Amazon and eBay warned by MPs about VAT fraudsters

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Amazon and eBay are profiting from sellers who defraud UK taxpayers by failing to charge VAT, according to a report by MPs.

The report estimates up to £1.5bn has been lost from third-party sellers on online marketplaces not charging the tax on sales they make in the UK.

MPs in the Public Accounts Committee criticised HMRC for being “too cautious” in pursuing the “fraudsters”.

Amazon and eBay said they were working with HMRC on the issue.

Labour MP Meg Hillier, who chairs the committee, called online VAT fraud “hugely damaging” for British businesses and taxpayers.

She added that “the response of HMRC and the marketplaces where fraudsters operate has been dismal”.

‘Bewildering’

The fraud has increased because foreign firms selling goods to UK shoppers – usually via online marketplaces like Amazon and eBay – are keeping some of their stock in UK warehouses to provide next day delivery.

If items are dispatched from UK soil, the sellers have to charge VAT at 20%.

But many have not been, so undercutting genuine UK suppliers and reducing tax revenue, the committee’s report found.

Brexit will make the issue more complicated because of uncertainty over trading and customs, it added.

Both Amazon and eBay told the committee they took action to remove “bad actors” from their sites.

But the report said it was “bewildering that these big companies have taken such little action to date”.

It added that Amazon and eBay, amongst other online marketplaces, “continue to profit from fraudulent activities taking place on their sites” by charging the sellers a commission.

In the hearings a pack of lightbulb socket converters and a hose for a Dyson vacuum cleaner were held up as examples of products sold without VAT.

‘Above and beyond’

The report’s conclusions include:

  • The UK’s tax agency, HMRC, should set up an agreement with online marketplaces by March next year to tackle the issue
  • The websites should require non-EU sellers – which dispatch goods already in the UK – to provide a valid VAT number
  • HMRC should “inject more urgency” by making more extensive use of its existing powers

HMRC said it had introduced new rules last year to hold online marketplaces liable for unpaid VAT by overseas sellers, leading to a ten-fold rise in the number of sellers registering for VAT.

“The new reforms will secure an extra £875m in tax to help pay for vital public services,” an HMRC spokesman said.

In a statement Amazon said it was reviewing the report and supported efforts to ensure sellers across all marketplaces were VAT compliant.

An eBay spokesperson said it was going “above and beyond” HMRC’s requirements to provide a “fair marketplace for all our buyers and sellers”.

China’s Xi pledges to build ‘modern socialist country’

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BEIJING (Reuters) – Chinese President Xi Jinping opened a critical Communist Party Congress on Wednesday with a pledge to build a “modern socialist country” that will never copy the political systems of others and will remain open to the world.

Xi’s wide-ranging speech kicked off the twice-a-decade congress, a week-long, mostly closed-door conclave that will culminate with the selection of a new Politburo Standing Committee that will rule China’s 1.4 billion people for the next five years.

He set out his vision as he addressed more than 2,000 delegates in Beijing’s cavernous Great Hall of the People, including 91-year-old former president Jiang Zemin.

“Through a long period of hard work, socialism with Chinese characteristics has entered a new era, this is a new historical direction in our country’s development,” Xi said in a speech carried live across the nation on state television.

China will relax market access for foreign investment and expand access to its services sector, as well as deepen market-oriented reform of its exchange rate and financial system, while at the same time strengthening state firms, he said.

China’s political system is the broadest, most genuine, and most effective way to safeguard the fundamental interests of the people, Xi said.

“We should not just mechanically copy the political systems of other countries,” he said.

FIRM ON GRAFT, TAIWAN

Xi praised the party’s successes, particularly his high-profile anti-graft campaign.

“The fight against corruption has formed an overwhelming posture and strengthened in development,” he said.

Xi has waged a relentless fight against deep-rooted graft since assuming power five years ago, with more than a million officials punished and dozens of former senior officials jailed.

He also said China had firmly opposed and prevented independence for self-ruled Taiwan, claimed by Beijing as its own, over the past five years.

While the speech was high on aspiration and short on policy specifics, its language will be parsed for signals or policy directives, including on the direction of reforms for the world’s second-largest economy.

China’s President Xi Jinping speaks during the opening session of the 19th National Congress of the Communist Party of China at the Great Hall of the People in Beijing, China October 18, 2017. REUTERS/Aly Song

Xi has consolidated power swiftly since assuming the party leadership in 2012, locking up political rivals for corruption, restructuring the military and asserting China’s rising might on the world stage.

