Ethiopia’s state-owned telecommunications company has started selling shares to the public, in a move aimed at establishing a new national stock market and giving Ethiopians a stake in the company, one of the country’s largest and most profitable.

Ethio Telecom will be the first company listed on the new Ethiopian Securities Exchange, or ESX, which is set to begin operating in November. It will be the country’s first stock market since the 1970s.

Ethiopia Prime Minister Abiy Ahmed said last Wednesday that the 130-year-old Ethio Telecom is offering 10% of its shares to the public, 100 million shares in all.

Investors, who must be Ethiopian nationals, can buy up to 3,333 shares of the company at a price of 300 birr, or about $2.50 per share.  

CEO Frehiwot Tamiru said the company will now be called Ethio Telecom PLC.

“Today marks a significant milestone as we launch the sale of Ethio Telecom shares, an essential step in our ongoing journey from political revolution to evolution over the past six years,” Abiy said in a post on X.

He said offering the shares lays “the groundwork for Ethiopia’s stock market and expanding access to ownership in one of the nation’s leading state-owned enterprises, which has now evolved into a share company.”

Ethiopia, once a communist country aligned with the Soviet Union, has gradually allowed greater foreign investment and has slowly privatized state companies, though the government still owns and controls key banking, telecom and transportation firms.

Not everyone sees the sale of Ethio Telecom shares as a sure winner for the Ethiopian public. Ethiopian economist and the executive director of Initiative Africa, Kibur Gena, is concerned that only wealthy Ethiopians will be able to invest in the company.

“This raises questions, in my opinion, of fairness and inclusivity,” he said.  “Such a move might provide, of course, immediate financial benefits to the government; it could also perpetuate inequalities in wealth distribution and restrict, of course, broader public participation in national assets.”

Kibur argues that this approach to privatization could lead to a “deeper wealth gap” and make it harder for the majority of Ethiopians to gain access to economic opportunities.’

“This would certainly contradict the principles of economic equity, which many argue that, when you sell public assets or public resources, they should be distributed more widely to ensure that economic benefits reach marginalized or less affluent groups.”

Ethio Telecom sees it differently.  To help ensure that the share sale is inclusive, investors can buy as few as 33 shares, purchasable for 9,900 birr ($82), according to a company post on Facebook.

However, many Ethiopians don’t even earn $82 in a month, according to World Bank data.

Asked why the privatization of state companies have been slow in Ethiopia, Kibur said it can be seen as a “pragmatic strategy to protect national development goals” and “maintain economic sovereignty.”

“In many ways, privatization may eventually happen and it is happening,’’ he said. ‘’Many economists would argue that it should be done gradually with strong regulatory frameworks in place so that it can ensure that it contributes to long-term development and social stability rather than short-term market efficiency.”

Abiy said Ethio Telecom generated about $829 million in revenue and $239 million in profit during 2023, noting the amount is the most income generated for the state, compared to all other domestic and foreign companies operating in Ethiopia, including commercial banks, combined.

“We are doing this so that people could have confidence in it and join the stock market but it would have continued to be profitable even if we didn’t sell shares,” the prime minister said.

Abiy hinted the government may offer more stakes for sale.

“The sale of shares that we started with Ethio Telecom may continue with Ethiopian Airlines, with hotels and other sectors,” he said.

This story originated in VOA’s Horn of Africa Service. 
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Washington — The International Monetary Fund on Tuesday upgraded its economic outlook for the United States this year, while lowering its expectations for growth in Europe and China. It left its forecast for global growth unchanged at a relatively lackluster 3.2% for 2024. 

The IMF expects the U.S. economy — the world’s largest — to expand 2.8% this year, down slightly from 2.9% in 2023 but an improvement on the 2.6% it had forecast for 2024 back in July. Growth in the United States has been led by strong consumer spending, fueled by healthy gains in inflation-adjusted wages. 

Next year, though, the IMF expects the U.S. economy to decelerate to 2.2% growth. With a new presidential administration and Congress in place, the IMF envisions the nation’s job market losing some momentum in 2025 as the government begins seeking to curb huge budget deficits by slowing spending, raising taxes or some combination of both. 

