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Conservatives anxious to counter America’s leading economic adversary have set their sights on a top trade priority for labor unions and progressives: cracking down on the deluge of duty-free packages coming in from China.

The changing political dynamic could have major ramifications for e-commerce businesses and consumers importing products from China valued at less than $800. It also could add to the growing tensions between the countries.

Under current U.S. law, most imports valued at less than $800 enter duty-free into the United States as long as they are packaged and addressed to individual buyers. It’s referred to as the de minimis rule. Efforts to lower the threshold amount or exclude certain countries altogether from duty-free treatment are set to become a major trade fight in this Congress.

“De minimis has become a proxy for all sorts of anxieties as it relates to China and other trade-related challenges,” said John Drake, a vice president at the U.S. Chamber of Commerce, who argues that the current U.S. law should be preserved.

The rule speeds the pace of commerce and lowers costs for consumers. It also allows U.S. Customs and Border Protection to focus its resources on the bigger-ticket items that generate more tariff revenue for the federal government.

The volume of products coming into the U.S. that benefit from the de minimis rule has soared in recent years. Congress raised the U.S. government’s threshold for expedited, duty-free treatment from $200 to $800 in 2016.

The volume of such imports has since risen from about 220 million packages that year to 771 million in 2021 — with China accounting for about 60%, according to the government — and 685 million last year.

“I think everybody’s got to kind of wrap their head around what kind of mistake this was,” Robert Lighthizer, the former U.S. trade representative during the Trump administration, told a House panel last month. “Nobody dreamt this would ever happen. Now we have packages coming in, 2 million packages a day, almost all from China. We have no idea what’s in them. We don’t really know what the value is.”

Lighthizer urged Congress to get rid of the de minimis rule altogether, or take it to a much lower amount, say $50 or $100. He said foreign companies are taking advantage of the “loophole” and “putting people out of work in stores; they’re putting people out of work in manufacturing.”

Last year, House Democrats pushed to prohibit Chinese-made goods from benefiting from the special treatment for lower-cost goods. That move was part of a larger measure that boosted investments in semiconductor manufacturing and research.

In the rush to get a bill passed before the 2022 elections, the Biden administration and Democratic leaders jettisoned provisions without bipartisan buy-in. The trade provision was opposed by important U.S. business groups and key Republican members of Congress, so it didn’t make the final bill.

Fast forward just a few months and it’s clear the political dynamic has shifted — and quickly.

In its first set of recommendations, a new House committee focused exclusively on China called for legislation that would reduce the threshold for duty-free shipments into the U.S. with a particular focus on “foreign adversaries, including the (People’s Republic of China.)”

The Select Committee on the Chinese Communist Party said that exploiting the $800 threshold may be a major avenue through which Chinese companies selling directly to American consumers can circumvent U.S. law designed to prevent the sale of goods made with forced labor. The committee also said Customs and Border Protection “could not reasonably scrutinize” goods sent under the $800 threshold for forced labor concerns because of the sheer number of products coming in.

The committee is most concerned about retailers Temu and Shein, which ship directly to consumers in the U.S. In a report released Thursday, it said the two companies alone are likely responsible for more than 30% of all de minimis shipments entering the U.S. each day, or nearly 600,000 a day last year.

The committee also has competitiveness concerns. It points out that U.S. retailers such as Gap and H&M paid $700 million and $205 million in import duties, respectively, in 2022. In contrast, virtually all of the goods sold by Temu and Shein are shipped using the de minimis exception in which the importer pays no duty.

Committees with jurisdiction over trade are also signaling a new mindset. Last year, the top Republican on the House Ways and Means Committee, Texas Rep. Kevin Brady, since retired, warned against what he called “hasty changes in reasonable de minimis limits.”

But the Republican now leading the House Ways and Means Committee, Rep. Jason Smith of Missouri, said he wants to “have a lot of conversations” about the $800 threshold.

“Basically, when you’re looking at $800 or less, that’s a free-trade agreement with anyone. And you’re looking at millions of products that come in per day. We need to look at it,” Smith said.

Meanwhile, the Senate has some bills on the issue, which were just introduced this month.

One, from Sens. Sherrod Brown, D-Ohio, and Marco Rubio, R-Fla., would prevent the expedited, tariff-free treatment of imports from certain countries, most notably China and Russia.

The other, from Sens. Bill Cassidy, R-La., and Tammy Baldwin, D-Wis., not only similarly targets China and Russia, but would affect other trade partners. It would do so by reducing the threshold for duty-free treatment to the amount that other nations use.

For example, taking a country like Belgium, which uses the European Union threshold of 150 euros, or about $165 currently – then the U.S. would reciprocate and use that same amount when determining whether goods coming in from Belgium get duty-free and expedited treatment.

Cassidy said it was former President Donald Trump who “really reframed the argument” for Republicans when it comes to trade with China.

“He pointed out that, through a variety of mechanisms, they are taking jobs, not because they are out-competing us, but because they are subsidizing, because they are using forced labor, that sort of thing,” Cassidy said.

In early 2022, when Congress was considering putting the de minimis trade provision in the semiconductor bill, several business groups led by the Chamber of Commerce and the National Association of Manufacturers wrote congressional leaders urging them to keep it out. They said the changes would “impose sweeping costs on American businesses, workers and consumers, add new inflationary pressures on the U.S. economy, and exacerbate ongoing supply chain disruptions at U.S. ports.”

Drake said that cutting back the threshold not only would represent a big tax increase for many U.S. small businesses, but many would have to hire a customs broker to process their shipments.

“There’s a reason Congress raised the level back in 2016,” Drake said. “They knew in addition to it being a competitive advantage for the U.S. business community, they also recognized that collecting duties on these low-value shipments, you know, really wasn’t worth the trouble.”
…

Pakistan’s parliament on Sunday approved the government’s 2023-24 budget which was revised to meet International Monetary Fund conditions in a last ditch effort to secure the release of more bailout funds.

The IMF in mid-June expressed dissatisfaction with the country’s initial budget, saying it was a missed opportunity to broaden the tax base in a more progressive way.

