Month: June 2017

More international visitors came to the U.S. than expected in April 2017, according to a new report released Tuesday in Washington.

The U.S. Travel Association’s Travel Trends Index shows that international travel to the U.S. grew by about 4 percent in April, compared with data for April 2016.

The strong showing contradicted fears that tourism from abroad would slow in reaction to President Donald Trump’s proposed travel bans, which have been blocked by court challenges.

The Trump administration’s first ban on travel from a handful of mostly Muslim countries was issued Jan. 27. The Travel Association said any fallout from the travel bans would have begun to show up in April travel data.

“Are we surprised by this data? The honest answer is yes,” U.S. Travel Association CEO Roger Dow said in a statement. “There have been many claims that the administration’s actions on travel have tarnished America’s brand abroad, but we’re seeing hard economic evidence of the U.S. travel sector’s remarkable resilience.”

The U.S. Travel Association statistics also suggest that a slowdown in international arrivals that began in the spring of 2016 may be moderating.

Data from the U.S. Commerce Department has been showing a decline in international arrivals over the second and third quarters of last year. Those statistics take months to compile and will not reflect 2017 arrivals until next year. The government data is also more comprehensive, including, for example, border crossings by car from Canada and Mexico, which the U.S. Travel Association data does not include.

It’s also not unusual for travel spending and arrivals numbers to fluctuate month to month due to seasonal tourism and other economic factors.

The Travel Trends Index is compiled in partnership with Oxford Economics, using multiple sources including hotel and airline data.

The U.S. Travel Association is a national nonprofit organization representing the travel industry, dedicated to increasing travel within and to the U.S.

 
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The European Union hopes six Balkan countries will agree at a summit on July 12 in Italy to create a regional common market that could be working within a year, a top EU official said Tuesday, in the bloc’s latest step to re-engage the region.

The EU is eager to show it remains committed to the Balkan region despite public hostility at home to further eastern enlargement of the bloc following years of economic crisis, high unemployment and the rise of euroskeptic and populist parties.

The Western Balkan common market, which would remove barriers to trade, introduce standardized rules for businesses and lift obstacles to working across the region, would build on an existing regional free-trade accord, said European Commissioner Johannes Hahn, who oversees EU membership bids.

“We hope to get endorsement for this at the Trieste summit,” Hahn said of the next annual gathering of Western Balkans leaders with top EU officials.

“With the political will, we can have this done within a year,” he told reporters, adding that the European Commission, the EU’s executive arm, would help the process.

Pointing toward EU

The six Western Balkan nations, still scarred by wars fought in the 1990s and plagued by political and ethnic divisions, all hope eventually to join the EU. The six are Albania, Bosnia, Kosovo, Macedonia, Montenegro and Serbia.

The EU sees a common market of 20 million people across the six nations as a way to strengthen the Balkan economy, calm ethnic tensions, counter Russian influence and reinvigorate the region’s bid to join the bloc, diplomats say.

Hahn said the common market would help prepare countries for the EU’s single market, which breaks down barriers to trading across the bloc, giving unfettered access to consumers.

“This is an attempt to create a positive atmosphere in the Balkans, to create new business opportunities. It should be achievable,” Hahn said.

Hahn also stressed that any agreement would not remove all remaining tariff barriers because Kosovo relies on customs duties for a third of its revenues.
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Qatar’s currency came under pressure on Tuesday as Gulf Arab commercial banks started holding off on business with Qatari banks because of a diplomatic rift in the region.

Banking sources said some banks from Saudi Arabia, the United Arab Emirates and Bahrain delayed letters of credit and other deals with Qatari banks after their governments cut diplomatic ties and transport links with Doha on Monday, accusing Qatar of backing terrorism.

Saudi Arabia’s central bank advised banks in the kingdom not to trade with Qatari banks in Qatari riyals, the sources told Reuters. The central bank did not respond to a request for comment.

Qatar has dismissed the terrorism charge and welcomed a Kuwaiti mediation effort. Doha, the world’s biggest liquefied natural gas exporter, says it has enough reserves to support its banks and its riyal currency, which is pegged to the dollar.

Qatari banks have been borrowing abroad to fund their activities. Their foreign liabilities ballooned to 451 billion riyals ($124 billion) in March from 310 billion riyals at the end of 2015, central bank data shows.

So any extended disruption to their ties with foreign banks could potentially threaten a funding crunch for some Qatari banks. Banks from the UAE, Europe and elsewhere have been lending to Qatari institutions.

Gulf banking sources, who declined to be named because of political sensitivities, said Saudi Arabian, UAE and Bahraini banks were postponing deals until they received guidance from their central banks on how to handle Qatar.

