Month: April 2017

As economic and political leaders gather in Washington for the annual spring meetings of the World bank and International Monetary Fund — new warnings Thursday about the impact of rapid change on the global economy. At issue, the pace of technological advance and its Impact on jobs, particularly in developing economies. Mil Arcega has more. …

U.S. officials are reviewing Venezuela’s seizure of General Motors’ assets in the country, U.S. State Department spokesman Mark Toner said Thursday. “We are reviewing the details of the case,” Toner said in a statement, saying the United States hoped to resolve the matter “rapidly and transparently.” GM said Wednesday that Venezuelan authorities had taken over its plant in the industrial hub of Valencia, adding that it was halting operations and laying off 2,700 workers due to the “illegal judicial seizure of its assets.” The largest U.S. automaker vowed to “take all legal actions” to defend its rights. The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has already roiled many U.S. companies. The seizure is the result of a civil dispute with a Venezuelan concessionaire dating back to 2000 and does not represent a nationalization as such, according to local media reports. GM, the market leader in Venezuela for 35 years, said in a statement that in addition to the plant seizure “other assets of the company, such as vehicles, have been illegally taken from its facilities.” Total auto production in Venezuela fell to a historic low of 2,849 cars in 2016, nearly 75 percent less than the year before, according to Venezuela’s automotive industry group. In the first two months of 2017, GM has not produced any vehicles, while total Venezuelan auto production was just 240 vehicles, down 50 percent over the same period last year. The New York Times reported the GM plant had been …

President Donald Trump has ordered an investigation into whether foreign steel imports are damaging U.S. national security, saying his administration would “fight for American workers and American-made steel.” The probe is authorized under a rarely used section of a 1962 trade law that allows a president to restrict imports in cases where security interests are at stake. “This has nothing to do with China,” Trump insisted, adding, “This has to do with worldwide, what’s happening. The dumping problem is a worldwide problem.” Steel industry Surrounded by steel industry executives at an Oval Office signing ceremony Thursday, Trump clearly stated the probe was not directed at China, which has long been accused of dumping its excess steel production on U.S. markets. The president said the investigation could be completed within 50 days, far ahead of the nine months prescribed by law. Shares of steel companies surged on news of the probe. The price of United States Steel Corporation stock was up more than 8 percent soon after the announcement. “The important question is protecting our defense needs,” said Commerce Secretary Wilbur Ross, who added the investigation is designed to find a balance between free trade and national security while building up the U.S. military. “And we will do whatever is necessary to do that.” Ross noted that steel imports rose nearly 20 percent in the first two months of this year, much of it from China, and now make up more than 26 percent of the entire American marketplace. “Steel imports, …

Former Brazilian Finance Minister Antonio Palocci told a court hearing Thursday that he could provide details of a political kickback scheme, which could threaten former President Luiz Inacio Lula da Silva’s chances of running in the 2018 election. In the video of the hearing released Thursday, Palocci made the offer directly to Judge Sergio Moro, who has overseen a sweeping three-year-old corruption investigation, known as Operation Car Wash, that has upturned Brazilian politics. “I could immediately present all the facts, with names, addresses and operations carried out, things that will certainly be of interest to Car Wash,” Palocci said in the video of the hearing. Operation Car Wash, named for a gas station in what began as a money laundering probe in the capital Brasilia, has uncovered a bribery scheme at the highest levels of Brazilian politics in return for contracts at state-run enterprises. Palocci, one of the closest advisers to Lula and former President Dilma Rousseff from 2003 to 2011, was jailed in September on charges he ran a bribery scheme funneling money to the Workers Party, which then ruled Brazil. Newspaper Folha de S.Paulo reported Tuesday, without citing sources, that Palocci met with investigators in recent weeks to discuss the terms of a possible plea bargain deal to give evidence against Lula and other party leaders. Palocci’s lawyer could not be reached to comment. Several polls show Lula as the favorite in voting intentions for the 2018 presidential election, but he could be barred from running if sentenced …

