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Colas, Cigarettes: N. Korea Airline Diversifies as Threats of Sanctions Mount

Even after disembarking from North Korea’s Air Koryo plane at Pyongyang airport, it’s difficult to miss the airline’s brand. The Air Koryo conglomerate makes cigarettes and fizzy drinks, besides owning a taxi fleet and petrol stations – and all have the same flying crane logo as the carrier.

The military-controlled airline expanded into consumer products in earnest in recent months, visitors to the isolated country say. It was not clear if the diversification into the domestic market was related to the loss of many international routes when the United Nations slapped economic sanctions on North Korea for its nuclear and ballistic missile programs.

Washington is now considering tougher measures, including a global ban on Air Koryo itself, to punish North Korea for continuing weapons tests, U.S. officials have said.

But any U.S. action on Air Koryo would not be binding on other nations and would have little effect unless joined by China and Russia – both of which have sought to introduce exceptions to United Nations sanctions on North Korea in the past.

“China may indeed agree to this kind of ban on Air Koryo since it seems like China and the U.S. have reached an agreement that North Korea needs to be dealt with in some way. But the question is whether Russia will agree to sanctions against Air Koryo,” said Sun Xingjie, an associate professor at China’s Jilin University.

North Korean officials are rarely accessible to reporters, and it was not possible to get comment from Air Koryo or from the Pyongyang government.

Air Koryo now flies only to Beijing and three other cities in China, and to Vladivostok in Russia. Flights to Bangkok, Kuala Lumpur and Kuwait were dropped last year but just last month, Air Koryo added a route from Pyongyang to the Chinese city of Dandong, the main transit point for trade between the two countries.

Air Koryo has 15 active planes on its fleet, either Russian or Ukrainian-made, and uses refuelling, maintenance and repair facilities in China and Russia, according to aviation databases and U.N. documents.

The airline has a number of domestic flights connecting the capital Pyongyang to Orang, Sondok and Samjiyon towns, according to a schedule available last year.

Businesses in secretive North Korea do not publicly share information about revenues or costs, so it was not possible to determine what effect any existing sanctions have had or may have in future.

But visitors to North Korea say the Air Koryo conglomerate, owned by the country’s air force, is clearly expanding.

Cabs, Gas Stations

In 2015, the conglomerate launched its own brand of sky-blue taxis which now parade the streets of Pyongyang alongside cabs from at least eight other state-owned companies.

Air Koryo colas and cigarettes are available in shops across Pyongyang.

Air Koryo started branching into soft drinks late last year, said Simon Cockerell of Beijing-based Koryo Tours, which organizes travel to North Korea.

It got into retail sales of petrol in January. “They have at least one petrol station in Pyongyang, perhaps two,” Cockerell said. “I wouldn’t be surprised to see more Air Koryo products make it to market before too long.”

A United Nations panel which investigates North Korean sanctions infringements said in a report in February there was an “absence of boundaries” between Air Koryo and the air force.

“The airline’s assets are actively utilised for military purposes,” the report said.

“Outwardly, this seems like a commercial airline, but in effect, this is run by the government,” said Kim Yong-hyun, a professor of North Korean Studies at Dongguk University in South Korea.

The United Nations has not sanctioned Air Koryo, although it has accused it of being involved in the smuggling of banned goods. Civilian aircraft are exempt from the U.N. ban on jet fuel exports to North Korea when refuelling overseas. Member states are required to inspect any cargo originating from North Korea, including on Air Koryo flights.

In December, the United States designated Air Koryo, 16 of its aircraft and 10 of its offices as “sanctioned entities,” meaning that U.S. citizens are generally prevented from engaging in transactions with them. It was not clear if the ban extended to Americans flying on the airline for tourism.

Officials at Pyongyang’s airport said they were unconcerned about any attempts by the global community to strengthen sanctions that could target Air Koryo directly.

“We are not afraid, we have our own counter actions prepared,” said a customs official, without elaborating, standing at the Air Koryo check-in counter.