The IMF, a 190-nation lending organization, works to promote economic growth and financial stability and reduce global poverty. In its latest forecast, it expects China’s economic growth to slow from 5.2% last year to 4.8% this year and 4.5% in 2025. The world’s No. 2 economy has been hobbled by a collapse in its housing market and by weak consumer confidence — problems only partly offset by strong exports. 

The 20 European countries that share the euro currency are collectively expected to eke out 0.8% growth this year, twice the 2023 expansion of 0.4% but a slight downgrade from the 0.9% the IMF had forecast three months ago for 2024. The German economy, hurt by a slump in manufacturing and real estate, isn’t expected to grow at all this year. 

Worldwide inflation has been cooling — from 6.7% in 2023 to a forecast 5.8% this year and 4.3% in 2025. It’s falling even faster in the world’s wealthy countries, from 4.6% last year to a forecast 2.6% this year and 2% — the target range for most major central banks — in 2025. The progress against inflation has allowed the Fed and the European Central Bank to finally reduce rates after they had aggressively raised them to combat the post-COVID-19 inflation surge. 

But just as lower borrowing costs aid the world’s economies, the IMF warned, the need to contain enormous government deficits will likely put a brake on growth. The overall world economy is expected to grow 3.2% in both 2024 and 2025, down a tick from 3.3% last year. That’s an unimpressive standard: From 2000 through 2019, before the pandemic upended economic activity, global growth had averaged 3.8% a year. 

The IMF also continues to express concern that geopolitical tension, including antagonism between the United States and China, could make world trade less efficient. The concern is that more countries would increasingly do business with their allies instead of seeking the lowest-priced or best-made foreign goods. Still, global trade, measured by volume, is expected to grow 3.1% this year and 3.4% in 2025, improving on 2023’s anemic 0.8% increase. 

India’s economy is expected to 7% this year and 6.5% in 2025. While still strong, that pace would be down from 8.2% growth last year, a result of consumers slowing their spending after a post-pandemic boom. 

The IMF predicts that Japan’s economy, hurt by production problems in the auto industry and a slowdown in tourism, will expand by a meager 0.3% this year before accelerating to 1.1% growth in 2025. 

The United Kingdom is projected to register 1.1% growth this year, up from a dismal 0.3% in 2023, with falling interest rates helping spur stronger consumer spending.
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Detroit — Had she wanted to, Michelle Chumley could have afforded a pricey new SUV loaded with options. But when it came time to replace her Chevrolet Blazer SUV, for which she’d paid about $40,000 three years ago, Chumley chose something smaller. And less costly.  

With her purchase of a Chevrolet Trax compact SUV in June, Chumley joined a rising number of buyers who have made vehicles in the below-average $20,000-to-$30,000 range the fastest-growing segment of the nation’s new-auto market.  

“I just don’t need that big vehicle and to be paying all of that gas money,” said Chumley, a 56-year-old nurse who lives outside Oxford, Ohio, near Cincinnati.  

Across the industry, auto analysts say, an “affordability shift” is taking root. The trend is being led by people who feel they can no longer afford a new vehicle that would cost them roughly today’s average selling price of more than $47,000 — a jump of more than 20% from the pre-pandemic average.  

To buy a new car at that price, an average buyer would have to spend $737 a month, if financed at today’s average loan rate of 7.1%, for just under six years before the vehicle would be paid off, according to Edmunds.com, an auto research and pricing site. For many, that is financially out of reach.  

Yet there are other buyers who, like Chumley, could manage the financial burden but have decided it just isn’t worth the cost. And the trend is forcing America’s automakers to reassess their sales and production strategies. With buyers confronting inflated prices and still-high loan rates, sales of new U.S. autos rose only 1% through September over the same period last year. If the trend toward lower-priced vehicles proves a lasting one, more generous discounts could lead to lower average auto prices and slowing industry profits.  

“Consumers are becoming more prudent as they face economic uncertainty, still-high interest rates and vehicle prices that remain elevated,” said Kevin Roberts, director of market intelligence at CarGurus, an automotive shopping site. “This year, all of the growth is happening in what we would consider the more affordable price buckets.”  