Argentina hopes to have an agreement on a free-trade deal between the European Union and the South American Mercosur bloc by year’s end, its foreign minister said Thursday. The European Union and Mercosur launched trade negotiations in 1999, but they have faced multiple setbacks, partly because of the leftist rule in Argentina that lasted more than a decade. That government has now replaced by a more pro-business government since late 2015 that advocates trade. “We hope that it will be by the end of the year, but it is not a deadline. It could be in the first quarter of the coming year,” Argentine Foreign Minister Susana Malcorra told reporters in Brussels. “We would like to at least make an announcement at the WTO meeting in Buenos Aires that things are sufficiently close,” she added. Trade ministers will convene in Buenos Aires in December for a meeting of the World Trade Organization. Malcorra named issues related to rules of origin as well as food safety measures as important points that still needed to be discussed. The EU and Mercosur exchanged market access offers in May 2016, including lists of imports that each side was prepared to liberalize. The full members of the Mercosur trade bloc are Argentina, Brazil, Paraguay, Uruguay and Venezuela, which was suspended in December. …

General Motors said Wednesday that Venezuelan authorities had illegally seized its plant in the industrial hub of Valencia and vowed to “take all legal actions” to defend its rights. The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has roiled many U.S. companies. “Yesterday, GMV’s (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations. In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities,” the company said in a statement. It said the seizure would cause irreparable damage to the company, its 2,678 workers, its 79 dealers and to its suppliers. Industry in freefall Venezuela’s Information Ministry did not immediately respond to a request for information. Venezuela’s car industry has been in freefall, hit by a lack of raw materials stemming from complex currency controls and stagnant local production, and many plants are barely producing at all. In early 2015, Ford Motor Co. wrote off its investment in Venezuela when it took an $800 million pre-tax writedown. Many US companies out The country’s economic crisis has hurt many other U.S. companies, including food makers and pharmaceutical firms. A growing number are taking their Venezuelan operations out off their consolidated accounts. Venezuela’s government has taken over factories in the past. In 2014 the government announced the “temporary” takeover of two plants belonging to U.S. cleaning products maker Clorox Co., which had left the country. Venezuela faces around 20 arbitration cases over nationalizations under late leader Hugo …

A federal judge in Miami fined Princess Cruise Lines $40 million Wednesday for illegally dumping oil waste into the Atlantic Ocean and Gulf of Mexico, and for falsifying records. It is the largest such water pollution fine in U.S. history. The Miami Herald newspaper says the British engineer who reported the dumping to the U.S. Coast Guard will get a $1 million reward. According to the Herald, engineers aboard the Caribbean Princess in 2012 and 2013 were ordered to dump the oily water straight into the sea and avoid the ship’s filtration system, in order to save money. It said the ship’s two senior engineers falsified the vessel’s records. The British engineer recorded the dumping on a cellphone. Four other Princess ships also were involved in the illegal dumping off the East Coast, and near Florida and Texas. …

Peru’s economy will recover in coming years with investment in construction after recent flooding, likely growing 4.5 percent in 2018 and 5 percent in 2019, Finance Minister Alfredo Thorne said on Wednesday. Previously, the government had expected growth of 4.3 and 4.1 percent for the next two years. The estimate for 2017 growth was lowered this month to 3 percent from 3.8 percent previously due to flooding. “The shock will be temporary,” Thorne said in a presentation at Lima’s Chamber of Commerce. The floods have damaged 6,000 kilometers (3,728 miles) of roads, destroyed thousands of houses and killed 106 people since December. Peru’s economy, which has also been hurt by paralyzed infrastructure projects due to a corruption investigation involving Brazil’s Odebrecht, grew at its lowest rate in more than two years in February. …

