Month: April 2017

Anticipation of U.S. President Donald Trump’s plans for big corporate and individual tax cuts spurred Wall Street to record highs Tuesday, and sent Asian markets soaring overnight. Trump is planning to unveil his tax plans Wednesday, with aides saying he will ask Congress to slash the current 35 percent rate down to 15 percent, a pledge he first made during last year’s presidential election campaign. White House spokesman Sean Spicer said the U.S. has been “uncompetitive” against other countries in attracting new businesses, “largely because of our rates.” U.S. lawmakers have for years vowed to adopt broad tax reforms, but the efforts have foundered. Congress has been unable to reconcile competing demands to eliminate tax breaks for some corporate and individual interests and raise taxes on others. Trump’s tax plans are likely to face months of hearings and debate in Congress, where his Republican colleagues have their own ideas on how the tax code ought to be reshaped. Some lawmakers have expressed concerns that Trump’s call for a big corporate tax cut would balloon the nearly $20 trillion in long-term debt the U.S. has accumulated if there are not corresponding measures to raise more revenue. U.S. Treasury chief Steven Mnuchin said Monday, “The tax reform will pay for itself with economic growth” that would boost tax revenues. Mnuchin called for tax simplification as well, saying U.S. reforms ideally would let taxpayers file their annual tax returns on a “large postcard.” The argument that tax cuts pay for themselves has little …

Canadian officials say a new tariff imposed by the Trump administration will raise the cost of new homes in the United States by $1,000 each, and shut 150,000 Americans out of home ownership. Washington’s decision also puts “thousands” of U.S. homebuilding jobs at risk, according to Canada’s ministers of natural resources and foreign affairs. The comments follow preliminary action by the U.S. Commerce Department to impose a 20 percent tariff on $5.77 billion worth of soft wood imports from Canada to the United States. The wood is a key ingredient of family homes. U.S. officials allege that Canada unfairly subsidizes exported wood. Subsidies could make the product cheaper, making it difficult for U.S. companies to compete on price. Canada “strongly disagrees” with the decision to impose this “unfair and punitive” tax, says Canada’s resources minister, Jim Carr. Canada’s foreign minister, Chrystia Freeland, says Canada will take the issue to court, where the United States has lost similar cases in the past.  U.S. Commerce Secretary Wilbur Ross says this has been “a bad week” in U.S.-Canadian trade relations, noting an additional dispute over Canadian milk exports. While the dispute over wood tariffs might raise the cost of new homes in the United States, a report published Tuesday by the Census Bureau shows sales of newly-constructed homes jumped upward by 5.8 percent last month. If sales continue at that pace for a year, 621,000 homes would change hands. Prices also rose. A separate report from a business group called the Conference Board …

The magnate behind LVMH is to incorporate Christian Dior into his luxury goods empire in a multibillion-dollar deal.   It’s the latest business coup for businessman Bernard Arnault, who has expanded his LVMH empire to include dozens of leading luxury brands — from high-end champagne and whiskies, to exclusive Vuitton handbags, Kenzo and Givenchy perfumes and Bulgari and TAG Heuer watches. Dior Couture, launched in 1946 and seen as the pinnacle of Paris style, would be a starring jewel in his empire.   Shares in Christian Dior and LVMH Moet Hennessy — Louis Vuitton rose after Tuesday’s long-awaited deal. The public offers values Dior at 260 euros per share. Shares in Dior spiked 12 percent to 253.95 euros by early afternoon trading Tuesday, while LVMH shares were up 4.3 percent at 223.95 euros.   According to the announcement, LVMH, which already owned Christian Dior cosmetics and perfumes, would buy Christian Dior Couture, its fashion business, for 6.5 billion euros ($7.1 billion). In addition, the Arnault Family Group is making a public offer for the Christian Dior shares it doesn’t currently hold.   The hope is that combining Dior’s entities under one roof and simplifying internal activities, savings will be generated.   The statement says the boards of both companies approved the transactions on Monday. The proposed deal will still need regulatory approval and consultations with workers. The companies also hope to issue the public offer in June, and finalize the purchase of Dior Couture in the second half of this year. …