“We will not take action without central bank guidance, but it is wise to evaluate what you give to Qatari clients and hold off until there is further clarity,” said a UAE banker, adding that trade finance had stalled for the time being.

The sources said the UAE and Bahraini central banks had asked banks under their supervision to report their exposure to Qatari banks. The UAE and Bahraini central banks did not reply to requests for comment.

Reserves

With an estimated $335 billion of assets in its sovereign wealth fund and its gas exports earning billions of dollars every month, Qatar has enough financial power to protect its banks.

“We are watching the financial sector very closely. If the market needs liquidity, the central bank will definitely provide liquidity,” a Qatari central bank official told Reuters.

Nevertheless, losing some of their foreign business links could be uncomfortable for Qatari banks because they have been expanding their loans faster than other banks in the six-nation Gulf Cooperation Council. To fund this, they have been seeking loans and deposits from the rest of the GCC.

Among large banks, Doha Bank and Qatar Islamic Bank (QIB) are the most exposed to GCC deposits, with QIB obtaining a quarter of its deposits from the GCC, said Olivier Panis, analyst at Moody’s Investors Service.

“We need to look into the maturity of those deposits but if they’re short-term deposits, this could expose the banks rapidly to reduced confidence from GCC institutions,” he said.

Doha Bank and QIB did not respond to requests for comment.

Because of such worries, the Qatari riyal fell in the spot market on Tuesday to 3.6470 against the U.S. dollar, its lowest level since June 2016, although it later rebounded to 3.6405, almost equal to its official peg of 3.64.

It also fell slightly in the one-year forwards market, where traders bet on rates 12 months from now.

The riyal’s drop “is based on speculation,” the Qatari central bank official said, adding Doha had a “huge cushion” of foreign currency to support the riyal if necessary.

A commercial banker in fellow GCC state Kuwait, which did not sever diplomatic ties with Qatar, said on Tuesday that business with Qatari institutions was continuing as normal.

But there were signs that Qatar’s financial ties might be damaged well beyond the Gulf. Some Sri Lankan banks stopped buying Qatari riyals, saying counterpart banks in Singapore had advised them not to accept the currency.

In Egypt, which also cut diplomatic and transport ties with Qatar, some banks resumed dealing in Qatari riyals after halting trade on Monday, but others appeared to be continuing to limit transactions with Doha.

Banks reducing their business with Qatar could lose out financially, but the damage looks likely to be relatively minor.

Panis at Moody’s estimated under 2 percent of Saudi banking sector assets were related to Qatar and the figure was around 5 percent for Bahrain, while the UAE’s exposure was also small.

 
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Cities are pushing back on the possibility of losing millions of dollars in U.S. anti-terrorism grants under President Donald Trump’s spending plan — the third straight White House that has moved to cut the funding.

The proposed budget would cut cash for the program from $605 million to nearly $449 million for the fiscal year beginning Oct. 1 and require cities such as New York, Los Angeles and Las Vegas to pay 25 percent of the grants.

The administration says it is proposing the cost-share system, similar to other grant programs, to “share accountability” with states and cities.

But lawmakers and local officials argue that reducing funding for the Urban Area Security Initiative would undercut efforts to maintain safe communities. Cities have spent the money on command centers, active-shooter training and personnel to patrol airports, transit hubs and waterways.

Big cities have been down this road before, with funding fluctuating over the years.

President George W. Bush created the grant program after the Sept. 11, 2001, attacks, but scaled it back in his second term. President Barack Obama’s proposed 2017 budget suggested slashing the funding from $600 million to $330 million.

In each instance, local politicians reacted with outrage and questioned the wisdom of taking away money in the fight against terrorism. This year, Congress ignored Obama’s guidance and increased funding by $5 million.

But some cities that have received grants in previous years have not spent all the money, another reason the White House says the changes are needed.

The proposed cuts came a day after the deadly Manchester, England, concert bombing and the same day authorities in Las Vegas tried to ease concerns about the city being targeted in a recent Islamic State propaganda video. It encouraged knife and vehicle attacks and featured images of Sin City, Times Square in New York and banks in Washington, D.C.

Law enforcement officials in Orlando, Florida, told a congressional committee weeks after a nightclub became the site of the worst mass shooting in modern U.S. history that central Florida had missed out on needed training and opportunities to buy equipment because it had not made the cut to receive funding.

Grants are awarded to the highest-ranked urban areas on a list determined by risk of terrorist threats based on past plots or a known presence; whether its infrastructure is a valuable target; and the consequence of an attack on the population, economy or national security.

Last year, the 29 highest-ranked metro areas that applied for a grant received funding.

