«Це сприятиме підтримці привабливості гривневих інструментів, збереженню стійкості валютного ринку і зниженню інфляції, що в комплексі формуватиме передумови для подальшого поступового пом’якшення валютних обмежень»
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Indian Prime Minister Narendra Modi makes his first state visit to Washington in nine years on June 21. The trip comes as the United States and India increase cooperation in critical emerging technologies. Matt Dibble has the story.
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The Federal Reserve kept its key interest rate unchanged Wednesday after having raised it 10 straight times to combat high inflation. But in a surprise move, the Fed signaled it may raise rates twice more this year, beginning as soon as next month.

The Fed’s move to leave its benchmark rate at about 5.1%, its highest level in 16 years, suggests that it believes the much higher borrowing rates have made some progress in taming inflation. But top Fed officials want to take time to more fully assess how their rate hikes have affected inflation and the economy.

“Holding the target rate steady at this meeting allows the committee to assess additional information and its implications” for the Fed’s policies, the central bank said in a statement.

The central bank’s 18 policymakers envision raising their key rate by an additional half-point this year, to about 5.6%, according to economic forecasts they issued Wednesday.

The economic projections revealed a more hawkish Fed than many analysts had expected. Twelve of the 18 policymakers forecast at least two more quarter-point rate increases. Four supported a quarter-point increase. Only two envisioned keeping rates unchanged. The policymakers also predicted that their benchmark rate will stay higher for longer than they envisioned three months ago.

“We understand the hardship that high inflation is causing, and we remain strongly committed to bring inflation back down to our 2% goal,” Fed Chair Jerome Powell said at a news conference.

One reason why the officials may be predicting additional rate hikes is that they foresee a modestly healthier economy and more persistent inflation that might require higher rates to cool. Their updated forecasts show them predicting economic growth of 1% for 2023, an upgrade from their meager 0.4% forecast in March. And the officials expect “core” inflation, which excludes volatile food and energy prices, of 3.9% by year’s end, higher than they expected three months ago.

Immediately after the Fed’s announcement, which followed its latest policy meeting, stocks sank, and Treasury yields surged. The yield on the two-year Treasury note, which tends to track market expectations for future Fed actions, jumped from 4.62% to 4.77%.

The Fed’s aggressive streak of rate hikes, which have made mortgages, auto loans, credit cards and business borrowing costlier, have been intended to slow spending and defeat the worst bout of inflation in four decades. Mortgage rates have surged, and average credit card rates have surpassed 20% to a record high.

The central bank’s rate hikes have coincided with a steady drop in consumer inflation, from a peak of 9.1% last June to 4% as of May. But excluding volatile food and energy costs, so-called core inflation remains chronically high. Core inflation was 5.3% in May compared with 12 months earlier, well above the Fed’s 2% target.

Powell and other top policymakers have also indicated that they want to assess how much a pullback in bank lending might be weakening the economy. Banks have been slowing their lending — and demand for loans has fallen — as interest rates have risen. Some analysts have expressed concern that the collapse of three large banks last spring could cause nervous lenders to sharply tighten their loan qualifications.

The Fed has raised its benchmark rate by a substantial 5 percentage points since March 2022 — the fastest pace of increases in 40 years. “Skipping” a rate hike at this week’s meeting might have been the most effective way for Powell to unite a fractious policymaking committee.

The 18 members of the committee have appeared divided between those who favor one or two more rate hikes and those who would like to leave the Fed’s key rate where it is for at least a few months and see whether inflation further moderates. This group is concerned that hiking too aggressively would heighten the risk of causing a deep recession.

In an encouraging sign, inflation data that the government issued this week showed that most of the rise in core prices reflected high rents and used car prices. Those costs are expected to ease later this year.

Wholesale used car prices, for example, fell in May, raising the prospect that retail prices will follow suit. And rents are expected to ease in the coming months as new leases are signed with milder price increases. Those lower prices, though, will take time to feed into the government’s measure.

The economy has so far fared better than the central bank and most economists had expected at the beginning of the year. Companies are still hiring at a robust pace, which has helped encourage many people to keep spending, particularly on travel, dining out and entertainment.
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European Union antitrust regulators took aim at Google’s lucrative digital advertising business in an unprecedented decision ordering the tech giant to sell off some of its ad business to address competition concerns.

The European Commission, the bloc’s executive branch and top antitrust enforcer, said that its preliminary view after an investigation is that “only the mandatory divestment by Google of part of its services” would satisfy the concerns.

The 27-nation EU has led the global movement to crack down on Big Tech companies, but it has previously relied on issuing blockbuster fines, including three antitrust penalties for Google worth billions of dollars.

It’s the first time the bloc has ordered a tech giant to split up keys of business.

Google can now defend itself by making its case before the commission issues its final decision. The company didn’t immediately respond to a request for comment.

The commission’s decision stems from a formal investigation that it opened in June 2021, looking into whether Google violated the bloc’s competition rules by favoring its own online display advertising technology services at the expense of rival publishers, advertisers and advertising technology services.

YouTube was one focus of the commission’s investigation, which looked into whether Google was using the video sharing site’s dominant position to favor its own ad-buying services by imposing restrictions on rivals.

Google’s ad tech business is also under investigation by Britain’s antitrust watchdog and faces litigation in the U.S.

Brussels has previously hit Google with more than $8.6 billion worth of fines in three separate antitrust cases, involving its Android mobile operating system and shopping and search advertising services.