The financial industry is closely watching Alibaba affiliate Ant Financial’s attempt to acquire Dallas-based MoneyGram International, the world’s second biggest money transfer company after Western Union. Ant is offering $1.2 billion, more than U.S.-based competitor Euronet Worldwide. If successful, the deal would turn Ant Financial into a financial behemoth with access to MoneyGram’s vast network of 350,000 outlets of retail shops, post offices and banks across 200 countries. At present, Ant’s business is largely based on the Chinese yuan. The acquisition would also give it access to U.S. dollar funds and escrow accounts for managing the funds. “If you look at MoneyGram, what they might be doing here (to Ant Financial) is bringing a unique extra key that has much to do with that escrow account surplus and be able to hold a lot of dollars,” Jacob Cooke, chief executive officer of Web Presence in China, told VOA. “That, of course, will give them access to a whole bunch more opportunities to Ant’s financial services.” Bidding war As Euronet entered the race, Ant Financial hiked its bid by 36 percent, leaving no one in doubt about its determination to acquire MoneyGram and take on Western Union, the world’s biggest money transfer company, on its own terms. But Euronet has so far refused to give up, saying it is reviewing the new situation. Euronet is also battling the Ant’s bid at another level. It has gone public in saying the Chinese acquisition bid poses serious security risks as payment companies hold …

U.S. Senator Dan Sullivan on Monday called on both the American and Chinese governments to exercise “true reciprocity” in relations, including trade and diplomacy.    The Republican senator from Alaska, in a speech concerning Chinese outbound investment, and in an interview with VOA afterward, said China has been aggressively buying companies in key sectors such as robotics, biotech, advanced machineries, software, entertainment and media “throughout America and Western Europe. But if you’re an American firm, or a firm from Germany, and you want to go to China and buy Chinese companies in those same sectors, you would be told ‘no;’ you would be prohibited.”   Making “true reciprocity” US policy   Sullivan’s proposed “true reciprocity” is rather simple and straightforward: “If Chinese companies want to invest in America’s biotech sector, then American companies should be able to invest in China’s biotech sector. It’s simple, it’s fair, it’s what China has said it wants to do but it doesn’t do, and we need to be much more serious about implementing it.”   Should China continue to ignore Washington’s calls for equal treatment and a level playing field, Sullivan says he is prepared to introduce legislation aiming at closing what he identifies as China’s “credibility gap,” and making sure that “true reciprocity” becomes official U.S. policy.   The Alaska Republican, who serves on both the Senate’s Commerce and Armed Services Committees, called on the U.S. government to reject “Middle Kingdom diplomatic practices” that fail to grant U.S. diplomats the same level of …

General Motors’ Venezuelan subsidiary has sent a message to almost 2,700 staff informing them that they are no longer employed by the company and had received severance pay in their bank accounts, according to two employees. A Venezuelan court last week ordered the seizure of the company’s Valencia plant, ruling in favor of two dealers that had filed a case in 2000 against the subsidiary on grounds they had not complied with an agreed sale of 10,000 vehicles. Workers say that before the seizure was announced, GM had been dismantling the plant, which has not produced a car since the beginning of 2016 because of shortages of parts and strict currency controls in the OPEC nation. The seizure, which GM called “illegal,” comes amid a deepening economic and social crisis in leftist-led Venezuela that has already roiled many U.S. companies. “We all received a payment and a text message,” said a worker who had worked for the company for more than a decade, adding that his corporate email account had been deactivated over the weekend. “Our former bosses told us the executives left and we were all fired. There is no longer anyone in the country,” added another employee who received the same message on his personal cell phone and a payment to his account. He had been at GM for five years.   The company did not immediately respond to a request for comment about the layoffs or the worker allegations it had already been dismantling the plant. GM …

Tesla Chief Executive Elon Musk took many risks with the technology in his company’s cars on the way to surpassing Ford Motor Co.’s market value. Now Musk is pushing boundaries in the factory that makes them. Most automakers test a new model’s production line by building vehicles with relatively cheap, prototype tools designed to be scrapped once they deliver doors that fit, body panels with the right shape and dashboards that don’t have gaps or seams. Tesla, however, is skipping that preliminary step and ordering permanent, more expensive equipment as it races to launch its Model 3 sedan by a self-imposed volume production deadline of September, Musk told investors last month. Musk’s decision underscores his high-risk tolerance and willingness to forego long-held industry norms that has helped Tesla upend the traditional auto industry. While Tesla is not the first automaker to try to accelerate production on the factory floor, no other rival is putting this much faith in the production strategy succeeding. Musk expects the Model 3 rollout to help Telsa deliver five times its current annual sales volume, a key target in the automaker’s efforts to stop burning cash. “He’s pushing the envelope to see how much time and cost he can take out of the process,” said Ron Harbour, a manufacturing consultant at Oliver Wyman. Investors are already counting on Tesla’s factory floor success, with shares soaring 39 percent since January as it makes the leap from niche producer to mass producer in far less time than rivals. …

