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Washington Digests US-China Trade Announcement

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.

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Facebook’s Zuckerberg, EU Lawyers Locked in Negotiations

Facebook and European Union officials were locked in high-stakes negotiations Sunday over whether founder Mark Zuckerberg will appear Tuesday before EU lawmakers to discuss the site’s impact on the privacy rights of hundreds of millions of Europeans, as well as Facebook’s impact on elections on both sides of the Atlantic and the spreading of fake news.

Being debated is whether the meeting would be held after EU Parliament President Antonio Tajanibe agreed to have it live-streamed on the internet and not held behind closed-doors, as previously agreed.

The leaders of all eight political blocs in the parliament have insisted the format be changed.

Lawmakers say it would be deeply damaging for Zuckerberg, if he pulls out simply because they want him to hold what they say is the equivalent of a “Facebook Live.”

Claude Moraes, chairman of the EU parliament’s Civil Liberties, Justice and Home Affairs panel, warned Zuckerberg will have to go into greater detail than he did in his testimony before U.S. Senate and Congressional panels last month on the “issues of algorithmic targeting, and political manipulation” and on Facebook’s relationship with Cambridge Analytica.

Facebook shared with the British firm the data of millions of Americans and Europeans, which was subsequently used for election campaigning purposes. Facebook did not return calls from VOA asking about whether Zuckerberg’s meeting with EU lawmakers would still go ahead.

“EU governments are absolutely aware that every election now is tainted. We want to get to the heart of this,” said Moraes. EU lawmakers say Zuckerberg’s appearance is all the more important as he has declined to appear before national European parliaments, including Britain’s House of Commons.

Terrorist connections

Zuckerberg is likely also to be pressed on why Facebook is still being used by extremists to connect with each other and to recruit. Much of the focus in recent weeks on Facebook has been about general issues over its management of users’ data, but analysts are warning the social-media site is enabling a deadly form of social networking and isn’t doing enough to disrupt it.

“Facebook’s data management practices have potentially served the networking purposes of terrorists,” said the Counter Extremism Project, nonprofit research group, in a statement.

“CEP’s findings regularly debunk Facebook’s claims of content moderation. This week, a video made by the pro-ISIS al-Taqwa media group was found that includes news footage from attacks in the West and calls for further violence, encouraging the viewer to attack civilians and ‘kill them by any means or method,” according to CEP

CEP researchers say Facebook’s “suggested friends” feature helps extremists connect to each other and is “enabling a deadly form of social networking.” “Worldwide, during the Muslim holy month of Ramadan, there has been a spike of militant activity on social media channels … Encrypted messaging apps like Facebook-owned WhatsApp are well known mechanisms used by terrorists to communicate, plot and plan attacks, a practice that is tragically continuing,” CEP says.

New rules

Aside from the EU parliament, Zuckerberg has agreed to be interviewed onstage Thursday at a major tech conference in Paris, and is scheduled to have lunch with French president Emmanuel Macron during the week.

His visit comes as the British government is threatening social-media companies with a tax to pay for efforts to counter online crime. According to Britain’s Sunday Telegraph newspaper, British ministers have instructed officials to carry out research into a new “social media levy” on internet companies.

Culture Minister Matt Hancock indicated Sunday the British government is beginning to move away from allowing the internet companies to regulate themselves and is ready to impose requirements on them, which if approved by parliament will make Britain the “safest place in the world” to be online.

A new code of practice aimed at confronting social-media bullying and to clear the internet of intimidating or humiliating online content could be included in the legislation, say officials. Other measures being considered include rules that have to be followed by traditional broadcasters that prevent certain ads being targeted at children. Hancock said work with social-media companies to protect users had made progress, but the performance of the industry overall has been mixed, he added.

Hancock said, “Digital technology is overwhelmingly a force for good across the world and we must always champion innovation and change for the better.”

 

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US, China Back Away From Tariff War

The U.S. and China have agreed to back away from imposing tough new tariffs on each other’s exports, a day after reaching a deal for China to buy more American goods to “substantially reduce” the huge trade deficit with the U.S.

U.S. Treasury Secretary Steven 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.”

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.”

Watch related video by VOA’s Michael Bowman:

U.S. President Donald 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.

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 is mediocre.

“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 radiating 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.”

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. But ZTE 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 report.

 

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South Korea’s LG Group Chairman Dies at 73

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.

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US, China Agree to Increased Trade Cooperation

China and the United States said Saturday that they had reached consensus on steps to substantially reduce the U.S. trade deficit with Beijing.

The announcement followed high-level talks in Washington and U.S. allegations that unfair Chinese trade practices meant the United States was buying far more from China than it sold there.

China pledged to make “meaningful” increases in purchases of services and goods, particularly agricultural and energy items. 

A statement from the White House said Washington would send a team of officials to China to work out details. It mentioned the importance of intellectual property protection and said the two sides would work to achieve a “level playing field in trade.”

New York Senator Chuck Schumer, the Democratic minority leader, said the statement offered too few details.

He said China often denies access to its huge market unless U.S. companies give Chinese firms access to American technical and business secrets. Schumer said short-term purchases of U.S. goods would not make up for that. 

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India, EU Give WTO Lists of US Goods for Potential Tariff Retaliation

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.

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China Ends US Sorghum Anti-Dumping Probe, OKs Toshiba Deal

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.

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EU Mulls Direct Iran Central Bank Transfers to Beat US Sanctions

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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