Kim, the South Korean professor, said any sanctions on Air Koryo would have mostly a symbolic effect.

“It will not cause huge damage to the North Korean economy,” he said in the Korean language. “Air Koryo is not a ‘dollar box'[which makes a lot of foreign money].”

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Trump Orders Wide Review of Financial System Regulations

U.S. President Donald Trump has ordered a full review of the powers given to government regulators to oversee the banking and finance industries following the financial meltdown of 2008.

Trump went to the Treasury Department on Friday to sign three executive orders that start the process of fulfilling his campaign pledges to undo regulations that he says unduly strain the U.S. economy.

“My entire administration [is] working around the clock to help struggling Americans achieve their financial dreams … and have real confidence in the future,” Trump said as he signed the orders. “Together we will restore prosperity to this nation.”

U.S. Treasury Secretary Steve Mnuchin explained that two of the orders could eventually lead to a significant revision of controversial provisions of the 2010 Dodd-Frank Wall Street Reform law.

“Our goal is to make this a smarter, more effective process that reduces the kind of systemic risk that harmed so many Americans during the financial crisis of 2008,” Mnuchin said.

Dodd-Frank reform

One order temporarily freezes a portion of Dodd-Frank known as the Orderly Liquidation Authority, which gives the federal government broad discretion in making loans to failing financial institutions. The Trump administration argues that the OLA encourages excessive risk-taking by banks because taxpayers are potentially liable for bad loans.

Trump on Friday called the Dodd-Frank regulations “unfair” and “damaging,” saying they had “failed to hold Wall Street firms accountable.”

Critics say the review is aimed at revoking Obama-era reforms that have brought stability and transparency to the sometimes murky world of high finance, and helped to prevent another crisis.

Edwin Truman, who served as a senior Treasury official in the Clinton and Obama administrations, says Dodd-Frank encourages banks to raise more capital and be more open about their activities.

“That doesn’t mean that a complicated piece of legislation like Dodd-Frank couldn’t be improved and tweaked,” Truman told VOA. “It’s like Obamacare. It could be improved while maintaining its basic principles. So there’s scope for reform but not really repeal or replacement.”

Boston University law professor Tamar Frankel, an expert in financial system regulation, said Dodd-Frank has not achieved the purpose for which it was designed, which is to create consumer confidence in the banking industry. But she worries that a rollback of Obama-era regulations could bring about a return to dangerous lending practices.

“Loans of the kind banks made before 2008 are the poison of any financial system,” Frankel said.

Tax laws

Trump’s latest orders also authorize a review of tax laws, which the president argues impose an undue burden on taxpayers.

“This is such a privilege for me to sign,” he said during the ceremony. “This is really the beginning of a whole new way of life that this country hasn’t seen in really many, many years.”

Secretary Mnuchin told reporters Friday he was looking forward to taking a hard look at the tax code.

“We are going to go through and look at every significant financial regulation that’s been done in the past year and a half,” Mnuchin explained. “We’re going to determine if they’re needed in the tax code, or if they’re unnecessary.”

In making his case, Mnuchin pointed to statistics showing individuals and businesses cumulatively spend a total of 6.1 billion hours complying with the tax code each year, at a cost to the U.S. economy of $234.4 billion. He said the basic Form 1040 used to file taxes had grown from 34 lines and two pages of instructions to 79 lines and 211 pages of instructions.

Mnuchin has 180 days to report back to the president with recommended reforms.

Trump also hinted Friday that he’s almost ready to make another big announcement on taxes, saying he was ready to unveil a “massive tax cut” next week, shortly before he reaches the symbolic 100-day mark of his presidency.

“The process has begun long ago, ” he said, “but it really formally begins on Wednesday.”

In a separate interview with The Associated Press, Trump said the plan would provide tax cuts for both individuals and businesses. He would not provide details of the plan, saying only that the tax cuts will be “bigger I believe than any tax cut ever.”

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Greece Blows Away EU-IMF Bailout Targets With Strong Budget Performance

Greece far exceeded its international lenders’ budget demands last year, official data showed on Friday, posting its first overall budget surplus in 21 years even when debt repayments are included.