Focus at the congress will be on how Xi plans to put his expanded authority to use.

Key questions include whether Xi ally and top corruption-buster Wang Qishan will stay on past traditional retirement age and to what extent Xi will promote allies to senior positions.

Close attention will also be paid to any moves that would enable Xi to stay on in a leadership capacity after his second term ends in 2022. That could include resurrecting the position of party chairman, a title that would put him on par with Mao Zedong.

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One of the most important signals for that would be whether – or how often – Xi is referred to as “lingxiu”, or leader. That honorific has been bestowed on only two others since the founding of the People’s Republic of China in 1949: Mao and his short-lived successor, Hua Guofeng.

Such decisions will be formally announced at the end of the congress next week.

WILL XI BE “CROWNED”?

Another key measure of Xi’s power will be whether he manages to have his name “crowned” in the party constitution, elevating him to the level of previous leaders exemplified by Mao Zedong Thought and Deng Xiaoping Theory.

As with other major set-piece events held in the capital, Beijing has been blanketed with security, with long lines at some suburban subways stations as passengers waited to go through metal detectors and be patted down.

Coverage in state media and across the city has kicked into overdrive, with large red banners plastered around Beijing welcoming the congress, while censors have stepped up already tight monitoring of the internet.

Tencent Holdings Ltd’s WeChat, China’s top social media platform with more than 960 million users, released a short statement late on Tuesday saying that, due to “system maintenance”, users will be unable to modify profile pictures, nicknames and tag lines until the end of the month.

The disabled features are sporadically used to show solidarity for popular social and political causes.

Tencent recently ramped up controls on chat services, making users legally liable for content deemed offensive to Communist Party values, as well as updating the firm’s privacy policies to clarify that message data is made available to government agencies.

Additional reporting by Philip Wen, Michael Martina, Cate Cadell, Kevin Yao and Elias Glenn; Writing by Ben Blanchard; Editing by Paul Tait

U.S. senators reach bipartisan deal on Obamacare, Trump indicates support

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WASHINGTON (Reuters) – Two U.S. senators on Tuesday reached a bipartisan agreement to shore up Obamacare for two years by reviving federal subsidies for health insurers that President Donald Trump planned to scrap, and the president indicated his support for the plan.

The deal worked out by Republican Senator Lamar Alexander and Democratic Senator Patty Murray would meet some Democratic objectives, including reviving the subsidies for Obamacare and restoring $106 million in funding for a federal program that helps people enroll in insurance plans.

In exchange, Republicans would get more flexibility for states to offer a wider variety of health insurance plans while maintaining the requirement that sick and healthy people be charged the same rates for coverage.

The Trump administration said last week it would stop paying billions of dollars to insurers to help lower-income Americans pay medical expenses, part of the Republican president’s effort to dismantle Obamacare, former Democratic President Barack Obama’s signature healthcare law.

The subsidies to private insurers cost the government an estimated $7 billion this year and were forecast at $10 billion for 2018. Trump’s move to scuttle them had raised concerns about chaos in insurance markets.

Trump hoped to make good on his campaign promise to dismantle the law when he took office in January, with Republicans, who pledged for seven years to scrap it, controlling Congress. But he has been frustrated with their failure to pass legislation to repeal and replace it.

Obamacare, formally known as the Affordable Care Act, extended health insurance coverage to 20 million Americans. Republicans say it is ineffective and a massive government intrusion in a key sector of the economy.

The Alexander-Murray plan could keep Obamacare in place at least until the 2020 presidential campaign starts heating up.

“This takes care of the next two years. After that, we can have a full-fledged debate on where we go long-term on healthcare,” Alexander said of the deal.

It is unclear whether the agreement can make it through Congress.

Chuck Schumer, the top Senate Democrat, said it had “broad support” among senators in his party, but it was harder to gauge possible support among Republicans.

Moderate Republican Senator Susan Collins, who helped sink earlier Obamacare repeal legislation, voiced backing for the new plan, but conservative Republicans may be less welcoming.

Senator Patty Murray (D-WA), flanked by Senate Minority Leader Chuck Schumer (D-NY), speaks to reporters on following a policy luncheon on Capitol Hill in Washington, U.S. October 17, 2017. REUTERS/Eric Thayer

Senator Bernie Sanders, an independent who ran for the Democratic presidential nomination in 2016, threw his weight behind the effort. In an interview with Reuters, Sanders said Alexander was a “well-respected figure” known for bipartisanship and that the Tennessee senator’s reputation would help propel the legislation through the Senate.