The revised budget was approved a day after Finance Minister Ishaq Dar introduced new taxes and expenditure cuts.

“The [finance] bill is passed,” House Speaker Raja Pervaiz Ashraf said in a live TV broadcast on Sunday.

With currency reserves barely enough to cover one month’s imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF funds do not come through.

There are five days to go before the $6.5 billion Extended Fund Facility (EFF) agreed in 2019 expires on June 30. The IMF has to review whether to release some of the $2.5 billion still pending to Pakistan before then. The tranche has been stalled since November.

Dar also announced on Saturday a number of other changes, including raising a petroleum levy and lifting of all restrictions on imports, which has been one of the major concerns of the IMF as part of its fiscal tightening measures for the South Asian economy.

The budget revision came after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of a global financing summit in Paris last week, followed by a marathon three-days of virtual talks between the two sides.

Under the $6.5 billion EFF’s ninth review, negotiated earlier this year, Pakistan has desperately been trying to secure the IMF funds, which are crucial to unlock other bilateral and multilateral financing for the debt-ridden country.
…

Evan Burroughs has spent eight years touting the virtues of an Oregon pilot program charging motorists by the distance their vehicle travels rather than the gas it guzzles, yet his own mother still hasn’t bought in.

Margaret Burroughs, 85, said she has no intention of inserting a tracking device on her Nissan Murano to record the miles she drives to get groceries or attend needlepoint meetings. She figures it’s far less hassle to just pay at the pump, as Americans have done for more than a century.

“It’s probably a good thing, but on top of everybody else’s stress today, it’s just one more thing,” she said of Oregon’s first-in-the-nation initiative, which is run by the state transportation department where her son serves as a survey analyst.

Burroughs’ reluctance exemplifies the myriad hurdles U.S. states face as they experiment with road usage charging programs aimed at one day replacing motor fuel taxes, which are generating less each year, in part due to fuel efficiency and the rise of electric cars.

The federal government is about to pilot its own such program, funded by $125 million from the infrastructure measure President Biden signed in November 2021.

So far, only three states — Oregon, Utah and Virginia — are generating revenue from road usage charges, despite the looming threat of an ever-widening gap between states’ gas tax proceeds and their transportation budgets. Hawaii will soon become the fourth. Without action, the gap could reach $67 billion by 2050 due to fuel efficiency alone, Boston-based CDM Smith estimates.

Many states have implemented stopgap measures, such as imposing additional taxes or registration fees on electric vehicles and, more recently, adding per-kilowatt-hour taxes to electricity accessed at public charging stations.

Last year, Colorado began adding a 27-cent tax to home deliveries from Amazon and other online retailers to help fund transportation projects. Some states also are testing electronic tolling systems.

But road usage charges — also known as mileage-based user fees, distance-based fees or vehicle-miles-traveled taxes — are attracting the bulk of the academic attention, research dollars and legislative activity.

Doug Shinkle, transportation program director at the nonpartisan National Conference of State Legislatures, predicts that after some 20 years of anticipation, more than a decade of pilot projects and years of voluntary participation, states will soon need to make the programs mandatory.

“The impetus at this point is less about collecting revenue than about establishing these systems, working out the kinks, getting the public comfortable with it, expanding awareness around it,” he said.

Electric car sales in the U.S. rose from just 0.1% of total car sales in 2011 to 4.6% in 2021, according to the U.S. Bureau of Labor Statistics. S&P Global Mobility forecasts they will make up 40% of the sales by 2030, while other projections are even rosier.

Patricia Hendren, executive director of the Eastern Transportation Coalition, said figuring out how to account for multistate trips is particularly important in the eastern U.S., where states are smaller and closer together than those in the West. Virginia’s program, launched in 2022, is already the largest in the nation and will provide valuable lessons, she said. 

Hendren’s organization, a 17-state partnership that researches transportation safety and technology innovations, participated in one of the earliest pilot projects and eight others since. The biggest hurdle, she said, is to inform the public about the diminishing returns from the gas tax that has long paid for roads.

“This is about the relationship between the people who are using our roads and bridges and how we’re paying for it,” Hendren said. “We’ve been doing it one way for 100 years, and that way is not going to work anymore.”

Eric Paul Dennis, a transportation analyst at the Citizens Research Council of Michigan, said the failure of states to convert years of research into even one fully functional, mandatory program by now raises questions about whether road usage charging can really work.

“There’s no program design that I have seen that I think can be implemented at scale in a way that is publicly acceptable,” he said. “That doesn’t mean that a program can’t be designed to do so, but I feel like if you can’t even conceive of the program architecture that seems like something that would work, you probably shouldn’t put too much faith in it.”

Indeed, a chicken-and-egg dispute over how to proceed in Washington state has stymied road usage charging efforts there.

Lawmakers passed a bill last month that would have begun early steps toward a program by allowing collection of motorists’ odometer readings on a voluntary basis. Democratic Gov. Jay Inslee vetoed the measure, though, arguing that Washington needs a program in place before starting to collect citizens’ personal data.

States also must grapple with the social and environmental implications of their plans for replacing the gas tax, said Asha Weinstein Agrawal, director of the National Transportation Finance Center at San Jose State University’s Mineta Transportation Institute.

The institute has conducted national surveys every year since 2010 and found growing support for mileage-based fees, special rates for low-income drivers and rates tied to how much pollution a vehicle generates, she said.

Weinstein Agrawal said public policy, and the way transportation is funded, often fails to reflect states’ growing emphasis on curbing carbon emissions as a way to deal with climate change.

“To switch over to a system that makes it cheaper to drive a gas guzzler and more expensive to drive a Prius,” she said, “seems both symbolically problematic and to be sending, in the most literal way, the wrong economic incentives to people.”

Evan Burroughs said his 85-year-old father, Hank, who drives an electric car, avoids paying significant vehicle registration fees by participating in Oregon’s program, while Burroughs himself has paid an extra dollar or two each month for his Subaru Outback.

