G20 Avoiding Commitment to Strong Free Trade Endorsements

Steven Mnuchin’s Official Portrait as the 77th U.S. Secretary of the Treasury.

US finance officials attending the G20 summit in Baden-Baden, Germany, refrained from signing a document committing the US to free trade as a policy. The refusal is a 180-degree departure from a decade-old policy of supporting free trade. The non-move stymied the chance of any deal from being forged. US intervention also led to any cooperative actions from taking place to stem the tide of climate change.

The talks between the world’s 20 most important world powers, known as the G20, ended with no joint position statement that would have definitively renewed the country’s long-standing promise to develop and nurture free trade among the nations.

US Treasury Secretary Steve Mnuchin led the US delegation and its push-back against free trade. As a result, the G20 finance ministers’ statement reneged on past commitments made by the body, including an unequivocal rejection of protectionism and a strident backing of free trade.

The statement the ministers did issue was a mildly worded, non-committal statement that said that the G20 countries “are working to strengthen the contribution of trade to their economies.”
Also conspicuously missing were the usual commitments to multilateral trade systems, like the World Trade Organization (WTO).

The summit and the G20 are both an informal forum and a non-binding body of nations. Statements do not obligate any of the countries to any particular policy or practice. However, the discussions between the G20 nations and the statements they publish do have and impact on economic and financial policy in the year to come.

Latest Trump Treasury Nominees

U.S. President Donald Trump recently announced nominees for the Treasury Department.  The nominees are managing directors, bankers and investment executives.  To date, some of the senior economic positions are held by former Goldman Sachs executives, Gary Cohn (National Economic Council Director) and Steven Mnuchin (Treasury Secretary).

One of the recent nominees for Deputy Treasury Secretary is Goldman Sachs banker Jim Donovan. He has been at Goldman Sachs since 1993 and has worked in a variety of fiscal strategic areas such as corporate strategy, investment banking and management. As the Deputy Treasury Secretary, James Donovan will work in Trump’s domestic policy agenda at the Treasury Department.

Another global investment bank executive, David Malpass, was also nominated to the Department, as Treasury Undersecretary for International Affairs.  He has worked in two previous administrations for George H. W. Bush and Ronald Reagan. He was Chief Economist at Bear Stearns and was Trump’s economic advisor during his Presidential campaign.

Another nominee is Sigal Mandelker, who is being nominated as Under Secretary for Terrorism and Financial Intelligence.  Like Donovan and Malpass, Mandelker also brings to the post legal experience.  He was once Clarence Thomas’ law clerk and he then worked at the Department of Justice in various roles.  During the George W. Bush administration, Mandelker advised the Secretary of Homeland Security as well.

GoPro Taking Aggressive Measures to Become Profitable

GoPro, the action camera manufacturer, has promised to cut 270 jobs, along with other measures, to get the company back to profitability. The company also pre-announced that its first-quarter earnings for 2017 would be at the high-end of guidance, coming to about $210 million. Operating expenses are to go down by over $200 million, and the company will return to EBITDA (Earnings before interest, taxes, depreciation, and amortization) profitability during 2017.

In response, the company’s stock rose by 11 percent after the news was announced.

Last quarter GoPro had previously guided revenue between $190 million and $120 million. Its operating expenses totaled between $168 million and $178 million (GAAP) for the same quarter. They reported a net loss of $116 million on $541 million in revenue for the year. The restructuring should give the company control of 10 million additional dollars.

“We’re determined that GoPro’s financial performance match the strength of our products and brand. Importantly, expense reductions preserve our product roadmap and we are tracking to full-year non-GAAP profitability in 2017,” said CEO Nick Woodman.

Surprising Facts About Refugees to the US

Immigrants on deck of steamer “Germanic.” Unknown photographer, 1887.

Immigration and how the US handles refugees seeking to live in the country of the free has been a hot subject in the news lately. Here are a few facts about refugees many people might not be aware of:

  • Refugees must repay the cost of the airfare to the United States. Although the government does pay for the flights of refugees to the US, that money is an interest-free loan which must be repaid as soon as the refugee begins to earn an income. That money is then funneled back into a fund that pays for additional refugees to be brought over.
  • Studies show that although there are costs involved in resettling refugees, the positive contribution they make to the economy balances out the expense. Money is spent mostly to provide social services like language and vocational training, healthcare and cash allowances. One study showed that in Cleveland, where 4,518 refugees were resettled between 2000 and 2012, 38 new businesses were started, yielding an additional 175 jobs and $12 million in spending in Cleveland in 2012.
  • Refugees must prove their status. International law states that a refugee is someone with a “well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it.” Being poor is not enough.
  • The process of resettlement is a long and arduous one. According to the World Bank Group, the average length of time a refugee waits in “limbo” until he is resettled is 10.3 years. The median is four years until a permanent home is found. Once the process of resettlement in the US begins, the minimum amount of time it takes is 18 months. Immigration lawyers say that it is not unusual for the process to take from four to eight years.

Intellectual Property Theft Costing US $600 Billion Each Year

NKIE & McDnoald’s [sic] sandals in China. Photo by Stephen Woolverton.
According to private watchdog group, the Commission on the Theft of American Intellectual Property, annual losses of intellectual property range from around $225 billion to as much as $600 billion. The breakdown is as follows:

  • Theft of Trade Secrets: between $180 billion and $540 billion.
  • Counterfeit Goods: between $29 billion and $41 billion.
  • Pirated Software: $18 billion.

China, including Hong Kong, is the biggest culprit, says the commission, accounting for about 87 percent of the counterfeit goods which are confiscated at the border. The report issued by the commission states that Chinese authorities actually encourage the theft of intellectual property.

The commission is headed by former governor of Utah and Republican presidential candidate Jon Huntsman, who was also a US ambassador to China; and a former director of US national intelligence, Admiral Dennis Blair.

“The vast, illicit transfer of American innovation is one of the most significant economic issues impacting U.S. competitiveness that the nation has not fully addressed,” Huntsman said. “It looks to be, must be, a top priority of the new administration.”