Day: January 24, 2018

Gulf Arab officials used the World Economic Forum in Davos on Wednesday to slam Iran for what they said was its destabilizing behavior in the region,

taking advantage of Tehran’s conspicuous absence at the annual event.

Iranian Foreign Minister Mohammad Javad Zarif had been a regular presence at the annual forum that brings together top politicians, CEOs and bankers, and he often clashed with his Gulf Arab counterparts at competing sessions. But this year, he did not show.

As a result, the platform was wide open for Saudi Arabia, the United Arab Emirates and Bahrain to criticize Iran.

Iran, the leading Shiite Muslim power, and Sunni Muslim Saudi Arabia, a key U.S. ally, are rivals for influence in the Middle East, where they support opposing sides in Yemen, Syria, Iraq and Lebanon.

“In the Middle East, we have two competing visions … and the vision of darkness is sectarianism. It’s trying to restore an empire that was destroyed thousands of years ago. It’s using sectarianism and terrorism in order to interfere in the affairs of other countries,” Saudi Foreign Minister Adel al-Jubeir told a panel at the forum. “History has shown that light always prevails over darkness.”

Iran denies interference in Arab countries’ affairs. Last year at Davos, Zarif said Iran and Saudi Arabia should be able to work together to help end conflicts in Syria and Yemen.

Yemeni conflict

Saudi-led forces, which back the Yemeni government, have fought the Iran-allied Houthis in Yemen’s civil war. Saudi Arabia’s crown prince has described Iran’s supply of rockets to the Houthis as “direct military aggression” that could be an act of war.

Lebanon’s Prime Minister Saad al-Hariri gave a more measured critique. With his coalition government, which includes the Iran-backed Hezbollah group, he has had to tread carefully. His Saudi allies accuse Hezbollah of waging war

across the Middle East as agents of Iran.

“Iran is a country that we need to deal with. … As prime minister, I would like to have the best relationship with Iran, but I would like it state to state,” Hariri said at a separate panel.

“Iran represents a challenge in the region, maybe, but dialogue also is a part of resolving these issues,” Hariri said.

German Defense Minister Ursula von der Leyen, while acknowledging that Berlin had issues with Iran, used the moment to defend the 2015 Iran nuclear deal sealed with world powers, which U.S. President Donald Trump has threatened to abandon.

“We have many worries about Iran, without any question, and we see a lot of problems with Iran, without any question. But we think that the Iran [nuclear] deal encapsulates the core problem, and therefore we think we should stick to the deal as long as Iran sticks to the deal, too,” she said.
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Toys R Us, a nostalgic favorite even as many shoppers moved to Amazon and huge chains like Walmart, plans to close up to 182 stores, or about 20 percent of its U.S. locations.

The company that once dominated toy sales in the U.S. has been operating under bankruptcy protection since last fall, when it filed for Chapter 11 under the weight of $5 billion in debt. Toys R Us operates about 900 stores in the U.S., including Babies R Us stores.

Loyal fans lamented the closing of their hometown stores. Many said they liked to shop at Toys R Us because of the atmosphere and the variety of toys they found.

“It’s an experience,” said Bryan Likins of Indianapolis, who takes his 4-year-old daughter to Toys R Us. “She likes to walk through the store and point to different toys she liked.”

Likins said he remembered playing with the video games and trying out bikes with his brothers at Toys R Us, and he liked continuing that with his child. He said he shopped on Amazon only for specific items that he wasn’t sure other toy sellers carried.

The store closings will begin in February and the majority of locations identified for closure, which include Babies R Us stores, will go dark by mid-April. At some other locations, Toys R Us and Babies R Us stores will be combined. The bankruptcy court still must sign off on the closings.

Toys R Us wouldn’t say how many jobs were to be cut. It said some employees would be moved to other stores and those who could not be moved would severance pay.

Ease of shopping

Chairman and CEO Dave Brandon said Wednesday that tough decisions were required to save Toys R Us. He acknowledged “operational missteps” during the critical holiday shopping season, when shopping at its stores and online wasn’t as easy as it should have been.

“The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company that will provide the level of service and experience you should expect,” he said in a letter to customers.

Gerrick Johnson, an analyst at BMO Capital Markets, had estimated that holiday sales at the company’s North America stores were down more than 10 percent. He attributed much of the decline to people’s confusion around the bankruptcy filing and a fear of buying gifts at Toys R Us because they thought they wouldn’t be able to return them if necessary. Johnson also blamed a weak marketing campaign and email promotions that didn’t create a sense of urgency.

Toys R Us, based in Wayne, New Jersey, has struggled with debt since private-equity firms Bain Capital, KKR & Co. and Vornado Realty Trust took it private in a $6.6 billion leveraged buyout in 2005. The plan had been to take the company public again, but weak sales have prevented that from happening. With such debt levels, Toys R Us has not had the financial flexibility to invest in its business.