“To me, that’s worth it to be part of the experiment,” he said, “and to know I’m paying my fair share for the roads.” 
…

Conservatives eager to counter America’s leading economic adversary have set their sights on a top trade priority for labor unions and progressives: cracking down on the deluge of duty-free packages coming in from China.

The changing political dynamic could have major ramifications for e-commerce businesses and consumers importing products from China valued at less than $800. It also could add to the growing tensions between the countries.

Under current U.S. law, most imports valued at less than $800 enter duty-free into the United States as long as they are packaged and addressed to individual buyers. It’s referred to as the de minimis rule. Efforts to lower the threshold amount or exclude certain countries altogether from duty-free treatment are set to become a major trade fight in this Congress.

“De minimis has become a proxy for all sorts of anxieties as it relates to China and other trade-related challenges,” said John Drake, a vice president at the U.S. Chamber of Commerce, who argues that the current U.S. law should be preserved.

The rule speeds the pace of commerce and lowers costs for consumers. It also allows U.S. Customs and Border Protection to focus its resources on the bigger-ticket items that generate more tariff revenue for the federal government.

The volume of products coming into the U.S. that benefit from the de minimis rule has soared in recent years. Congress raised the U.S. government’s threshold for expedited, duty-free treatment from $200 to $800 in 2016.

The volume of such imports has since risen from about 220 million packages that year to 771 million in 2021 — with China accounting for about 60%, according to the government — and 685 million last year.

“I think everybody’s got to kind of wrap their head around what kind of mistake this was,” Robert Lighthizer, the U.S. trade representative during the Trump administration, told a House panel last month. “Nobody dreamt this would ever happen. Now we have packages coming in, 2 million packages a day, almost all from China. We have no idea what’s in them. We don’t really know what the value is.”

Lighthizer urged Congress to get rid of the de minimis rule altogether, or reduce it to a much lower amount, say $50 or $100. He said foreign companies are taking advantage of the threshold and “putting people out of work in stores, they’re putting people out of work in manufacturing.”

Last year, House Democrats pushed to prohibit Chinese-made goods from benefiting from the special treatment for lower-cost goods. That move was part of a larger measure that boosted investments in semiconductor manufacturing and research.

In the rush to get a bill passed before the 2022 elections, the Biden administration and Democratic leaders jettisoned provisions without bipartisan buy-in. The trade provision was opposed by important U.S. business groups and key Republican members of Congress, so it didn’t make the final bill.

Fast forward just a few months and it’s clear the political dynamic has shifted — and quickly.

In its first set of recommendations, a new House committee focused exclusively on China called for legislation that would reduce the threshold for duty-free shipments into the U.S. with a particular focus on “foreign adversaries, including the (People’s Republic of China.)”

The Select Committee on the Chinese Communist Party said that exploiting the $800 threshold may be a major avenue through which Chinese companies selling directly to American consumers can circumvent U.S. law designed to prevent the sale of goods made with forced labor. The committee also said Customs and Border Protection “could not reasonably scrutinize” goods sent under the $800 threshold for forced labor concerns because of the sheer number of products coming in.

The committee is most concerned about retailers Temu and Shein, which ship directly to consumers in the U.S. In a report released Thursday, it said the two companies alone are likely responsible for more than 30% of all de minimis shipments entering the U.S. each day, or nearly 600,000 a day last year.

The committee also has competitiveness concerns. It points out that U.S. retailers such as Gap and H&M paid $700 million and $205 million in import duties, respectively, in 2022. In contrast, virtually all of the goods sold by Temu and Shein are shipped using the de minimis exception in which the importer pays no duty.

Committees with jurisdiction over trade are also signaling a new mindset. Last year, the top Republican on the House Ways and Means Committee, Texas Rep. Kevin Brady, since retired, warned against what he called “hasty changes in reasonable de minimis limits.”

But the Republican now leading the House Ways and Means Committee, Rep. Jason Smith of Missouri, said he wants to “have a lot of conversations” about the $800 threshold.

“Basically, when you’re looking at $800 or less, that’s a free-trade agreement with anyone. And you’re looking at millions of products that come in per day. We need to look at it,” Smith said.

Meanwhile, the Senate has some bills on the issue, which were just introduced this month.

One, from Sens. Sherrod Brown, D-Ohio, and Marco Rubio, R-Fla., would prevent the expedited, tariff-free treatment of imports from certain countries, most notably China and Russia.

The other, from Sens. Bill Cassidy, R-La., and Tammy Baldwin, D-Wis., not only similarly targets China and Russia, but would affect other trade partners. It would do so by reducing the threshold for duty-free treatment to the amount that other nations use.

For example, if another country, say Belgium, which uses the European Union threshold of 150 euros, or about $165 currently, then the U.S. would reciprocate and use that same amount when determining whether goods coming in from Belgium get duty-free and expedited treatment.

Drake, of the U.S. Chamber of Commerce, said that cutting back the threshold not only would represent a big tax increase for many U.S. small businesses, but many would have to hire a customs broker to process their shipments.

“There’s a reason Congress raised the level back in 2016,” he said. “They knew in addition to it being a competitive advantage for the U.S. business community, they also recognized that collecting duties on these low-value shipments, you know, really wasn’t worth the trouble.”
…

The World Bank chief will announce a raft of measures on Thursday to aid countries hit by natural disasters, including a pause in debt repayments to the lender, as world leaders gather in Paris to give impetus to a new global finance agenda.

Some 40 leaders, including about a dozen from Africa, China’s prime minister and Brazil’s president, will be joined in the French capital by international organizations at the “Summit for a New Global Financial Pact.”

It aims to boost crisis financing for low-income countries, reform post-war financial systems and free up funds to tackle climate change by getting top-level consensus on how to progress several initiatives currently struggling in bodies like the G20, COP, IMF-World Bank and United Nations.

Leaders are set to back a push for multilateral development banks like the World Bank to put more capital at risk to boost lending, according to a draft summit statement seen by Reuters.

