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Daybreak Africa

Each morning, Daybreak Africa looks at the latest developments on the continent, starting with headline news and providing in-depth interviews, reports from VOA correspondents, sports news as well as listener comments.

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Hundreds of Thousands in Hong Kong Protest Extradition Bill

Demonstrations continued throughout the night in Hong Kong where hundreds of thousands protested Sunday against a controversial extradition bill that would allow suspected criminals to be sent to mainland China for trial. The changes would permit extradition requests from authorities in mainland China, Taiwan and Macau for suspects accused of criminal wrongdoing, such as rape and murder. VOA’s Zlatica Hoke has more.

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US Treasury Chief: Trump ‘Perfectly Happy’ to Tax More Chinese Imports

U.S. Treasury chief Steven Mnuchin said Sunday President Donald Trump would be “perfectly happy” to tax more imports from China if he cannot reach a trade deal with Chinese President Xi Jinping.

Both presidents are scheduled to meet later this month at the Group of 20 meeting in Japan.

“We made enormous progress, I think we had a deal that was almost 90% done,” Mnuchin told CNBC. “China wanted to go backwards on certain things” — a charge Beijing denies.

“We’ve stopped negotiating,” Mnuchin said, with the next steps depending on Trump’s meeting with Xi in Osaka at the G-20 summit of leaders of major economies June 28-29.

“The president will make a decision (on tariffs) after the meeting,” Mnuchin said. “I believe if China is willing to move forward on the terms that we were discussing, we’ll have an agreement. If they’re not, we will proceed with tariffs.”

Trump has already imposed tariffs on $200 billion worth of Chinese goods, but now is thinking about taxing an additional $325 billion worth of Chinese products. That would include nearly everything China exports to the U.S. The world’s two biggest economies have sparred for months over a trade deal, but have not been able to reach an agreement.

Trump’s threatened tariff hike came as G-20 finance ministers meeting in Fukuoka, Japan, said trade and geopolitical conflicts are risking global economic growth, but at the U.S. insistence, dropped a call to “recognize the pressing need to resolve trade tensions.”

“Global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020,” the finance chiefs, including Mnuchin, said in an end-of-meeting communique. “However, growth remains low and risks remain tilted to the downside. Most importantly, trade and geopolitical tensions have intensified. We will continue to address these risks and stand ready to take further action.”

The International Monetary Fund warned last week that a continuing U.S.-China standoff on tariffs could cut a half-percentage point from the global economy in 2020.

Meanwhile, China vowed Sunday to build what it calls a strong firewall against attempts to restrict its ability to technologically innovate.

“China … will never allow certain countries to use China’s technology to contain China’s development and suppress Chinese enterprise,” the main state-run newspaper declared.

China plans to announce details of its plans in the near future.

The Chinese statement did not mention any country by name, but the United States has restricted U.S. firms from selling technology to China’s Huawei, suspecting the company of building spyware into its telecommunications products.

The U.S. has also warned its allies against the alleged risk in buying Huawei technology.

 

 

 

 

 

 

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Protesters Fill Hong Kong Streets Over Proposed Extradition Law

Hundreds of thousands of protesters marched on the streets of central Hong Kong on Sunday showing their dislike for a proposed law that would allow people to be extradited to mainland China to face charges — sparking the biggest public backlash against the city’s pro-Beijing leadership in years.

The bill was fast-tracked through the city’s legislature. It is expected to receive a second reading on Wednesday.

Government officials hope it will win approval by the end of the June.

Despite widespread criticism from human rights groups, Hong Kong’s leader, Carrie Lam, moved forward with the legislation.

Opponents say they do not think China’s legal system would guarantee the same rights to defendants as they would have in semi-autonomous Hong Kong.

“What can we do to get Carrie Lam to listen to us, how many people have to come out to make her reconsider listening to the public?” Miu Wong, a 24-year-old office worker at the protests, told AP.

But Hong Kong’s leaders say there is a need for such law to close loopholes and stop the city from being a place of escape for mainland fugitives.

Hong Kong officials said critics and dissidents of the Chinese government under the new law would not be extradited.

Hong Kong is a former British colony that was returned to China in 1997. It kept the right to its own social, legal and political systems for 50 years under a “one country, two systems” framework.

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China Creates System to Protect Its Technology

China is creating a system to protect its technology, according to state media, as the U.S. restricts the access of Chinese companies to American technology in a spiraling trade dispute.

The People’s Daily newspaper said Sunday that the system will build a strong firewall to strengthen the nation’s ability to innovate and to accelerate the development of key technologies.

