By Christopher Doering
WASHINGTON (Reuters) - Gary Gensler, the recently confirmed chairman of the U.S. Commodity Futures Trading Commission, said the Obama administration's plan to overhaul the financial regulatory system would lower risk and increase transparency, but he called on Congress for help.
"The president laid out a very bold agenda to regulate the markets," Gensler told CNBC television in an interview.
Gensler, who has pushed for overseeing both markets and dealers, said large financial institutions that deal in derivatives should be regulated for capital and margin requirements and be subjected to greater transparency.
"The way we do that is with Congress' help hopefully," he said, echoing his requests earlier this month for Congress to give CFTC more regulatory authority.
The CFTC was given a lot of attention in the 88-page white paper released on Wednesday. The package called for CFTC to coordinate with the Securities and Exchange Commission in overseeing dealers and trading of over-the-counter derivatives.
Derivatives such as credit default swaps were blamed for amplifying last fall's economic crisis.
"We'll be working along with the Securities and Exchange Commission to make sure that we police these and have clear authorities to do so," he said.
The White House's plan said the CFTC and the SEC should iron out their opposing philosophies in favor of common rules that will make it easier to find violators and introduce new financial instruments. It did not propose merging the two agencies.
The paper said the CFTC should have the authority to set position limits on OTC derivatives that perform or affect a significant price discovery function on futures markets.
Absent from the report were proposals to curb excessive speculation. Traders, farm groups and some farm state members of Congress blame a wave of hot money from hedge funds for driving commodities ranging from oil to wheat to record highs in 2008.
Gensler said there are "legitimate reasons why hedgers want speculators on the other side of the market place but we also have to make sure there is not some undue manipulation in these markets and there is not pressure beyond what is helpful to the markets to get a fair price discovery function."
(Reporting by Christopher Doering; Editing by Marguerita Choy)
Source: Reuters
Friday, June 19, 2009
No perjury charge against Sen. Burris: prosecutor
By Andrew Stern
CHICAGO (Reuters) - An Illinois prosecutor investigating the appointment of Roland Burris to President Barack Obama's vacant U.S. Senate seat said on Friday there was insufficient evidence to charge Burris with perjury.
Some of Burris' answers to questions posed by an Illinois legislative committee in January were vague, but he did not lie about his discussions with then-Governor Rod Blagojevich's aides concerning his appointment, Sangamon County Prosecutor John Schmidt said in a statement.
Blagojevich, who was impeached and ousted from office by state legislators, was indicted in April on corruption charges, including charges that he tried to sell the Senate seat.
"Some of (Burris') statements were vague, but vague statements cannot support a perjury charge," Schmidt said.
After Burris testified to the legislative committee, a requirement demanded by Senate leaders before they would agree to seat him, he amended the testimony in written form to explain that he had additional contacts with Blagojevich's brother, Rob.
An FBI tape-recording of Burris' conversation with Rob Blagojevich discussing fund-raising possibilities was released by federal prosecutor Patrick Fitzgerald's office as part of an ongoing Senate Ethics Committee investigation.
Burris and Blagojevich are both members of President Barack Obama's Democratic party.
Burris has insisted he did not offer Blagojevich anything in exchange for the seat, and has refused calls to resign. He has hinted he may campaign to be elected to the seat in 2010.
Blagojevich, who has pleaded innocent, was arrested December 9 but went ahead with the appointment of the black former Illinois attorney general few weeks later against the advice of fellow Democrats.
"(The) investigation was both thorough and fair, and I am glad that the truth has prevailed," Burris said in a statement.
"This matter has now been fully investigated; I cooperated at every phase of the process, and as I have said from the beginning, I have never engaged in any pay-to-play, never perjured myself, and came to this seat in an honest and legal way."
(Additional reporting by Tom Ferraro in Washington)
Source: Reuters
U.S., Chinese military officials to meet next week
WASHINGTON (Reuters) - Top U.S. and Chinese military officials will meet next week to discuss North Korea and maritime conflicts with the aim of improving cooperation between Beijing and Washington, the Pentagon said on Friday.
Pentagon policy chief Michele Flournoy will meet with Lieutenant General Ma Xiaotian, deputy chief of general staff of the People's Liberation Army, in Beijing on June 23 and 24, a senior Pentagon official said.