The willingness of Sanders, a liberal champion, to offer his support of a deal with Republicans that could allow states to change some Obamacare requirements provided a boost to the Alexander-Murray effort. ”We are going to overturn what Trump is trying to do,” Sanders said.

Schumer urged Senate Majority Leader Mitch McConnell to bring the plan to a vote on the Senate floor and urged the House of Representatives to take it up then as quickly as possible so Trump can sign it.

TRUMP STILL SEEKS LONG-TERM SOLUTION

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Trump, during comments at the White House, suggested he could get behind the Alexander-Murray plan as a short-term solution.

In remarks later at the Heritage Foundation, a conservative think tank, Trump commended the work by Alexander and Murray, but said: “I continue to believe Congress must find a solution to the Obamacare mess instead of providing bailouts to insurance companies.”

Trump said earlier he wanted lawmakers, once they completed a major tax reform effort, to again take up broader legislation that failed in the Senate last month that would divvy up federal healthcare money as block grants to states.

Murray is the top Democrat on the Senate Health, Education, Labor and Pensions Committee, and Alexander is its chairman.

She said the two were able to find common ground on the steps aimed at stabilizing the insurance markets created under Obamacare and to “help protect families from premium spikes as a result of the sabotage we have seen from this administration.”

According to a document seen by Reuters, the plan would make it easier for states to get waivers approved that would allow them to offer cheaper healthcare plans, including catastrophic health plans, which cover a limited set of benefits and are currently only available to those under 30.

Shares of U.S. hospital operators, including Tenet Healthcare Corp and HCA Healthcare Inc, moved higher after news of the deal. Tenet shares closed 5.3 percent higher, while HCA rose 2.2 percent. Shares of some U.S. health insurers also extended their gains on the day, with Anthem Inc finishing up 1.9 percent and Centene Corp gaining 3.2 percent.

Analyst Brian Tanquilut of global investment banking firm Jefferies, who focuses on hospital companies, said that if the deal is passed in Congress, it should stabilize the Obamacare insurance exchanges and improve their viability.

“Hospitals will avoid a potential spike in bad debt and charity care next year,” Tanquilut said. “This is obviously a good step. It’s bipartisan and guaranteed for two years.”

Reporting by Yasmeen Abutaleb and Richard Cowan; Additional reporting by Roberta Rampton in Washington and Lewis Krauskopf in New York; Writing by Will Dunham and Jeff Mason; Editing by Jonathan Oatis and Peter Cooney

Islamic State defeated in its Syrian capital Raqqa

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RAQQA, Syria (Reuters) – U.S.-backed militias in Syria declared victory over Islamic State in its capital Raqqa on Tuesday, raising flags over the last jihadist footholds after a four-month battle.

The fighting was over and the alliance of Kurdish and Arab militias was clearing the city’s stadium of mines and any remaining militants, said Rojda Felat, commander of the Raqqa campaign for the Syrian Democratic Forces (SDF).

A formal declaration of victory in Raqqa will soon be made, once the city has been cleared of mines and any possible Islamic State sleeper cells, said SDF spokesman Talal Selo.

In Washington, the U.S. military said that about 90 percent of Raqqa had been retaken from Islamic State but it expected the SDF to face pockets of resistance.

The fall of Raqqa, where Islamic State staged euphoric parades after its string of lightning victories in 2014, is a potent symbol of the jihadist movement’s collapsing fortunes.

Islamic State has lost much of its territory in Syria and Iraq this year, including its most prized possession, Mosul. In Syria, it has been forced back into a strip of the Euphrates valley and surrounding desert.

The SDF, backed by a U.S.-led international alliance, has been fighting since June to take the city which Islamic State used to plan attacks abroad.

A Reuters witness said militia fighters celebrated in the streets, chanting slogans from their vehicles.

The fighters and commanders clasped their arms round each other, smiling, in a battle-scarred landscape of rubble and ruined buildings around the main square.

The flags in the stadium and others waved in the city streets were of the SDF, its strongest militia the Kurdish YPG, and the YPG’s female counterpart, the YPJ.

Fighters hauled down the black flag of Islamic State, the last still flying over the city, from the National Hospital near the stadium.

“We do still know there are still IEDs (improvised explosive devices) and booby traps in and amongst the areas that ISIS once held, so the SDF will continue to clear deliberately through areas,” said Colonel Ryan Dillon, a spokesman for the coalition.

