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Tourism Industry Feels Financial Fallout from Trump’s Ban

You may have heard this before: uncertainty is bad for business.

With President Donald Trump’s controversial travel ban on hold for now — the result of an appeals court decision to uphold a lower court’s temporary restraining order — the approximately $7 billion U.S. travel and tourism industry has taken a breath, but is holding it.

Trump’s executive order was in effect for only one week, but that was long enough for there to be financial damage, particularly given the reality that once it travels through the court system, the travel ban may be back.

“Consumers don’t like uncertainty, and the travel industry doesn’t like uncertainty,” said Henry Harteveldt, a travel industry analyst and founder of Atmosphere Research Group.

Global travelers beyond the scope of the seven nations directly impacted by Trump’s ban, immediately felt discouraged from visiting the United States, according to the travel data company ForwardKeys.

Net airline bookings to the U.S. dropped 6.5% overall from the same period in 2016. Regionally, there was a 37.5% drop across the Middle East, 14% in the Asia Pacific region, and 13.6% in Western Europe.

Immediate impact

President Trump says the aim of his executive order is to keep Americans safe.

But the consequences of barring refugees and foreign nationals from certain countries — without definitive proof of an imminent threat — has sparked widespread debate and concern among affected immigrants and the international community at large. The order bans travelers from Syria, Iran, Iraq, Somalia, Sudan, Libya and Yemen.

In one week, the Global Business Travel Association (GPTA) noted an immediate loss of $185 million in business travel bookings, a number which Harteveldt says only skims the perimeter of a longer-term effect, due in part to continued confusion.

“Right now the United States has a sign on it that says, ‘You may not be welcome here,’ and that’s not very good for our national brand — the United States of America,” Harteveldt told VOA. “The bad image the U.S. has may have people saying, ‘You know, I love the United States, but it’s just not the right environment for us to go visit this year. We’ll wait.'”

According to data compiled by GPTA, U.S. business travel transaction levels in the week before and after the travel ban resulted in a net industry impact of -3.4%.

For every one percent impact on annual U.S. business travel spending, the country either gains or looses $5 billion in gross domestic product along with 71,000 jobs, according to GPTA’s calculations.

Pall over business’

In a January interview with VOA, Dan Ikenson, director of CATO Institute’s Herbert A. Stiefel Center for Trade Policy Studies, called the ban disruptive to U.S. and foreign professionals who engage in the services trade — and by extension, supply chains.

“Just as important as physical goods moving over borders is the expertise, the know how, the representation of companies to conduct business,” said Ikenson. “The threat of this restriction spreading is something that is going to put a pall over business and over investment.”

Companies that might have previously considered setting up affiliates and subsidiaries in the U.S., and vice-versa, Ikenson added, may suspend those plans for as long as uncertainty persists.

Replicating the US experience’

Harteveldt, who previously served as marketing director for Trump Shuttle, a Donald Trump-owned airline from 1989-1992, believes the president has no “ill will” towards the travel industry. However, he says the long-term unintended consequences of the president’s actions may be felt for many months.

“People start planning their summer holidays 90 days or more in advance,” Harteveldt said. “If we look less attractive — and when you couple that with factors that the dollar is strong right now — it makes the U.S. that much less attractive as a possible destination.”

Harteveldt notes the world is full of destinations — from Disney theme parks to beaches, hiking and fine dining — that are capable of replicating the U.S. experience. 

In New York’s Times Square, the quintessential live-entertainment-and-neon-bright American tourist experience may not be enough to persuade international travelers to return under persistently uncertain circumstances.

“The good thing about New York is the diversity,” said Erika Andrea López, a Colombian tourist. “If that’s impeded, they’ll lose their touch … you’ll feel that you’re coming to a place that discriminates against you.”

“Anything can happen,” added Isaac Quaye, a first-time visitor from Ghana to the United States. When asked if he would return if the ban were reinstated, he shrugged. “I don’t know … I can’t tell.”

Yuthicka Sirohi, from Delhi, India, says everyone has a right to protect their country, but believes a “100% ban” against specific countries goes too far.

While she might not hesitate to return one day, Sirohi says she might feel more comfortable visiting another cosmopolitan city like London to suit her “travel-a-holic” needs.

Still, she hopes it doesn’t get to that.

“I think freedom is in the air here,” she said.

VOA Latin America Division’s Vero Balderas contributed to this report.

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China Awards Trump Valuable New Trademark

China has awarded President Donald Trump a valuable new trademark. The win comes after a 10-year dispute and raises a host of ethical questions about the president’s foreign intellectual property.

