Month: April 2017

News reports say President Donald Trump may be preparing to sign an executive order pulling the United States out of the North American Free Trade Agreement.

Trump has called the pact that took effect in 1994 a disaster that has primarily benefited Mexico and cost the U.S. jobs.

The reports say the order could come as early as this week, but may be no more than a threat used so the U.S. can renegotiate a better deal.

A Canadian foreign ministry spokesman Wednesday said Canada was “ready to come to the table at any time.”

Earlier this week, Trump ordered a 20 percent tariff on Canadian lumber imports.

Many Mexican officials have called NAFTA a disappointment, saying it has brought slow economic growth despite increased investment in factories and industry.
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President Donald Trump’s plan to slash business and household taxes could shift the U.S. economy into higher gear, but it may have one effect the White House would not welcome — interest rates ratcheted higher than expected by a wary central bank.

The Trump administration says hundreds of billions of dollars fed into the economy via deep cuts in business taxes and more generous exemptions for individuals will unleash a wave of investment and make the U.S. economy more competitive than ever.

But the plan, if approved in the form Trump officials outlined on Wednesday, could add inflationary fuel to an economy already running near full capacity, a risk Federal Reserve officials have been warning about since Trump got elected.

Confronted with the prospect of massive cuts that would slash the corporate tax rate to 15 percent from 35 percent and overhaul the personal tax code, Fed officials will need to start debating if they can maintain a measured pace of rate hikes or they might need to move faster, say analysts and economists who follow the U.S. central bank.

Fed’s inflation goal is 2 percent

The Fed aims to hold inflation at around 2 percent, and is close to that threshold, with its target short term rate expected to rise two more times, to about 1.5 percentage points, by the end of the year.

Trump has said he hopes low rates will continue, a potential source of friction with the Fed if officials do decide they need to move faster because of his policies.

An estimated up to $700 billion a year in tax cuts could threaten to derail such a scenario, especially if not all of that money finds its way into productive investments, or drives price and wage hikes.

“The premise is that all the tax savings get plowed into high-return investments to generate growth. But if they don’t and they just get churned around into M&A and other financial engineering things, it’s even worse because you’re raising risks elsewhere in the economy,” said Mark Mazur, former U.S. treasury assistant secretary for tax policy during the Obama administration, now head of the Urban-Brookings Tax Policy Center in Washington.

Uncertainty as to whether and in what shape the plan will get implemented adds to other challenges the Fed faces in trying to chart its course over the next several months.

Looming threats

The threat of a government shutdown and renewed debate over the federal debt ceiling late this summer or early in the fall will test both the new administration and the Fed’s ability to set its policy course. Republican and Democratic lawmakers need to pass a series of bills to keep the government running, but are sparring over issues such as whether to fund a border wall with Mexico.

Government closures, forced budget cuts, and a tense 2013 debt ceiling debate have thrown the Fed off course before, dragging down economic growth and idling hundreds of thousands of workers.

Taken together, the coming discussions will be critical for the Fed and for world markets looking for proof Trump can oversee a functioning government, said David Stockton, a former Fed research director now with the Peterson Institute of International Economics.

“If you have a shutdown followed by a serious flirtation with default … some of the optimism built into household and business confidence could deflate and deflate pretty quickly,” Stockton said. “If all of a sudden it begins to look like even with one party in control nothing seems to be happening, it could be a shock.”

For the Fed, those would be self-inflicted wounds in an otherwise calm economic environment. From healthy corporate profits to strong consumer confidence and geopolitical developments like the recent French election results, events have been breaking in favor of steady U.S. growth and job gains — and a gradual pace of Fed rate increases.

Policymakers are hesitant

Policymakers currently foresee two more rate increases this year, a view investors largely accept in how they have priced different securities.

So far, policymakers have been hesitant to mold their thinking too much around speculation about what Trump might do because details have been scant and Congress’ reaction uncertain.

With the scope of the tax plan now revealed and fiscal deadlines on the horizon, that is now likely to change — for better or worse.

Though the Republicans now control both the White House and the Congress, there is no guarantee they will easily reach agreement on either spending or tax plans, or on the debt ceiling. Divisions in the GOP doomed Trump’s first stab at healthcare overhaul, and some Republican lawmakers are likely to oppose either raising the debt limit or cutting taxes too much because of the larger deficits that would produce.

“The next few months are going to be make or break. They are going to have to show they are going to get something done,” said IHS Markit economist Chris Christopher.
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A Somali pirate will be spending the rest of his life in a U.S. federal prison for attacking an American Navy ship in 2010.