Meanwhile, other stores like Target have been increasing their assortment of toys.

Toys R Us closed its flagship store in Manhattan’s Times Square, a huge tourist destination, about two years ago.

While its sales numbers have been shrinking, Toys R Us still sells about 20 percent of the toys bought in the U.S., according to Stephanie Wissink, an analyst at Jefferies LLC.

Competitive pressures will force the company to examine all its stores, and more will likely be shuttered over the next year or two, Wissink said. Moody’s lead retail analyst Charlie O’Shea said the closings would let Toys R Us “focus all of its operating efforts on only its best locations.”

Ryan McLaine, mother of a 4-year-old boy, is disappointed that her favorite Toys R Us store in Exton, Pennsylvania, was on the list of closures.

“We would always like to reward him. It was always fun to take him to the big store to see what he would like,” she said. “Now, we have to figure out what to do next.”

She said the next closest Toys R Us location is in King of Prussia, and it’s not well-maintained. And she doesn’t like to shop for toys on Amazon.com because she likes to get a reaction from her son before she buys.

A ‘category killer’

Toys R Us reigned supreme in the 1980s and early 1990s, when it was one of the first of the “category killers” — a store totally devoted to one thing: toys. Its scale gave it leverage with toy sellers and it disrupted general merchandise stores and mom-and-pop shops. Children sang along with commercials featuring the mascot, Geoffrey the giraffe.

Now Toys R Us and other category killers like the now-defunct Sports Authority, Borders and Circuit City are being upended by Amazon and online shopping. More than three dozen retailers sought bankruptcy protection last year, due in large part to radical shifts in where people shop, and what they buy.

GlobalData Retail estimates that nearly 14 percent of toy sales were made online in 2016, more than double the level five years ago.

Jonathan Cordell, the father of an 8-month-old boy, said he does a lot of price comparisons online, jumping back and forth between Babies R Us and Amazon. But he likes to buy baby clothes at Babies R Us in Queens’ College Point section, which is on the list of stores to be closed.

“I usually take advantage of the price matching. I could find clothing at 50 percent off. You can’t find that on Amazon,” he said.

Toys R Us has been hurt by the shift to mobile devices taking up more play time. Some toy makers have struggled as well, with talk last year about the possibility of a merger between Mattel and Hasbro, the nation’s largest toy makers.

Wissink estimates that Toys R Us accounts for about 11 percent of Mattel’s annual sales and about 9 percent of Hasbro’s annual volume. Shares of Mattel Inc. fell while Hasbro Inc.’s stock was up in afternoon trading.
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Protesters have been pouring into the streets in several Swiss cities to express opposition to U.S. President Donald Trump’s attendance at this week’s World Economic Forum in Davos.

Trump arrives Thursday in the Swiss ski resort and is slated to present his “America First” message in a speech Friday to global business and political leaders.

On the eve of his arrival, members of Trump’s economic team previewed the strategy for increasing U.S. global competitiveness.

Treasury Secretary Steve Mnuchin, one of 10 Cabinet secretaries attending the gathering, endorsed a lower dollar, pushing the greenback to its lowest level in three years, according to the Bloomberg Dollar Index.

“Obviously, a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters at Davos.

A day after Trump imposed tariffs on imported solar-energy components and large washing machines, Mnuchin said he was not worried about what many see as a clash between Trump’s protectionist policies and the concept of globalism.

“This is about an ‘America First’ agenda, but ‘America First’ does mean working with the rest of the world” on free trade issues, Mnuchin said.

But many observers and analysts see an irreconcilable conflict of economic philosophies.

Gary Hufbauer, a senior fellow at Washington’s Peterson Institute for International Economics, expressed amusement at the prospect of the populist Trump speaking at a forum that has become a symbol of the growing consensus around an increasingly globalized world.

“It’s hard to square ‘America First’ with the Davos ethos of globalism, but Trump might put it this way: Every other country pursues its own interests first and foremost, while America makes concession after concession and carries burden after burden,” Hufbauer said in a written answer to a VOA request. “The time has come for America to act just like all the other countries represented in Davos.”

Presidential scholar Joshua Sandman of the University of New Haven likens Trump’s visit to the biblical story of Daniel in the Lion’s Den.

“Even though the Davos people are antithetical to his populist message, he wants to confront them and to establish the legitimacy of the American approach as he articulates it, which is to confront globalism and put American interests first,” Sandman said in a phone interview.

Briefing White House reporters this week, Trump’s chief economic adviser Gary Cohn said the president would use his speech at Davos to tell the world America is open for business. “We want the world to invest in America and create jobs for hardworking Americans,” he said.

“He’s going to talk to world leaders about making sure we all respect each other, we all abide by the laws, we all have free, fair, open, and reciprocal trade,” Cohn explained. “And if we live in a world where there are not artificial barriers, we will all grow and we will all help each other grow. And the president truly believes that.”

Political scientist Thomas Whalen of Boston University says Trump is unlikely to win many converts among the globalist crowd at Davos.