Under pressure to unload their more expensive models, automakers have been lowering the sales prices on many such vehicles, largely by offering steeper discounts. In the past year, the average incentive per auto has nearly doubled, to $1,812, according to Edmunds. General Motors has said it expects its average selling price to drop 1.5% in the second half of the year.  

Through September, Roberts has calculated, new-vehicle sales to individual buyers, excluding sales to rental companies and other commercial fleets, are up 7%. Of that growth, 43% came in the $20,000-to-$30,000 price range — the largest share for that price category in at least four years. (For used vehicles, the shift is even more pronounced: 59% sales growth in the $15,000-to-$20,000 price range over that period.)  

Sales of compact and subcompact cars and SUVs from mainstream auto brands are growing faster than in any year since 2018, according to data from Cox Automotive.  

The sales gains for affordable vehicles is, in some ways, a return to a pattern that existed before the pandemic. As recently as 2018, compact and subcompact vehicles — typically among the most popular moderately priced vehicles — had accounted for nearly 35% of the nation’s new vehicle sales.  

The proportion started to fall in 2020, when the pandemic caused a global shortage of computer chips that forced automakers to slow production and allocate scarce semiconductors to more expensive trucks and large SUVs. As buyers increasingly embraced those higher-priced vehicles, the companies posted robust earnings growth.  

In the meantime, they deemed profit margins for lower-prices cars too meager to justify significant production of them. By 2022, the market share of compact and subcompact vehicles had dropped below 30%.  

This year, that share has rebounded to nearly 34% and rising. Sales of compact sedans were up 16.7% through September from 12 months earlier. By contrast, CarGurus said, big pickups rose just under 6%. Sales of large SUVs are barely up at all — less than 1%.  

Ford’s F-Series truck remains the top-selling vehicle in the United States this year, as it has been for nearly a half-century, followed by the Chevrolet Silverado. But Stellantis’ Ram pickup, typically No. 3, dropped to sixth place, outpaced by several less expensive small SUVs: the Toyota RAV4, the Honda CR-V and the Tesla Model Y (with a $7,500 U.S. tax credit).  

The move in buyer sentiment toward affordability came fast this year, catching many automakers off guard, with too-few vehicles available in lower price ranges. One reason for the shift, analysts say, is that many buyers who are willing to plunk down nearly $50,000 for a new vehicle had already done so in the past few years. People who are less able — or less willing — to spend that much had in many cases held on to their existing vehicles for years. The time had come for them to replace them. And most of them seem disinclined to spend more than they have to.  

With loan rates still high and average auto insurance prices up a whopping 38% in the past two years, “the public just wants to be a little more frugal about it,” said Keith McCluskey, CEO of the dealership where Chumley bought her Trax.  

Roberts of CarGurus noted that even many higher-income buyers are choosing smaller, lower-priced vehicles, in some cases because of uncertainties over the economy and the impending presidential election.  

The shift has left some automakers overstocked with too many pricier trucks and SUVs. Some, like Stellantis, which makes Chrysler, Jeep and Ram vehicles, have warned that the shift will eat into their profitability this year.  

At General Motors’ Chevrolet brand, executives had foreseen the shift away from “uber expensive” vehicles and were prepared with the redesigned Trax, which came out in the spring of 2023, noted Mike MacPhee, director of Chevrolet sales operations.  

Trax sales in the U.S. so far this year are up 130%, making it the nation’s top-selling subcompact SUV.  

“We’re basically doubling our (Trax) sales volume from last year,” MacPhee said.   

How long the preference for lower-priced vehicles may last is unclear. Charlie Chesbrough, chief economist for Cox Automotive, notes that the succession of expected interest rates cuts by the Federal Rates should eventually lead to lower auto loan rates, thereby making larger vehicles more affordable.  

“The trends will probably start to change if these interest rates start coming down,” Chesbrough predicted. “We’ll see consumers start moving into these larger vehicles.” 
…

Mel Nichols, a 37-year-old bartender in Phoenix, Arizona, takes home anywhere from $30 to $50 an hour with tips included. But the uncertainty of how much she’s going to make on a daily basis is a constant source of stress.