Mohamed Farah, 31, was sentenced Wednesday for piracy and other acts in connection with the armed attack on the USS Ashland in the Gulf of Aden, off the coast of Djibouti.

Three other defendants already got life sentences, while two more were given 15- and 33-year prison terms.

The pirates set out to hijack another ship, but were stopped by a British naval vessel. They then turned their sights on the Ashland, pelting the ship with small-arms fire.

The Ashland returned fire, setting the pirates’ small boat ablaze and forcing them into the sea.

The Ashland was not damaged and no one on board was hurt.
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President Donald Trump and Commerce Secretary Wilbur Ross on Tuesday said they did not fear a trade war with Canada after American punitive action on lumber and milk.

“They have a tremendous surplus with the United States,” Trump said, adding “people don’t realize Canada’s been very rough on the United States. … They’ve outsmarted our politicians for many years.”

Trump added that he wanted “a very big tax” on Canadian lumber and timber.

He made the comments at a meeting with American farmers where he signed an executive order aimed at helping agriculture and rural areas.   

Trump also talked to Canadian Prime Minister Justin Trudeau Tuesday. Trudeau “refuted the baseless allegations by the U.S. Department of Commerce and the decision to impose unfair duties,” according to a summary of the call released by Trudeau’s office.

“The prime minister stressed that the government of Canada will vigorously defend the interests of the Canadian softwood industry, as we have successfully done in all past lumber disputes with the U.S.,” the statement said.

The White House later issued its own brief, three-sentence readout of the call, which it called “very amicable.”

The Canadian dollar fell to a 14-month low against the greenback after the United States imposed preliminary tariffs averaging 20 percent — more than $1 billion of countervailing duties — on imported Canadian softwood.

Earlier in the day, Trump vowed moves to protect the American dairy industry.

On Tuesday morning, he tweeted: “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!”

Against NAFTA

Trump, since his time campaigning for the presidency, has voiced his strong displeasure with the 1994 North American Free Trade Agreement (NAFTA), but until now he has vented most of his ire southward, toward Mexico.

Ross, speaking to reporters on the White House podium, would not explicitly characterize the actions on lumber and dairy as the opening shots on renegotiating NAFTA, but he did say: “Everything relates to everything else when you’re trying to negotiate.”

He described Canada as “generally a good neighbor,” asserting that its allegedly unfair trade practices regarding lumber and dairy were not very neighborly.

Asked on Tuesday in Kitchener, Ontario, about the U.S. trade actions and the fate of NAFTA, Canadian Prime Minister Justin Trudeau replied, “Standing up for Canada is my job, whether it’s softwood or software.”

Trudeau added, “Any two countries are going to have issues that will be irritants to the relationship and, quite frankly, having a good, constructive, working relationship allows us to work through those irritants.”

Some other Canadians were less diplomatic in their reactions.

“In Canada, the perception is that we’re always very nice,” said Unifor President Jerry Dias, representing forestry workers across the country. “But we can’t get trampled by this guy [Trump].”

‘Ignore, do not engage’

The majority of Canadians, including the prime minister and his colleagues, “understand that President Trump is prone to making ill-informed, off-the-cuff and arbitrary comments about a host of domestic and foreign policy issues,” Donald Abelson, the chairman of the political science department at the University of Western Ontario in London, told VOA.

“Canada will likely respond to Trump’s Tuesday tweet in a manner similar to how a competent parent responds to a child’s temper tantrum — ignore, do not engage,” added Abelson, who is also director of the school’s Canada-U.S. Institute.  

Other Canadians displayed wry humor — a traditional reaction to irritations from south of the border (at least since the last U.S. invasion during the War of 1812), considering the asymmetry of power.   

The president’s messages prompted immediate puns on Canadian social media, with tweets referencing “sacred cows” and calling the American trade action on dairy “udderly stupid” and “cheesy,” Sparkle Hayter, veteran Canadian journalist and author, told VOA.

The dairy dispute goes back decades. Currently, there is an overproduction of milk, according to dairy farmers on both sides of the border.

The U.S.-Canada lumber squabble is rooted in a couple of centuries of history.

In response to the proposed tariff on softwood lumber, “Canada to strike back by charging duties on exported Cdn actors,” tweeted the account of 22 Minutes, a satirical news program on national public broadcaster CBC.

Cows are No. 1

The Twitter account also noted the U.S. president “tweeted about Canadian dairy industry first thing this morning, so on his list of priorities: 1. Canadian Cows. 2. North Korea.”  

Trump’s attention on Canada comes amid indications he is pivoting away — at least temporarily — from the southern border and his quest to quickly fund his border wall with Mexico.