The governments of Spain and Brazil on Monday reinforced their commitment to completing a trade pact between the European Union and South American trade bloc Mercosur despite protectionist sentiments. On a two-day visit to Brazil, Spanish Prime Minister Mariano Rajoy said he agreed with Brazilian President Michel Temer about the need to wrap up a trade deal that has taken more than 15 years to negotiate. Rajoy also called for elections as the only way to reach a negotiated solution to the political crisis in Venezuela, expressing “deep concern” over the volatile situation in the neighboring country. “We agree that given the degree of confrontation and the volatility of the situation, a negotiated solution is needed, and it must inevitably involve giving back to the Venezuelan people their voice,” he said. Rajoy is heading a large delegation of Spanish businessmen who are looking for investment opportunities in Brazilian banking, energy, water and infrastructure sectors. Spain backs deal Brazil is the third-most important market for Spanish investors, who account for the second largest stock of foreign investment in the South American nation after the United States. Spain is one of the strongest backers of an accord to lower trade barriers between the European Union and Mercosur members Brazil, Argentina, Uruguay and Paraguay. Negotiations have been delayed for years by the reluctance of European farmers and Mercosur manufacturers to face competition. “Spain has always been and will continue to be a firm supporter of the agreement,” Rajoy said after meeting Temer. “In …

The CEO of one of the Middle East’s largest carriers said Monday passenger numbers to the United States have dipped slightly over fears by some Muslim passengers that their visas may be rejected upon arrival, but expressed confidence in President Donald Trump as a “very good businessman.”   Qatar Airways CEO Akbar al-Baker said uncertainty about travel to the United States is “affecting the business, but to a very small extent.”   “We didn’t have massive decline like other carriers so we still have robust loads to the United States and we will continue our commitment to our passengers in the United States,” al-Baker said.   Emirates, the Middle East’s largest airline, slashed its flights to the United States by 20 percent last week.   Dubai, where Emirates is based, and Doha, Qatar Airways’ main hub, were among the 10 cities in Muslim-majority countries affected by a ban on laptops and other personal electronics in carry-on luggage aboard U.S.-bound flights.   “Qatar Airways does not plan and will not reduce frequencies to the United States,” he said. “I am sure that these uncertainties that passengers have soon could be resolved by statements from the United States’ government.”   Al-Baker also expressed hope that Trump would resist pressure from American Airlines, Delta Air Lines and United Airlines to block aggressive expansion into the U.S. market by Gulf-based carriers.   “I have repeatedly mentioned that President Trump is a very wise individual and a very good businessman, and I don’t think that …

More than 700 global leaders in business, government and civil society from 65 countries are meeting to explore the opportunities and challenges offered by eCommerce, with a special focus on developing countries. The future of e-commerce could not be brighter. The  U.N. Conference on Trade and Development or UNCTAD is kicking off “eCommerce Week” with new statistics, which show the global size of the market in 2015 reached $25 trillion. UNCTAD Secretary-General, Mukhisa Kituyi urges developing countries to join the action and not be left behind in the eCommerce revolution. “Those countries, populations and small enterprises, which have no presence on the digital platform are not only invisible, but they basically cannot grow, they cannot compete,” he said. Kituyi says his own country of Kenya shows how the danger of being left behind by the digital phenomenon can inspire governments into taking political action. He says four years ago, Kenya enacted a new law to provide every school child with a laptop. Since computers run on electricity, he says the government accelerated moves to make this service available throughout the country. “In four years, more primary schools have received electricity in Kenya than in the preceding 55 years. So, the appetite for digital inclusion with sound policy can trigger investment in infrastructure for other purposes, which had been held back because of low political priority,” he said. eCommerce week will feature panel discussions on topical issues such as cybersecurity and cybercrime, digital trade, and youth employment in the digital economy. …