Zimbabwe’s Dingy Trains Mirror Economic Decline

Dark, dirty and slow, Zimbabwe’s trains, like much else in the impoverished southern African country, have seen better days.

Once the preferred mode of transport for most Zimbabweans, the state-run rail service mirrors the decline in the country’s economic fortunes during the last two decades under the leadership of former President Robert Mugabe.

Gilbert Mthinzima Ndlovu, a veteran of Zimbabwe’s 1970s independence war and a security guard at the National Railways of Zimbabwe (NRZ) for 35 years, yearns for the old days when trains were full and arrived on time.

“Times are different now as we have few passengers,” the off-duty Ndlovu told Reuters as he rested in a badly lit first class cabin during the journey from the capital Harare to his home in Bulawayo, Zimbabwe’s second city.

Now the 10-hour journey can take 16 hours, he said.

Not surprising, then, that many Zimbabweans prefer to make the 440 km (273 mile) journey by bus or public taxi in around five hours than have to endure a cold overnight train ride – even if at $10 the train ride costs only half as much.

The train carriages often lack lighting and water, and the toilets are filthy. The signalling and information systems are often vandalized and some tracks overgrown with grass and weeds because they have not been used in years.

NRZ is now trying to improve its fortunes.

Last year South African logistics group Transnet won a $400 million joint bid to recapitalize NRZ and fix some of the problems, including acquiring and refurbishing carriages.

But for now passengers have to make do with a broken train service.

“Today you can’t even buy food from the train and all the coaches are filthy, with no water and the lights are not working,” said one passenger who declined to give his name.


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US Prosecutors: China Corruption Case Grows Stronger

Last month, Patrick Ho, a former Hong Kong official fighting foreign bribery charges in New York, thought he had finally received a break.

In a dramatic move in the high-profile bribery case, prosecutors on Sept. 14 dropped all criminal charges against Cheikh Gadio, a former Senegalese foreign minister they had accused of helping Ho bribe African officials.

Arguing that the government’s move undermined its case against Ho, Ho’s lawyers urged a federal judge in New York to release their client from a federal jail. 

But the presiding judge, Loretta Preska, wasn’t buying it. She dismissed the motion, Ho’s fifth unsuccessful request for bail. And prosecutors said Gadio has agreed to cooperate, expressing confidence that his testimony against Ho will strengthen their case. 

“(Far) from weakening the case, Gadio’s testimony will provide substantial evidence of the defendant’s guilt,” prosecutors wrote in a court filing. 

Left largely unnoticed in the U.S., the corruption case against Ho has sent shockwaves across Asia, putting the spotlight on an open secret in global business circles — rampant bribery of foreign governments by Chinese companies seeking business deals around the world.    

China has largely ignored the problem, according to China experts.  While the government of President Xi Jinping has launched a much-publicized domestic anticorruption campaign, experts say Chinese authorities have yet to bring a single foreign bribery case against a Chinese company or executive.  

Ho has denied any wrongdoing.  

Ho, 69, and Gadio, 62 were arrested in New York last November and charged as part of a conspiracy to bribe African officials on behalf of CEFC China Energy, a Shanghai-based energy conglomerate with ties to the country’s military. 

At the time, Ho headed China Energy Fund Committee, a Virginia and Hong Kong-based NGO funded by CEFC China Energy, while Gadio ran a business consulting firm when he was a member of Senegal’s parliament. 

In one of two bribery schemes, prosecutors alleged that Ho and Gadio met on the sidelines of the United Nations in late 2014 to engage in a conspiracy to pay a $2 million cash bribe to Idriss Deby, the president of Chad.The payment was offered in exchange for helping CEFC Energy’s entry into Chad’s rich energy sector, according to prosecutors. 

Gadio allegedly introduced Ho to Deby and served as a middleman during discussions between the Chinese executives and Chadian officials. The complaint did not make clear whether any payment was made to Deby, but it did say that Gadio received $400,000 for his services. 

In the second scheme, Ho allegedly paid a bribe of $500,000 to Sam Kutesa, the Ugandan foreign minister, in 2016 in exchange for Kutesa’s help in helping CEFC Energy gain business contracts in Uganda’s financial and energy sectors, according to the criminal complaint.The bribe was paid after Kutesa finished his one-year term as president of the U.N. General Assembly and returned to Uganda. 