“China … will never allow certain countries to use China’s technology to contain China’s development and suppress Chinese enterprises,”the main paper of the ruling Communist Party said, without directly referring to the United States.

No details have been released about what China is calling a national technological security management list. The plan was announced Saturday evening in a brief three-paragraph dispatch by the official Xinhua News Agency.

The aim is to forestall and defuse national security risks more effectively, Xinhua said, adding that detailed measures would be unveiled in the near future.

The initiative follows U.S. moves to restrict sales to Huawei Technologies and other Chinese tech firms on national security grounds.

The U.S. Commerce Department last month added Huawei to its list of entities that are engaged in activities contrary to U.S. national security or foreign policy interests.

As such, any sale of U.S. technology to Huawei will require Commerce Department approval.

China responded by saying its Commerce Ministry would develop its own list of foreign entities that it regards as “unreliable.”

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Trade Experts Unruffled About Rare Earth Minerals Supply

Rising trade tensions between the U.S. and China have sparked worries about the 17 exotic-sounding rare earth minerals needed for high-tech products like robotics, drones and electric cars. 

 

China recently raised tariffs to 25% on rare earth exports to the U.S. and has threatened to halt exports altogether after the Trump administration raised tariffs on Chinese products and blacklisted telecommunications giant Huawei.  

  

With names like europium, scandium and ytterbium, the bulk of rare earth minerals are extracted from mines in China, where lower wages and lax environmental standards make production cheaper and easier.  

  

But trade experts say no one should panic over China’s threats to stop exporting the elements to the U.S. 

 

There is a U.S. rare minerals mine in California. And Australia, Myanmar, Russia and India are also top producers of the somewhat obscure minerals. Vietnam and Brazil both have huge rare earth reserves.  

  

The sky is not falling,'' said Mary B. Teagarden, a China specialist, professor and associate dean at the Thunderbird School of Global Management in Phoenix.There are alternatives.” 

 

Simon Lester, associate director of the center for trade policy studies at the Cato Institute think tank in Washington, agreed. “Over the short term, it could be a big disruption, but companies that want to stay in business will find a way,” he said.    

Although the U.S. is among the world’s top 10 countries for rare earths production, it’s also a major importer of the minerals, looking to China for 80% of what it buys from other countries, according to the U.S. Geological Survey. China last year produced 120,000 metric tons of rare earths, while the United States produced 15,000 metric tons.  

Mountain Pass Mine

 

The United States also depends on China to separate the minerals pulled from Mountain Pass Mine, the sole rare earths mine in the U.S., which was bought two years ago by the Chicago-based JHL Capital Group LLC .  

  

“We need to develop a U.S.-based supply chain so there is no possibility we can be threatened,” said Ryan S. Corbett, managing director of JHL Capital. 

 

The mine’s top products are neodymium and praseodymium, two elements that are used together to make the lightweight magnets that help power electric cars and wind turbines and are found in electronics such as laptop hard drives. 

 

Mountain Pass, located in San Bernardino County, Calif., was once the top supplier of the world’s rare earth minerals, but China began taking over the market in the 1990s and the U.S. mine stopped production in 2002.  

  

Mountain Pass later restarted production, only to close again amid a 2015 bankruptcy. Corbett said extraction resumed last year after JHL Capital purchased the site with QVT Financial LP of New York, which holds 30%, and Shenghe Resources Holding Co. Ltd. of China, a nonvoting shareholder with 9.9%.  

  

Since then, Mountain Pass has focused on achieving greater autonomy with a $1.7 billion separation system set to go online late next year that would allow it to skip sending rare earths ore to China for that step. 

 

China could hurt itself in the long run by cutting off the U.S., specialists said.  

  

David Merriman, a rare earths analyst for Roskill commodity research in London, said that during a similar trade flap with China in 2011, Japan began looking to other countries, including Australia, for the minerals needed to manufacture electronics.   

Australian rare earths production giant Lynas Corp. Ltd. this month announced a proposed deal with Blue Line Corp. of Texas for a separation facility at an industrial site in Hondo, Texas.  

Other deposits

  

There may be other options, too. Deposits of rare earths have been detected in other U.S. states, including Wyoming and Alaska, as well in several remote areas of Canada. The Interior Department is calling for more prospecting and mining of “critical minerals,” including on public lands currently considered off-limits, and even in oceans. 

