sharp drop to 1.8 percent growth in 2019.

The U.N.’s mid-year report on the World Economic Situation and Prospects launched Thursday says growth in the world economy is surpassing expectations, reflecting further economic expansion in developed countries and broadly favorable investment conditions.

However, the report said, “downside risks” have increased including “a rise in the probability of trade conflicts between major economies.”

Dawn Holland, chief of the U.N.’s Global Economic Monitoring Branch, cited the Trump administration’s imposition of tariffs in January and proposed new tariffs against China as well as the renegotiation of the U.S. trade agreement with Mexico and Canada, which has left “a void of uncertainty.”

There are also negotiations between the European Union and the United States partly linked to tariffs on steel, she said, and an increasing number of disputes have been raised with the World Trade Organization over the last six months.

The report said other factors also pose risks including uncertainty over monetary policy, increasing debt levels, and greater geopolitical tensions including in the Korean peninsula, Middle East, South China Sea and Ukraine.

But the U.N.’s assessment was generally upbeat citing continued economic improvements over the last several months including accelerating wage growth, improved investment prospects, and the short-term impact of the U.S. fiscal stimulus package.

“Many commodity-exporting countries will also benefit from the higher level of energy and metal prices,” the report said.

According to the U.N., world growth is now forecast to reach 3.2 percent in both 2018 and 2019, up from its forecast in December of 3 percent growth this year and 3.1 percent next year.

While many countries will experience growth, the report said output is expected to decline in central Africa and southern Africa, the report said. And the forecast for economies in transition including Russia and the world’s poorest countries have been revised “marginally downward” for 2018.

Assistant Secretary-General for Economic Development Elliott Harris cautioned, however, that “there is a strong need not to become complacent in response to upward trending headline figures.”

The report not only highlights the risks to economic growth but “the need to urgently address a number of policy challenges, including threats to the multilateral trading system, high inequality and the renewed rise in carbon emissions,” he told a press conference launching the report.

And it warned that if trade tensions and barriers were to “spiral over the course of 2018, through widespread retaliations and extensive disruption to global value chains, this could trigger a sharp drop in global investment and trade.”
…

Iranian state TV is reporting that the country has signed an agreement with a British consortium to develop an oil field, just as another major company, France’s Total, says it will withdraw from Iran because of the renewed U.S. sanctions.

The new agreement is the first between Iran and a company from a key Western ally of the United States since Washington last week announced it will pull out of the landmark 2015 nuclear deal between Iran and Western powers. The U.S. said it was reinstalling sanctions against Iran.

Managing Director of Pergas International Consortium Colin Rowley, and Bijan Alipour, managing director of National Iranian South Oil Co., signed a preliminary deed on the partnership in the presence of British Ambassador Rob Macaire in Tehran on Wednesday night.

The project, if the agreement turns into a contract, will require more than $1 billion to produce 200,000 barrels of crude oil per day during the next decade in the 55-year old Karanj oil field. The oil field is located in the country’s oil-rich province and currently produces 120,000 barrels of crude per day.

The U.S. sanctions aim to limit companies from any country from dealing with Iran by prohibiting them from using American banks in their operations. Pergas seems to do little business in the U.S., potentially giving it more freedom to operate in Iran.

Its move contrasts with the decision by French oil and gas producer Total to not continue a multi-billion dollar project in Iran unless it is granted a waiver by U.S. authorities.

The group said in a statement Wednesday that it “cannot afford to be exposed to any secondary sanction” including the loss of financing by American banks.

Total wants U.S. and French authorities to examine the possibility of a specific project waiver.

The 2017 contract for new development at the vast South Pars gas field was the first major gas deal signed with Iran following the 2015 nuclear deal.

Major European powers and Tehran committed this week to keep working together to save the Iran nuclear deal.
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The European Union has called on U.S. President Donald Trump’s administration to stop threatening it with tariffs on steel and aluminum, saying Thursday it is prepared to discuss trade — but not at gun-point.

In March, Trump slapped tariffs of 25 percent on steel imports and 10 percent on imported aluminum, but granted the 28 EU countries a temporary exemption until June 1. He also temporarily exempted big steel producers Canada and Mexico, provided they agree to renegotiate a North American trade deal to his satisfaction.

“It’s Europe’s economic sovereignty, and what we are demanding is that we are exempted without conditions or time limits,” French President Emmanuel Macron said in Bulgaria, where EU leaders have gathered for a summit with Balkans countries.