The primary surplus — the leftover before debt repayments that is the focus of International Monetary Fund-European Union creditors — was more than eight times what they had targeted.

Data released by Greek statistics service ELSTAT — to be confirmed on Monday by the EU — showed the primary budget surplus at 3.9 percent of gross domestic product last year versus a downwardly revised 2.3 percent deficit in 2015.

This was calculated under European System of Accounts guidelines, which differ from the methodology used by Greece’s in bailout deliberations.

Under EU-IMF standards, the surplus was even larger.

Government spokesman Dimitris Tzanakopoulos said the primary budget surplus under bailout terms reached 4.19 percent of gross domestic product last year versus the 0.5 percent of GDP target.

“It is more than eight times above target,” Tzanakopoulos said in a statement. “Therefore, the targets set under the bailout program for 2017 and 2018 will certainly be attained.”

Debt-strapped Greece and its creditors have been at odds for months over the country’s fiscal performance, delaying the conclusion of a key bailout review which could unlock needed bailout funds.

The IMF, which has reservations on whether Greece can meet high primary surplus targets, has yet to decide if it will fund Greece’s current bailout, which expires in 2018.

The 2016 outperformance could lead the fund to revise some of its projections. The IMF’s participation is seen as a condition for Germany to unlock new funds to Greece.

Athens hopes to discuss the fund’s participation and its projections at the sidelines of the IMF’s spring meetings in Washington. EU and IMF mission chiefs are expected to return to Athens on Tuesday to discuss the bailout review.

After meeting Greek Finance Minister Euclid Tsakalotos in Washington, IMF chief Christine Lagarde said: “We had constructive discussions in preparation for the return of the mission to discuss the two legs of the Greece program: policies and debt relief.”

ELSTAT said the overall surplus including debt repayments reached 0.7 percent of GDP compared with a 5.9 percent deficit in 2015.

Analysts attributed the outperformance to the implementation of bailout measures and increased efforts to improve the state’s revenue collection capacity.

“It’s an impressive outperformance versus the bailout program target for the primary surplus,” said Athens-based Eurobank’s chief economist Platon Monokroussos.

“The data suggests that the 2017 fiscal target under the bailout program is fully attainable under the current baseline macroeconomic scenario,” he said.

Athens faces a primary surplus target of 1.75 percent of GDP this year.

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Canadian PM Responds to Trump’s Criticism of Dairy Industry

Canadian Prime Minister Justin Trudeau said Friday that he plans to be respectful and engage the United States with a fact-based approach to solving problems a day after Donald Trump called Canada a “disgrace” for policies that hurt American farmers.


Trudeau said during a news conference alongside visiting Italian Prime Minister Paolo Gentiloni on Parliament Hill that he will stand up for Canada’s interests and people.


“The way to do that is to make arguments in a respectful fashion, based on facts, and work constructively and collaboratively with our neighbors,” said the Liberal leader.


The U.S. president took aim at Canada’s dairy industry this week for creating a new lower-priced classification of milk product that he argues hurts U.S. producers. Trump said it has put farmers in Wisconsin and New York state out of business.


Canada changed its policy on pricing domestic milk to cover more dairy ingredients, leading to lower prices for Canadian products including ultra-filtered milk that compete with U.S. milk. Canada’s dairy sector is protected by high tariffs on imported products and controls on domestic production as a means of supporting prices that farmers receive.


Trump said on Thursday “what they’ve done to our dairy farm workers is a disgrace”.


The U.S. president criticized Canadian policies related to a few industries including lumber, timber and energy, adding that officials will have to get to the negotiating table with Canada very quickly.


Trump also said this week he would make “some very big changes” to the NAFTA treaty with Canada and Mexico or “we are going to get rid of NAFTA for once and for all.”


The threat to get rid of or alter NAFTA is a potential problem for Canada, whose biggest trade partner is the United States.


Gentiloni and Trudeau on the other hand were keen to display their support for free trade and open borders, including the Canada-EU free trade pact, amid growing populist opposition.