"North Korea will factor in very strongly," the official said. "We've learned that there's a lot of common interest here in international consensus to moderate North Korean behavior."
The first military-to-military talks between the United States and China since December 2007 are not expected to yield any landmark agreements but simply improve the lines of communication as China expands its military power.
China and the United States have been working together to rein in North Korea's nuclear ambitions.
North Korea conducted a nuclear test on May 25 and may be looking to launch a long-range missile toward Hawaii after the United Nations punished Pyongyang by toughening sanctions.
The U.S. Navy is tracking a North Korean ship under the new sanctions that bar Pyongyang from trading in weapons, including missile parts and nuclear material.
China's build-up of sea power has raised concerns in the United States, heightened by a series of standoffs in recent months between U.S. and Chinese ships.
Flournoy's visit will hopefully initiate more frequent meetings between military officials to ensure such incidents do not spiral out of control, the Pentagon official said.
"That's part of the rationale ... so we can understand their continuing buildup and make sure that the conditions for stability and peace are maintained," the official said.
After visiting Beijing, Flournoy will travel to Tokyo on June 25 and Seoul on June 26, the official said.
(Reporting by Andy Sullivan; Editing by Bill Trott)
Source: Reuters
Pentagon policy chief Michele Flournoy will meet with Lieutenant General Ma Xiaotian, deputy chief of general staff of the People's Liberation Army, in Beijing on June 23 and 24, a senior Pentagon official said.
"North Korea will factor in very strongly," the official said. "We've learned that there's a lot of common interest here in international consensus to moderate North Korean behavior."
The first military-to-military talks between the United States and China since December 2007 are not expected to yield any landmark agreements but simply improve the lines of communication as China expands its military power.
China and the United States have been working together to rein in North Korea's nuclear ambitions.
North Korea conducted a nuclear test on May 25 and may be looking to launch a long-range missile toward Hawaii after the United Nations punished Pyongyang by toughening sanctions.
The U.S. Navy is tracking a North Korean ship under the new sanctions that bar Pyongyang from trading in weapons, including missile parts and nuclear material.
China's build-up of sea power has raised concerns in the United States, heightened by a series of standoffs in recent months between U.S. and Chinese ships.
Flournoy's visit will hopefully initiate more frequent meetings between military officials to ensure such incidents do not spiral out of control, the Pentagon official said.
"That's part of the rationale ... so we can understand their continuing buildup and make sure that the conditions for stability and peace are maintained," the official said.
After visiting Beijing, Flournoy will travel to Tokyo on June 25 and Seoul on June 26, the official said.
(Reporting by Andy Sullivan; Editing by Bill Trott)
Source: Reuters
China ministry "regrets" U.S. tire trade finding
BEIJING (Reuters) - China's Ministry of Commerce expressed "deep regret" at a U.S. trade panel ruling that Chinese tires had flooded the U.S. market, the first step in what could be the Obama administration's first trade dispute with Beijing.
The International Trade Commission found that a surge of low-cost tires from China had disrupted U.S. markets, following a complaint by the United Steelworkers union which hopes to cap Chinese tire imports at their 2005 level.
"China has repeatedly expressed its opposition to foreign governments' using safeguard clauses to launch investigations of Chinese products," Commerce Ministry spokesman Yao Jian said in a statement posted on the ministry's website on Friday.
"The decision does not conform to objective facts, and also violates relevant World Trade Organization rules in addition to U.S. law."
Lawyers representing Chinese tire producers argue that U.S. companies largely abandoned the low-range tire market before Chinese manufacturers moved in. They also noted that no U.S. tire producers had joined the steelworkers' complaint.
"We hope the U.S. will fully consider the actual situation of this case and proceed from the overall interests of the two countries' industries," Yao said.
U.S.-based steel makers have long complained that Chinese incentives to its steel industry have resulted in a flood of steel exports to countries like the United States. Tires are often reinforced with steel wire.
The union's complaint says that closings of U.S. plants by Goodyear, Continental Tire, and Bridgestone/Firestone have cost thousands of jobs.
This is not the first time that imported Chinese tires have ruffled relations between the two countries. Two years ago, Chinese-made radial tires imported by an American dealer were recalled after the manufacturer stopped including a safety feature that prevented the tires from separating.