The company is appealing all three penalties. An EU court last year slightly reduced the Android penalty to 4.125 million euros. EU regulators have the power to impose penalties worth up to 10% of a company’s annual revenue.
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Many of the wigs and false eyelashes labeled “Made in China” that are sold by American retailers may violate U.S. sanctions on North Korea, which is where they are actually manufactured, according to experts.

China imported approximately 30 tons of North Korean-made wigs and false eyelashes in April worth over $22.7 million, according to data from China’s General Customs Administration examined by VOA’s Korean Service.

About half, amounting to more than $11.2 million, were imported by Chinese companies in Henan province. Xiaogang, a city in central Henan province, is the world’s largest wig manufacturing, distribution and export hub.

Although North Korea sealed its border with China in January 2020 at the beginning of the pandemic, trade between the neighbors has resumed gradually since North Korea declared victory over COVID-19 in August 2022. China is North Korea’s biggest trading partner.

The amount of Pyongyang’s wig and false lash exports to China in April shows that “trade is returning after the pandemic” as North Korea’s total exports to China in 2021 “only amounted to $56.3 million,” said Troy Stangarone, senior director at Korea Economic Institute (KEI) to VOA Korean by email.

As North Korea’s exports to China return to pre-pandemic levels, experts said U.S. companies must be vigilant that supply chains do not include Chinese manufacturers that use North Korean labor. U.S. penalties for sanctions violations convictions include “incarceration, fines, and forfeiture of any/all goods imported and proceeds of these crimes,” according to federal law.

“Chinese firms have been known to subcontract with North Korean firms and label the goods as made in China,” Stangarone said. “Any efforts by Chinese firms to directly or indirectly export wigs and fake lashes or any other North Korean goods to the United States would be a violation of U.S. sanctions.”

Despite the sanctions, however, there is still a good chance that those items could end up in the U.S., he added.

$128.6 million in human hair products

China was the top global exporter of human hair products including wigs and fake lashes in 2021, totaling approximately $1.84 billion while the U.S. was the largest importer of those products worth approximately $1.01 billion in the same year.

In April, China was the largest exporter of wigs and other human hair products to the U.S. amounting to $128.6 million.

“If firms utilize China as part of their supply chain, they need to be aware” they could be “unknowingly sending North Korean goods to the United States,” said Stangarone.

The U.S. Treasury issued an advisory in 2017 cautioning American businesses to “closely examine their entire supply chain(s) for North Korean laborers and goods and services or technology” especially “those businesses with operation in high-risk countries.”

The advisory said that North Korea uses forced labor to raise revenue to fund its weapons of mass destruction (WMD) and ballistic missile programs.

The “use of North Korean citizens or nationals as laborers in supply chains could trigger U.S. sanctions, and the issuance of work authorizations for these North Korean nationals is prohibited under UN Security Council resolution 2397” issued in 2017, said the advisory.

Joshua Stanton, a Washington-based attorney who helped draft the Sanctions Enforcement and Policy Enforcement Act in 2016, said, “Importing products made with forced or penal labor into the United States has long been a violation of the U.S. Tariff Act.”

He continued, “If goods are made in whole or in part with North Korean labor, they’re subject to rebuttable presumption that they’re made with forced labor.”

Regulations ban imports from North Korea

The regulations ban imports of goods, services or technology from North Korea. 

In 2019, California-based e.l.f. Cosmetics agreed to pay nearly $1 million for importing over $4 million worth of false eyelash kits from Chinese suppliers that sourced materials from North Korea in violation of the North Korean Sanctions Regulations. 

The U.S. Treasury said the cosmetics company “appears not to have exercised sufficient supply chain due diligence while sourcing products from a region” in which North Korea is “known to export goods.”

“If U.S. Customs and Border Protection’s Office of Trade identifies those [North Korean-made] wigs, it will seize them and sell them at auction,” said Stanton.

Stanton said U.S. Customs and Border Protection (CBP) may rely on tips to identify North Korea-made products such as items coming from an exporter or factory with a known history of employing labor in North Korea, among other ways of detection.

In 2022, CBP seized goods produced by the Chinese companies Jingde Trading, Rixin Foods and Zhejiang Sunrise Garment Group at U.S. ports.

The seizures were based on CBP’s “investigation indicating that these companies use North Korean labor in their supply chains in violation of the Countering America’s Adversaries Through Sanctions Act (CAATSA),” the CBP said in December 2022. 

CAATSA bans the importation to the U.S. of items made by North Korean workers “anywhere in the world,” said the statement.

Although U.N. Security Council sanctions on North Korea do not explicitly list wigs and false lashes as banned export items, China and North Korea could be violating those sanctions, according to Stanton. U.N. sanctions ban the Pyongyang regime from exporting items like coal, textiles and seafood to prevent sales revenue from funding its weapons programs.

“The U.N. sanctions are not required to list every product and item that North Korea exports,” Stanton said.

North Korea’s “export to China is nonetheless a violation of UN sanctions if China fails to ensure that Pyongyang doesn’t use the profits for prohibited activities, including WMD proliferations,” continued Stanton.

North Korea conducted a record number of weapons tests last year to enhance the development of its missile and nuclear programs, a practice that Pyongyang is continuing this year. Its latest attempted launch of a satellite using ballistic missile technology banned by the UN failed on May 31.

Christy Lee contributed to this report.
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