Convinced that the U.S. move breaks global trade rules, the EU has drawn up a list of “rebalancing” duties worth some 2.8 billion euros ($3.4 billion) to impose on U.S. products if it is not permanently exempt. It has vowed not to negotiate under threat.

“I don’t think we have to consider this or that, when it contravenes the laws of international trade,” Macron said.

But he added: “We can improve things, in a peaceful setting.”

German Chancellor Angela Merkel echoed his remarks.

“We have a common position: we want an unlimited exemption, but are then prepared to talk about how we can reciprocally reduce barriers for trade,” she told reporters in the Bulgarian capital Sofia.

Should the exemptions be dropped, the EU stands ready to deepen trans-Atlantic energy cooperation, notably on liquefied natural gas, improve reciprocal market access for industrial products and work together to reform the rules of the World Trade Organization.

The EU rejects Trump’s assertion that the tariffs are needed for U.S. national security and sees them as protectionist measures meant to boost local businesses. Most EU countries are U.S. allies in the world’s biggest security organization, NATO.

 
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President Donald Trump says the United States has not “folded” in trade negotiations with China as both countries get set for another round of meetings.

“We have not seen China’s demands yet,” Trump tweeted Wednesday. “The U.S. has very little to give because it has given so much over the years. China has much to give.”

U.S. Treasury Secretary Steve Mnuchin opens two days of talks in Washington with Chinese officials Thursday.

“These meetings are a continuation of the talks held in Beijing two weeks ago and will focus on rebalancing the United States-China bilateral economic relationship,” the White House says.

They are also aimed at avoiding a full-blown trade war after the U.S. and China exchanged tariffs in March.

Trump told the country Wednesday that the U.S. has been losing hundreds of billions of dollars a year and countless U.S. manufacturing jobs because of its trade deficit with China.

But despite his tough talks on China, Trump wants to rescue China’s giant technology company ZTE, puzzling many lawmakers.

ZTE was forced to close one of its plants and cease major operations after the U.S. Commerce Department barred it from buying American-made components for its consumer products. ZTE had been using those components in goods sold to Iran and North Korea, a violation of U.S. trade embargoes.

The president said earlier this week that “too many jobs” were being lost in China because of ZTE’s problems, and he ordered the Commerce Department to help it “get back into business, fast.”

Republican Senator Marco Rubio told VOA that the Commerce Department’s sanctions on ZTE are “a law enforcement function that really shouldn’t have anything to do with trade. … Chinese telecom companies are agents of the Chinese government. They don’t just steal national security secrets, they steal commercial secrets.”

House Democratic Leader Nancy Pelosi also talked to VOA, saying Trump does not know how to fight when it comes to balancing trade issues.

“The president talked big about wanting to have a fair trade relationship with China and folded immediately on the ZTE issue.”

Pelosi said Trump’s motives over ZTE are hard to understand, but said he will face serious opposition in Congress if he tries to use ZTE as a bargaining chip.

Michael Bowman and VOA Mandarin contributed to this report.
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Four years ago, Maeve Taylor and her husband decided to quit their jobs and move their family across the United States to start an organic dairy farm in New York.

The couple used a federal loan to buy 35 cows and started to learn their new trade on a patch of rented farmland.

But when they began looking for land of their own they hit their first major hurdle. Even in an area with a long agricultural tradition and lots of farmland, there was nothing to buy — at least at a price they could afford.

“You’d think you could buy something, but hardly any of it is for sale,” Taylor told the Thomson Reuters Foundation. “Wealthy landowners … live here as retirement homes or have purchased property as a vacation home.”

More than 31 million acres (12.5 million hectares) of U.S. farmland were lost between 1992 and 2012, according to a major assessment released this week by the American Farmland Trust — double previous estimates.

The advocacy group found nearly two-thirds of all U.S. development during that period was on farmland, taken over primarily by the expansion of urban areas and by low-density housing.

Experts say new farmers are being priced out by developers and the rural landscape risks being radically transformed as farms are split or sold as real estate, unless the government is prepared to safeguard agricultural property.

“We’re at a time in history where farmland isn’t being bought by farmers,” said Holly Rippon-Butler at the National Young Farmers Coalition, an advocacy group. “Our limited agricultural resources could be lost to agriculture forever. That’s the urgency.”

Nearly 100 million acres — 10 percent of agricultural land in the United States — is expected to change hands by the end of the decade as elderly farmers retire, according to a 2014 government estimate, the first of its kind.

The average age of U.S. farmers — and agricultural landholders — has been steadily rising, to the point where today many are looking to secure a comfortable retirement.