“For every good day, there’s three bad days,” said Nichols, who has been in the service industry since she was a teenager. “You have no security when it comes to knowing how much you’re going to make.”

That uncertainty exists largely because federal labor law allows businesses to pay tipped workers, like food servers, bartenders and bellhops, less than the minimum wage as long as customer tips make up the difference. Voters in Arizona and Massachusetts will decide in November whether it’s good policy to continue to let employers pass some of their labor costs to consumers.

The ballot measures reflect an accelerating debate over the so-called subminimum wage, which advocates say is essential to the sustainability of the service industry and detractors say pushes the cost of labor off employers’ shoulders and leads to the exploitation of workers.

The amount tipped workers make varies by state. Fourteen states pay the federal minimum, or just above $2 an hour for tipped workers and $7 an hour for non-tipped workers.

Arizona employers can pay their tipped workers $3 less hourly than other workers. Under current rates, that means tipped workers’ base pay is $11.35 an hour.

Voters will decide whether to approve a measure backed by state Republicans and the Arizona Restaurant Association to change the minimum for tipped workers to 25% less than the regular minimum wage as long as their pay with tips is $2 above that minimum.

The hourly minimum wage in Arizona is currently $14.35 and increases yearly according to inflation.

Voters in Massachusetts are being asked to eliminate the tiered minimum-wage system.

There, voters will decide on a measure to incrementally increase the state’s tipped worker wage — currently $6.75 per hour — until it meets the regular minimum wage by January 2029. The measure was put forward by One Fair Wage, a not-for-profit that works to end the subminimum wage.

If voters approve the measure, the Bay State would join seven states that currently have a single minimum wage. Michigan will soon join that group after an August state Supreme Court ruling initiated a phase-out of the subminimum wage.

“When you’re not making the money that you should be making to pay your bills, it becomes hard on you,” said James Ford, a longtime Detroit-based hospitality worker. ”[The ruling] makes me think we’re moving forward.”

Other states have wage measures on the ballot. In California, voters will choose whether to raise the hourly minimum wage from $16 to $18 by 2026 in what would be the highest statewide minimum wage in the country. Measures in Alaska and Missouri would gradually raise minimum wages to $15 an hour while also requiring paid sick leave.

In the last two years, Washington, D.C., and Chicago also have started to eliminate the subminimum wage.

Employers must ensure that workers get the full minimum if they don’t make that much with tips. But they don’t always comply with federal labor law. One in 10 restaurants and bars investigated nationally by the U.S. Labor Department between 2010 and 2019 violated a provision of the Fair Labor Standards Act, resulting in the establishments paying $113.9 million in back wages.

The issue disproportionately affects women, who make up about 47% of the U.S. workforce but nearly 70% of those who work in tipped professions, according to an AP analysis of U.S. Census data.

In Arizona, Republican state Sen. J.D. Mesnard, the sponsor of Proposition 138, said the measure is a win for both businesses and lower-wage workers.

“The employer is protected in the sense that they can preserve this lower base, knowing that there are going to be tips on top of it,” Mesnard said. “The tipped worker is guaranteed to make more than minimum wage, which is more than they’re guaranteed today.”

Nichols doesn’t support it.

“It would reduce my hourly, and anything that reduces my hourly is not something that I want to lean into,” she said. “I don’t believe that business owners need any more cuts in labor costs.”

Proposition 138 was initially put forward as a response to a ballot measure pushed by One Fair Wage that would create a single minimum wage of $18, but the group abandoned the effort after threats of litigation from the restaurant association over how it collected signatures.

Instead, One Fair Wage will focus on trying to pass a wage hike in the Legislature. Democratic State Rep. Mariana Sandoval said she hopes her party in November can flip the Legislature, where Republicans hold a one-seat majority in both chambers.

After working for tips for more than 20 years, server Lindsay Ruck, who works at a restaurant at Phoenix Sky Harbor International Airport, said she’s faced her fair share of belligerent customers. But because their tips make up such a significant part of her pay — approximately $60 an hour — she’s hesitant to stand up to them.

To Ruck, higher base pay — not less — is called for.