In a sign that the four-month battle for Raqqa had been in its last stages, Dillon said there were no coalition air strikes there on Monday.

Speaking with reporters in Washington later on Monday via video conference, Dillon said about 100 Islamic State fighters still remained in Raqqa.

“We expect our Syrian Democratic Force partners to hit pockets of resistance as the final parts of the city (are) cleared,” Dillon added.

TRAPPED BY FIGHTING

Fatima Hussein, a 58-year-old woman sitting on a pavement smoking a cigarette, said she had emerged from her house after being trapped for months by the fighting. Islamic State had killed her son for helping civilians leave the city, she said.

The fight for Raqqa has shattered much of the city. Houses, apartment blocks and public buildings were flattened by air strikes or holed by shellfire.

On Tuesday the international charity Save the Children said many of the 270,000 people who fled the fighting would likely be stuck in aid camps for months or years.

Fighters of Syrian Democratic Forces march along a road after Raqqa was liberated from the Islamic State militants, in Raqqa, Syria October 17, 2017. REUTERS/Erik De Castro

Children who fled were haunted by nightmares from the violence they witnessed, including Islamic State beheadings and coalition air strikes, it said.

The SDF has said that after the Raqqa battle ends, it would hand over control to a civil council set up by its political allies. It echoes the pattern in other territory the YPG and its allies have taken across northern Syria.

The State Department said the United States would help clear rubble and restore basic services in Raqqa.

“We will assist and take, essentially, the lead in bringing back the water, electricity and all of that,” State Department spokeswoman Heather Nauert told a briefing. “But eventually the governance of the country of Syria is something that I think all nations remain very interested in.”

Kurdish influence in the future of the mainly Arab city has been a sensitive issue for some activists from Raqqa and for Turkey. Ankara views the YPG militia as an extension of the PKK that has waged an insurgency on Turkish soil for three decades.

The SDF took the National Hospital after fierce fighting overnight and early on Tuesday, said spokesman Mostafa Bali.

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“During these clashes, the National Hospital was liberated and cleared from the Daesh mercenaries, and 22 of these foreign mercenaries were killed there,” said Bali, using the Arabic acronym for Islamic State.

An SDF field commander who gave his name as Ager Ozalp said three militiamen had been killed on Monday by mines that have become an Islamic State trademark in its urban battles.

Another field commander, who gave his name as Abjal al-Syriani, said SDF fighters had found burned weapons and documents in the stadium.

The stadium and hospital became the last major positions held by Islamic State after some of its fighters quit, leaving only foreign jihadists to mount a last stand.

The SDF has been supported by a U.S.-led international coalition with air strikes and special forces on the ground since it started the battle for Raqqa city in early June.

The final SDF assault began on Sunday after a group of Syrian jihadists evacuated the city under a deal with tribal elders, leaving only a hard core of up to 300 fighters to defend the last positions.

PASSPORTS AND MONEY

Raqqa was the first big city Islamic State captured in early 2014, before its series of rapid victories in Iraq and Syria brought millions of people under the rule of its self-declared caliphate, which passed laws and issued passports and money.

It used the city as a planning and operations center for its warfare in the Middle East and its string of attacks overseas, and for a time imprisoned Western hostages there before killing them in slickly produced films distributed online.

The SDF advance since Sunday also brought it control over the central city public square, where Islamic State once displayed the severed heads of its enemies, and which became one of its last lines of defense as the battle progressed.

The offensive has pushed Islamic State from most of northern Syria, while a rival offensive by the Syrian army, backed by Russia, Iran and Shi‘ite militias, has driven the jihadists from the central desert.

On Tuesday, a military media unit run by Lebanon’s Hezbollah said the Syrian army, which Hezbollah fights with, had pushed into the last Islamic State districts of Deir al-Zor city.

The only populated areas the jihadist group still controls in Syria are the towns and villages downstream of Deir al-Zor city along the Euphrates valley, areas that for the past three years Islamic State ran from Raqqa.

Additional reporting by Ellen Francis and Dahlia Nehme in Beirut and Idrees Ali and Phil Stewart in Washington; Writing by Angus McDowall in Beirut; Editing by Matthew Mpoke Bigg and James Dalgleish

Pakistan blast kills at least six in southwestern city

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ISLAMABAD (Reuters) – An explosion ripped through a police truck on Wednesday to kill at least six people in Pakistan’s southwestern city of Quetta, police said.