Almost two-thirds of U.S. farmland is now managed by someone over 55, and farmers older than 65 now outnumber those under 35 by a sixfold margin, according to the Young Farmers Coalition, citing federal statistics.

“Significant challenge”

The looming changeover in landholdings could be an opportunity for new farmers wanting to buy. But most agricultural lands are kept within families or sold to acquaintances, not on the open market.

Less than a quarter of the nearly 100 million acres of agricultural land that will change hands is expected to be sold to a non-relative, according to the 2014 federal findings.

Another 58 million acres is expected to be passed down through farming families.

Taylor said she and her husband were repeatedly turned away by sellers who pointedly told them that they wouldn’t be able to afford the asking price.

Eventually, driven by falling prices for organic dairy products, they decided to sell their cows in order to pay off their loan — a story that appears to be increasingly common.

Last year, the Young Farmers Coalition surveyed U.S. farmers aged under 40 to gauge how they were fairing. The findings were stark. Almost 40 percent of respondents cited land access as a “significant challenge” — the survey’s most-cited concern.

Real estate values for farms more than doubled from 2000 to 2015, U.S. Department of Agriculture research found in February.

Meanwhile, farm incomes stayed relatively flat, particularly after commodity prices fell in recent years. A study released in September found that the value of farm production compared with farm real estate is at its lowest point ever recorded.

Opportunities

Campaigners are now looking to lawmakers debating updates to what is commonly known as the farm bill, which expires in September.

The new five-year bill, a draft of which was released in mid-April, could offer strategies to address the issue.

While local-level zoning regulations already seek to protect farmland in the United States, experts say it is not difficult for developers to change the designation — and almost unheard of for it to be changed back again.

“In general, once you transfer land out of farming, it’s very difficult if not impossible to bring it back into farming,” said Juli Obudzinski, deputy policy director with the National Sustainable Agriculture Coalition.

Even if land continues to be farmed, Obudzinski said spiking real estate values meant it was more likely to be bought up by existing farmers than new ones looking to get into the sector, and called for a national strategy on the looming transition.

“Otherwise, our concern is that these lands will just go to the biggest farms and the highest bidders, increasing consolidation and decreasing the viability of rural communities,” Obudzinski said.

Still, the aging of U.S. agricultural landholders does offer potential opportunities.

Maeve Taylor’s family is now in the process of purchasing land in nearby Vermont, close enough that they won’t have to move.

The transaction is being facilitated by the Vermont Land Trust, which matched the Taylors with a farming family who wanted to sell.

It structured the sale in such a way that the land would be affordable to the Taylors, using a mechanism under debate in the farm bill discussions.

The owners had been raising organic wheat for nearly four decades, Taylor said, supplying it to nearby bakers. Now, they wanted to retire and ensure that their business continued.

The land sale is expected to take place this month, and Taylor expects to be farming organic wheat by summer.
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Malaysia’s new government to scrutinize past economic policies under the now ousted Najib Razak administration is prompting analysts to warn of a slide in investment and growth in one of Southeast Asia’s top economies.

The new leadership has appointed a group of prominent citizens, an eminent persons group, to come up with a new policy agenda within the next 100 days that will, among other things, review mega investment projects that have been key drivers of economic growth.

The new government has also established a special task force as corruption allegations over the abuse of funds in a sovereign wealth fund set up by Najib, and ordered a review of political representation on Malaysia’s largest government investment firms, including the main sovereign and pension funds.

Leading the eminent persons group is a former finance minister, Daim Zainuddin, and it includes a former central bank governor, Zeti Akhtar Aziz, a former president the Malaysian energy giant, Petronas, an economist and a leading businessman.

Gareth Leather, senior Asia economist for Capital Economics, an economic research group in London, says a key issue is whether Malaysia’s new government will remain united in the face of moves toward economic reforms.

“[The coalition] when it was formed was very much a coalition against Najib rather than anything pro-reform. So the first real test they have got is to see if there is enough cohesion within that coalition to push through [economic] reforms,” Leather told VOA.

A key campaign promise by new Prime Minister Mahathir Mohamad’s Pakatan Harapan — or Alliance of Hope — was to abolish a value added, goods and services tax.

While the tax, known as GST, was unpopular among voters, analysts say the revenue enabled the government to diversify its tax base from an over-reliance on corporate tax and the oil industry.

Immediately after the vote, financial markets reacted nervously to the scrapping of the tax and questions of the impact the measure would have on the government’s budget. Contributions from the GST have reached $10.6 billion.

Malaysian Finance Ministry officials have not said when the tax would be abolished, and analysts predicted a tough road ahead for the plan.