“I think that there should be just a single minimum wage and then people should get tipped on top of that,” Ruck said.

The National Restaurant Association and its state affiliates warn of reduced hours, lower employment and menu price hikes if employers can’t rely on tips to pay their workers. That’s why Dan Piacquadio, a co-owner of Harold’s Cave Creek Corral restaurant outside Phoenix, is hoping voters pass Proposition 138.

“This is just a way to protect our current system that’s been there for 20 years and protect restaurant owners, keep restaurants affordable, and most importantly, keep very good pay for all tipped workers,” Piacquadio said.

Between 2012 and 2019, the number of restaurants and people employed at those restaurants grew at a faster clip in the seven states that have a single minimum wage compared to states that pay the federal minimum tipped wage, according to labor economist Sylvia Allegretto.

“We are sitting here in a state that has a $16 minimum wage,” Allegretto said from Oakland, California, where she works at the left-leaning Center for Economic and Policy Research. “No subminimum wage, and we’ve got a thriving restaurant industry.”
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LA RIOJA, Argentina — They look like cash, fit into wallets like cash and the governor promises they’ll be treated like cash.

But these brightly colored banknotes aren’t pesos, the depreciating national currency of Argentina, or U.S. dollars, everyone’s money of choice here.

They are chachos, a new emergency tender invented by the left-wing populist governor of La Rioja, a province in the country’s northwest that went broke when far-right President Javier Milei slashed federal budget transfers to provinces as part of an unprecedented austerity program.

“Who would have imagined that one day I’d find myself wishing I’d gotten pesos?” said Lucia Vera, a music teacher emerging from a gymnasium packed with state workers waiting to get their monthly bonus of chachos worth 50,000 pesos (about $40).

Across La Rioja’s capital, “Chachos accepted here” decals now appear on the windows of everything from chain supermarkets and gas stations to upscale restaurants and hair salons. The local government guarantees a 1-to-1 exchange rate with pesos, and accepts chachos for tax payments and utilities bills.

But there’s a catch. Chachos can’t be used outside La Rioja, and only registered businesses can swap chachos for pesos at a few government exchange points.

“I need real money,” said Adriana Parcas, a 22-year-old street vendor who pays her suppliers in pesos, after turning down two customers in a row who asked if they could buy her perfumes with chachos.

The bills bear the face of Ángel Vicente “Chacho” Peñaloza, the caudillo, or strongman, famed for defending La Rioja in a 19th-century battle against national authorities in Buenos Aires. A QR code on the banknote links to a website denouncing Milei for refusing to transfer La Rioja its fair share of federal funds.

After entering office in December 2023, Milei swiftly imposed his shock therapy in a bid to reverse decades of budget-busting populism that ran up Argentina’s monumental deficits. The cuts squeezed all of Argentina’s 23 provinces but boiled over into a full-blown crisis in La Rioja, where the public payroll accounts for two-thirds of registered workers and the federal government’s redistributed taxes cover some 90% of the provincial budget.

With just 384,600 people and little industry beyond walnuts and olives, La Rioja received more discretionary federal funds than any other last year except Buenos Aires, home to 17.6 million people. Yet the province’s poverty rate tops 66% — the result, critics say, of a patronage system long used to placate interest groups at the expense of efficiency.

While Milei’s reforms forced other provinces to tighten their belts and lay off thousands of employees, Governor Ricardo Quintela — an ambitious power broker in Argentina’s long-dominant Peronist movement and one of Milei’s fiercest critics — refused to absorb the strife of austerity.

“I’m not going to take food from the people of La Rioja to pay the debt that the government owes us,” Quintela told The Associated Press, portraying his chacho-printing plan as a daring stand against 10 months of crumbling wages, rising unemployment and deepening misery under Milei.

La Rioja defaulted on its debts in February and August. A New York federal judge ordered the province to pay American and British bondholders nearly $40 million in damages in September. Argentina’s Supreme Court is taking up the case of the province’s refusal to charge consumers sky-high prices for electricity after Milei’s removal of subsidies.

“There’s an alternative path to the cruelty of policies that the president is applying,” Quintela said.