“We have plenty of time” to complete the wall during his first term, Trump assured reporters Tuesday afternoon.  

The presidential desire for border protection might find a better reception to the north, considering the comments from some Canadians.

“Some [in Canada] would like to separate from the U.S., like literally,” by digging a two-mile moat at the border “and filling it with beavers and mosquitoes,” quipped Hayter from her home province of Alberta.   

But many Canadians see themselves confronting a cross-border creature bigger than a beaver.

“Sleeping with an elephant” is how the late Pierre Trudeau, the current Canadian prime minister’s father, once characterized relations with the United States, “affected by every twitch and grunt.”
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Amid growing tensions over North Korea’s missile and nuclear programs, the U.S. military Wednesday began moving some parts of the THAAD anti-missile defense system onto a deployment site in South Korea, Seoul said.

“South Korea and the United States have been working to secure an early operational capability of the THAAD system in response to North Korea’s advancing nuclear and missile threat,” South Korea’s defense ministry said in a statement.

The first elements of the Terminal High Altitude Area Defense system were delivered to South Korea in early March. On Wednesday, South Korea’s defense ministry said other elements were moved onto a deployment site — a former golf course — in Seongju county.

South Korea and the United States said the sole purpose of the advanced THAAD system is to defend against missile launches from North Korea.

While China opposes THAAD, calling it a threat to its own security, it has spoken out against North Korea’s missile and nuclear tests and has supported U.N. sanctions against Pyongyang.

Failed missile test

Most recently, on April 16, North Korea conducted a failed missile test in defiance of increased U.S. warnings that there would be serious consequences for such provocative actions, including a possible military response. North Korea also is believed to be preparing for a sixth nuclear weapons test.

On Tuesday, North Korea marked the 85th anniversary of the founding of its military with a “massive fire drill” in the eastern port city of Wonsan, according to South Korea’s defense ministry.

The celebration came on the same day a U.S. nuclear-powered submarine, the USS Michigan, arrived in South Korea, and the navies of those two countries joined Japan in conducting military exercises in the waters west of the Korean Peninsula.

The naval exercises are scheduled to last through Wednesday, the same day President Donald Trump has invited all 100 U.S. senators to the White House for a classified briefing that will primarily concern North Korea.

Defense Secretary Jim Mattis, Secretary of State Rex Tillerson, Director of National Intelligence Dan Coats and General Joe Dunford, chairman of the Joint Chiefs of Staff, will conduct the briefing.

While lawmakers often receive classified briefings on Capitol Hill, it is rare for them to take place at the White House and for the entire Senate to be involved in one event.

Wednesday’s briefing will be held in the auditorium of the Eisenhower Executive Office Building, next to the White House.

‘A big world problem’

During a White House lunch with ambassadors of U.N. Security Council member states on Monday, the U.S. president called unacceptable the “status quo in North Korea.” Trump said the Security Council must be prepared to impose additional and stronger sanctions on North Korea’s nuclear and ballistic missile programs.

“North Korea is a big world problem, and it’s a problem we have to finally solve,” the president added. “People have put blindfolds on for decades, and now it’s time to solve the problem.”

Several U.S. senators were looking forward to hearing from the White House on North Korea.

Senator Ben Cardin of Maryland, the top Democrat on the Senate Foreign Relations Committee, told Reuters, “I hope that we hear their policy as to what their objectives are, and how we can accomplish that hopefully without dropping bombs.”

Republican Senator Lindsey Graham of South Carolina told Reuters the Trump administration should be telling senators if it has a “red line.”

VOA’s Steve Herman at the White House and Brian Padden in Seoul contributed to this report.​
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Nine former U.S. ambassadors to the United Nations have signed a letter to members of Congress urging them not to slash U.S. contributions to the U.N. budget.

“The U.N. remains an indispensable instrument for advancing the global stability and prosperity on which U.S. interests and priorities depend,” the ambassadors wrote. “We therefore urge you to support U.S. leadership at the U.N., including through continued payment of our assessed and voluntary financial contributions to the organization.”

The ambassadors are from both Republican and Democratic administrations, spanning five presidents.

U.S. is U.N.’s largest donor

The United States is the U.N.’s largest donor, contributing about $611 million this year to the regular budget of more than $2.5 billion. Washington also contributes more than $2 billion annually to support U.N. peacekeeping missions and hundreds of millions more to vital programs including the U.N. Children’s Fund and the World Food Program.

The Trump administration announced earlier this month that it would no longer fund the U.N. Population Fund, which provides lifesaving care to millions of women and girls around the world.