In a speech to be delivered on Thursday, new World Bank president Ajay Banga will outline a “toolkit”, including offering a pause in debt repayments, giving countries flexibility to redirect funds for emergency response, providing new types of insurance to help development projects and helping governments build advance-emergency systems.

While the new World Bank measures are designed to give developing nations some financial breathing space, there was no discussion of multilateral lenders offering debt writedowns — so-called haircuts.

China — the world’s largest bilateral creditor — has been pushing for lenders like the World Bank or the International Monetary Fund to absorb some of the losses.

Those institutions and many developed nations, notably the United States, are resisting, arguing that acceding to Beijing’s demand would be tantamount to a bailout for China. Chinese Prime Minister Li Qiang is due to speak at the summit on Friday.

New vision

Citing the war in Ukraine, climate crisis, widening disparity and declining progress, leaders said the World Bank and other multilateral financial institutions needed a new vision.

The global financial architecture is outdated, dysfunctional and unjust, the United Nations Secretary-General Antonio Guterres said.

“It is clear that the international financial architecture has failed in its mission to provide a global safety net for developing countries,” he said.

French President Emmanuel Macron, hosting the summit, said it was time to act or trust would be lost.

The summit aims to create roadmaps that can be used over the next 18-24 months, ranging from debt relief to climate finance. Many of the topics on the agenda take up suggestions from a group of developing countries, led by Barbados Prime Minister Mia Mottley, dubbed the “Bridgetown Initiative.”

The coronavirus pandemic pushed many poor countries into debt distress as they were expected to continue servicing their obligations in spite of the massive shock to their finances.

Africa’s debt woes are coupled with the dual challenge faced by some of the world’s poorest countries of tackling the impacts of climate change while adapting to the green transition.

Wealthy nations have yet to come good on climate finance that they promised as part of a past pledge to mobilize $100 billion a year, a key stumbling block at global climate talks.

Though binding decisions are not expected, officials involved in the summit’s planning said some strong commitments should be made about financing poor countries.

Nearly eighty years after the Bretton Woods Agreement created the World Bank and International Monetary Fund (IMF), leaders aim to squeeze more financing from multilateral lenders for the countries that need it most.

In particular, there should be an announcement that a $100 billion target has been met that will be made available through the International Monetary Fund for vulnerable countries, officials said.

U.S. Treasury Secretary Janet Yellen, whose country is the World Bank’s biggest shareholder, said multilateral development institutions should become more effective in the way they use their funds before thinking of injecting more money into them.

Some leaders are expected to lend their weight to long-stalled proposals for a levy on shipping industry emissions ahead of a meeting next month of the International Maritime Organization officials said.
…

Chinese commercial banks lowered interest rates on Tuesday as Beijing seeks ways to boost economic growth, which has been disappointingly slow as the country recovers from pandemic-era lockdowns and supply chain bottlenecks.

The move took place just days after the Chinese central bank announced it would cut the interest rate it charges on several different facilities it uses to supply commercial banks with cash.

The change in commercial banks’ prime rates, which are offered to borrowers with the best credit, were relatively modest. The rate on one-year loans fell to 3.55% from 3.65%, while the rate on five-year loans dropped to 4.2% from 4.3%.

Striking a balance

The change, which was the most significant adjustment to interest rates in nearly a year, was smaller than some analysts had expected. China faces continued softness in its real estate sector, high levels of indebtedness and persistently slow growth.

David Qu, an economist covering China for Bloomberg Economics, said on Bloomberg television that the small rate cut was an effort to maintain what he referred to as a “balance between stabilizing the housing market and avoiding stimulating another bubble in the housing market.”

In an analysis released last week after the Peoples Bank of China signaled that rate cuts were coming, Logan Wright and Allen Feng of the Rhodium Group wrote, “[T]he reductions in mortgage rates will not have much of an impact on property sales, but may help to reduce mortgage payment burdens for Chinese households. This is more likely designed to boost household consumption, so that households can free up and come from debt service for other purposes.”

Lower growth expected

Concerns about China’s economy have worsened in recent months, a fact that senior leaders in Beijing have begun to publicly acknowledge.

On Friday, Chinese state television reported that Premier Li Qiang told a meeting of senior Communist Party leaders that the government is exploring ways of driving growth.

“The external environment is becoming more complex and severe, and the slowdown in global trade and investment will directly affect the recovery process of our country’s economy,” Li said.

Over the weekend, Goldman Sachs Group Inc. reduced its forecast for growth in China this year to 5.4% from 6%.

The Chinese economy’s growth rate is still significantly higher than that of many developed economies, including the U.S., which the International Monetary Fund expects to grow at only 1.6% in 2023. However, China’s growth rate was as high as 7.8% 10 years ago, and has been mostly slowing since, with the exception of an anomalous 8.1% rate in 2021 as it returned from the depths of the pandemic.

More stimulus expected

After reports last month that industrial output and retail sales had both come in under expectations, some experts expected that the Chinese government would engage in a careful program of targeted economic stimulus in the near future. The trouble is that some of the most obvious levers of influence may be less potent than they have been in the past.

For instance, lower interest rates are usually seen as stimulative because they encourage borrowing to fund capital investment. However, debt levels among Chinese companies are already quite high, which will serve to dampen demand for more credit.

In recent months, Chinese officials have signaled openness to foreign investment in the country as another means of increasing economic growth.

However, this comes after a period in which Beijing’s aggressive crackdown on Chinese tech firms and high-profile visits of state security officials to the Chinese offices of Western businesses have left some companies wary.

In April, security officials entered the offices of consulting firm Bain & Company and questioned employees. That visit came a month after officials entered the offices of another U.S. firm, the Mintz Group, and detained five Chinese nationals working there.

Global challenges

The change in interest rates takes place amid a number of important discussions between China and other large economies around the world.

On Monday, U.S. Secretary of State Antony Blinken visited Beijing, where he met with Chinese Foreign Minister Qin Gang and then President Xi Jinping. Both sides characterized the discussions as productive, but on issues of significant economic concern to Beijing, no progress was announced.