While the charges against Gadio were never presented to a grand jury, Ho was indicted on multiple counts of foreign bribery and money laundering. 

Ho pleaded not guilty.  

Timothy Belevetz, a former federal prosecutor now a partner at the Holland & Knight law firm, said bribery cases under the foreign bribery law known as the Foreign Corrupt Practices Act rarely go to trial.

“This is an opportunity for law to be made,” Belevetz said. 

FCPA was passed in 1977 in response to disclosures that U.S. companies were bribing foreign officials to secure business deals. The law has since been amended, giving the Justice Department and the Securities and Exchange Commission broad jurisdiction over foreign companies that have subsidiaries in the United States or trade on U.S. stock exchanges. 

In recent years, the Justice Department, working with international law enforcement agencies, has brought a growing number of corruption cases against foreign companies and executives paying bribes to foreign government officials.

While the Justice Department has previously charged U.S. and European companies with paying bribes to Chinese officials, never before has it tried the representative of a Chinese company on charges of bribing foreign officials in exchange for business contracts.

At the heart of the Ho bribery case is the question of whether any payment promised or made to the African officials was a bribe, as prosecutors call it, or a charitable donation, as defense lawyers put it. 

As Ho’s Nov. 5 trial approaches, prosecutors have revealed how Gadio’s testimony, as well as evidence of Ho’s business dealings with Iran and alleged arms sales to African nations, will help their case at trial.

In a recent court filing, prosecutors wrote that Gadio will testify that Ho handed $2 million in cash, hidden in a gift box, to Deby, and only after Deby “refused to accept this obvious bribe” did Ho draft a letter pledging $2 million to “charitable causes” in Chad. 

Gadio will also tell a jury that Ho never asked him about the status of the donation, indicating Ho had no “interest in doing charitable works in Chad.”

“This expected testimony considerably strengthens the government’s proof beyond the already-strong case reflected in the detailed Complaint,” prosecutors wrote. 

Prosecutors have also indicated in recent days that they intend to introduce evidence of Ho’s involvement in other corrupt actions.

In a court filing last week, prosecutors disclosed they have evidence that shows Ho had offered a bribe to John Ashe, a diplomat from Antigua and Barbuda who served as president of the U.N. General Assembly the year before Kutesa held the post. (Ashe was implicated in another corruption case involving a Chinese national but he died in 2016 before the case went to trial). 

Prosecutors also plan to introduce evidence of Ho’s interest in doing business with Iran while the country was under U.S. sanctions, and brokering arms sales to Libya and Qatar. 

In an October 2014 email, one of several cited in court documents, Ho suggested that CEFC China serve as a “middleman” to help Iran access funds it kept in a Chinese bank under U.S. sanctions to pay a Hong Kong bank for precious metals.

The complaint had hinted at Ho’s willingness to help Chad procure weapons from China, but new government filings allege that Ho’s interest in arms dealing extended beyond Chad. 

In March 2015, according to an intercepted email, Ho asked an unidentified intermediary to send him a list of weapons and military equipment requested by Libya so that “we can execute that right away.”

A month later, Ho emailed the intermediary. “Qatar needs toys quite urgently. Their chief is coming to China, and we hope to give them a piece of good news.”

Prosecutors say they want to introduce the emails as background evidence “to show the development and nature of the relationship” between Ho and Gadio. 

Belevetz said that as with other white-collar criminal cases, the case against Ho will turn more on documents such as emails and wire transfer records than testimonies of witnesses. 

In white-collar cases, “you often have a paper trail that shows what was said,” Belevetz said.

Edward Kim, one of Ho’s lead attorneys, declined to comment.

Sean Hecker, Gadio’s lawyer, said in a statement to VOA, “Dr. Gadio looks forward to continuing to cooperate with U.S. authorities before returning to Senegal to continue his service to the Senegalese people and the important pursuit of establishing peace and security across the Sahel Region.”


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Ireland Boosts Budget Spending as Brexit Looms

Ireland’s finance minister boosted budget day spending for the second year in a row as the government warned of economic “carnage” if neighboring Britain crashes out of the European Union without a divorce deal.