“None of us believe the U.N. is perfect, but we all believe it remains an essential tool in America’s foreign policy and national security tool box,” said Madeleine Albright, who served as President Bill Clinton’s U.N. ambassador and later as the first female secretary of state.

“Whether we are dealing with North Korea, Iran, Iraq or Mali, the U.N. plays a vital and unique role in galvanizing the global community and increasing pressure on rogue actors and meeting humanitarian needs on the ground,” she told reporters during a conference call about the letter.

Leadership role at risk

She warned that if the U.S. retreats on its financial contributions, other powers such as Russia and China  will move to fill the gap, potentially taking the U.S. leadership role with them.

“It is important strategically for us to know that the U.N. plays a huge role in dealing with problems in a way that keeps us from having to deal with them,” former U.N. Ambassador Thomas Pickering told reporters. Pickering served as U.N. envoy under Republican President George H.W. Bush.

He pointed to peacekeeping operations, saying that while the U.S. shoulders more than a quarter of the annual budget, the country is in return spared putting its own troops on the ground in places where it is in the U.S. interest to see stability.

Trump seeks 28 percent cut in funding

Last month, President Donald Trump announced he is seeking a 28 percent budget cut for diplomacy and foreign aid, which includes an unspecified reduction in U.N. funding.

Trump had lunch at the White House on Monday with U.N. Security Council ambassadors. He said “big reforms” are needed at the world body, complaining that costs have “absolutely gone out of control.” But he hinted that if the U.N. performs better, he would not be as tough on the U.S. contribution.
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About 5,000 American and Philippine troops will hold humanitarian exercises next month instead of annual war games, scaling back military drills in response to President Rodrigo Duterte’s disdain for their longstanding defense alliance.

Troops taking part in “Balikatan” will simulate a response to a devastating super typhoon in the central Philippines, modeled on typhoon Haiyan in 2013, which killed at least 6,300 people and left more than 200,000 families homeless.

“Balikatan is designed to meet current challenges facing the Philippines,” U.S. embassy press officer Molly Koscina said in a statement on Monday.

Duterte has made no secret of his grudge against the United States and believes a U.S. military presence of any kind in the Philippines puts his country at risk of being dragged into conflict. He has threatened to abrogate treaties with Washington, but has yet to follow up.

Duterte contacts Russia, China

The volatile leader has reached out to Russia and China and invited their warships to come to the Philippines for exercises too.

He has taken issue with the United States on its approach to the South China Sea and said Manila will never take part in joint patrols, to avoid provoking China.

Balikatan, which means “shoulder-to-shoulder,” has taken place on 32 occasions and every year since 2000, involving conventional warfare activities, as part of a mutual defense treaty between the two countries under a 1951 security pact.

Amphibious landing part of last’s years drills

Nearly 9,000 troops participated in a simulation of retaking an oil-and-gas platform last year, seized by an imaginary enemy, and practiced an amphibious landing on a Philippine beach near an area of the disputed South China Sea.

U.S. Marines also used for the first time in the Philippines a long-range truck-mounted multiple rocket launcher.

A Philippine army spokesman said the downsizing of the exercises was in response to Duterte’s dislike of war games with Washington.

“We made some adjustments, based on the pronouncements of the president that such exercises should be focused on humanitarian operations,” Major Frank Sayson told reporters. “Just to make it clear, this is not a war game.”

Two major military drills called off

Sayson said the two sides agreed to scrap two major military drills — Amphibious Landing Exercise or “Phiblex” and Cooperation Afloat and Readiness Training (CARAT) — geared toward external and maritime defense.

He said the two armies would work on marksmanship and defusing of homemade bombs, as part of counter-terrorism exercises.
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President Donald Trump complained on Monday that the United States is shouldering an unfair burden of the cost of the United Nations, but said if the world body reforms how it operates, the investment would be worth it.

Trump, who has frequently criticized the cost to the United States of supporting the NATO alliance, took his concerns directly to the ambassadors of the U.N. Security Council, who joined him at the White House for a lunch.

“If we do a great job, I care much less about the budget because you’re talking about peanuts compared to the important work you’re doing,” Trump told the 15 council envoys.

The United States is the biggest U.N. contributor, paying 22 percent of the $5.4 billion core budget and 28.5 percent of the $7.9 billion peacekeeping budget. These assessed contributions are agreed by the 193-member U.N. General Assembly.

Trump said the U.S. share of those budgets was “unfair.”

He has proposed a 28 percent budget cut for diplomacy and foreign aid, which includes an unspecified reduction in funding for the United Nations and its agencies, as well as enforcement of a 25 percent cap on U.S. funding for peacekeeping operations.