These included the Biden administration’s continued application of broad tariffs on Chinese goods implemented by the administration of former President Donald Trump, and severe restrictions on China’s ability to buy cutting-edge semiconductors due to bans put in place by the Biden administration.

On Tuesday, Li traveled to Germany for meetings with senior officials there. Germany, which counts China as its second-largest trading partner after the European Union, saw its economy rocked after the Russian invasion of Ukraine exposed its over-reliance on Russia as a source of fossil fuels. The German government is in the midst of “de-risking” its economy by expanding the number of countries it relies on for key imports — a process that has China concerned about the future of its trade with Europe’s largest individual economy.
…

The risks of artificial intelligence to national security and the economy need to be addressed, U.S. President Joe Biden said on Tuesday, adding he would seek expert advice.

“My administration is committed to safeguarding Americans’ rights and safety while protecting privacy, to addressing bias and misinformation, to making sure AI systems are safe before they are released,” Biden said at an event in San Francisco.

Biden met a group of civil society leaders and advocates who have previously criticized the influence of major tech companies, to discuss artificial intelligence.

“I wanted to hear directly from the experts,” he said.

Several governments are considering how to mitigate the dangers of the emerging technology, which has experienced a boom in investment and consumer popularity in recent months after the release of OpenAI’s ChatGPT.

Biden’s meeting on Tuesday included Tristan Harris, executive director of the Center for Humane Technology, Algorithmic Justice League founder Joy Buolamwini, and Stanford University Professor Rob Reich.

Regulators globally have been working to draw up rules governing the use of generative AI, which can create text and images, and whose impact has been compared to that of the internet.

Biden has also recently discussed the issue of AI with other world leaders, including British Prime Minister Rishi Sunak whose government will later this year hold a first global summit on artificial intelligence safety. Biden is expected to discuss the topic with Indian Prime Minister Narendra Modi during his ongoing U.S. visit.

European Union lawmakers agreed last week to changes in draft rules on artificial intelligence proposed by the European Commission in a bid to set a global standard for a technology used on everything from automated factories to self-driving cars to chatbots.
…

A global aid agency warned Monday that a large-scale plague of locusts is ravaging northern Afghanistan and could destroy 1.2 million metric tons of wheat, almost one-quarter of the country’s annual harvest.

“The escalating situation threatens to plunge millions of people into worsening levels of hunger,” the nongovernmental aid group Save the Children said in a statement.

The locust outbreak comes as funding shortfalls have cut off food aid for 8 million people in Afghanistan in the past two months, the group said. It urged the international community to increase humanitarian aid and resume development assistance to help prevent the impoverished country from spiraling into “famine-like conditions.”

Save the Children said that the Moroccan locust, one of the world’s most damaging plant pests, is sweeping across eight of Afghanistan’s 34 provinces, the country’s wheat basket.

The agency said the outbreak has come at the worst possible time for Afghanistan, where more than 15 million people — one-third of the population — are projected to face crisis levels of hunger over the next five months, including 3.2 million children.

Aid organizations face a $2.2 billion shortfall in humanitarian funding to support Afghanistan’s most vulnerable children and families, especially women and girls.

Arshad Malik, the Save the Children country director, said that millions of children would suffer unless humanitarian aid is immediately increased.

“However, humanitarian aid alone is not a quick fix. The underlying drivers of hunger, including resuming development aid and support to the country’s ailing economy, will also need to be addressed.”

Since the Taliban regained control of the conflict-torn South Asian nation in August 2021, the international community has suspended development assistance and imposed financial sanctions.

The United Nations says the humanitarian crisis in Afghanistan, stemming from years of war and prolonged drought, has worsened since the Taliban took control of the country. 

U.N. officials say that the Taliban’s discriminatory policies against Afghan women have caused the humanitarian and economic situation in the country to deteriorate. The hardline group has barred Afghan women from working for the United Nations and other aid agencies. 

The Taliban have suspended girls’ education beyond the sixth grade and banned many women government employees from workplaces. 

The restrictions on Afghan women, and other human rights concerns, have deterred foreign governments from recognizing the Taliban as legitimate rulers of the country.   
…

Military and civilian aircraft streaked across the sky as the Paris Air Show returned Monday after a four-year COVID-induced hiatus, with a big crowd including Ukrainian military officials and the French president.

Organizers have billed the biennial event as the “recovery airshow” after the coronavirus ravaged the sector and the event was cancelled in 2021.

This year’s airshow has a new focus on defense following Russia’s invasion of Ukraine, along with the industry’s efforts to reduce its carbon footprint, with French President Emmanuel Macron arriving in a helicopter partly using sustainable aviation fuel (SAF).

Huge traffic jams around Le Bourget airport outside Paris were testament to the interest in this year’s show, as aircraft makers field hundreds of orders and airlines brace for a near-record number of passengers this year.

The Ukraine conflict has also prompted countries to step up military spending, which could benefit aerospace defense firms.

While Russia has been excluded from the event, Ukrainian military officials toured the huge exhibition space at Paris-Le Bourget airport, some taking photos of missiles on display.

Le Bourget offers a forum to announce deals with some 2,500 firms lining up to show off their latest planes, drones, helicopters and prototypes such as flying taxis.

Airbus chief executive Guillaume Faury, who heads France’s aerospace industry association GIFAS, called it “the return of the good old times of the excitement of the show.”

Macron was welcomed as he opened the event with an aerial display including Airbus’ latest A321 XLR airliner, civilian and military helicopters and a jet fighter.

Businesspeople and uniformed military visitors from around the world watched the action or headed into the guarded private spaces of the major firms’ stands.

With 125,000 square meters of exhibition space — the equivalent of nearly 18 soccer pitches — around 320,000 visitors are expected during the week-long event.

Big deals

Along with the Farnborough airshow in England, which takes place in even numbered years, Le Bourget is a key sales event for the civil and defense industries.

Airbus and rival Boeing compete fiercely in announcing orders for aircraft running into the billions of dollars.

Both industry heavyweights are also battling to solidify supply chains as they increase production to meet growing demand.