 

We have to be more forward-thinking,'' said Alexander Gysi, an assistant professor in geology and geological engineering at the Colorado School of Mines in Golden.It would be better for the U.S. to have a greater range of sources for rare earths.”

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Cargo of N. Korean Coal Adrift Near Vietnam

Ham Ji-ha contributed to this report.

WASHINGTON — A vessel loaded with $3 million worth of North Korean coal is now floating off Vietnam’s coast, searching for a place to dock.

The Dong Thanh, a Vietnamese-owned vessel sailing under a Panamanian flag, entered Vietnamese territorial waters Thursday carrying the North Korean coal. It has wandered the international waters off Malaysia and Indonesia for two months after each denied the ship entry into their territorial waters.

The coal aboard the Dong Thanh began its odyssey in the cargo hold of the Wise Honest, a North Korean cargo vessel now in U.S. custody in American Samoa. The Justice Department authorized seizure of the Wise Honest in early May, alleging it was transporting North Korean coal and violating U.S. and United Nations (U.N.) sanctions.

Prior to the U.S. action, Indonesia detained the Wise Honest for over a year starting April 2018. Indonesian authorities held the ship for having improper shipping documents and violating the country’s maritime law.

But the coal was released by the Indonesian Balikpapan District Court, the district where the vessel was ordered to remain anchored, when an Indonesian broker with ties to North Korea requested that the coal be sold.

The court released the coal based on a Certification of Origin that stated the coal originated in Russia.

Because the Wise Honest took on the coal on board while docked at Nampo, North Korean port of Nampo in March 2018, and Pyongyang has a history of creating false documents, the certificate is widely believed to be fake, according to the U.N. Panel of Experts.

When the Justice Department seized the Wise Honest, officials described the action as a part of a broad plan to use U.S. law to enforce international sanctions in an effort to apply “maximum pressure” to squeeze off North Korea’s source of income that finances its nuclear and missile programs.

“North Korea and the companies that help it evade U.S. and U.N. sanctions should know that we will use all tools at our disposal – including a civil forfeiture action such as this one or criminal charges – to enforce sanctions,” said U.S. Assistant Attorney General for National Security John Demers in a statement released by the U.S. Attorney’s Office in the Southern District of New York on May 9.

He continued, “We are deeply committed to the role of the Justice Department plays in applying maximum pressure to the North Korean regime to cease its belligerence.”

Although the Justice Department was applying the maximum pressure policy initiated by President Donald Trump at the start of his presidency in 2017, the seizure is seen as a move by the Justice Department and unconnected to post-summit approaches to North Korea by the Trump administration.

“This should not been seen as a reflection of the administration’s political mood,” said Joshua Stanton, a Washington-based attorney who helped draft the North Korean Sanctions Enforcement Act in 2016, one of the laws the U.S. invoked to seize the Wise Honest.

Trump’s attitude toward North Korea has softened since his first face-to-face meeting with North Korean leader Kim Jong Un at their first summit last year in Singapore despite the two countries’ differences over denuclearization.

Even after having major disagreements with Kim over the timing of denuclearization and lifting the sanctions, in the failed Hanoi summit in February, Trump has continued to speak favorably of Kim while moderating maximum pressure on Pyongyang.

On March 22, Trump tweeted an order reversing Treasury sanctions on North Korea issued that day, throwing Washington into confusion because there were no sanctions issued on the same day as his tweet. The Treasury had announced financial sanctions on North Korea the day before.

In an attempt to explain Trump, White House Press Secretary Sarah Sanders said, “President Trump likes Chairman Kim, and he doesn’t think these sanctions will be necessary.”

Stanton said, “Trump isn’t saying maximum pressure anymore.” He added, “Trump isn’t doing maximum pressure.”

Despite Trump’s easing of maximum pressure amidst stalled diplomacy with Kim, the U.S. District Court in the Southern District of New York (SDNY) invoked the International Emergency Economic Powers Act (IEEPA) and the North Korean Sanctions and Policy Enhancement Act of 2016 (NKSPEA) to seize the Wise Honest.

“The most independent district in the entire country by a mile is the Southern District of New York,” said Stanton. “They are notoriously independent of the prerogatives of the politicians in Washington.”

NKSPEA, enacted under President Barack Obama in 2016 and amended under Trump in 2017, authorizes the U.S. to forfeit North Korea’s property involved in illicit activities such as maritime coal smuggling. IEEPA bans sanctioned persons from accessing the U.S. financial system.