Having already pre-committed 2.6 billion euros ($2.99 billion) on increased public sector and planned infrastructure spending for next year, Paschal Donohoe, in Tuesday’s annual budget speech, almost doubled the remaining pot to 1.5 billion euros to dish out on further tax cuts and spending increases.

The state’s fiscal watchdog warned ahead of the budget that the booming economy did not need such additional stimulus.

But with an election potentially looming and the fast-growing economy exacerbating deficits in areas such as housing, a scrapping of a reduced VAT rate for the hospitality sector mostly funded the extra 700 million euro of spending.

That allowed the government to keep giving workers a small annual tax break it has promised to continue in future budgets, reverse welfare cuts imposed during a series of austerity budgets a decade ago, and boost infrastructure spending. 

“The shared progress we have made is real. However the risks and challenges that we now face are equally real,” Donohoe told parliament in a speech that went long past the allotted hour as he reeled off measure after measure but also struck a tone of caution with 25 different mentions of Brexit.

Donohoe said the government’s “central case” was that Britain and the European Union would reached a Brexit deal in the coming weeks, but the possibility of a no deal had influenced the financial decisions made.

Foreign Minister Simon Coveney warned of “carnage” if Britain crashed left without a deal, though he said that would mostly be felt by Britain, with Ireland likely to benefit from “huge solidarity” from fellow EU member states.

A further round of “Brexit-proofing” measures, which have had mixed results to date, were announced in the budget, including a 300 million euro loan scheme for small and medium sized businesses and the agriculture and food sectors to invest in future growth.

Balanced budget 

Donohoe said the best preparation for Brexit was responsible budgeting and he intended to balance the state’s books for the first time in more than a decade next year, an improvement on the tiny deficit originally planned but still not the surplus the central bank says should already be running.

The state’s independent fiscal watchdog, set up in response to the years of reckless spending that left the exchequer massively exposed when the 2008 financial crisis hit, voiced concerns over the “not very good budgetary practice” of recent years.

It is particularly worried by successive years of spending coming in over budget, which it fears will happen again next year.

Hotel and restaurant owners were unhappy at their return to the standard 13.5 percent VAT from the 9 percent rate introduced in 2011 to boost the then struggling sector. In a report in July, Ireland’s finance department said the lower rate had become a “significant deadweight.”

“#Budget19 will be known as an election budget paid for by the tourism industry,” Adrian Cummins, head of the Restaurants Association of Ireland, tweeted.

Ireland’s betting tax was also doubled to 2 percent, hitting the country’s largest operator, Paddy Power Betfair, which said it would have cost it 20 million pounds  ($26 million) this year. Its shares closed down 5 percent.

Donohoe outlined his planned “exit tax” for firms that move assets or migrate their tax residence from Ireland, setting it in line with the corporate tax rate of 12.5 percent but surprising business by introducing it immediately and not by 2020 when Ireland was obliged to come in line with EU rules.

A company would be liable to pay the exit tax on gains built up in Ireland from any asset — such as intellectual property — it planned to move out of the scope of the Irish tax authorities. The measure is part of a new EU Anti-Tax Avoidance Directive.

The budget will be the last before the next parliamentary election if Prime Minister Leo Varadkar’s Fine Gael-led minority government cannot agree an extension to its “confidence and supply” deal with the largest opposition party, Fianna Fail.

They agreed to open talks on Tuesday but while Varadkar said he wanted to complete the review and potential renewal by the end of the month, Fianna Fail leader Micheal Martin saw talks lasting until until Christmas.


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Business is Booming in Vietnam

Foreign companies have been flocking to Vietnam.

Earlier this year, one of the world’s biggest private equity firms Warburg Pincus added banking and logistics to its Vietnam portfolio, pushing its total investment into the country over the $1 billion mark.

Auto players like JAC Motors of China, as well as Kamaz, the largest truck maker in Russia, have recently turned to Vietnam. The Southeast Asian country is seeing money pour in from all over the globe, whether it’s Indonesia’s Gojek in ride-hailing, or Qatar’s Ooredoo in telecommunications. 

With a trade war rippling across the Pacific and fears of interest rate contagion in emerging markets, much of Asia looks bleak. So why is the economy in communist Vietnam such a bright spot?