The truck was carrying police recruits, four of whom were killed, along with two passers-by on the city’s eastern outskirts, Quetta Police Chief Abdur Razzaq Cheema said.

“We can’t say whether it is a suicide blast,” he added. “Our teams are at the scene and investigating.”

Television broadcast images of the burned-out remains of the vehicle.

(This version of the story corrects headline and paragraph 1 to clarify toll)

Writing by Kay Johnson; Editing by Clarence Fernandez

Trump tax plan hits bump in Senate as Rand Paul weighs ‘no’ vote

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WASHINGTON (Reuters) – Senate Republicans scrambled on Tuesday to ensure support for a budget resolution vital to President Donald Trump’s drive to overhaul the U.S. tax code, as one Republican fiscal hawk announced he might vote against the measure.

As the Senate opened debate on a fiscal year 2018 budget, Senator Rand Paul objected to spending levels that he said would exceed agreed caps by $43 billion, and called for spending reforms for so-called entitlement programs such as the Medicare and Medicaid health insurance programs.

“I will not vote for the budget unless it keeps within the spending caps,” the Republican senator told reporters. In a conversation with Trump earlier on Tuesday, Paul said he told the Republican president: “I‘m all in. I want to be supportive. I‘m a ‘yes’ vote. But we have to obey our own rules.”

Senate Republican aides denied that the budget resolution exceeds federal spending caps set by the Budget Control Act of 2011. Paul said the excess spending was for overseas military operations, which aides said are not subject to caps.

The budget resolution already had a narrow path to passage in the Senate, where Democrats oppose the measures and Republicans have only a 52-48 majority. A “no” vote from Paul appeared to put the budget a single vote from failure, threatening to upend Trump’s drive for tax reform.

Another fiscal hawk, Senator Ted Cruz, has refused to disclose whether he would support the measure.

However, the Republican odds of passing a budget resolution improved unexpectedly when Senator Thad Cochran returned to the Senate despite an illness and said in a statement that he looked forward to “taking part in the debate on the budget and tax cuts.” A day earlier, Cochran’s office had said he would not be available this week.

With Cochran in the Senate, Republicans can pass the measure even if they lose two votes.

The budget resolution is essential to Trump’s tax reform strategy because it would unlock a legislative tool known as reconciliation, which would allow Senate Republicans to pass a tax bill with a simple majority. Without it, a partisan tax bill would need 60 votes in the 100-member Senate and would almost certainly fail.

The Republican effort had gained momentum on Monday when two other potential Senate Republican “no” votes – Susan Collins and Lisa Murkowski – indicated they were leaning toward “yes.” Senator John McCain also said he would support the budget resolution.

After failing to overturn Obamacare earlier this year, Republicans fear they will face a backlash from constituents in next year’s congressional midterm elections if they are unable to pass legislation to cut taxes for businesses and individuals.

Trump and top Republicans have proposed a plan to deliver up to $6 trillion in tax cuts over the next 10 years as part of a reform package that they say will boost economic growth and provide more jobs and higher wages.

Democrats, who criticize the Republican plan as a giveaway to the wealthy, will likely propose numerous amendments to the budget plan to prevent tax cuts for the rich and require legislation that would not expand the federal deficit.

“We’re talking about a major political party now working night and day on behalf of the top 0.1 percent,” Senator Bernie Sanders, an independent who caucuses with Democrats, told Reuters on Tuesday.

Both the Senate and the House of Representatives must agree on a budget resolution. The House has already approved a different version, so House and Senate Republicans would need to hammer out a unified version and pass it before reconciliation could take effect.

Reporting by David Morgan; additional reporting by Tim Ahmann, Richard Cowan, Amanda Becker and Yasmeen Abutaleb; Editing by Jonathan Oatis

Hillary Clinton says U.S. threats of war with North Korea ‘dangerous, short-sighted’

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SEOUL (Reuters) – Former U.S. presidential candidate Hillary Clinton said on Wednesday that “cavalier” threats to start war on the Korean peninsula are “dangerous and short-sighted”, urging the United States to get all parties to the negotiating table.

Clinton also called on China to take a “more outfront role” in enforcing sanctions against North Korea aimed at curbing its missile and nuclear development.

“There is no need for us to be bellicose and aggressive (over North Korea),” said Clinton at a forum in the South Korean capital Seoul, stressing the need for greater pressure on North Korea and diplomacy to bring Pyongyang to talks.

Tensions between Pyongyang and Washington have soared following a series of weapons tests by North Korea and a string of increasingly bellicose exchanges between U.S. President Donald Trump and North Korean leader Kim Jong Un.