The Las Vegas area has spent the money on training and equipment for bomb and hazardous-material squads along with computer software and hardware at a law enforcement command center.

Las Vegas received almost $3 million in fiscal year 2016. Irene Navis, planning coordinator and assistant emergency manager in Nevada’s Clark County, said the area would be able to meet the proposed 25 percent cost-share requirement.

“Fortunately, not one agency is going to get the whole amount; it’s split up,” Navis said. “So, for one agency, it might be that they get $25,000 for equipment and the match is really small. Agencies that get a large amount of money, that’s something that they would have to consider. But, in general, in our urban area, it would not be a problem.”

U.S. Rep. Dina Titus, a Democrat whose district includes the Las Vegas Strip, called the funding change a “pay-to-play scheme.”

“It is unimaginable that the administration believes southern Nevada’s security will be improved by cutting vital programs that protect residents and travelers in our community,” she said.

But the government questions why state and local governments aren’t spending all the money if it’s so important.

“The federal government cannot afford to over-invest in programs that state and local partners are slow to utilize when there are other pressing needs,” according to a written justification from the Trump administration.

The office of Sen. Chuck Schumer, the New York Democrat who has sparred with Obama and Trump on the grants, says that because of government procurement rules, it can take time for cities and states to spend the money. But he says that does not mean they have not allocated the money or don’t need it.

New York City received the largest grant last year at more than $178 million, followed by Chicago, Los Angeles and Washington, D.C.

“America’s cities are critical partners in the fight against terrorism — and taking away this funding would undermine the national priority to secure the homeland,” Los Angeles Mayor Eric Garcetti, a Democrat, said in a statement.
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Global airlines made a full-throated defense of globalization on Monday at their largest annual gathering, vowing not to give up on climate change agreements and calling for a swift resolution of a diplomatic rift threatening air travel in the Middle East.

Missing from the general meeting of the International Air Transport Association in Mexico was Qatar Airways Chief Executive Officer Akbar Al Baker. Usually a star of the show, he appeared to have left the summit amid a dispute between Arab powers.

Asked about Saudi Arabia and Bahrain’s move to ban Qatari planes from their airports and airspace, IATA Director General Alexandre de Juniac called for openness.

“We would like borders to be reopened, the sooner the better,” he told reporters, expanding on earlier remarks in the opening session.

“Aviation is globalization at its very best,” he had told executives from IATA’s more than 200 airlines. “As aviation’s leaders, we must bear witness to the achievements of our connected world.”

Qatar Airways could not be reached for comment.

The Arab rift was a stark reminder of the political risks to the airlines, which have run up healthy profits even as the global consensus they rely upon comes under the threat of nationalist and protectionist political currents.

Forecasting a third straight year of robust earnings, IATA raised its 2017 industry profit outlook on Monday to $31.4 billion, up from a previous forecast of $29.8 billion.

The IATA also raised its outlook for 2017 industry revenue to $743 billion from $736 billion on expectations that the global economy will post its strongest growth in six years.

The forecast underscored a new golden age for airlines’ profitability even as carriers scramble to meet fast-changing electronics restrictions, pressure to limit emissions and unprecedented scrutiny on social media over their every mistake.

A United Nations representative urged airline leaders to stand by an industry emissions accord known as CORSIA even as U.S. President Donald Trump breaks with a climate pact struck in Paris last year.

“We need to promote implementation of this historic agreement,” said Olumuyiwa Benard Aliu, president of the U.N.’s International Civil Aviation Organization.

IATA’s de Juniac said the airlines would hold fast to their commitments.

“The very disappointing decision of the U.S. to withdraw from Paris is not a setback for CORSIA,” he told the meeting.  “We remain united behind CORSIA and our climate change goals.”
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The U.S. Supreme Court on Monday scaled back the Securities and Exchange Commission’s power to recover ill-gotten profits from defendants’ misconduct, handing Wall Street firms a victory and dealing another blow to the regulator’s enforcement powers.

In a 9-0 ruling, the Supreme Court found that the SEC’s recovery remedy known as “disgorgement” is subject to a five-year statute of limitations. The justices sided with New Mexico-based investment adviser Charles Kokesh, who previously was ordered by a judge to pay $2.4 million in penalties plus $34.9 million in disgorgement of illegal profits after the SEC sued him.

The decision marked the second time since 2013 that the Supreme Court has reined in the SEC’s enforcement powers. In the prior case, called Gabelli v. SEC, the justices unanimously ruled that civil monetary penalties are also subject to a five-year time bar.

The ruling represented a major victory for Wall Street firms, whose Securities Industry and Financial Markets Association trade group had urged the justices to curb the SEC’s powers in order to provide more certainty and predictability to the enforcement process.