(Reporting by Lucy Hornby, Editing by Dean Yates)
Source: Reuters
The International Trade Commission found that a surge of low-cost tires from China had disrupted U.S. markets, following a complaint by the United Steelworkers union which hopes to cap Chinese tire imports at their 2005 level.
"China has repeatedly expressed its opposition to foreign governments' using safeguard clauses to launch investigations of Chinese products," Commerce Ministry spokesman Yao Jian said in a statement posted on the ministry's website on Friday.
"The decision does not conform to objective facts, and also violates relevant World Trade Organization rules in addition to U.S. law."
Lawyers representing Chinese tire producers argue that U.S. companies largely abandoned the low-range tire market before Chinese manufacturers moved in. They also noted that no U.S. tire producers had joined the steelworkers' complaint.
"We hope the U.S. will fully consider the actual situation of this case and proceed from the overall interests of the two countries' industries," Yao said.
U.S.-based steel makers have long complained that Chinese incentives to its steel industry have resulted in a flood of steel exports to countries like the United States. Tires are often reinforced with steel wire.
The union's complaint says that closings of U.S. plants by Goodyear, Continental Tire, and Bridgestone/Firestone have cost thousands of jobs.
This is not the first time that imported Chinese tires have ruffled relations between the two countries. Two years ago, Chinese-made radial tires imported by an American dealer were recalled after the manufacturer stopped including a safety feature that prevented the tires from separating.
(Reporting by Lucy Hornby, Editing by Dean Yates)
Source: Reuters
Congress sends $106 billion war funds bill to Obama
By Jeremy Pelofsky
WASHINGTON (Reuters) - The U.S. Congress on Thursday sent President Barack Obama a $106 billion bill to pay for the Iraq and Afghanistan wars after political sparring that could foreshadow tougher fights over Obama's agenda.
The bill, delayed by disputes over quickly closing the U.S. prison at Guantanamo Bay and expanding support for the IMF, highlighted the difficulties Obama may face in Congress even though his fellow Democrats control both the Senate and House of Representatives.
The bill contains $79.9 billion to continue fighting the two wars, $7.7 billion to address the H1N1 flu pandemic, and $1.4 billion in foreign aid for Pakistan, which is fighting Taliban militants spilling over the border from Afghanistan.
"The bill before us represents a balanced compromise between the issues and funding recommended by the House and Senate," said Democratic Senator Daniel Inouye, chairman of the Senate Appropriations Committee.
The Senate voted 91-5, with most Republicans joining Democrats to support it. Obama is expected to sign it into law. The House approval on Tuesday garnered only five Republican votes and 32 Democrats voted against it.
Democrats have a commanding majority in the House, but still need to keep centrist Democrats aboard and win a few Republican votes in the Senate to forestall any procedural roadblocks mounted by the opposition party.
After weeks of tense negotiations among the White House, Democrats and Republicans, lawmakers put limits on Obama's efforts to close the controversial prison at Guantanamo Bay, Cuba, where more than 200 terrorism suspects are being held.
LIMITS ON DETAINEES
The legislation permits the administration to bring suspects to U.S. soil for trial but not permanent detention. It also bans the release in the United States of any detainees who have been cleared of wrongdoing through September 30.
Republicans and, later, Democrats demanded the White House produce a detailed plan before shutting the facility down. In the meantime, the administration has rushed to release or transfer more than a dozen detainees.
Another obstacle was a $100 billion credit line for the International Monetary Fund, which is working to help developing countries survive the economic downturn, an $8 billion increase in the U.S. contribution to the lender, and U.S. support for the IMF's plan to sell 400 tons (12.97 million ounces) of its gold reserves.
House Republicans had expressed concern the IMF would use the funds to lend to U.S. foes like Iran and Venezuela and also argued the matter should have been considered separately.
With the bill's passage, Obama can follow through on a commitment he made with other Group of 20 member nations to add $500 billion to an IMF emergency fund for countries needing financial aid to avoid bankruptcy.
The Senate also fought off an attempt to strip out $1 billion set for a program to boost flagging U.S. car sales by offering vouchers to encourage consumers to trade in their less fuel-efficient vehicles for ones that get better mileage.
Republican Senator Judd Gregg had argued the program was not paid for and should not be allowed to add to the growing debt. Auto sales are off 40 percent this year. Continued...