At least 158 planes, helicopters and drones are on display, from the latest long-haul commercial jets to the F-35, a U.S. stealth fighter.

The United States has a strong presence with 425 exhibitors, bolstered by renewed interest in military equipment in the aftermath of the Ukraine war.

Firms from 46 other nations are present.

China, which lifted COVID restrictions only at the beginning of this year, is also represented.

However, Beijing is not displaying its first homegrown medium-haul passenger jet, the C919, built to compete with the Airbus A320neo and Boeing 737 MAX.

Flying taxis

The airshow also hopes to open a window into the future as projects for flying taxis and other vertical takeoff aircraft abound.

Several prototypes will be on display as part of a “Paris Air Mobility” exhibition to showcase the latest innovations that developers hope will change how people travel.

Engine maker Safran announced early Monday that it would open four production lines in France and Britain making electric motors for small planes.

For his part, Macron arrived aboard Airbus’ latest helicopter, the H160, in a flight fueled with 30% SAF before visiting the European group’s stand laying out its net-zero-by-2050 plan.

Macron had on Friday announced $2.2 billion to help develop technologies to reduce aircraft emissions.

Air travel accounts for nearly 3% percent of global CO2 emissions but serves only a small minority of the world population.

With the industry targeting net zero emissions by mid-century, firms are turbocharging efforts to achieve it.

The initial focus is on SAF, made from sources such as municipal waste, leftovers from the agricultural and forestry industry, crops and plants, and even hydrogen.

But companies are also working to develop battery- and hydrogen-powered aircraft.
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Multinational companies — including Amazon, Marriott and Hilton — pledged Monday to hire more than 13,000 refugees, including Ukrainian women who have fled the war with Russia, over the next three years in Europe.

Just ahead of World Refugee Day on Tuesday, more than 40 corporations say they will hire, connect to work, or train 250,000 refugees, with 13,680 of them getting jobs directly in those companies.

“Every number is a story of an individual family who left everything, seeking safety, seeking protection and wanting to be able to rebuild as quickly as possible,” said Kelly Clements, United Nations deputy high commissioner for refugees. “So the commitments that businesses are going to make on Monday are absolutely essential.”

She said 110 million people have been displaced worldwide, with an estimated 12 million from Ukraine, nearly half of whom are living in Europe after the continent’s largest movement of refugees since World War II.

The hiring push in Europe was organized by the Tent Partnership for Refugees, a nonprofit founded by Chobani CEO Hamdi Ulukaya that connects businesses and refugees, and is being unveiled at a gathering in Paris. The group’s first summit in the U.S. last year led to commitments to hire 22,725 refugees.

In the new round, Amazon leads the pack, vowing to hire at least 5,000 refugees over the next three years in Europe, followed by Marriott and Hilton with 1,500 each, Starbucks and ISS with 1,000 each, and smaller commitments from brands such as Adidas, Starbucks, L’Oreal, PepsiCo and Hyatt.

“This is good for us as a company because the opportunity to add diversity to our workforce will continue to make us a stronger company,” said Ofori Agboka, Amazon vice president overseeing human resources. “With diversity brings innovation, creativity, different insights.”

He said the vast majority of jobs will be hourly roles at fulfillment and storage centers and in transport and delivery.

Amazon announced 27,000 job cuts earlier this year, part of a wave of layoffs after tech companies ramped up hiring during the COVID-19 pandemic. Those layoffs primarily affected salaried office jobs, Agboka said.

Daria Sedihi-Volchenko fled Kyiv last year and now works in Warsaw, Poland, as a senior program manager for an Amazon Web Services program providing free tech training for Ukrainians. She says about 40% of those in the program have no tech background.

“I went through the same way as many of our learners … are going through,” she said. “I had to learn, and I took a commitment on my interview. I said that ‘OK, if we can agree and I can start working for you, I promise to learn Polish and I promise to learn technical skills.'”

A year ago, Sedihi-Volchenko woke up to explosions from Russia’s invasion.

“I was terrified. I was so scared for Ukraine, for the nation, for the future, for my own life,” she said. “But also that was a shocking moment when I understood that everything in my life is changing.”

She began living in basements but left as Russian forces approached Kyiv. She drove 40 hours to reach Moldova, thankful that she “didn’t drive on a single land mine and nobody shot into my car.”

She went to Poland to find work, embarking on an IT path after working as a project manager for government ministries and as an economist in Ukraine.

Companies are hoping refugees can fill staffing needs after the economy bounced back from the pandemic. In Europe, unemployment is at its lowest since the euro currency was introduced in 1999.

“We’re seeing record levels of demand for our properties across many markets here in Europe,” Marriott International CEO Anthony Capuano said. “And so we are hiring aggressively to make sure we can accommodate our guests as demand ramps up.”

Marriott’s jobs will largely be hourly positions such as housekeepers, kitchen staff and front desk attendants.

European nations have welcomed Ukrainians, and while Clements applauded opening schools, workplaces and other opportunities to them, she said the same should be offered to others fleeing conflict and crises in places like Syria, Sudan and Afghanistan.

Sedihi-Volchenko knows the challenges ahead for refugees, even as some companies offer help with language skills, counseling and training. Job listings can be difficult to decipher, and like her, they may have difficulty securing a stable internet connection or work clothes.

“It’s important to give a refugee just time to learn the language, but the person can start working because if you bring experience with IT systems or finance or project management or any other area, naturally, you understand, it’s not so much about the language. You understand the flow of work,” she said.

She said 110 million people have been displaced worldwide, with an estimated 12 million from Ukraine, nearly half of whom are living in Europe after the continent’s largest movement of refugees since World War II.

A year ago, Sedihi-Volchenko woke up to explosions from Russia’s invasion.
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Chinese consumers snapped up billions of dollars’ worth of items in China’s first major online shopping festival after emerging from the pandemic as merchants slashed prices, but analysts say that consumer confidence still remains weak.