He appeared confident, speaking as Milei’s approval ratings dipped below 50% for the first time since the radical economist came to power.

But as Milei and his allies tell it, Quintela’s alternative offers little more than a return to Argentina’s habitual Peronist preserve of reckless spending — and insolvency — that delivered the unmitigated crisis that his government inherited.

“You were used to having your tie fastened for you and your shoes polished, but now, you’ve got to tie the knot yourself,” Eduardo Serenellini, press secretary of Milei’s office, snapped at La Rioja business leaders on a recent visit to the province. “When you run out of cash, you run out cash.”

Serenellini picked up a chacho note, then flicked it away like lint.

Gov. Quintela’s gambit in the remote province has had little effect on Argentina’s federal finances, but that could change if more cash-strapped provinces catch on, as happened during Argentina’s terrible financial crisis of 2001, when a similarly brutal austerity scheme sent over a dozen provinces scrambling to print their own parallel currencies.

Unlike two decades ago, when former President Néstor Kirchner, a Peronist, put an end to the chaos by redeeming “patacones,” “cecacores” and “boncanfores” for pesos, President Milei has ruled out a bailout for La Rioja.

“We will not be accomplices to irresponsible people,” Milei warned in a recent interview with Argentine TV channel Todo Noticias. But the libertarian purist added that he couldn’t stop La Rioja from doing what it pleased, considering that Argentina’s constitution allows for such desperate financial workarounds.

The chacho hit the streets in August after La Rioja’s legislature approved plans to run off $22.5 billion pesos worth of the currency to help cover up to 30% of public sector salaries.

With La Rioja’s average income sinking below $200 per month and stores shuttering for lack of business, authorities doled out 8.4 billion pesos worth of the scrip in monthly bonuses in August and September, an effort to help workers cope with Argentina’s 230% annual inflation and spur the stricken local economy.

To encourage the chacho’s use, authorities promise to pay interest of 17% on bills held to maturity on December 31.

“The closer we get to the expiration date, the more we’ll see public confidence in the chacho increase,” said provincial treasurer adviser Carlos Nardillo Giraud.

Most state workers interviewed in the many chacho lines spilling onto La Rioja’s sidewalks last month said they wanted to get rid of the bills as quickly as possible.

“Now the chacho is an alternative, an option for people who can’t make it to the end of the month,” said 30-year-old physics teacher Daniela Parra, mounting her boyfriend’s motorcycle with arms full of chachos, ready to spend them all in one go at the supermarket. “Who knows what will it be next month?”

On the streets, merchants said they felt locked in a catch-22.

Rejecting chachos meant turning away customers with new spending power in a deep recession. But accepting chachos meant filling cash registers with money that’s worthless to foreign suppliers and already changing hands at a discount to pesos on the street.

“They’ve formed a system where you’re forced to depend on the state for everything,” said Juan Keulian, the director of La Rioja’s Center for Commerce and Industry. “There’s no choice in a place like this.”
…

BANGKOK — Southeast Asia is bearing the mounting brunt of U.S. trade curbs aimed at stemming the forced labor of ethnic minority Uyghurs in China, with billions of dollars in blocked exports, the latest U.S. trade figures show.

Economists and human rights experts ascribe the heavy hit the region is taking to global supply chains shifting to reroute exports from China through Southeast Asia and to China’s persistent dominance in key commodities.

With both powerful forces at play, Southeast Asia is “caught in the middle,” Jayant Menon, a senior fellow at the ISEAS Yusof Ishak Institute in Singapore, told VOA.

The United States has detained $3.56 billion worth of imports in all since its Uyghur Forced Labor Prevention Act, or UFLPA, took effect in mid-2022, according to recent figures from U.S. Customs and Border Protection. Some 86% of those, more than $3 billion worth, arrived from Malaysia, Thailand and Vietnam. Only $395 million arrived directly from China.

The act forbids imports of any products made in whole or in part in China’s Xinjiang autonomous region, the Uyghurs’ historic homeland, presuming they have been made with forced labor. While many of the shipments are eventually allowed to enter the United States, the burden is on the importer to secure their release by proving the products are produced without forced labor, a process that can take months.