Source: Reuters
Congress carves into Obama financial rule reforms
Tightening rules
Play Video
By Kevin Drawbaugh
WASHINGTON (Reuters) - Senior U.S. lawmakers launched an assault on Thursday on the centerpiece of the Obama administration's financial reform plan -- giving the Federal Reserve new powers to police broad risks in the economy.
In addition to handling monetary policy, under the Obama plan the Fed would regulate "systemic risk" and try to prevent future financial crises, working with an inter-agency council.
"The Federal Reserve system was not designed to carry out the systemic risk oversight mission the administration proposes to give it," Senator Richard Shelby, the top Republican on the U.S. Senate Banking Committee, said at a hearing.
Concluding that the Fed is better qualified than any other government agency to handle such a job "represents a grossly inflated view of the Fed's expertise," Shelby said, reflecting the rapid spread of 'Fed fatigue' on Capitol Hill.
A day after President Barack Obama unveiled his plan, Treasury Secretary Timothy Geithner was defending it in testimony before the banking committee in the first of more than a dozen hearings before Congress by mid-July.
Other points of contention emerged during the session, including a proposal for establishing a consumer financial product safety agency and the administration's decision not to pursue more streamlining of bank supervisors.
The likelihood of the Obama plan emerging intact from Congress is remote, said William Donaldson, former chairman of the U.S. Securities and Exchange Commission, in an interview.
He called the plan "pretty positive, not too radical ... Now it becomes a matter of everybody else throwing their oar in. Clearly there are some differing opinions ...
"I think there's a feeling that maybe too much is being thrown into the Federal Reserve," he said. "I find it hard to believe they'll get anything done before year-end."
Geithner urged Congress to act quickly on regulatory reform in response to the crisis, which has focused public and government attention worldwide on oversight of banks and markets.
"We may disagree about the details, and we will have to work through those issues. But ordinary Americans have suffered too much; trust in our financial system has been too shaken; our economy has been brought too close to the brink for us to let this moment pass," he said.
BIGGEST CHANGES SINCE 1930S
Obama is proposing the most far-reaching changes in U.S. financial regulation since the 1930s, mirroring a similar effort already under way in the European Union.
Much of the Obama plan, under development for six months, will require legislative action from Congress. The president wants to sign legislation into law before the end of the year, an ambitious schedule as other pressing issues, including healthcare reform, are competing for Congress' time.
In the House of Representatives, where Democrats are in firm control, quick action is expected. But the outlook is unclear in the Senate, where the balance of power is held by a handful of moderates, some of them banking committee members. Continued...
Source: Reuters
Pelosi backs "self-sufficient" public health plan
By Donna Smith
WASHINGTON (Reuters) - House Speaker Nancy Pelosi said on Thursday a new self-sufficient government medical plan under President Barack Obama's healthcare reform would be part of House legislation, as a Senate panel weighed an alternative that would create nonprofit medical cooperatives.
The government plan, the so-called public option, is likely to be the most controversial provision in draft legislation that three committees in the House of Representatives are expected to make public on Friday.
"I have every confidence that we will have a public option coming out of the House of Representatives -- that will be one that is actuarially sound, administratively self-sufficient, one that contributes as to competition, does not eliminate competition," Pelosi told a news conference.
"It may not be called public option but it will be a level playing field," she said.
Pelosi said the government plan, once established, would not receive continuing government funding.
Healthcare reform is Obama's top legislative priority, which he believes is needed to help put the U.S. economy back on a sound footing as it emerges from the recession.
U.S. healthcare costs nearly 16 percent of gross domestic product, roughly twice what many developed countries pay per capita. Costs are rising much faster than inflation, yet 46 million people are uninsured and have little access to care.
Obama and other Democrats who want a new government plan to help cover the uninsured argue the competition is need to keep insurance premiums low. Republicans strongly oppose a new public plan, saying it would drive insurance companies out of business and lead to a government-led medical system.
The Senate Finance Committee, one of two Senate panels drafting health reform legislation, is considering the cooperative alternative as a way to win some Republican support for the overhaul.
A draft summary of the Senate Finance bill posted on The Washington Post website described the proposed cooperatives as a consumer-oriented and consumer-governed nonprofit corporation. Panel members told reporters the co-op proposal was still being negotiated.