 

China’s Trademark Office posted the registration of Trump’s new mark, which became official Feb. 14, to its website Wednesday. It gives Trump the right to use his name for building construction services in China through 2027.

 

This may be the first foreign trademark Trump has received as president, but it’s unlikely to be the last. He has 49 pending trademark applications in China alone.

 

Critics say Trump’s foreign intellectual property holdings are a conflict of interest and may violate the U.S. Constitution. But Trump’s lawyer says he has taken adequate steps to distance himself from his trademark portfolio.

 

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Tourism Industry Feels Financial Fallout from Trump’s Travel Ban

Despite a temporary halt to President Trump’s executive order banning travelers from 7 countries, travel and tourism executives are beginning to notice signs of financial damage, which may continue to cripple the multi-trillion dollar industry in the months ahead. VOA’s Ramon Taylor reports

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Despite Trump Talk of ‘Tweaking’ NAFTA, Canada Could Still Be Hurt

Although U.S. President Donald Trump says he only wants to tweak trade ties with Canada, his pledge to renegotiate NAFTA to focus on Mexico is almost impossible and Canada will not emerge unscathed, Canadian officials and trade experts said Tuesday.

Trump had warm words for Canadian trade following a meeting with Prime Minister Justin Trudeau on Monday, but his call for major changes to the North American Free Trade Agreement to target Mexico stymied experts.

“I can’t see how it’s possible at all. It would be very complicated to do and I don’t think Mexico would … ever go along with it,” said Mark Warner, a trade lawyer and principal at MAAW Law in Toronto.

Canada and Mexico send the bulk of their exports to the United States under NAFTA.

One senior Canadian government official, asked how the agreement could be tweaked for one partner and changed in a major way for another, admitted frankly, “I don’t know.”

Trump spoke after his first meeting with Trudeau, who is trying to sell the merits of NAFTA while opposing a border tariff, an idea circulating in U.S. political circles that could badly hit Canadian industries.

Warner said that if the U.S. government decided to impose the tariff, “the consequences of that could be described as a tweak but the significance of it would be major.”

Matthew Kronby, an international trade lawyer at Bennett Jones in Toronto, said “it is very hard to tease apart the elements of the deal that I suppose Trump might think are a disaster with Mexico while leaving it intact with Canada.”

Officials say that while Trump did not reveal any details about his intentions on NAFTA, Canada would suffer collateral damage, whatever the administration pushes for.

“We cannot be untouched or unscathed by this,” said one person familiar with the matter.

Separately, another official working on the bilateral trade file said that once talks started, the U.S. dairy industry was set to demand Canada dismantle its supply management system of tariffs and taxes that keep out most dairy imports, including those from the United States.

“That could be a very unpleasant conversation,” said the official, who asked to remain anonymous because of the sensitivity of the situation.

Trudeau’s ability to make concessions is limited since all of Canada’s major political parties have vowed to protect supply management. Holding out too firmly, though, could irritate the American side, which might demand concessions elsewhere.

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Mexico Economy Minister Says Doubts US Border Tax Will Materialize

Mexico Economy Minister Ildefonso Guajardo said on Tuesday he doubted a proposed border tax on Mexican imports to the United States, which the White House has said could be used to finance President Donald Trump’s border wall, would ever materialize.

Speaking on the sidelines of an event in Mexico City, Guajardo said he had spoken with several Trump’s advisors and had not found any uniformity in their backing of the border tax.

“I wouldn’t be so certain that it will end up in the proposal,” he told reporters.

Billed as a way to boost U.S. manufacturing and pay for corporate tax cuts, the so-called border adjustment would essentially tax imports but not exports. It is expected to be part of House tax reform legislation that could emerge in March or April.

It is unclear whether the border adjustment proposal has Trump’s support.

The White House has floated the idea of imposing a 20 percent tax on goods from Mexico to pay for a wall at the southern U.S. border. However, aides later said the tax was simply one of various measures being considered.

Trump has threatened to scuttle the North American Free Trade Agreement, which also includes Canada, if he cannot recast it to benefit U.S. interests, raising the risk of a major economic shock for Mexico.

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Boeing Faces Union Vote Wednesday

A strongly contested union election pits the world’s largest aerospace company against the International Association of Machinists and Aerospace Workers on Wednesday.

Three thousand workers at Boeing’s plant in South Carolina are eligible to vote on whether they want to be represented by the union.

Many businesses and key political leaders in South Carolina have spoken against the union. Union membership in the conservative state is just 1.6 percent, the lowest in the nation. The low level of union representation is said to be one reason that Boeing located the plant in the state.

Boeing employs about 7,500 people in South Carolina, and nearly 150,000 around the world. The company opened a plant in South Carolina after labor strife in Washington state, where unions have been more successful.