Gentiloni, who had been in Washington on Thursday, said Canada and Italy share a common, pro-trade world view and that they live in “interesting times.” He also said the anti-trade movement is bigger than one single country.


“The United States president’s opinions are perfectly legitimate,” the Italian leader said through a translator. “But we have to be aware of the fact that this push goes against free trade as a catalyst for world growth … that is why we need to work politically, culturally and economically to fight against this trend.”


Italy is to host the G7 leaders’ summit next month, which will be part of Trump’s entry into the world of multilateral summitry.

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World Bank: Automation Could Wipe Out Two-Thirds of Jobs in Developing Countries

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.

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US Reviewing Venezuela’s Seizure of GM Assets

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 closed for the last six weeks as a result of a takeover by members of one of its unions.

Nearly all vehicles built in Venezuela in the first two months this year were assembled by Toyota Motor Corp, which said Thursday that its plant was operating normally.

But a spokesman added the automaker was “only producing based on orders that come in.”

Venezuela’s car industry has been hit by a lack of raw materials stemming from complex currency controls.

In early 2015, Ford Motor Co wrote off its investment in Venezuela when it took an $800 million pre-tax writedown. The company said Thursday it was not producing vehicles in Venezuela.

The South American nation’s economic crisis has hurt many other U.S. companies, including food makers and pharmaceutical firms. A growing number are removing their Venezuelan operations from their consolidated accounts.

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Trump Orders National Security Probe of Steel Imports

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, despite measures already taken, have continued to rise despite repeated Chinese claims that they were going to reduce their steel capacity,” he said. “Instead, they have actually been increasing it consistently.”

Investigation sought

Steel industry executives attending Thursday’s Oval Office ceremony applauded Trump’s call for an investigation.

Mario Longhi, the CEO of U.S. Steel Corporation, said, “The signing of this executive order clearly demonstrates your understanding of the fundamental importance that our industry has, not just to the national economy, but to the national defense.”

Trade experts and free market advocates, however, were skeptical of Trump’s rationale for the investigation.

“It’s just a bogus attempt to limit imports,” said Dan Griswold, a research fellow at the Mercatus Center at Virginia’s George Mason University.

Griswold said any move to restrict imports would be bad for U.S. industry and consumers because it would drive up prices for products that contain steel, from appliances to automobiles to new houses.

“But it will make certain steel producers and their politically active unions increase their profits and the gains they make by restricting competition,” he said.

Issue of national security

Gary Hufbauer, senior fellow at the Peterson Institute of International Economics in Washington, questions the idea that dependence on foreign steel is a national security issue.

Hufbauer, who served as a senior Treasury Department official under former President Jimmy Carter, said the probe reflects the thinking of Commerce Secretary Ross, a billionaire investor with close ties to the steel industry.

“It’s not coming from the defense industry,” Hufbauer said. “It’s coming from the steelmakers, and key administration figures starting with Ross and others who feel the steel industry has been beset by steel from abroad and that’s weakening the U.S. steel industry. But that’s from a commercial standpoint, not a defense standpoint.”

Ross stepped down from the board of the Luxembourg-based steel giant ArcelorMittal after accepting the job as Trump’s commerce secretary.

A financial disclosure form he filed with the Office of Government Ethics shows Ross served on ArcelorMittal’s board for nearly a decade, and was paid more than $100,000 in director’s fees last year. He was also reported to have divested himself of between $750,000 and $1.5 million in equity holdings in the company, which is described on its home page as “the world’s leading integrated steel and mining company.”

Bloomberg News reported this week that while U.S. steelmakers may be counting on Trump to help business, any regulatory change could take years.

In a note to clients, Bloomberg Intelligence analyst Caitlin Webber wrote that changes would also likely be challenged at the World Trade Organization.

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GM: Venezuela Illegally Seizes Factory

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 Chavez.

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Princess Cruises Fined $40 Million for Water Pollution

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.

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Finance Minister: Peru Economy to Recover in 2018, 2019 After Flood Damage

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.