'COALITION OF THE WILLING'
Democratic Committee Chairman Max Baucus met behind closed doors on Thursday with panel members, including some Republicans -- a group he called a "coalition of the willing" -- to try to reach agreement on a $1 trillion bill that aims to cut soaring healthcare costs and provide medical coverage to the millions of uninsured.
"We are getting closer and closer and closer. There is no doubt in my mind we are getting closer to a bipartisan bill," Baucus told reporters. He and other senators attending the session said no agreement had been reached. Many issues remained unresolved, including whether employers should offer health benefits to their workers, they said.
The draft shows that senators are considering requiring employers whose workers receive Medicaid or proposed government tax subsidies for insurance to help pay for that coverage.
It would also limit the ability of workers to drop out of employer-sponsored health plans in favor of subsidized insurance that would be offered through state exchanges -- clearinghouses where businesses and individuals could shop for insurance. Continued...
Source: Reuters
Obama still concerned about oil speculation: White House
WASHINGTON (Reuters) - President Barack Obama remains concerned about speculation in the oil markets even though he has not proposed concrete steps to rein it in, White House spokesman Robert Gibbs said on Thursday.
Asked why Obama's regulatory reforms this week did not include changes to deal with speculation in oil markets, Gibbs said, "I don't think the president's concern has changed" but the proposals this week were focused on stabilizing financial markets.
"I don't know if it's a part of a future proposal," Gibbs said of dealing with oil speculation.
"The great concern that drove the process for financial regulatory reform that was outlined by the president yesterday was ensuring that the causes for the economic catastrophe that we saw over the past many months ... be remedied to ensure that they don't happen again," he said.
As a presidential candidate, Obama supported enaction of requirements that would limit U.S. energy futures to trade only on regulated exchanges. He also urged gathering more data on index funds and other large investors in futures market blamed for record high oil prices last year.
Oil prices hit records above $147 a barrel last summer, then fell as the recession took hold, hitting lows in the $30s last December. Since then oil has surged, and was trading above $71 a barrel on Thursday on the New York Mercantile exchange.
Several lawmakers have blamed excessive speculation in the futures market for the latest surge in oil prices, which is also lifting gasoline costs.
Sen. Bernie Sanders, Independent of Vermont, introduced legislation last week that would order the Commodity Futures Trading Commission to use its emergency powers to stop market speculators from pushing up oil prices.
Last summer when oil prices hit record levels, numerous bills aimed at reining in speculation were offered, but no major overhaul of energy markets was adopted.
The CFTC, which oversees commodity markets, said earlier this year it has not found evidence that any specific traders were responsible for the run up in oil prices in 2008.
(Reporting by Ayesha Rascoe and David Alexander; Editing by David Gregorio)
Source: Reuters
Asked why Obama's regulatory reforms this week did not include changes to deal with speculation in oil markets, Gibbs said, "I don't think the president's concern has changed" but the proposals this week were focused on stabilizing financial markets.
"I don't know if it's a part of a future proposal," Gibbs said of dealing with oil speculation.
"The great concern that drove the process for financial regulatory reform that was outlined by the president yesterday was ensuring that the causes for the economic catastrophe that we saw over the past many months ... be remedied to ensure that they don't happen again," he said.
As a presidential candidate, Obama supported enaction of requirements that would limit U.S. energy futures to trade only on regulated exchanges. He also urged gathering more data on index funds and other large investors in futures market blamed for record high oil prices last year.
Oil prices hit records above $147 a barrel last summer, then fell as the recession took hold, hitting lows in the $30s last December. Since then oil has surged, and was trading above $71 a barrel on Thursday on the New York Mercantile exchange.
Several lawmakers have blamed excessive speculation in the futures market for the latest surge in oil prices, which is also lifting gasoline costs.
Sen. Bernie Sanders, Independent of Vermont, introduced legislation last week that would order the Commodity Futures Trading Commission to use its emergency powers to stop market speculators from pushing up oil prices.
Last summer when oil prices hit record levels, numerous bills aimed at reining in speculation were offered, but no major overhaul of energy markets was adopted.
The CFTC, which oversees commodity markets, said earlier this year it has not found evidence that any specific traders were responsible for the run up in oil prices in 2008.
