Foreign Policy Update – USA Gov Policy

MEXICO

At a press conference on June 10, Secretary of State Michael Pompeo discussed the evolving illegal immigration situation we face along the Mexican border. He stated that President Trump is doing exactly what he said he would do and is the first president in history to act effectively on his promise.

The US has agreed to Mexico placing 6,000 Mexican National Guard troops along the southern border of the United States to help stem the tide of illegal immigration. According to Pompeo, this is the “biggest effort to date” by Mexico.

Those crossing the U.S. southern border to seek asylum, he added, “will be rapidly returned to Mexico where they may await their adjudication of their asylum claims.” Past numbers of asylum seekers averaged a few hundred per day. In recent months this number has exploded with some crossing points experiencing several thousand individuals attempting to enter the United States daily. The numbers are so large that ICE reports only 30% of their resources can be devoted to criminal activity as 70% are assigned to handle illegal immigration now.

The Secretary attributes movement on the issue to President Trump’s announcement that he will impose a 5% tariff on Mexican goods if the government doesn’t take action. An entire team of Mexican negotiators arrived to begin resolving the dispute. He said: “It’s what prompted this series of conversations that took on a level of seriousness and a timed commitment that we were committed to getting done before the weekend. And, so it’s a fundamentally different commitment about doing this across the entire border at scale.” Washington plans to review the situation daily to ensure Mexico is making progress and keeping its commitment.

HONG KONG

The State Department is urging all sides to use restraint and to refrain from violence following protests in Hong Kong. The Spokesperson added that Washington believes “these peaceful protests are incredibly important” and that it’s important for the Hong Kong Government to “respect these freedom of expressions, respect the right of people to peacefully assemble.”

Proposed legislation in Hong Kong would allow authorities to subjugate Hong Kong residents to the Chinese government as it relates to some of their fundamental rights and potentially move those charged with a crime to mainland China for prosecution. Under the One Country-Two party System Hong Kong operates under a framework of a Chinese autonomous region.

IRAN

After the two recent attacks on oil tankers near the Gulf of Hormuz, the United States is not backing off pressuring the Iranian regime to stop terrorizing innocent people.

“Our position on the JCPOA,” according to the State Department Spokesperson, “has not changed.” Washington does not want Iran to get a nuclear weapon. “Whether it’s the JCPOA or our maximum pressure campaign towards Iran – holistically. It’s not – it’s certainly about a nuclear weapon, and I know that our European counterparts would like the Iranians to stay in the JCPOA. We certainly do not want them to have a nuclear weapon,” according to the Spokesperson.

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NORTH KOREA

The United States is seeking a fundamental transformation of US-North Korea relations. With that the Trump Administration hopes to build lasting peace on the Korean peninsula.

The State Department Spokesperson pointed out that “We’re looking for a complete denuclearization. The President… maintains a warm relationship with Chairman Kim, and here at the State Department, we are ready and willing to continue engagement on working-level negotiations with the North Koreans.” In addition to a verifiable denuclearization the Administration says its looks forward to building a “bright economic future for the North Korean people.”

Washington is working to ensure that North Korean commitments, made a year ago, come to fruition. During this period the State Department confirmed economic sanctions will remain in effect.

CHINA

The United States is growing increasingly concerned that China’s “Belt and Road Initiative” is not simply about commercial projects that happen to be in strategically significant areas of the world, but that each one is a national security initiative designed by Beijing to appear as a commercial operation. Washington has reminded countries in China’s sightline that Beijing is attempting to “use state-owned enterprises to gain political influence and power.” Pompeo said that we “welcome that investment if it’s purely commercial and it’s designed for a noble end, but we have to be ever mindful of the national security risks presented….”

DARIA NOVAK served in the United States State Department during the Reagan Administration, and currently is on the Board of the American Analysis of News and Media Inc., which publishes usagovpolicy.com and the New York Analysis of Policy and Government. Each Saturday, she presents key updates on U.S. foreign policy from the State Department.