“Picking fights with Kim Jong Un puts a smile on his face,” Clinton said, without mentioning Trump by name.

Clinton also indirectly referred to Trump’s comments towards North Korea on social media, saying “the insults on Twitter have benefited North Korea, I don’t think they’ve benefited the United States”.

The war of words has seen Trump call the North Korean leader “little rocket man” on a suicide mission, and vowed to destroy North Korea if it threatens the United States or its allies. North Korea has in turn called Trump “mentally deranged” and a “mad dog”.

Talks between the adversaries have long been urged by China in particular, but Washington and its ally Japan have been reluctant to sit down at the table while Pyongyang continues to pursue a goal of developing a nuclear-tipped missile capable of hitting the United States.

On Tuesday, Deputy Secretary of State John J. Sullivan said the United States didn’t rule out the eventual possibility of direct talks with North Korea.

North Korea’s Deputy U.N. Ambassador Kim In Ryong told a U.N. General Assembly committee on Monday that the situation on the Korean peninsula was now touch-and-go point “and a nuclear war may break out any moment”.

CHINA PRESSURE

Clinton, a former U.S. secretary of state, said Washington’s allies have increasingly been expressing concerns over the reliability of the United States, advising Washington to avoid becoming distracted with North Korean threats and be “as forcefully patient” as possible.

Regarding China’s role in reining in North Korea, Clinton said Beijing would be better off trying to “tighten and absolutely enforce sanctions” against North Korea.

North Korea’s relationship with its main ally and trading partner China have been strained by the rapid pursuit of its weapons programs, with many of Pyongyang’s recent tests coinciding with major Chinese events.

There had been fears that North Korea would conduct another test to coincide with the start of China’s five-yearly party congress on Wednesday. Instead, Pyongyang sent Beijing a congratulatory message.

The central committee of the North’s ruling Workers’ Party of Korea said China had made “great progress in accomplishing the cause of building socialism with Chinese characteristics” under the guidance of the Communist Party of China.

“We are greatly pleased over this,” the party central committee said in the message carried by the official KCNA news agency, adding that it “sincerely wished” the China congress “satisfactory success.”

CAN‘T HAVE IT BOTH WAYS

Clinton said China’s retaliatory actions against South Korean companies doing business in China following the deployment of a U.S. anti-missile system in South Korea would be unnecessary had Beijing done a better job containing and deterring North Korea.

China has been curbing South Korean businesses there since Seoul decided to deploy the Terminal High Altitude Area Defence (THAAD) system, saying its powerful radar could be used to pierce its territory. South Korea and the United States have repeatedly told China that THAAD aims only to defend against North Korea’s missile threats.

“The Chinese can’t have it both ways. They can’t do less than they could to tighten economic pressures on North Korea and same time discount the real threat South Korea and its citizens face,” she said.

Reporting by Christine Kim; Additional reporting by Soyoung Kim; Editing by Lincoln Feast and Michael Perry

Judge blocks latest Trump curbs on people entering United States

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SAN FRANCISCO/WASHINGTON (Reuters) – A U.S. judge on Tuesday blocked President Donald Trump’s latest bid to impose restrictions on citizens from several countries entering the United States, which would have taken effect this week.

The open-ended ban, announced last month, targeted people from Iran, Libya, Syria, Yemen, Somalia, Chad and North Korea, as well as certain government officials from Venezuela. It was the third version of a policy that had previously targeted some Muslim-majority countries but had been restricted by the courts.

Tuesday’s ruling sets up another high stakes battle over Trump’s executive authority which legal experts expect will ultimately land in the U.S. Supreme Court. Trump’s first travel ban in January caused chaos and protests at U.S. airports before judges halted it.

The state of Hawaii sued to block Trump’s latest travel restrictions, arguing that federal immigration law did not give him the authority to impose them on six of those countries. Hawaii did not challenge entry restrictions relating to North Korea and Venezuela.

U.S. District Judge Derrick Watson in Honolulu said Hawaii was likely to succeed in proving that Trump’s latest travel ban violates federal immigration law.

The policy “suffers from precisely the same maladies as its predecessor: it lacks sufficient findings that the entry of more than 150 million nationals from six specified countries would be ‘detrimental to the interests of the United States,’” Watson wrote.

The White House in a statement said the ruling was “dangerously flawed” and that it was confident the courts would ultimately uphold Trump’s policy.