The plant is one of two that makes Boeing’s 787 commercial jetliner.

The union vote follows extensive organizing efforts by union supporters and a series of posters, meetings and television commercials by the company urging employees to vote against the union.

Published reports say President Donald Trump may visit the plant on Friday, after the vote.

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Small US Company Bucks a Trend, Adding Manufacturing Jobs

A rising tide of automation, trade problems and lagging growth in productivity has slashed millions of jobs from the U.S. manufacturing sector. At the same time, a small factory in Northbridge, Massachusetts, has been hiring, expanding and exporting.

Riverdale Mills hopes to grow further by making unusual products and building a strong workforce.

Riverdale makes materials that have revolutionized lobster fishing with unique processes and materials. The company applied lessons from fishing to making security fences, including some that protect borders. 

After welding, the wire metal mesh is dunked in a vat filled with tons of molten zinc at a historic building about an hour west of Boston. It’s just one part of a complex process used to make many kinds of rust-resistant products. 

That process combines skilled people and high-tech innovation. It’s helping the company find new markets for updated products, and means while other factories are laying off workers, Riverdale’s Dennis Meola is training new employees.

“We have an experienced operator training a new individual,” Meola said. “We started a new person today, as a matter of fact.”

Riverdale CEO Jim Knott says the company is growing, in part because he sells nearly half of his products overseas. Knott says he needs more than just machines to keep customers happy here and abroad.

“The key to being successful, both globally and in a domestic market, you have to have skilled or trained employees who are capable of making a leadership product that is better than what other people are making throughout the world,” he said.

On a recent visit to Riverdale, technicians were upgrading computers and other equipment that helps to run a huge machine that makes hundreds of welds at once. More automation is the reason that U.S. manufacturers produce as much as ever, with ever fewer people.

Massachusetts Institute of Technology Professor Tom Kochan says automation and international trade has cut one-third of U.S. manufacturing jobs since 1980. He says American employers mistakenly think of labor only as a cost to be minimized, not an asset. 

“Anytime some new form of technology comes along that they think they can replace that worker with technology, they tend to move in that direction,” Kochan said. “Often what that does is it over-invests in technology and under-invests in worker skills, and they end up still being the high cost producer.”

MIT research scientist Andrew McAfee says the U.S. education system is turning out workers with the skills “we needed 50 years ago.” He says a more modern approach is needed to boost productivity and prosperity. 

“We need to be encouraging creativity,” he said. “I think we need to be encouraging not just the ability to solve problems, but the ability to figure out what problem we should go chase down next. Technology is still lousy at that.”

McAfee says people eventually will adapt to the changing work environment, much as their ancestors did when the U.S. economy shifted from farming to manufacturing. It was a wrenching transition that began around the time when the building that now houses Riverdale Mills produced bayonets for the Union Army in the U.S. Civil War.

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One-Man Chocolate Factory Flourishes

Americans shower their loved ones with gifts on Valentine’s Day, with chocolate candy being the most popular gift-giving item, according to a recent National Retail Federation survey. The organization estimates consumers will spend $1.7 million on chocolates this year. That keeps Ben Rasmussen, who creates award-winning chocolates, especially busy. VOA’s June Soh visited his one-man chocolate factory in the Virginia suburbs. Carol Pearson narrates her report.

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IMF: Trump’s Plans Could Boost US Economy, Endanger Global Advances

International Monetary Fund chief Christine Lagarde voiced optimism Sunday that U.S. President Donald Trump’s planned tax cuts and construction spending would boost the American economy, but said they could cause trouble for the economies around the globe.

Lagarde, speaking at the World Government Summit in Dubai, said, “From the little we know, and I will insist on the little we know, because this is really work in progress… but from the little we hear, we have reasons to be optimistic about economic growth in the United States.”

Major U.S. stock indexes are near record highs, with the new U.S. leader promising to unveil a “phenomenal” tax cut plan in the next two to three weeks, while also pledging to launch $1 trillion in major infrastructure spending to fix the country’s deteriorating roads and bridges and expand airports. But both measures would need approval by Congress, where the controlling Republican lawmakers have voiced skepticism about any changes that would add to the country’s nearly $20 trillion in long-term debt.

But Lagarde warned that advances by the U.S. economy, the world’s largest, could hurt economies elsewhere because of the strength of the dollar against other currencies and expected action by the U.S. central bank, the Federal Reserve, to gradually boost its benchmark interest rate to keep the American economy from overheating.