“To raise as much money as the GST while getting rid of the GST is going to be quite difficult. I don’t think that they can really go ahead and form a U-turn a d decide to keep it — so it’s going to be quite tricky managing it for them,” Leather said.

Analysts say financial markets are also closely watching steps in the new investigations centered on former leader Najib, accused of siphoning off billions of dollars from the 1MDB wealth fund. He firmly denies the charges. The U.S. Department of Justice alleges some $4.5 billion was misappropriated from the 1MDB, originally set up by Najib.

At least six countries, including the U.S., Singapore and Switzerland, are investigating the allegations of corruption. The new government has vowed to undertake fresh investigations into the case. Last weekend Malaysian immigration authorities refused Najib and his family the right to leave the country pending the investigations.

Unlike abolishing the sales tax, Leather predicts the corruption investigations will have a positive effect on the economy.

“Hopefully what it will do is it will bring to light a lot of the problems, institutional problems that have been holding Malaysia’s economy back over the past few years. It would have been shocking had Najib been able to steal this election,” he said.

But observers say a review of the multi-billion dollar mega projects, especially those undertaken by China, may have a major impact. The Chinese have invested more than $3.38 billion in Malaysia — and China is the leading foreign investor ahead of the U.S., Japan and Singapore. Chinese investments include manufacturing, real estate and sovereign wealth fund bonds.

China has also supported rail infrastructure in Malaysia that is linked to the One Belt One Road, a Beijing initiative that envisions building a network extending throughout Asia.

Analysts say there is a risk that investment — a key driver of growth — may fall sharply over the next two years.

Economic growth, with quarterly figures due this week, has been expanding at between 5.5 percent and 6 percent over the past year, aided by exports and foreign investment.

During the election campaign, Mahathir rallied against Chinese investment and promised a detailed review of projects involving foreign countries.

Pavida Pananond, a professor of international business at Bangkok’s Thammasat University, also predicts that Malaysia faces key economic challenges, especially after more than 60 years of government led by the monolithic United Malay National Organization coalition.

Pavida, in emailed comments to VOA, said it “remains to be seen how much political power can be remained from [the] economic sphere” after such a length of time.

“While the intention to scrutinize major projects and to investigate corruption should be well received, major changes will not come easily as the Malaysian economy and business have long been dominated by government linked or government supported corporations and entities,” she said.

On a positive note, she added, “the euphoric excitement toward changes, equality and transparency, should be welcome, as they bode well for what is needed in the new era of efficiency — and innovation-driven economy that Malaysia aspired to achieve.”

 
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Most U.S. insurance companies have not adapted their strategies to address the dangers of climate change, making them likely to raise rates or deny coverage in high-risk areas, said a study released Tuesday.

With predictions of an above-average Atlantic hurricane season approaching, thousands of people could be unable to afford insurance protection or lose it altogether, said the Canadian research study published in the British Journal of Management.

Scientific consensus holds that climate change increases the intensity and frequency of extreme weather, from hurricanes to flooding. Last year, three record hurricanes struck the Gulf of Mexico and the Caribbean, causing billions of dollars’ worth of damage.

Yet insurance and reinsurance companies overwhelmingly continue to treat storms as “anomalous rather than correlated to climate change,” the study said.

“Insurers that ignore climate change will not put away enough money to cover their claims. To recoup those losses, they’ll have to raise rates or pull coverage from high-risk areas,” said lead author Jason Thistlethwaite, an assistant professor of environment and business at the University of Waterloo.

They will face whopping payouts associated with disasters, he said.

So long, coverage

“When this shift happens, thousands of people will lose coverage or it will be unaffordable,” he said.

Insured losses hit an all-time high between 2004 and 2014, according to a 2015 analysis by reinsurer Swiss Re.

Insurance companies use reinsurance to minimize their risk. 

But in 2015, only 3 percent out of a sample of 178 U.S. property insurers and reinsurers were taking into account climate change in corporate governance, underwriting and investment, the study found.

However, the number of companies factoring in climate change in at least one area of operation doubled to about three dozen from 2012 to 2015, it said.

With storm-related payouts soaring, insurance companies may go out of business or lose investors, Thistlethwaite said.

A shrinking insurance market will drive up costs to consumers, he said.

The researchers analyzed insurers in California, Connecticut, Minnesota, New York, Washington and New Mexico.

Less than a month away, the Atlantic hurricane season has been predicted to be “above average” by Colorado State University meteorologists. The season runs from June 1 to November 30.
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