“These restrictions are vital to ensuring that foreign nations comply with the minimum security standards required for the integrity of our immigration system and the security of our nation,” the statement said.

The Justice Department called Watson’s ruling “incorrect” and said it would appeal “in an expeditious manner.”

Following the ruling, the U.S. State Department instructed embassies and consulates around the world to “resume regular processing of visas” for citizens of Chad, Iran, Libya, Somalia, Syria and Yemen, a department official said on condition of anonymity.

The department will carry out the proclamation for North Korea and Venezuela “with the objective of maximizing national security,” the official said, because the order did not apply to restrictions on those countries.

A family exits after clearing immigration and customs at Dulles International Airport in Dulles, Virginia, U.S. September 24, 2017. REUTERS/James Lawler Duggan

As a candidate, Trump had promised “a total and complete shutdown of Muslims entering the United States.”

In announcing the newest travel restrictions, the White House had portrayed them as necessary consequences for countries that did not meet new requirements for vetting of immigrants and issuing of visas. Those requirements were shared in July with foreign governments, which had 50 days to make improvements if needed, the White House said.

A number of countries made improvements by enhancing the security of travel documents or the reporting of passports that were lost or stolen. Others did not, sparking the restrictions.

Immigrant advocacy groups cheered the Hawaii ruling.

“We’re glad, but not surprised, that President Trump’s illegal and unconstitutional Muslim ban has been blocked once again,” Omar Jadwat, director of the American Civil Liberties Union Immigrants Rights Project, said in a statement.

The ACLU and other groups have filed separate challenges to Trump’s policy in a Maryland federal court. A ruling is still pending.

In the Hawaii case, the judge said that the ban’s national security rationale was undermined by not knowing how the president settled on the countries designated by the ban.

The judge also said the proclamation likely runs afoul of a prohibition in immigration law on nationality-based discrimination in issuing visas. Watson had blocked Trump’s second travel ban in March.

In a statement on Tuesday, Hawaii Attorney General Doug Chin said: “Today is another victory for the rule of law.”

Kiyanoush Razaghi, an immigration attorney with the Catholic Legal Immigration Network who has many Iranian clients, said Iranians still have problems when applying for U.S. visas, including particularly lengthy wait times for security checks.

Razaghi said he has told his clients: “You can celebrate, there is no travel ban right now, but be careful because that doesn’t mean you are going to get a visa in a reasonable amount of time.”

Additional reporting by Andrew Chung in New York and Mica Rosenberg, Lawrence Hurley and Roberta Rampton in Washington; Editing by Chizu Nomiyama, Tom Brown, Grant McCool

NAFTA negotiators trade barbs, indicate wide differences

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WASHINGTON (Reuters) – The top U.S. and Canadian and trade officials on Tuesday accused each other of sabotaging efforts to renegotiate the North American Free Trade Agreement, even as they and Mexico agreed to extend talks into the first quarter of 2018.

A seven-day round of talks in suburban Washington ended in acrimony over aggressive U.S. demands on autos, a five-year sunset clause on the pact itself and Canada’s dairy regulations, among other key issues. Canada’s foreign minister, Chrystia Freeland, accused Washington of pursuing a “winner take all” approach.

In a major setback, Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo said they faced “significant conceptual gaps” in their views and agreed to stretch out the talks in search of solutions.

Lighthizer complained that the Mexican and Canadian sides showed no evidence of willingness to make changes that would “rebalance” NAFTA to shrink U.S. trade deficits.

He warned that U.S. companies could no longer count on NAFTA trade rules that since 1994 have encouraged investment in Mexico and Canada and that he views as primarily aimed at exporting to the United States.

“Everybody has to give up a little bit of candy, that’s really what this is about,” Lighthizer told a news briefing.

But the talks hit a wall on his proposals to radically reshape NAFTA, causing some observers to wonder whether the Trump administration intends to sink the trade pact.

PROPOSALS “WOULD TURN BACK THE CLOCK”

Washington’s demands, previously identified as red lines by its neighbors, include forcing renegotiation of the pact every five years, reserving the lion’s share of automotive manufacturing for the United States and making it easier to pursue import barriers against some Canadian and Mexican goods.

“We have seen proposals that would turn back the clock on 23 years of predictability, openness and collaboration under NAFTA,” Freeland said.

News of the talks’ extension through to the first quarter of next year, from the end of this year, lifted the Mexican peso MXN=D2 1.2 percent after a volatile day of trading. The peso has fallen 7 percent since July on expectations that NAFTA would not survive.