She said U.S. gains are good, but that “the more worrying news, if you will, is that it will have consequences on the rest of the world, and we are seeing it.” She said the Fed’s tightening of monetary policy “will be difficult on the global economy and for which economies will have to prepare.”

The IMF last month boosted its U.S. growth estimate a tenth of a point this year to 2.3 percent, and four-tenths of a point to 2.5 percent for 2018. The IMF predicted an increase in global growth to 3.4 percent in 2017 and and 3.6 percent in 2018, up from the 2016 figure of 3.1 percent.

Trump has already revoked U.S. participation in the planned 12-nation Trans-Pacific Partnership trade in favor of American deals with individual countries.

Lagarde, however, continued to promote globalization of the world economy, while acknowledging its negative aspects, which Trump says has cost U.S. manufacturing workers their jobs as their employers moved operations overseas in search of cheaper labor.

“We have been saying globalization is great, international trade is great — and it is,” Lagarde said. “But we have not looked at those who were badly, negatively impacted.”

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Somalia Says It Will Resume Printing Currency Soon

Somalia intends to resume printing banknotes this year for the first time since the government collapsed in 1991.

The governor of Somalia’s central bank, Bashir Issa Ali, told VOA in an exclusive interview Saturday that all technical preparations are complete, and his government is confident it can assemble a financial aid package within three months to fund the printing program. Further work would take another four months.

Asked if Somalia will print and distribute banknotes during 2017, Ali answered: “Absolutely. Absolutely. Absolutely!” He pledged the new currency would include “good, reliable security features.”

Pre-1991 banknotes have disappeared from Somali markets, replaced by either Western currencies, including dollars, or privately printed notes, most of which are worthless fakes.

Financial reforms to take hold soon

Ali said international institutions, such as the World Bank and the International Monetary Fund, as well as the U.S. Treasury, have been helping Somalia reform its financial sector and train central bank staff. 

“We have prepared all the issues and all the basic groundwork, and put in place the technical requirements,” he told VOA.

Outgoing Somali President Hassan Sheikh Mohamud met a key demand of the international community last year by signing into law parliament-approved legislation to outlaw money laundering and “financial terrorism.”

The Somali government needs $60 million to be able to begin printing banknotes. Ali said he expects to obtain pledges for that sum at an international donors’ conference for Somalia in London in May.

“We expect the international community to assist us with that issue,” the bank governor said.

Private banks, ‘mobile money’

Hardship and the scarcity of trustworthy currency has created opportunities for some innovative strategies in the private sector, Ali said, and Somalia has made some progress in establishing private banks and mobile money systems.

Many transactions in Somalia now take place using “electronic mobile money,” Ali added.

Somali shillings account for a small portion of the payments system, he said.

“Most of it is done through dollars and electronic money, which is a great thing for … saving costs and effort and very convenient, also.”

Remittance companies that relay payments from Somalis working abroad operate in many parts of the country, Ali noted, but a large part of the nation does not have access to electronic funds or dollars, so there is an urgent need for a reliable national currency.

Once Somalia-printed banknotes begin to circulate, the central bank governor said, his staff will be able to regulate and control operations by private banks and remittance services.

The bank now has trained staff members to work on the financial and exchange systems, and training efforts are continuing. On February 12, he said, “more than 10 staffers are departing for training about counterfeiting and financial controls. They include staff from the bank, police and the national security agency.”

Monetary policy comes next

Since Somalia does not yet have its own currency, it also lacks a monetary policy, Ali said, but once the banknotes begin circulating, he looks forward to “the beginning of a new era” in the East African nation.

“Monetary policy always must come together in close collaboration with the fiscal policy of the government — taxation and revenue, the public budget and these kind of things,” Ali told VOA. “We don’t apply any monetary policy at the moment.”

Economists have recently predicted a slowdown for Somalia’s domestic economy, which largely relies on livestock exports. Ali said a “very disastrous” drought has killed thousands of farm animals.

“When you don’t have enough crops, it will contribute to food shortages,” he said. “When you have drought problems, you will not be able to export livestock.

“That will affect our foreign market and our exports,” he added, so Somalia’s foreign-exchange earnings will decline.

“When you get less foreign exchange, you will not be able to import what is required,” the bank governor said, “and when you import less, there will be less tax revenue for the government.”

In the short term, the peaceful election of a new Somali president appears to have helped the nation’s economy. The Somali shilling rose in value compared with the U.S. dollar over a two-day period; $1 brought 22,000 shillings before the election in Mogadishu, and by Saturday it was trading at 16,000 shillings.

“It’s a matter of expectations. There is a new government, new environment and new atmosphere,” Ali said, and that will have an effect on people’s opinions about security, the economy and the stability of the government.