Stability is key

Gross domestic product is forecast to expand 7 percent this year. The currency and inflation are stable. Growth is expected in exports, manufacturing, foreign direct investment, and other indicators that show Vietnam outpacing rivals in the 10-member Association of Southeast Asian Nations.

“Vietnam is likely to remain the fastest-growing ASEAN economy in 2018 and 2019, as in 2017,” said Chidu Narayanan, Asia economist at Standard Chartered Bank. “We remain positive on Vietnam’s growth medium term on strong manufacturing activity, as FDI inflows to electronics manufacturing remain strong.”

The bank predicts a current account surplus of 3.7 percent of GDP for 2018, meaning Vietnam takes in more money through trade and investment than it sends abroad. That includes an increase in income from services, such as IT outsourcing.

To explain why the country of 100 million people is outperforming peers, it helps to look at factors like trade, consumer spending, and politics.

On the surface, Vietnam’s communist system would not sound like an appeal for investors. But many actually cite the political stability, albeit through one-party government, as a reason to come here. And in reality most businesses operate in a free market, with some state controls. 

Political stability contributes to economic stability, and it helped Vietnam weather a leadership transition that in other countries could spell volatility. Stock markets were not rattled when the president, Tran Dai Quang, died suddenly of illness last month while in office. He will be succeeded by Communist Party chief Nguyen Phu Trong, a man known for maintaining the status quo.

“There will be no major change in Vietnam’s economic strategy or political system as a result of the passing of President Tran Dai Quang,” said Carl Thayer, emeritus politics professor, the University of New South Wales at the Australian Defence Force Academy.

Vietnam likes trade deals

That economic strategy has been characterized by trade deals with as many countries as possible. Through ASEAN, Vietnam has trade pacts with Australia, New Zealand, China, India, Japan, and South Korea. It also signed the Trans-Pacific Partnership, as well as separate agreements with Russia and the European Union.

This could be part of the reason that investor optimism jumped 6 percentage points between the first and second quarters of 2018, according to a European Chamber of Commerce in Vietnam survey released Oct. 3.

“These results show once again that European companies and investors remain confident in Vietnam,” chamber co-chair Nicolas Audier said. “On the cusp of this historic [EU-Vietnam free trade] deal, which would boost trade and investment on both sides, we hope this positive message from EuroCham and its members will inspire the government to continue opening its markets to foreign investment.”

Also drawing in businesses are Vietnamese shoppers. Consumer confidence was higher in Vietnam than in Thailand, Malaysia and Singapore, market researcher Nielsen reported in March. As citizens’ incomes rise, their spending attracts brands in all manner of products.

Spanish fashion retailer Zara has opened outlets here, while Apple in September appointed its first premium reseller in the country, EDigi, authorized to do official repairs of iPhones and Macs. Vingroup, a conglomerate founded by Vietnam’s richest man, launched a line of cars this month with some promotional juice from soccer star David Beckham.

No economy is perfect

It’s not all coming up roses, of course. Economists say Vietnam needs to keep an eye on borrowing: consumers are using more credit cards, the government is close to its debt ceiling, and banks have more non-performing loans than desired. The real estate sector is also cooling, and the country wants to avoid any of the flak that comes from the trade war between the U.S. and China.

That trade war has made investors bearish on Asia’s biggest economy. Elsewhere in the region, Indonesia is fighting to hold the value of its currency, as investors abscond to take advantage of higher U.S. interest rates.

Philippine inflation is approaching 7 percent, the highest in nearly a decade. In Myanmar, the economic potential that once seemed sky-high is now taking a back seat as that state allows ethnic violence and jails journalists.

Vietnam is not far away but has been spared many of those problems for now. 


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Mahathir: Malaysia May Introduce New Taxes, Sell Assets to Pay Debt

Malaysia may introduce new taxes and sell assets such as land to pay down debt, Prime Minister Mahathir Mohamad said on Tuesday, as his administration struggles with liabilities of around 1 trillion ringgit ($240.67 billion).

Mahathir, who unexpectedly won a general election in May, has blamed the previous administration of Najib Razak for taking the country into such heavy debt, including that of the 1MDB state fund, which is the subject of corruption and money laundering investigations in Malaysia and other countries.