Chinese merchants offered customers steep discounts during the 618 shopping festival, which ran on China’s major shopping platforms from the end of May until June 18, in the hopes of shoring up sales amid a weaker-than-expected recovery in consumption.

Major shopping festivals, like e-commerce retailer JD.com’s 618 and Alibaba’s Singles’ Day, are typically barometers of consumption in China, and Chinese e-commerce platforms often participate by offering discounts and incentives to consumers.

Analysts say that consumption remains soft this year as China emerges from the pandemic, even as platforms including JD.com, Tmall, Taobao and Pinduoduo offered billions in subsidies.

“Chinese consumer confidence remains weak due to a mix of geopolitics, continued weakness from COVID-19 and domestic Chinese politics,” said Shaun Rein, founder and managing director of the China Market Research Group in Shanghai.

Rein said that consumers were less likely to spend more during 618 as merchants had already been discounting heavily for years because of the pandemic, and deals were not that much better compared to previous months.

In March, JD.com launched a “10-billion-yuan subsidies” program to compete with rival Pinduoduo, which is known for its low-priced goods. The CEO of Alibaba’s e-commerce business unit, Trudy Dai, also previously pledged to make “huge, historic” investments to attract users to its platforms.

“For months, Chinese consumers have been price-conscious, looking for deals and trading down across most product categories,” Rein said.

This year, for the first time, JD.com did not reveal its total sales numbers for the 618 event, despite saying in a blog post that the 2023 shopping extravaganza had “exceeded expectations, setting a new record.”

Last year, neither Alibaba nor JD.com unveiled final numbers for Singles’ Day in November, amid muted festivities during COVID-19 and an expected slowdown in growth.

JD.com said in a blog post that during the 618 shopping festival, consumers snapped up 10 times the number of products that were eligible under its “10-billion-yuan subsidies” program, compared to March.

Despite overall soft consumption, categories like cosmetics and luxury goods saw a bigger uptick in sales compared to the previous quarter, according to Jacob Cooke, CEO of e-commerce consultancy WPIC.

For this year’s 618 event, more luxury brands took part as they sought to boost sales in China after the sector in 2022 declined for the first time in five years amid China’s strict “zero-COVID” policies and lockdowns that hammered retail spending.

Brands like Moncler and Lemaire took part in 618 on Tmall for the first time.

Many luxury brands also took the opportunity to launch new products online, with some offering rare discounts and other incentives such as interest-free payment in instalments over 12 months.

Brands like Burberry, Chloe and Miu Miu’s sales in the first 30 minutes of the 618 festival at the end of May had exceeded its total sales during the shopping festival a year ago, according to Tmall data.

“Luxury coming back online is a big trend, because that’s the category that’s been hit really hard over COVID-19,” said Cooke. “Some brands may see up to a 10-fold increase in sales over last year.”
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Binance, the world’s biggest cryptocurrency exchange, and Binance.US have entered into an agreement with the U.S. Securities and Exchange Commission to ensure that U.S. customer assets remain in the United States until a sweeping lawsuit filed this month by the regulatory agency is resolved.

The agreement, disclosed in court papers filed late Friday, still requires the approval of the federal judge overseeing the litigation. To make certain that U.S. customer assets do not go offshore, the agreement allows only Binance.US employees access to these assets.

The SEC on June 5 sued Binance, its CEO and founder Changpeng Zhao and Binance.US’s operator, alleging that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict U.S. customers from its platform and misled investors about its market surveillance controls.

The suit and one filed by the SEC the following day against major U.S. exchange Coinbase represented a dramatic escalation of a crackdown on the industry by U.S. regulators.

Under the agreement, which does not resolve the SEC lawsuit, Binance.US will take steps to make sure that no Binance Holdings officials have access to private keys for its various wallets, hardware wallets or root access to Binance.US’s Amazon Web Services tools, the court filings showed.

The SEC said in a statement released on Saturday that the emergency relief order secured for Binance.US customers will protect their assets and ensure that they can continue to withdraw those assets.

“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please … these prohibitions are essential to protecting investor assets,” Gurbir Grewal, director of the SEC’s enforcement division, said in the statement.

A Binance spokesperson said in a statement on Saturday: “Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms. User funds have been and always will be safe and secure on all Binance-affiliated platforms.”

Under other provisions in the proposed agreement, Binance.US will create new crypto wallets to which the global exchange’s employees have no access, provide additional information to the SEC and agree to an expedited discovery schedule, the filings said.

The U.S. affiliate of Binance halted dollar deposits last week and gave customers a deadline of June 13 to withdraw their dollar funds, after the SEC asked a court to freeze its assets.
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Pakistan is in a debt crisis. It must pay billions in debt servicing, but the state’s coffers are almost empty. As hopes for reviving a bailout deal with the International Monetary Fund fade, experts say the country may escape default this month, but the situation will grow increasingly grave.

Hit by devastating floods, political instability and pandemic-related supply shocks, Pakistan’s import-dependent economy has been on the brink of default for months as the country’s external debt burden mounts against shrinking foreign exchange reserves.

Pakistan’s total external debt stood at upward of $126 billion at the end of 2022. Most of the country’s income goes to pay off the principal as well as interest on this debt.

In June, Pakistan is due to pay $3.6 billion to its lenders. According to the governor of the State Bank of Pakistan, the country’s central bank, $400 million has been paid, while $2.3 billion is expected to be rolled over. Still, the country must pay $900 million. The dollar reserves of the central bank are hovering at about $4 billion.

Need for IMF

Hopes of reviving a stalled 2019 International Monetary Fund, or IMF, bailout deal faded further this week after the lender objected to a few provisions in Pakistan’s proposed federal budget for the fiscal year starting July 2023.

In a statement to VOA, IMF resident representative for Pakistan, Esther Perez Ruiz, listed several measures that did not meet the lender’s expectations, including a new tax amnesty that she said was “against program’s conditionality and governance agenda.”

However, Perez Ruiz said, “the IMF team stands ready to work with the government in refining this budget ahead of its passage.”

Pakistan’s Minister for Finance Ishaq Dar rejected the objections.