(Reporting by Ayesha Rascoe and David Alexander; Editing by David Gregorio)
Source: Reuters
Senators hit at core of Obama financial reforms
Tightening rules
Play Video
By Kevin Drawbaugh
WASHINGTON (Reuters) - Senior U.S. lawmakers launched an assault on Thursday on the centerpiece of the Obama administration's financial reform plan -- giving the Federal Reserve new powers to police broad risks in the economy.
In addition to handling monetary policy, under the Obama plan the Fed would regulate "systemic risk" and try to prevent future financial crises, working in tandem with an inter-agency council.
"The Federal Reserve system was not designed to carry out the systemic risk oversight mission the administration proposes to give it," Senator Richard Shelby, the top Republican on the U.S. Senate Banking Committee, said at a hearing.
Concluding that the Fed is better qualified than any other government agency to handle such a job "represents a grossly inflated view of the Fed's expertise," Shelby said, reflecting the rapid spread of 'Fed fatigue' on Capitol Hill.
A day after President Barack Obama unveiled his plan, Treasury Secretary Timothy Geithner was defending it in testimony before the banking committee in the first of more than a dozen hearings before Congress by mid-July.
Other points of contention emerged during the session, including a proposal for establishing a consumer financial product safety agency, and the administration's decision not to pursue more streamlining of bank supervisors.
Geithner urged Congress to act fast on regulatory reform in response to the crisis, which has focused public and government attention worldwide on oversight of banks and markets.
"We may disagree about the details, and we will have to work through those issues. But ordinary Americans have suffered too much; trust in our financial system has been too shaken; our economy has been brought too close to the brink for us to let this moment pass," he said.
BIGGEST CHANGES SINCE 1930S
Obama is proposing the most far-reaching changes in U.S. financial regulation since the 1930s, mirroring a similar effort already under way in the European Union.
Much of the Obama plan, under development for six months, will require legislative action from Congress. The president wants to sign legislation into law before the end of the year, an ambitious schedule as other pressing issues, such as healthcare reform, are competing for Congress' time.
In the House of Representatives, where Democrats are in firm control, quick action is expected. But the outlook is unclear in the Senate, where the balance of power is held by a handful of moderates, some of them banking committee members.
At the panel hearing, Geithner sat alone at a long, black-draped table. Criticized early in his tenure as too timid under questioning from lawmakers, he was assertive, at times asking Senator Christopher Dodd, the Democratic chairman of the committee, for more time to make key points.
Dodd warned the financial industry against attacking the proposal for setting up a financial products safety agency.
"This is a very simple, common-sense idea ... Let's put a cop on the beat," Dodd said. "Stronger consumer protection, I believe, would have stopped this crisis before it started." Continued...
Source: Reuters
Top general warns against ending F-22 fighter
By Jim Wolf
WASHINGTON (Reuters) - A top Air Force general, swerving from the Pentagon leadership, said ending production of Lockheed Martin Corp's F-22 Raptor fighter jet, as proposed by President Barack Obama, would put current U.S. military strategy at high risk.
"In my opinion, a fleet of 187 F-22s puts execution of our current national military strategy at high risk in the near to mid-term," Gen. John Corley, head of the Air Combat Command, wrote in a June 9 letter to a senator.
"To my knowledge, there are no studies that demonstrate 187 F-22s are adequate to support our national military strategy," he said in the letter to Sen. Saxby Chambliss, a Republican from Georgia, where the plane undergoes final assembly.
An analysis by the Air Combat Command, which supplies warplanes to regional U.S. warfighting commands, "done in concert with Headquarters Air Force, shows a moderate risk can be obtained with an F-22 fleet of approximately 250 aircraft," added Corley, who has announced plans to retire.
Defense Secretary Robert Gates has urged Congress to end purchases of the radar-evading F-22, the top U.S. fighter, on the ground that there was no military requirement for more. With production capped at 187, the last would roll off the line in late 2011 or early 2012.
The House of Representatives' Armed Services Committee voted 31 to 30 early Wednesday to authorize purchase of 12 more F-22s with a down payment of $369 million in fiscal 2010, which starts October 1. The provision kicked off a battle likely to last well into the fall as the matter comes to votes elsewhere in the House and Senate.