The government is also looking for new sources of revenue to make up the shortfall it is expected to face after scrapping an unpopular goods and services tax just weeks after the Mahathir-led Alliance of Hope coalition was elected to government.

“We may have to devise new taxes in order to have the money to pay our debts,” Mahathir told an investor conference.

“The other thing we can do is to sell our assets. Land is one of them… Beyond that we may have to sell some of our valuable assets in order to raise funds to pay the debts.”

He did not identify or elaborate on what these assets would be.

Last month, Finance Minister Lim Guan Eng said Malaysia will consider a combination of new debt issuance and asset sales to meet its short-term financing needs.

($1 = 4.1550 ringgit)


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Netflix to Bring New US Production Hub to New Mexico

Netflix has chosen New Mexico as the site of a new U.S. production hub and is in final negotiations to buy an existing multimillion-dollar studio complex on the edge of the state’s largest city, government and corporate leaders announced Monday.

 

It’s the company’s first purchase of such a property, and upcoming production work in Albuquerque and at other spots around New Mexico is forecast to result in $1 billion in spending over the next decade.

 

More than $14 million in state and local economic development funding is being tapped to bring Netflix to New Mexico. Republican Gov. Susana Martinez and Albuquerque Mayor Tim Keller, a Democrat, touted the investment and said lengthy efforts to put New Mexico on the movie-making map are paying off.

“This is awesome,” the governor told dozens of people gathered inside a cavernous sound stage at ABQ Studios. “This massive investment will have a huge impact of course on New Mexico and continue our efforts to grow and diversify the economy.”

 

Martinez acknowledged the state’s reliance on federal funding and oil and gas development, saying more needs to be done to encourage diverse ventures such as Netflix as the private sector is the backbone of the American economy.

 

Keller said the city has laid the groundwork to make sure the film industry is part of its economic development plan. He called landing Netflix a “transformative victory” for the city.

Netflix projects produced in New Mexico include the Emmy Award-winning limited series “Godless” and “Longmire.” Company officials said previous experience working in the state inspired them to jump at the opportunity to establish a new production hub in Albuquerque.

 

Netflix earlier this year announced it was establishing its first European production hub in Spain. That operation is expected to help the online video entertainment platform expand its Spanish-language content.

 

It also has a production hub in Los Angeles and it’s possible the company’s footprint will continue to expand, given the amount of content the online entertainment provider is aiming to create.

 

“We will look at each place on its merits — the same kind of decision-making that went into the impending purchase of this studio,” said Ty Warren, Netflix’s vice president for physical production. “The combination of great crews, existing infrastructure, financial incentives — it was all part of it.”

 

Netflix has about 130 million subscribers worldwide.

 

Officials did not release details about the sales price of the studio complex in New Mexico. The property includes several sound stages, production offices, mill space and a back lot.

 

Martinez, whose second and final term ends this year, initially talked about trying to rein in New Mexico’s film incentive program and an annual $50 million cap was instituted.

 

As the state dug its way out of the recession, she said it was important to avoid cuts to critical programs such as education, health care and public infrastructure. She was criticized by many who thought the cap would stifle the growth of the film industry.

 

In 2013, she signed the “Breaking Bad bill,” named after the Emmy-winning TV drama that filmed primarily in Albuquerque during its five seasons. The legislation enhanced incentives for television productions.

 

Martinez said the industry has since marked three consecutive record-breaking years in New Mexico and it is lining up to be another monumental year.

 

The industry has drawn more in-state direct spending from film and TV productions each year since 2014, topping out at $505 million last fiscal year, according to the state film office.


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AA Aims to Avoid Putting Delayed Travelers on Other Airlines

American Airlines is telling employees to think twice before rebooking stranded customers on rival airlines, and regular economy-class passengers are the most likely to suffer when there are long delays or canceled flights.

A new policy at American directs airport agents not to rebook economy passengers on competing airlines — with no stated limit on how long they must wait for a seat on another American flight. A manager can make exceptions in a few cases, such as people flying to a wedding or funeral and those who would be stranded overnight with no hotel room.

Agents can still put economy passengers on American’s international partner airlines, but that won’t help customers flying within the U.S.

By contrast, American told agents in late September to help the airline’s best customers get to their destinations quickly, even if it means putting them on Delta or United.