Over the last six months, the skyline over the sleepy fishing city of Gwadar has been transformed by machines that dredge the Arabian Sea and cranes that set up shipping berths in what is projected to become Pakistan’s biggest international port. Infrastructure developments have enabled the hammer-shaped Gwadar peninsula to emerge as the centerpiece of China’s determined effort to shorten its trade route to the Persian Gulf and obtain access to the rich oil reserves there. A mini-“Chinatown” has appeared, with prefabricated living quarters, a canteen and a karaoke center. After hours, the workers have the grounds to play their favorite game, badminton. A spokesman for the Chinese team in Gwadar said in an interview that his government had invited employment bids in China, then brought the workers here. He proudly touted the successful test run conducted by China in November when it used Pakistan’s land route from Kashgar to Gwadar to transport a convoy of 60 containers for export to the Middle East and North Africa. Prior to that, he said, China had sailed materials through the South China Sea and the Indian Ocean to reach Gwadar. The Chinese propose to cut down that 12,000-kilometer sea route by about one-fourth once they adopt the land route from the northwestern province of Xinjiang to Gwadar. So eager is China to save on distance, time and expense — and the challenge posed by the U.S. Navy in the South China Sea — that it has weathered Pakistan’s unstable law-and-order situation to build its …

The Brazilian government on Wednesday agreed to lower the minimum retirement age for police officers in its pension reform proposal, a day after members of their unions stormed Congress to protest the controversial bill. In the reform draft, congressman Arthur Maia, a government ally in charge of making changes to the original proposal, reduced the minimum retirement age for police to 55 from 60. After he revealed the details of his proposal on Tuesday, hundreds of police unions dressed in black shirts broke the windows of the main entrance of the legislature in Brasilia and clashed with congressional guards. The violent clash, during which the guards used pepper spray and stun grenades to disperse the protesters, illustrated the unpopularity of the reform proposal that is central to President Michel Temer’s austerity agenda. The protest was the latest in what is expected to be months of street demonstrations by workers’ unions even after Temer has repeatedly watered down the proposal, which aims to reduce some of the world’s most generous pension benefits. Maia is scheduled to read his full reform draft at a special lower house commission later on Wednesday. The initial vote of the proposal, which is a constitutional amendment, has been set for May 2 at the commission. As it is a constitutional amendment, the measure has to be approved by a three-fifths majority in separate votes by both houses of Congress.   …

The International Monetary Fund said President Trump’s plans to cut regulations and taxes might encourage companies to make risky investments of the kind that preceded the financial crisis in 2008. The comment came Wednesday in the newest edition of the IMF’s Global Financial Stability Report, which also said the financial system has gotten more stable in recent months, as economic growth strengthened and interest rates rose, which helped banks. Trump’s proposals are intended to boost investment, growth and employment and would include changes like reducing taxes on foreign earnings brought back to the U.S. IMF experts say some of the money is likely to flow into sectors with significant debts.Those firms might have difficulty repaying loans if inflation and interest rates rise sharply from their current unusually low levels. The IMF also warned against slashing banking regulations, which were tightened in the wake of the financial crisis in the hope of preventing future problems. The fund said there is room for “fine-tuning” but urged Washington not to undertake “wholesale” weakening of the rules. Tuesday, IMF economists said the global economy will grow a bit faster than earlier predictions amid buoyant financial markets and improved manufacturing and trade.They warned that rising protectionism could hurt trade and economic growth. The reports come as financial and economic officials from around the world gather in Washington for this week’s meetings of the IMF and the World Bank. …

Emirates Airline, the world’s biggest international air carrier by traffic, said Wednesday it is cutting flights to five U.S. cities because of a drop in demand since President Donald Trump sought to curb immigration from several Muslim-majority countries and imposed restrictions on passengers carrying electronic devices on flights to the United States.   The Dubai-based carrier said that over the last three months, as Trump assumed power in Washington, it has seen “a significant deterioration” in bookings to the U.S.  It said that “as any profit-oriented enterprise would,” it has decided to cut service to the U.S. and instead move flights to other cities across the globe. The U.S. in March cited terrorism threats as it banned air passengers from several Middle Eastern countries, including the United Arab Emirates, from carrying large electronic devices, such as laptops and tablets, in cabins on flights to the United States. Earlier, Trump issued two orders, both blocked by U.S. courts, that sought to bar citizens from several majority-Muslim countries from entering the U.S., part of his effort to protect U.S. borders from new terrorist attacks and impose “extreme vetting” on immigrants looking to settle in the country. The airline said “the recent actions taken by the U.S. government relating to the issuance of entry visas, heightened security vetting and restrictions on electronic devices in aircraft cabins have had a direct impact on consumer interest and demand for air travel into the U.S.” Emirates said it would trim service next month to two cities …