Gates, at a Pentagon briefing Thursday, said he had a "big problem" with the House panel's action.
"Frankly, to be blunt about it, the notion that not buying 60 more F-22s imperils the national security of the United States I find completely nonsense," he said.
On April 13, the Air Force's top civilian and top officer, citing tight budget constraints, formally endorsed Gates' proposal to wrap up F-22 production.
"This is the time to make the transition from F-22 to F-35 production," Air Force Secretary Michael Donley and General Norton Schwartz, the chief of staff, wrote in a Washington Post guest column at the time.
The Air Force had no immediate comment on its leaders' reaction to Corley, a former vice chief of staff and senior acquisition official.
Retired Lt. Gen. Michael Dunn, president of the Air Force Association, a support group, said Corley's assessment should serve as a "wake-up call" to members of Congress who are weighing what to do about the F-22.
In recent years, the Air Force's push to buy as many as 381 F-22s has been a major irritant in the Pentagon. A year ago, Gates forced the resignations of then-Secretary Michael Wynne and General Michael Moseley, then the chief of staff, amid strains over their drive to buy more for potential major conflicts.
Rep. Neil Abercrombie of Hawaii, a senior Democrat on the House Armed Services panel, said Thursday he expected Congress to fund at least 20 F-22s in the fiscal 2010 defense budget now under review.
Boeing Co is a key F-22 subcontractor. Abercrombie heads the subcommittee that oversees land and air programs. Continued...
Source: Reuters
U.S. panel: Chinese imports hurting U.S. tire market
By Susan Cornwell
WASHINGTON (Reuters) - A U.S. trade panel said on Thursday China was unfairly flooding the U.S. market with tires, the first step in a test case of how the Obama administration will handle trade disputes with Beijing.
In a 4-2 vote, the International Trade Commission found that a surge of low-cost tires from China had disrupted U.S. markets. Later this month, it will recommend a remedy to President Barack Obama.
The United Steelworkers union, which brought the complaint arguing that the imports have cost thousands of U.S. jobs, wants Obama to cap Chinese tire imports at their 2005 level.
Responding to the ruling, USW president Leo Gerard said the union hoped Obama would keep "a campaign pledge to crack down on China's unfair trading practices."
"Our domestic industries cannot survive unless our government enforces the trade laws that are designed to curb and dissuade anti-competitive practices that cause market disruptions," Gerard said in a statement.
Lawyers representing Chinese tire producers argue that U.S. companies largely abandoned the low-range tire market before Chinese manufacturers moved in. They also noted that no U.S. tire producers had joined the steelworkers' complaint.
The U.S.-based Tire Industry Association, an international group that represents all segments of the tire industry, called the USW petition a "protectionist" move.
Vic Delorio, executive vice president of Chinese tire maker GITI, said he was disappointed but did not believe U.S. manufacturers would increase production of low-cost tires.
"Instead, if there is a barrier placed on tires produced in China, we believe that U.S. manufacturers will simply increase importation of tires from other countries, such as Poland and Venezuela," he said. "We also believe that quotas or tariffs will lead to higher costs for American consumers."
The commission is expected to recommend a remedy by the end of June. A presidential decision is not due until September.
Trade experts are watching to see whether Obama, who won strong labor support in his bid for the White House, will be tougher on China than predecessor George W. Bush, who routinely rejected petitions for restricting imports from Beijing.
Democratic lawmakers backing the steelworkers's complaint hope Obama will use the case to chart a new course of tougher enforcement of trade laws, which allow quotas in some cases.
The steelworkers want Obama to restrict Chinese tire imports to 21 million, the 2005 level, with an increase of five percent per year over a three-year period.
The union said some 5,100 U.S. workers have lost jobs because of low-price Chinese tire imports, and another 3,000 jobs were at risk this year. The imports increased 215 percent in volume from 2004 to 2008, hitting 46 million tires worth $1.7 billion in 2008, the union said.
It cited closings of U.S. plants by Goodyear, Continental Tire, and Bridgestone/Firestone, and said more closings are pending. Continued...
Source: Reuters
WASHINGTON (Reuters) - A U.S. trade panel said on Thursday China was unfairly flooding the U.S. market with tires, the first step in a test case of how the Obama administration will handle trade disputes with Beijing.