Elite-level members of American’s frequent-flyer program and people who bought a first-class or business-class ticket can be booked on another airline if they face a delay of at least five hours — and even sooner for the highest level of elite customers.

The policy highlights the growing divide between airlines’ best customers and everyone else. It also shows how, for many travelers, flying on the biggest airlines is becoming more like taking a discount airline, with cramped planes, fewer perks and more extra fees.

Many of the largest and oldest airlines have agreements to put passengers on one another’s flights when there are long delays or cancellations. American, Delta Air Lines and United Airlines all have alliances with other global carriers and so-called interline agreements with each other. Airlines pay for such transfers, but at discounted fares.

Often, however, low-cost competitors including Southwest, JetBlue, Spirit and Frontier lack those deals. Their passengers are at greater risk of being stranded for a long time if the airline encounters a mechanical breakdown, a computer outage or bad weather.

Even though few travelers know about airline alliances and even fewer have heard of interline agreements, those rebooking options can make the big airlines much better than their smaller brethren when things go wrong.

Airlines have been putting displaced customers on other carriers for decades, but American, the world’s biggest airline, never had a written policy.

Some of American’s key airports including Dallas-Fort Worth and Chicago O’Hare see frequent long delays and cancellations because of storms. In July, American and regional affiliate American Eagle canceled 5,422 flights, according to the most recent government figures. That was the second highest rate in the industry behind Frontier Airlines, and compared with 2,394 cancellations at United and United Express and 1,154 at Delta and Delta Connection. The lopsided numbers suggest that American could be spending more than Delta and United to accommodate stranded passengers.

American Airlines spokesman Ross Feinstein said managers will have authority to make exceptions on a case-by-case basis. He said Delta and United have similar rules.

American made its instructions to agents available to The Associated Press. Delta made a portion of its guidelines available, and they do not appear biased against transferring economy passengers to another carrier. Delta spokesman Morgan Durrant said agents are told to try to rebook customers on partner airlines, but they can send anyone, including economy passengers, to American or United.

United Airlines declined to provide its guidelines to the AP, but spokeswoman Maddie King described restrictions that were updated last year and seem similar to American’s. She said economy customers can be placed on a non-partner airline like American or Delta if they would otherwise be stranded overnight and the delay was United’s fault. She said if the passenger is going to a big event like a wedding, “our employees are always empowered to make the right decision for our customers.”

The new American policy was first reported by Gary Leff on his blog, View from the Wing. In an interview, he said the ability to be transferred to another airline has always been one of the big advantages of traveling on those large carriers instead of a budget airline. This will narrow that gap, he said.

“We are going to have to wait and see what it looks like in practice. It comes down to how individual employees take this new policy,” Leff said. As for customers who need help getting to their destination on time, “You’ve got to convince someone to do it for you,” he said.

None of the three leading U.S. airlines would say how often they pay to put a passenger on another carrier’s flight, so it is unclear how many people will be affected.

“It may be the kind of thing that customers don’t notice until they need it,” Leff said.


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Nobel Economic Prize Awarded to 2 Americans

The Royal Swedish Academy of Sciences has awarded this year’s Nobel Prize for economics to Yale University’s William Nordhaus and New York University’s Paul Romer.

The Academy said Nordhaus and Romer “have designed methods for addressing some of our time’s most basic and pressing questions about how we create long-term sustained and sustainable economic growth.”

Nordhaus was awarded the prize “for integrating climate change into long-run macroeconomic analysis”.  In the 1990s, he created a model describing how the economy and the climate affect each other on the global stage, according to the Academy.

Romer was recognized “for integrating technological innovations into long-run macroeconomic analysis.”  The Academy said Romer’s research is the first to model how market conditions and economic decisions affect creation of new technologies.

Nordhaus, who earned his Ph.D. from the Massachusetts Institute of Technology in 1967, and Romer, who earned his Ph.D. from the University of Chicago in 1983 will split the the $1.01 million prize.

The economics prize is the last of the Nobel prizes to be awarded this year.  

The Nobel Peace Prize was awarded Friday to  Nadia Murad, a Yazidi human rights activist and survivor of sexual slavery by Islamic State in Iraq, and Denis Mukwege, a gynecologist treating victims of sexual violence in the Democratic Republic of Congo.