“Trump at Davos would be greeted about the same way an appearance by [disgraced Hollywood producer] Harvey Weinstein would go off at the Oscars,” Whalen said. “His approach to world affairs is anathema to those world leaders. We live in a 21st century interconnected globalized economy, and his idea of erecting trade barriers is going to unspool the entire system if left unchecked.”

Sideline meetings

The president ‘s schedule includes sideline meetings with several other world leaders, including British Prime Minister Theresa May. The president earlier canceled a planned trip to Britain for the opening of the new U.S. embassy in London, where he would be likely to face fierce protests. But National Security Adviser H.R. McMaster said Trump is prioritizing the meeting with May.

“We do have a special relationship,” McMaster said, adding that the meeting would touch on critical global issues, such as “the conflict in Syria, Iran’s destabilizing behavior, ways to address shortcomings in that Iran nuclear deal, and our shared goal of denuclearizing the Korean Peninsula.”

Trump also will meet the incoming African Union chairman, Rwanda’s President Paul Kagame, to “reaffirm the U.S.-Africa relationship and discuss shared priorities, including trade and security,” McMaster said.

The meeting comes weeks after Trump was reported to have used a vulgar slur to describe African countries during a conversation about immigration.

Trump will be the first U.S. president to attend the Davos forum since Bill Clinton in 2000. Other world leaders in attendance for the first time include Indian Prime Minister Narendra Modi and French President Emmanuel Macron.

German Chancellor Angela Merkel also will be there, but her advisers say she will not meet with Trump.

Economic adviser Cohn has attended several Davos meetings in his previous role as president of the Wall Street banking firm Goldman Sachs. Asked what Trump might find on his first trip to the Swiss resort that he would not expect, Cohn replied, “A lot of snow. Fourteen feet [4.25 meters] of snow.”
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The Trump administration is set to announce a raft of trade decisions over the next months, ranging from curbs on foreign imports of steel and aluminum to steps to clamp down on China’s alleged theft of intellectual property.

U.S. President Donald Trump has stressed his “America First” agenda in his first year in office and called for fairer, more reciprocal trade. He has blamed globalization for ravaging American manufacturing jobs as companies sought to reduce labor costs by relocating to Mexico and elsewhere.

Imported washing machines, solar panels

In its first major trade decision of the year, the administration slapped steep tariffs on imported washing machines and solar panels, boosting Whirlpool Corp. and dealing a setback to the renewable energy industry.

Monday’s decision imposed a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50 percent tariff on machines above that number. The tariff declines to 16 percent and 40 percent respectively in the third year.

The move punishes Samsung Electronics, which recently began washer production in South Carolina, and LG Electronics, which is building a plant in Tennessee.

The U.S. Solar Energy Industries Association on Tuesday warned that Trump’s move to slap 30 percent tariffs on imported panels would kill tens of thousands of jobs, raise the cost of going solar and quash billions of dollars of investment.

South Korea could push back by launching a complaint through the Geneva-based World Trade Organization, but that is likely to take years. Seoul could also raise it during current negotiations with the United States on modifying the U.S.-South Korea free-trade agreement, known as KORUS.

Steel

The U.S. Commerce Department sent its recommendations on ways to curb foreign steel imports to the White House on January 11. The report followed Trump’s decision, made several months after he took office, to open a Section 232 investigation (from Section 232 of the Trade Expansion Act of 1962) into whether steel imports threaten U.S. national security.

Trump has 90 days to decide on any potential action. He has promised that any actions will protect steelworkers from imports. Curbing excess steel production in China, which now supplies half of the world’s steel, would be a key goal of any action. Broad tariffs could, however, also affect steelmakers in Europe, Japan, South Korea and Turkey.

It is unclear when the decision on steel imports will be announced.

Aluminum

The Commerce Department has sent Trump the results of its national security investigation into aluminum imports. That Section 232 probe could see broad import restrictions imposed on lightweight metal. The White House has been debating whether to order broad tariffs or quotas on steel and aluminum, pitting administration officials who favor aggressive restrictions against those who favor a more cautious approach to avoid a run-up in prices.

It is unclear when Trump will make his decision.

​Intellectual property

Trump and his trade advisers are currently considering penalizing China under Section 301 of the 1974 trade law for its alleged theft of American intellectual property.

The 301 investigation would allow Trump to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.

Trump told Reuters in an interview on January 17 that he was considering imposing a big “fine” against China, but he did not elaborate on his answer.

U.S. businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms that have stolen ideas and software or forced them to turn over intellectual property as part of doing business in China.

A White House official told Reuters January 19 that Trump was particularly focused on the 301 investigation because it was “systemic” and covered a large swath of American businesses.

China could retaliate by weighing whether the actions are in line with WTO rules while ratcheting up pressure on U.S. businesses — for example, by buying from a European company such as Airbus instead of Boeing.
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