In a 4-2 vote, the International Trade Commission found that a surge of low-cost tires from China had disrupted U.S. markets. Later this month, it will recommend a remedy to President Barack Obama.
The United Steelworkers union, which brought the complaint arguing that the imports have cost thousands of U.S. jobs, wants Obama to cap Chinese tire imports at their 2005 level.
Responding to the ruling, USW president Leo Gerard said the union hoped Obama would keep "a campaign pledge to crack down on China's unfair trading practices."
"Our domestic industries cannot survive unless our government enforces the trade laws that are designed to curb and dissuade anti-competitive practices that cause market disruptions," Gerard said in a statement.
Lawyers representing Chinese tire producers argue that U.S. companies largely abandoned the low-range tire market before Chinese manufacturers moved in. They also noted that no U.S. tire producers had joined the steelworkers' complaint.
The U.S.-based Tire Industry Association, an international group that represents all segments of the tire industry, called the USW petition a "protectionist" move.
Vic Delorio, executive vice president of Chinese tire maker GITI, said he was disappointed but did not believe U.S. manufacturers would increase production of low-cost tires.
"Instead, if there is a barrier placed on tires produced in China, we believe that U.S. manufacturers will simply increase importation of tires from other countries, such as Poland and Venezuela," he said. "We also believe that quotas or tariffs will lead to higher costs for American consumers."
The commission is expected to recommend a remedy by the end of June. A presidential decision is not due until September.
Trade experts are watching to see whether Obama, who won strong labor support in his bid for the White House, will be tougher on China than predecessor George W. Bush, who routinely rejected petitions for restricting imports from Beijing.
Democratic lawmakers backing the steelworkers's complaint hope Obama will use the case to chart a new course of tougher enforcement of trade laws, which allow quotas in some cases.
The steelworkers want Obama to restrict Chinese tire imports to 21 million, the 2005 level, with an increase of five percent per year over a three-year period.
The union said some 5,100 U.S. workers have lost jobs because of low-price Chinese tire imports, and another 3,000 jobs were at risk this year. The imports increased 215 percent in volume from 2004 to 2008, hitting 46 million tires worth $1.7 billion in 2008, the union said.
It cited closings of U.S. plants by Goodyear, Continental Tire, and Bridgestone/Firestone, and said more closings are pending. Continued...
Source: Reuters
Senator raps Obama stalling on trade deals
WASHINGTON (Reuters) - The United States risks being "wallflowers at the dance" as other countries pursue trade deals while the Obama administration sits on the sidelines, a senior Republican senator said on Thursday.
The Democratic Obama administration so far has only produced false starts on trade, allowing itself to be sidetracked by congressional Democrats and unionists who oppose some trade deals, Senator Charles Grassley said.
He said he feared the White House would not submit a free trade agreement with Panama to the Democratic-controlled Congress for approval before next year and doubted another pact negotiated with Colombia would come up even then.
Grassley, the senior Republican on the Senate Finance Committee, sensed no White House plan for submitting to lawmakers a trade deal that the United States negotiated with South Korea. All three pacts were negotiated by the Bush administration but must be ratified by Congress to go into effect.
"We are in need of real leadership to make sure that the United States remains at the economic forefront for the coming decades, but the president and his advisers are sidetracked by political considerations," Grassley told a trade association breakfast in Washington.
"All we've seen is false starts from the administration, and even more backsliding from the majority party, particularly in the House," he said.
Obama administration officials have sent conflicting signals on trade this year. Initially, they said they were working hard on readying the Panama deal for Congress.
Then they indicated last month that the Panama deal would wait until Obama outlined a new trade policy framework, and said this framework needed to be in sync with domestic policy.
Meanwhile some 50 House of Representatives Democrats have demanded that the Panama deal be renegotiated, saying they are concerned about Panama's tax and labor laws.
Grassley warned that U.S. exports had fallen this year as officials dithered over trade pacts. Meanwhile Canada was conducting trade negotiations with Panama and had already completed talks with Colombia, he said. The European Union was also negotiating with Colombia and South Korea, he said.
"We've in a sense been wallflowers at this dance before," Grassley said. Between 1995 and 2002, U.S. negotiating partners concluded over a hundred trade deals while the United States clinched just three, he said.
(Editing by Eric Beech)
Source: Reuters
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