Last year’s Nobel Prize for economics was awarded to American Richarld Thaler for his research on how human irrationality affects economic theory.

 


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Study Reveals First Big look at Chinese Investment in Australia

For the first time, researchers have been able to track the amount of Chinese investment in Australia.  From the purchase of large cattle properties to residential real estate, the scope of Chinese money has led to fraught discussions about the scale of foreign influence in Australia. The results of the research may have some surprises for some Australians who have been wary of China’s influence and the size of Chinese investments in their country.

The comprehensive new database shows how much Chinese investors are pouring into Australia. Between 2013 and 2017 the figure was more than $28 billion (U.S. dollars).Most of the money was spent on mining projects and real estate, although increasingly larger amounts are being invested by the Chinese in tourism in Australia.

Academics from the Australian National University say this is proof that Chinese investment is maturing and becoming more sophisticated.

Working with business representatives and the Australian government, researchers are for the first time charting the real value of Chinese investment.The flow of money from China has been politically sensitive, with concerns that valuable Australian farmland and real estate have become foreign-owned.

Professor Peter Drysdale, researcher at the Australian National University, says his work will help to foster a more accurate debate about China’s role.

“Getting an accurate picture of what is going on is half the battle in having a sensible public discussion,” said Drysdale. “Making it possible to have a better informed discussion about what Chinese investment actually does in Australia and what its effect is on the Australian economy.”

The database was compiled by painstaking analysis of thousands of transactions from sources such as the Foreign Investment Review Board and the Australian Bureau of Statistics.

The research highlighted that Chinese investment in Australia was at its highest in 2016, at $10.5 billion, but dropped to $6.2 billion in 2017.

While the report does not offer explanations for the sharp fall, bilateral business relations between Beijing and Canberra have been under increasing pressure because of diplomatic friction over alleged Chinese meddling in Australia’s domestic politics and the media.

Despite the tensions, China remains Australia’s most valuable trading partner.

 


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Final Tweaks in North American Trade Deal Keep Lid on E-commerce

Last-minute changes to a new North American trade deal sank U.S. hopes of making Canada and Mexico allow higher-value shipments to the countries by online retailers, such as Amazon.com, a top Mexican official said on Friday.

The revised pact was set to double the value of goods that could be imported without customs duties or taxes from the United States through shipping companies to Mexico.

But Canada’s adoption of a more restrictive threshold during its efforts last month to salvage a trilateral deal prompted Mexican negotiators to follow Canada’s lead, Economy Minister Ildefonso Guajardo said on Friday.

The final version of the trade agreement will insulate retailers in both countries from facing greater competition from e-commerce companies like Amazon.com Inc and eBay Inc.

“It was the solution liked much more by Mexican businesses,” Guajardo told local television.

The change was came so last-minute that it was not written into the agreement published last weekend.

The new deal, called the United States-Mexico-Canada Agreement (USMCA), was meant by U.S. President Donald Trump to create more jobs in the United States. Trump had been highly critical of the prior NAFTA agreement since before he ran for president.

U.S. negotiators originally pushed Mexico and Canada to raise import limits to the U.S. level of $800 from current thresholds of $50 and C$20, respectively.

Traditional retailers in Mexico opposed such a big hike, fearing online companies would sell cheap imports from Asia through the United States. Even so, Mexico initially agreed in August to raise the threshold on customs duties and taxes to $100 in its bilateral deal with the United States.

Guajardo said that Canada, after Mexico had finished negotiations, set its sales tax exemption at just C$40, about $30, and put a ceiling of C$150, about $117, on custom duties exemptions.

The Retail Council of Canada said the deal will protect retailers against a “massive change in the competitive landscape.”

Mexico decided to follow suit, Guajardo said, favoring local clothing, footwear and textile industries, as well as the finance ministry that collects duties and taxes.

Mexican negotiators lowered the sales tax exemption back to the $50 level, while raising the customs duties limit to $117, matching Canada, Guajardo said.

“Mexico offered a deal where it really didn’t concede anything,” said Adrian Correa, a senior lawyer at FedEx Corp.

Mike Dabbs, eBay’s government relations director for the Americas, said separate tax and custom duty thresholds could create confusion.

“That does not help the experience for small businesses and consumers,” he said.


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