“This is based on legal authorities that [were signed into law] before Trump was president,” said Stanton. “And SDNY, if they’re doing it, it’s because they see a violation of the law that they can prosecute and win for an amount that is worth their prosecutorial resources.”

The Wise Honest was owned by Korea’s Songi Trading Company which was designated by the Treasury’s Office of Foreign Assets Control (OFAC) in June 2017. [[ https://www.treasury.gov/press-center/press-releases/Pages/sm0099.aspx ]] The Korean People’s Army runs the company according to OFAC. The Wise Honest was also used to import heavy machinery into North Korea according to the court complaint.

Kwon Chol Nam, one of the company’s representatives, paid for services expenditures and equipment purchases for the Wise Honest in U.S. dollars. Those funds were routed through correspondent banks in the U.S. including ones doing business within the jurisdiction of the SDNY. The U.S. forbids its financial institutions from processing transactions for the benefit of North Korea.

The use of the U.S. financial system gave the U.S. jurisdictional authority to seize the Wise Honest, which was property involved in maritime coal smuggling and thus in violation of U.N. sanctions.

Stanton said “I think [the Justice Department is] actually being more aggressive than the president.”

Ken Gause, director of Adversary Analytics Program at the CNA, said, “We have tried the naming and shaming…other countries involved in the ship-to-ship transfers.”

 

He continued, “And that doesn’t seem to have had much effect. And so now this would be kind of like the next step up – to actually impound and take possession of North Korean property that is involved in illicit activities.”

 

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G-20 Finance Leaders’ Goal: Adapt to Turmoil in Trade, Tech

Financial leaders of the Group of 20 gathered Saturday to brainstorm ways to adapt global finance to an age of trade turmoil and digital disruptions.

The central bank governors and other financial regulators meeting in this southern Japanese port city also flagged risks from upsets to the global economy as Beijing and Washington clash over trade and technology.

Asked if other financial leaders attending the meetings in Fukuoka were raising concerns over the impact on global markets and trade from President Donald Trump’s crusade against huge, chronic U.S. trade deficits, especially with China, U.S. Treasury Secretary Steven Mnuchin said no.

Trump and members of his administration contend that the ripple effects of the billions of dollars in tariffs imposed by Washington on Chinese exports over the past year are creating new business opportunities for other businesses in the U.S. and other countries.

But Mnuchin acknowledged that growth has been slowing in Europe, China and other regions.

“I’m hearing concerns if we continue on this path there could be issues. There will be winners and losers,” he said.

The G-20 officials were expected to express their support for adjusting monetary policy, for example by making borrowing cheaper through interest rate cuts, in a communique to be issued as meetings wrap up on Sunday.

Their official agenda on Saturday was focused on longer-term, more technical issues such as improving standards for corporate governance, policing cyber-currencies and reforming tax systems to ensure they are fair for both traditional and new, online-based industries.

Ensuring that governments capture a fair share of profits from the massive growth of businesses like Google and Amazon has grown in importance over the many years the G-20 finance chiefs have been debating the reforms aimed at preventing tax evasion and modernizing policies to match a financial landscape transformed by technology.

One aim is to prevent a “race to the bottom” by countries trying to lure companies by offering unsustainably and unfairly low tax rates as an incentive.

Mnuchin said he disagreed with details of some of the proposals but not with the need for action.

“Everyone, we are now facing a turning point,” Japanese Finance Minister Taro Aso told the group. “This could be the biggest reform of the long established international framework in over 100 years.”

Some European members of the G-20, especially, want to see minimum corporate tax rates for big multinationals. France and Britain have already enacted stop-gap tax systems for digital businesses, but they are not adequate, said French Finance Minister Bruno Le Maire.

“For the time being there is no fair taxation of this new economic model,” Le Maire said, adding that the hope is to have an agreement by the year’s end.

The issue is not confined to the wealthiest nations. Indonesia, a developing country of 260 million with more than 100 million internet users, is also struggling to keep up.

“The growth has been exponential but we cannot capture this growth in our GDP as well as in our tax revenue,” said Indonesian Finance Minister Mulyani Indrawati.

Mobile banking, big data, artificial intelligence and cloud computing are among many technologies that are expanding access to financial services for many people who in the past might not have even used banks.

But such innovations raise questions about protecting privacy and cybersecurity, Aso said.

“We need to stay vigilant against risks or challenges,” Aso said.

Japan, the world’s third-largest economy, is hosting the G-20 for the first time since it was founded in 1999. The venue for the annual financial meeting, Fukuoka, is a thriving regional hub and base for start-ups.

The G-20 groups include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.