Trump raises stakes with sanctions list

STRATEGIC TARGET: A worker polishes steel pipes at a Dongbei Special Steel Group factory in Dalian, China. (Reuters)
Updated 03 April 2018

Trump raises stakes with sanctions list

  • The “Section 301” investigation authorizing the tariffs alleges China has systematically sought to misappropriate US intellectual property.
  • Fears are growing that the two countries will spiral into a trade war that will crush global growth.

WASHINGTON: The Trump administration this week will unveil the list of Chinese imports targeted for US tariffs to punish Beijing over technology transfer policies, a move expected to intensify trade tensions between the world’s two largest economies.
The list of $50 billion to $60 billion worth of annual imports is expected to target “largely high-technology” products and it may be more than two months before tariffs take effect, administration officials have said.
The US Trade Representative’s office needs to unveil the list of products by Friday under President Donald Trump’s China tariff proclamation signed on March 22.
The tariffs are aimed at forcing changes to Chinese government policies that USTR says results in the “uneconomic” transfer of US intellectual property to Chinese companies.
The agency’s “Section 301” investigation authorizing the tariffs alleges China has systematically sought to misappropriate US intellectual property through joint venture requirements, unfair technology licensing rules, purchases of US technology firms with state funding and outright theft.
China has denied that its laws require technology transfers and has threatened to retaliate against any US tariffs with trade sanctions of its own, with potential targets such as US soybeans, aircraft or heavy equipment.
On Sunday, Beijing slapped extra tariffs of up to 25 percent on 128 US products, including frozen pork, as well as wine and certain fruits and nuts, in response to US tariffs on imports of aluminum and steel announced last month by the Trump administration.
Fears are growing that the two countries will spiral into a trade war that will crush global growth.
US technology industry officials said they expected the Trump administration’s list to target products that benefit from Beijing’s “Made in China 2025” program, which aims to upgrade the country’s domestic manufacturing base with more advanced products.
The state-led program targets 10 strategic industries for replacing imports with Chinese-made products: advanced information technology, robotics, aircraft, shipbuilding and marine engineering, advanced rail equipment, new energy vehicles, electrical generation equipment, agricultural machinery, pharmaceuticals and advanced materials.
“Foreign technology acquisition through various means remains a prime focus under Made in China 2025 because China is still catching up in many of the areas prioritized for development,” USTR said in its report justifying the tariffs.
US Trade Representative Robert Lighthizer has said that preserving America’s technological edge is “the future of the US economy.”
Reports that the tariff list may also include consumer goods such as clothing and footwear drew strong protests from US business groups, which argued that it would raise prices for US consumers.
While there have been contacts between senior members of the Trump administration and their Chinese counterparts since Trump announced his intention to impose tariffs, there has been little evidence of intensive negotiations to forestall them.
“The administration is following the Japan model from the 1980s,” said a tech industry executive. “They will publish a Federal Register notice of tariffs on certain products, then try to reach a negotiated settlement over the next 60 days.”
During his first stint at USTR in the Reagan administration, Lighthizer employed similar tactics to win voluntary Japanese export restraints on steel and autos.
Wendy Cutler, a former deputy USTR in charge of Asia negotiations, said that addressing the sweeping intellectual property allegations identified by USTR would require major changes to China’s industrial policy. A 60-day settlement may not be realistic in that case.
“I think they have set up a high bar for what they need to achieve, in order not to impose these types of tariffs and investment restrictions,” Cutler said.


Deal on oil cuts ‘close’ as Saudi Arabia enlists G20

Updated 07 April 2020

Deal on oil cuts ‘close’ as Saudi Arabia enlists G20

  • ‘Virtual’ energy summit on Friday in new effort to stabilize market

DUBAI: Saudi Arabia plans to use its presidency of the powerful G20 group of nations in efforts to restore balance to global oil markets.

The Kingdom is organizing a special meeting of G20 energy ministers — including the other two biggest producers, the US and Russia — to discuss cuts to output.

The “virtual” summit is scheduled for Friday, the day after an OPEC+ meeting of oil producers. Crucially, the US, which is not an OPEC member, will be involved in the G20 summit, energy secretary Dan Brouillette said.

The initiative emerged after a weekend phone call between Prince Abdul Aziz bin Salman, the Saudi energy minister, and Fatih Birol, executive director of the International Energy Agency. The involvement of the G20 is part of the group’s remit, Birol told Arab News on Monday.

“The job description of the G20 is to provide and maintain financial stability, so it is in line with their aims,” he said.

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“The oil industry is going through one of the worst times in its history, and this could have major implications for the global economy, financial markets and employment. Saudi Arabia has been a stabilizing factor in the markets for many years.”

Saudi Arabia and Russia were “very, very close” to a deal to cut oil output, said Kirill Dmitriev, chief executive of the Russian Direct Investment Fund and a close confidant of President Vladimir Putin. An agreement would “bring so much important stability to the market,” he said.

Nevertheless, significant challenges remain. So far, talks between OPEC+ members have focused on a cut of about 10 million barrels per day. This would not be enough to outweigh global market oversupply estimated at more than 20 million barrels, amid a demand slump caused by the coronavirus pandemic.

There are also concerns about whether US producers would be permitted to take part in cuts. American antitrust law prohibits cartel practices, which would rule out a concerted move by its many oil companies.

Some energy experts have suggested that action by the Railroad Commission of Texas, which regulates the energy business in the biggest US oil state, could help limit overall US output.

On the markets, amid the continuing uncertainty, Brent crude was trading about 5 percent down, at just over $32.