The United States and other governments have accused China of genocide over its treatment of the mostly Muslim Uyghurs for subjecting them to not only forced labor but mass surveillance and detention, religious persecution and forced sterilization — all denied by Beijing.

Xinjiang is a major source of some commodities crucial to the global supply chain, including 12% of the world’s aluminum, more than a third of the polysilicon for solar panels and 90% of the cotton produced by China, according to the Coalition to End Forced Labor in the Uyghur Region, a global network of rights groups.

Many of those supply chains now flow through Southeast Asia for reasons beyond just the UFLPA, said Nick Marro, principal Asia economist and global trade lead analyst for the Economist Intelligence Unit.

“For years, multinational companies — both Chinese and non-Chinese owned — have been pouring investment into Southeast Asia to construct supply chains aimed at dodging U.S. tariffs,” he told VOA.

While far from the only reason for the influx, he said, “shifting some production chains to Vietnam or Thailand, for example, can obfuscate whether a good might originally be produced in China.”

“This isn’t necessarily a fool-proof strategy,” Marro said. “U.S. trade authorities are very sensitive to illegal transshipments and other efforts aimed at circumventing U.S. duties. But for some supply chains, cracking down on these activities can be challenging — especially for products like cotton, which is notoriously difficult to trace.”

Evolving supply chains now require looking beyond exports arriving directly from China to catch what’s made there, said Menon, a former lead economist for trade with the Asian Development Bank.

“Increasingly there’s production and value addition in multiple countries,” he said. “Simply looking at goods that emanate from Xinjiang to the U.S. will not capture the intended objective.”

Of the slightly more than $3 billion worth of exports the United States has detained from Malaysia, Thailand and Vietnam because of the UFLPA, the vast majority, $2.96 billion, have been electronics, including solar panels.

Louisa Greve, global advocacy director for the Washington-based Uyghur Human Rights Project, ascribes that to the surge of investment from Chinese solar panel makers into Southeast Asia starting more than a decade ago.

“We don’t know of any Uyghurs working in Southeast Asia in solar, but we do know where the polysilicon has to come from. That’s the issue,” she told VOA. “It’s about the components.”

Greve added that the Southeast Asian countries and companies involved in importing and incorporating that polysilicon into the solar panels they help make and export also risk being complicit in the state-sponsored forced labor that goes into producing it in China.

“Thirty-five percent of the world’s polysilicon, or solar-grade polysilicon, is coming from China. It’s up to every manufacturer, like the plants that are actually making solar panels in Southeast Asia … to say, ‘We have to be responsible for the raw materials that we’re using,’” she said.

Menon asserted the UFLPA could benefit low-wage countries less tainted by forced labor than China by driving more business their way, but he said that Southeast Asia will still struggle to wean itself off Chinese supplies.

“China is still the hub or the center of ASEAN [Association of Southeast Asian Nations] supply chains. That hasn’t changed. There’s been some reconfiguration taking place, but by and large, China’s not going away,” he said.

Menon said that “blunt” trade tools like the act can also hurt the countries in the middle of those supply chains by driving existing production and investment away, leaving local workers with less work or fewer jobs.

“This [act] is quite a big move, quite a massive measure, and so I’d be surprised if it doesn’t have some impact in moving production around,” he said. “If you ban imports in this way, inevitably there will be some shifts that move production in a way that tries to circumvent those bans.”

Marro said the same pressures that drove companies to “de-risk” by moving production from China to Southeast Asia years ago could yet prove a “double-edged sword.” While the shift has boosted Southeast Asia’s economies, the costs may mount as the United States and others start taking a harder look at countries helping China evade their trade curbs.

Even with only 11 months of the 2024 fiscal year reported, U.S. customs figures show the UFLPA blocked more imports from Southeast Asia over the past year than the year before.

Marro said enforcement efforts were at a “very real risk” of picking up but added that geopolitics could also intervene.

“As much as U.S. officials want to crack down on Chinese tariff circumvention, there’s an equal effort to avoid isolating Southeast Asia when it comes to the U.S.’s increasingly hawkish strategy towards China,” he said. “This balancing act will characterize the future of U.S. policy to the region.”
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