Writing for the court, Justice Sonia Sotomayor said that disgorgement counts as a penalty and is therefore bound by a five-year statute of limitations that already applies to “any civil fine, penalty or forfeiture.”

The SEC disgorgement process “bears all the hallmarks of penalty: It is imposed as a consequence of violating a public law and is intended to deter, not to compensate,” Sotomayor wrote.

“We are pleased with the Supreme Court’s opinion today, which grants important protection to defendants facing enforcement actions by the SEC and other agencies,” said Adam Unikowsky, one of Kokesh’s lawyers.

An SEC spokesman declined to comment on the ruling.

Kokesh was sued by the SEC in 2009 for misappropriating investors’ money. His penalties covered conduct within the five-year statute of limitations, but the disgorgement covered conduct that largely occurred outside that time frame.

Kokesh appealed to the Supreme Court after losing at the Denver-based 10th U.S. Circuit Court of Appeals. Kokesh’s attorney argued that a disgorgement in the case constituted a punitive “forfeiture” that is time-barred.

The Justice Department argued that disgorgement is equitable relief that is not considered a punishment, but merely restores the defendant to the same position he was in prior to when the misconduct occurred.

Nick Morgan, a Los Angeles-based lawyer with the Paul Hastings law firm who represents clients being investigated by the SEC, said the ruling will especially affect complicated cases that require more time for the SEC to investigate.

“For the more complex cases, this will be a sea change for them, they will have to move more quickly,” Morgan said.
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U.S. Commerce Secretary Wilbur Ross on Monday extended the deadline for U.S.-Mexico sugar trade negotiations by 24 hours, and sources on either side of the spat said U.S. industry added new demands after the governments struck a provisional deal.

Ross said extra time was needed to complete “final technical consultations” for a deal. At stake is the possibility of stiff U.S. duties and Mexican retaliation on imports of American high-fructose corn syrup ahead of wider trade talks expected in August.

An agreement in Washington would end a year of wrangling over Mexican sugar exports. The latest talks began in March, two months after President Donald Trump took power vowing a tougher line on trade to protect U.S. industry and jobs.

They are seen as a precursor to the more complex discussions on the North American Free Trade Agreement between the United States, Mexico and Canada.

“The two sides have come together in quite meaningful ways, but there remain a few technical details to work out,” Ross said in a statement as time was running out on a Monday deadline.

“We are quite optimistic that our two nations are on the precipice of an agreement we can all support, and so have decided that a short extension of the deadline is in everyone’s best interest.”

Ross did not provide details of the issues yet to be resolved in his statement.

ICE U.S. domestic raw sugar futures for July delivery finished down 2.9 percent at 27.66 cents per lb, in the largest one-day loss in over a year.

One Mexican official familiar with the talks described what was still being discussed as details of “implementation” of the main points already agreed.

The official and three other sources with direct knowledge of the talks earlier said an agreement had been struck between the governments. Another Mexican official and a U.S. industry source said the U.S. sugar industry later came back with additional demands outside of the terms agreed on earlier.

Those demands included changes to a “first refusal right” that would allow Mexico to sell U.S. refiners any additional sugar they needed beyond agreed quotas, one of the Mexican officials said.

That source said the cane refiner ASR Group, a partnership that includes the politically connected Fanjul family, was active in raising the new requirements. The Fanjuls own Domino Sugar, C&H, and Florida Crystals.

ASR Group declined to comment on its involvement in the talks.

In an earlier attempt to break the impasse, U.S. Commerce Secretary Ross came close to hammering out a compromise deal before a deadline in May, but that also fell through when the U.S. sugar lobby upped pressure on U.S. lawmakers, said two sources familiar with the talks.

The powerful lobby also includes Imperial Sugar, owned by Louis Dreyfus, and U.S. cane and beet growers.

A Washington-based source familiar with the negotiations said that the two sides had “come together” on the four largest issues separating the U.S. and Mexican sugar industries, but some technical details still needed to be worked out. The person declined to elaborate.

The agreed terms would lower the proportion of refined sugar Mexico can export to the United States to 30 percent of total exports, from 53 percent, one of the Mexican government sources said.

The agreement would also cut the quality of Mexico’s crude sugar exports to 99.2 percent, from 99.5 percent, the source said, tackling a key complaint of U.S. refiners, who have said Mexican crude sugar was close to refined and going straight to consumers.

It also contemplated an increase on the price paid for Mexican sugar, to 23 cents per lb for raw sugar and 28 cents for refined, the source said.

Corn refiners including Archer Daniels Midland, Cargill, Corn Products International and Tate & Lyle would be affected if a final deal is not reached and Mexico resorted to retaliatory tariffs against fructose syrup.
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