Mexico sends about 80 percent of its exports to the United States, and is home to a host of factories for U.S. companies that manufacture products there that are then sent to the United States for sale.

Guajardo avoided direct criticism of Lighthizer’s approach, but said Mexico would stand firm against the U.S. demands.

(L-R) Canadian Foreign Affairs Minister Chrystia Freeland, U.S. Trade Rep Robert Lighthizer and Mexican Secretary of Economy Ildefonso Guajardo Villarreal make statements to the media after a NAFTA trilateral ministerial press event in Washington, U.S., October 17, 2017. REUTERS/Yuri Gripas

“A bad deal would be against the interest of Mexico itself, and therefore you have my guarantee that there will not be a bad deal,” Guajardo told reporters.

He added that rather than being intransigent, Mexico and Canada were taking a “good sense” approach to the talks.

Despite the tension, Mexican and Canadian officials have stressed that their governments will not walk away from the table. The talks are now scheduled to resume in Mexico City on Nov. 17-21, giving negotiators additional time to devise strategies.

While the NAFTA countries did close out a chapter on competition policy, Lighthizer said there were still deep differences on some issues such as digital trade, intellectual property rights and anti-corruption policies.

TERMINATION THREAT

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U.S. President Donald Trump, who made trade a centerpiece of his 2016 presidential campaign, has repeatedly threatened to terminate NAFTA if Mexico and Canada refuse major changes.

Lighthizer said he was not focused on termination and wanted to negotiate a “good agreement,” but added that he had no plan should talks collapse.

“If we end up not having an agreement, my guess is all three countries would do just fine. We have a lot of trade, a lot of reasons to trade,” he said.

One person close to the process said there was now a real possibility that negotiations to modernize NAFTA, which underpins some $1.2 trillion in annual trade between the three countries, could collapse.

Any termination decision would now be postponed until March 2018, by which time Trump could be distracted by other developments such as his tax reform plan, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

But it remained unclear how the talks regain momentum.

“Staggering talks could be the right description in the meantime,” Hufbauer said.

The Trump administration has also set out proposals that could impose fresh restrictions on long-haul trucking from Mexico, according to a person familiar with the matter. That too is likely to meet stiff resistance, Mexican officials say.

U.S. opposition to NAFTA’s dispute resolution mechanisms, plans to restrict outside access to government contracts and attacks on Canadian dairy and softwood lumber producers are all causing friction behind the scenes, officials say.

Additional reporting by David Ljunggren in Washington and Sharay Angulo in Mexico City; Editing by Jonathan Oatis and Leslie Adler

Amazon Studios chief resigns after harassment allegations

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(Reuters) – Amazon Studios (AMZN.O) chief Roy Price has resigned, a company spokeswoman said on Tuesday, following allegations that he harassed a producer and took no action when an actress told him she was sexually assaulted by producer Harvey Weinstein.

Price went on a leave of absence last week and Albert Cheng, the studio’s chief operating officer, remains interim head of the division, the spokeswoman said.

Price did not return requests for comment.

Many women have shared their experiences of mistreatment on social media using the hashtag #MeToo, in the wake of allegations of harassment against Weinstein in reports this month by The New York Times and The New Yorker.

Weinstein has denied having non-consensual sex with anyone.

The Hollywood Reporter last week reported an allegation by Isa Hackett, a producer on one of Amazon.com Inc’s shows, that Price had lewdly propositioned her in 2015.

On Tuesday, a lawyer for Hackett confirmed the allegations.

“I‘m pleased Amazon is taking steps to address the issues,” Hackett said in a statement on Tuesday. “An important conversation has begun about the need to create a culture in our industry which values respect and decency and rejects the abuse of power and dehumanizing treatment of others.”

The accusations against Price represented a rare scandal for the online retailer.

“This is a necessary move because of the sexual harassment allegation, but I think it’s a convenient excuse to replace him,” said Michael Pachter, an analyst at Wedbush Securities.

Amazon fared poorly for its original TV shows at last month’s Primetime Emmy Awards. Pachter said the company has appealed to elite, liberal tastes with its original TV lineup but has lacked “content that has mass appeal.”

Amazon did not reply to requests for comment.

Amazon is investing some $4.5 billion this year on video content. The company has said it hopes original shows will encourage people to sign up for its streaming and shopping club Prime.

Reporting by Jeffrey Dastin in San Francisco; Editing by Sandra Maler and Grant McCool