“Pakistan is a sovereign country and cannot accept everything the IMF demands,” local media quoted Dar as saying in a briefing to the Pakistani Senate Standing Committee on Finance on Thursday.

The $6.5 billion 2019 deal regarded as a key to avoiding default would give Pakistan $1.1 billion. Not a huge amount by itself, yet it would unlock funds from other lenders, helping to ease the country’s debt crisis.

To revive the deal, Islamabad slashed subsidies, increased taxes and largely stopped controlling the value of the rupee, among other steps over past few months, to woo the IMF.

Experts say the actions were too little, too late.

Differences also persisted on how much funding Pakistan should gather from friends. Islamabad failed to reach the target as allies, slow to help, signaled frustration with the country’s lack of economic reform.

Default risk

The 2019 program ends June 30 with Pakistan’s current fiscal year. Dar maintains Pakistan will not default if talks with the Washington-based lender fail.

“We have sovereign commitments, which the past government made. They are not PTI’s [Pakistan Tehreek-e-Insaaf] or [former Prime Minister] Imran Khan’s, they are Pakistan’s commitments. I think even at the cost of paying a political price we must meet those obligations, and we have,” Dar said at a news briefing last week.

Pakistan’s major ally China, to whom it owes the largest chunk of its bilateral debt, came to its rescue yet, again. In a message to journalists late Friday night, the State Bank of Pakistan announced receiving a $1 billion loan from China. Beijing refinanced the loan which Islamabad had earlier repaid.

However, the current government’s term in office ends mid-August, after which a caretaker setup will run the country until general elections.

Pakistan’s former finance minister, Hafeez Pasha, told VOA if the present government fails to unlock IMF funds, it may put Pakistan’s economy in peril in the new fiscal year.

“IMF will not talk to temporary governments. So, the earliest we can talk to the IMF is sometime after the elections, which could be October, November. This interim period is a period of great uncertainty. And this is what we are all very worried about,” Pasha said.

Plan B

It is unclear how the government plans to manage debt repayment without the IMF.

Dar told a post-budget news conference last week that the government would engage in debt restructuring with bilateral lenders or individual countries.

Days later, the central bank governor informed analysts in a briefing that he was unaware of any such plans.

Earlier, when asked if Pakistan had a Plan B, Dar’s response in a pre-budget news briefing had been an emphatic yes, but it was short on details.

He then signaled Pakistan could sell or lease assets to remain current on debt repayments.

“If you are pushed into a corner, what will you do? Lie down? Let there be a default? Pakistan is solvent. If Pakistan’s loans have soared from 70 billion to 100 billion in the last four years, Pakistan also has assets worth billions,” Dar told journalists.

Some experts say that in many ways, Pakistan already has defaulted, as companies face restrictions in sending dividends to shareholders overseas, airlines threaten to move out over nonpayment of dues, and parents struggle to find dollars for their children studying abroad.

Ali Khizar, research head at Business Recorder, a major Pakistani news outlet, points to the flight of human and financial capital from Pakistan as a sign.

“Pakistan may not have defaulted technically on its debt,” Khizar told VOA. But, he says, as people use informal means to send money outside, large businesses leave the country, and people migrate in record numbers to find work outside Pakistan, “we have defaulted on many grounds.”
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Pakistan is facing a debt crisis. It must pay billions in debt servicing, but the state’s coffers are almost empty. At the same time, hopes of reviving a stalled 2019 International Monetary Fund bailout program are fading. Is Pakistan just days away from a default? VOA’s Pakistan bureau chief Sarah Zaman reports from Islamabad. Camera/Edit: Naveed Nasim, Wajid Asad, Malik Waqar Ahmed
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Can you pay my bills?

That seems to be what Sweden is asking Beyoncé after the star came to town.

When the singer launched her global tour last month in Stockholm, tens of thousands of fans from around the world swarmed the Swedish capital. But it’s not all fun and games for the host of the kickoff of Beyoncé’s first solo tour in seven years.

A senior economist at a top Scandinavian bank says Beyoncé had something to do with Sweden’s higher-than-expected inflation rate last month.

Consumer prices rose 9.7% last month in Sweden compared with a year earlier, the country’s statistics agency, Statistics Sweden, said Wednesday. Costs for certain goods and services, including hotels, rose.

That was a drop from 10.5% in April — the first time that inflation in Sweden has fallen below 10% in more than six months — but it was still slightly higher than economists had predicted.

Michael Grahn, chief economist for Sweden at Danske Bank, thinks Beyoncé’s concert may help explain why.

“Beyonce’s start of her world tour in Sweden seems to have coloured May inflation,” he said on Twitter on Wednesday.

“How much is uncertain,” he added, but the concert “probably” contributed to 0.2 of the 0.3 percentage points that restaurant and hotel prices added to the monthly increase in inflation.

An estimated 46,000 people attended each of Beyoncé’s two Stockholm concerts. Fans from around the world took advantage of Sweden’s relatively weaker currency to buy tickets that were cheaper than in other countries, such as the United States.

“The main impact on inflation, however, came from the fact that all fans needed somewhere to stay,” Grahn told The New York Times. The popularity of the concerts meant some fans had to venture up to 40 miles [64 kilometers] away to find a room, he said.

Grahn told the Financial Times that the phenomenon was “quite astonishing.”

But he added on Twitter that he predicts the situation will return to normal in June.

“We expect this upside surprise to be reversed in June as prices on hotels and tickets reverse back to normal,” he said.
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The international credit rating agency Moody’s and the International Monetary Fund say the Sudan conflict will harm its neighbors’ economies if it continues. In the markets of N’djamena, Chad’s capital, traders and customers alike have already been feeling the pinch from high inflation as the economic fallout of the war threatens their love of hot, sweet, tea. Henry Wilkins reports. (Camera and Produced by: Henry Wilkins)
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Indian Prime Minister Narendra Modi makes his first state visit to Washington in nine years on June 21. The trip comes as the United States and India increase cooperation in critical emerging technologies. Matt Dibble has the story.
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