“We need the member states to come together to eliminate inefficiency and bloat and make sure that no one nation shoulders a disproportionate share of the burden,” he said.

Trump’s remarks came as the General Assembly prepares to negotiate in the coming months the U.N. regular budget for both 2018 and 2019 and the peacekeeping budget from July 1, 2017 to June 30, 2018.

United Nations Secretary-General Antonio Guterres met briefly with Trump at the White House on Friday for the first time since both took office earlier this year.

The United States currently owes the United Nations $896 million for its core budget, U.N. officials said. The United States is also reviewing 16 U.N. peacekeeping missions as the annual mandates come up for renewal by the Security Council in a bid to cut costs.

U.N. agencies such as the U.N. Development Program (UNDP), the children’s agency UNICEF, and the U.N. Population Fund (UNFPA), are funded by governments voluntarily.

The State Department said this month it was ending funding for UNFPA, the international body’s agency focused on family planning, as well as maternal and child health in more than 150 countries. Guterres warned that the cut could have “devastating effects” on vulnerable women and girls.

In 2016, the United States was the top contributor to the UNDP’s core budget, with an $83 million donation; the leading donor to UNICEF’s core budget in 2015 with $132 million; and the fourth-largest donor to the UNFPA, giving $75 million.
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For the first 20 years of Markus Rindt’s life, he knew just how far he could travel — no further west than the wall that split Germany in two.

“I grew up with walls around me —it was a weird situation, to see that the world seems to end at this wall,” remembers Rindt. “You feel that it cannot be that the world ends here.”

He’s spent the nearly 30 years since then-President Ronald Reagan called on then-Soviet Union leader Mikhail Gorbachev to “Tear down this wall” between West and East Germany making music, traveling and making the occasional political statement the best way he knows: in concert.

Now Rindt wants to take that movement to a new frontier — the barriers between the United States and Mexico —where he hopes to pull off an ambitious, border-long project in early June with the Dresden-based contemporary orchestra he leads — the Dresdner Sinfoniker just days before the June 12 anniversary of Reagan’s speech.

“Our plan,” he says, “is a very big plan.”

Rhetoric prompts series of concerts

Rindt added the open-air border show to a schedule of two planned concerts June 3 by the group in Mexico City and Puebla, inspired by U.S. President Donald Trump’s rhetoric in favor of building more walls along the border.

“This project is the most ambitious project so far. I have no idea if it [will work] in the end,” Rindt told VOA in a phone interview from Dresden, where he returned six years after fleeing to West Germany via Prague in 1989.

“I feel the project is necessary in our time. It is not only against this planned Trump wall, but against isolation[ist] tendencies around the world as well,” says Rindt. That includes Europe, where last year, Britain voted to withdraw from the European Union, and France, where a nationalist candidate is in the running for president.

#teardownthiswall

There are, of course, logistics to a cross-border concert; Rindt feels confident in Mexico’s approval for the group to perform with 15-20 musicians and a children’s choir from Tijuana on a stage along the southern side of the wall/fence. He is less sure that U.S. officials will approve of a few musicians and a children’s choir joining them through the fence in San Diego’s Friendship Park where relatives on both sides of the border are allowed to meet.

WATCH: Report from Friendship Park in San Diego

Rindt has never been to the U.S.-Mexico border. He’s invited U.S. and Mexican musicians to join the Dresdner Sinfoniker in June, and has raised more than half the funds to get his musicians there.

It’s not the first cross-border concert; those have been happening for years; Rindt knows that. There is even an artist who used the wall itself to make music. But Rindt hopes the event will take on a life of its own; he wants musicians and artists to perform along the border, from Texas to California, and use a hashtag inspired by Reagan’s speech to link all of their performances: #teardownthiswall.

‘There must be other ways’

He’s not ignorant or ignoring transnational issues, he says. Trump has said the wall is necessary for national security.

“I’m aware of some problems — drugs of course — some people will answer me what about drugs and criminals. There must be other ways to solve such problem.”

Data shows that smugglers do indeed work around border barriers. Trump recently told the Associated Press that: “People want the border,” but an April survey from Qunnipiac University shows increasing opposition to building more of a border wall among Americans, up from 55 percent against its construction just after President Donald Trump’s election in November, to 64 percent now.

“To Trump: I would say there is no best country in the world, no best religion, no best skin color — I don’t like this America-first thought,” says Rindt. “Europe is unified … It is so great this feeling now, to be so so free, the world is much bigger than before for us.  We are so far away from conflicts with each other. If you compare this with 60 years ago — we have to keep this freedom and peace.”
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