Illustration: Pixabay

Quick Analysis

Federal Reserve Report on the Economy

The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from each District’s sources. The latest edition has just been released. We present key portions of the summary here. Overall Economic Activity Overall economic activity expanded slightly, on balance, since late February. Ten out of twelve Districts experienced either slight or modest economic growth—up from eight in the previous report, while the other two reported no changes in activity. Consumer spending barely increased overall, but reports were quite mixed across Districts and spending categories. Several reports mentioned weakness in discretionary spending, as consumers’ price sensitivity remained elevated. Auto spending was buoyed notably in some Districts by improved inventories and dealer incentives, but sales remained sluggish in other Districts. Tourism activity increased modestly, on average, but reports varied widely. Manufacturing activity declined slightly, as only three Districts reported growth in that sector. Contacts reported slight increases in nonfinancial services activity, on average, and bank lending was roughly flat overall. Residential construction increased a little, on average, and home sales strengthened in most Districts. In contrast, nonresidential construction was flat, and commercial real estate leasing fell slightly. The economic outlook among contacts was cautiously optimistic, on balance. Labor Markets Employment rose at a slight pace overall, with nine Districts reporting very slow to modest increases, and the remaining three Districts reporting no changes in employment. Most Districts noted increases in labor supply and in the quality of job applicants. Several Districts reported improved retention of employees, and others pointed to staff reductions at some firms. Despite the improvements in labor supply, many Districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers, and hospitality workers. Wages grew at a moderate pace in eight Districts, with the remaining four noting only slight to modest wage increases. Multiple Districts said that annual wage growth rates had recently returned to their historical averages. On balance, contacts expected that labor demand and supply would remain relatively stable, with modest further job gains and continued moderation of wage growth back to pre-pandemic levels. Prices Price increases were modest, on average, running at about the same pace as in the last report. Disruptions in the Red Sea and the collapse of Baltimore’s Key Bridge caused some shipping delays but so far did not lead to widespread price increases. Movements in raw materials prices were mixed, but six Districts noted moderate increases in energy prices. Contacts in several Districts reported sharp increases in insurance rates, for both businesses and homeowners. Another frequent comment was that firms’ ability to pass cost increases on to consumers had weakened considerably in recent months, resulting in smaller profit margins. Inflation also caused strain at nonprofit entities, resulting in service reductions in some cases. On balance, contacts expected that inflation would hold steady at a slow pace moving forward. At the same time, contacts in a few Districts—mostly manufacturers—perceived upside risks to near-term inflation in both input prices and output prices. Highlights by Federal Reserve District Boston Business activity expanded at a modest pace in recent weeks, and prices rose slightly. Employment was flat overall, but one retailer reported significant layoffs. Convention and tourism activity grew at a robust pace. Home sales increased on a year-over-year basis, marking a turnaround. The outlook ranged from cautiously optimistic to bullish. New York On balance, regional economic activity remained flat. Labor market conditions were solid and continued to normalize as labor supply and labor demand came into better balance. Consumer spending was unchanged after a weak first quarter. Housing markets strengthened, with the spring selling season picking up beyond the seasonal norm. The pace of selling price increases remained modest. Philadelphia On balance, business activity was flat in the current Beige Book period—after declining slightly last period. Employment edged up, despite staffing and recruitment efforts slowing to a crawl. Wage and price inflation continue to moderate; however, housing affordability continues to be a concern. Overall, the outlook is positive, as firms remained optimistic about expectations for future growth. Cleveland District business activity increased modestly, as did employment. Firms anticipated greater ease filling open positions, including those that have been particularly challenging, because of increased labor availability. Wage pressures continued to normalize, and some contacts reduced starting wages for new roles. Cost and price pressures changed little. Richmond The regional economy grew at slight pace since our previous report. Consumer spending on retail goods was mixed but spending on travel and tourism was up slightly. Fifth District port activity slowed and was impacted by the collapse of the Francis Scott Key Bridge. Employment growth slowed from a moderate to a modest rate in recent weeks, but wages continued to grow moderately. Price growth also remained moderate. Atlanta The Sixth District economy grew modestly. Labor markets continued to stabilize; wage pressures eased. Many nonlabor costs moderated. Retail sales were steady, but consumers remained price conscious. Tourism remained robust. Commercial real estate conditions slowed. Transportation activity was mixed. Manufacturing grew slightly. Loan demand was flat. Energy activity improved. Chicago Economic activity increased slightly. Employment increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw no change in activity; and manufacturing and construction and real estate activity were flat. Prices and wages rose moderately, while financial conditions were stable. Prospects for 2024 farm income were unchanged. St. Louis Economic activity has continued to increase slightly since our previous report. Prices have increased modestly, as contacts are broadly feeling the pressures of increases in both labor and non-labor costs. The outlook was neutral to slightly optimistic, which is generally unchanged from our previous report, but better than one year ago. Minneapolis District economic activity grew slightly. Employment grew some, but labor demand was softer. Wage pressures were present but continued to ease, while price pressures ticked up. Consumer spending was mostly flat, and manufacturing slowed modestly. Commercial and residential construction improved […]