WASHINGTON: In trying to hammer out a trade agreement with China, the Trump administration may be drawing inspiration from classic rock, specifically The Who’s anthem “Won’t Get Fooled Again.”
Fed up with China for breaking past promises, the administration is insisting on provisions designed to force the Chinese to live up to any commitments they make in trade talks that entered an 11th round on Thursday.
In fact, top US trade negotiator Robert Lighthizer and Treasury Secretary Steven Mnuchin this week accused the Chinese of already reneging on concessions they’d made earlier in the negotiations.
In retaliation for that alleged backsliding, the United States is poised to dramatically escalate the trade war between the world’s two biggest economies at 12:01 a.m. Friday Eastern time — by raising import taxes on $200 billion in Chinese goods from 10% to 25%.
And President Donald Trump said he’s preparing to slap 25% tariffs on another $325 billion in Chinese imports, covering everything China ships to the United States.
The two countries are battling over US allegations that China steals technology and pressures American companies into handing over trade secrets, part of an aggressive campaign to turn Chinese companies into world leaders in robotics, electric cars and other advanced industries.
The US currently is levying 10% tariffs on $200 billion of Chinese imports and 25% on another $50 billion. The Chinese have retaliated by targeting $110 billion in US products and are threatening more sanctions if Washington goes ahead with its plan to raise tariffs Friday.
When the talks began last year, it appeared that the Chinese might try to appease Trump by agreeing to buy lots of American products — especially soybeans and liquefied natural gas — and put a dent in America’s massive trade deficit with China, a whopping $379 billion last year.
But as the talks dragged on, it became increasingly apparent that “a heap of soybeans isn’t going to get the job done,” said Amanda DeBusk, chair of the international trade practice at the law firm Dechert LLP and a former US Commerce Department official.
Business groups, disappointed that China didn’t fully open up to foreign competition after joining the World Trade Organization in 2001, are pressuring the administration to hold out for a deal that requires China to abandon predatory trade practices, stop subsidizing homegrown companies and treat foreign firms more fairly.
“It was way past time to confront China on many of these problems,” said Michael Wessel, a member of the congressionally created US-China Economic Security Review Commission and president of The Wessel Group consulting firm. “They’ve been allowed to skate for far too many years.”
Reaching a deal with China to end the tariff war would be only the first hurdle for the Trump administration. Next would come the hard part: enforcing the agreement.
“The details will matter a lot,” said Dean Pinkert, partner at the law firm Hughes Hubbard & Reed and a former member of the US International Trade Commission. “In regard to the ‘structural’ issues — including intellectual property and forced technology transfers — what sort of enforcement mechanism will be established? Who gets to judge whether structural commitments are being honored? “
The Trump administration wants Beijing to accept an enforcement mechanism with penalties to make sure it carries out its commitments.
US officials say they must be cautious because Beijing has made empty promises before: A 2018 report by the Office of the US Trade Representative, for instance, found that China has promised eight times since 2010 not to force foreign companies to transfer technology to China. Yet the coercion continued, the US said.
“They didn’t comply and aren’t complying with their WTO obligations, and they aren’t following through on the commitments they’ve made repeatedly over the last decade,” said trade lawyer Stephen Orava, a partner at King & Spalding.
Enforcement would require lifting the lid of secrecy on Communist Party policies toward acquiring technology, subsidizing industries and shielding them from competition.
But China is likely to balk at accepting intrusive monitoring of its behavior, something that President Xi Jinping’s government likely would see as a violation of Chinese sovereignty.
Meantime, the US is pushing to keep tariffs in place as leverage to pressure China to comply with any agreement.
Xi’s government has yet to make clear whether it is really willing to scale back ambitious plans to turn China into a technological superpower, something Chinese leaders see as a route to prosperity and global influence.
Beijing is willing to tweak the plans, but the Communist Party wants to keep its dominant economic role.
Chinese officials deny Beijing steals or pressures companies to hand over technology, despite what security experts say is a mountain of evidence the ruling party rewards those who acquire it and sometimes directly carries out theft.
For decades, the ruling party has showered Chinese businesspeople, academics and others who “localize foreign technology” — the official euphemism for unauthorized copying of foreign know-how — with promotions, research grants, money and public praise.
Security researchers say the government operates a network of research institutes and business parks to turn stolen technology into commercial products.
In 2013, three Chinese scientists at New York University were charged with sending US taxpayer-financed research on magnetic resonance imaging to a Chinese government-run institute.
The following year, five members of China’s military cyber warfare unit were indicted on US industrial spying charges.
Chinese companies “benefit from cyber espionage,” the US-China Economic and Security Review Commission said in a report this month.
“Chinese government efforts to encourage and direct firms to acquire technology from the United States are likely to continue as Beijing seeks to further develop its domestic high-tech industries,” the report said.
Obtaining foreign technology is a theme that runs through Chinese law and government. Ending tactics that irk Beijing’s trading partners would require changing a thicket of rules, regulatory habits and incentives to local officials to promote technology development.
That includes a 2008 law that allows penalties for foreign companies deemed to be abusing control over technology. Businesspeople say Beijing uses that to pressure foreign companies to cut prices of patent licensing or drop complaints that Chinese partners have stolen technology.
Automakers and competitors in other industries are also required to work through joint ventures with state-owned local partners that cannot function unless the foreign company supplies technology and teaches a potential Chinese competitor to develop its own.
Analysts say the US has been pushing China to write its commitments into law, and Beijing has been resisting. China specialist Derek Scissors, resident scholar at the conservative American Enterprise Institute, said the real “standoff is about how public the Chinese changes are going to be. The US wants them entirely public. China is not willing to make high-profile public changes.”
In the end, any enforcement plan is likely to fall short — unless Beijing decides it’s really time to change. “Enforcement at the end of the day requires China to be transparent and abiding by its agreements. I can’t think of any structure in law or diplomacy that can enforce that,” said James McGregor, chairman for Greater China at the government relations firm APCO Worldwide. “It has to come from within China and a real desire to change its system.”
Burned before, US pushes for way to enforce China trade deal
Burned before, US pushes for way to enforce China trade deal
- The two countries are battling over US allegations that China steals technology and pressures American companies into handing over trade secrets
- Trump said he’s preparing to slap 25% tariffs on another $325 billion in Chinese imports
Saudi Arabia, Azerbaijan discuss climate action cooperation ahead of COP29
- Two ministers discussed opportunities for work and cooperation between their two countries in the field of climate change
JEDDAH: Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman met with Azerbaijan’s Minister of Environment and Natural Resources Mukhtar Babayev on Thursday.
Babayev has also been appointed president of the UN COP29 climate talks which will be held in Baku in November.
During the meeting, the two ministers discussed opportunities for work and cooperation between their two countries in the field of climate change. They also talked about joint efforts to achieve the goals of the UN Framework Convention on Climate Change and the Paris Agreement, the Kingdom’s ministry said in a statement.
They reviewed the Kingdom’s efforts and initiatives in dealing with the effects of climate change, such as exploiting renewable energy sources, and managing, reducing and eliminating emissions through the Saudi and Middle East green initiatives.
In addition, the ministers discussed implementing the circular carbon economy approach and its technologies, which was developed by the Kingdom during its G20 presidency and endorsed by leaders, along with other national and regional programs and initiatives.
Saudi Arabia unveils Green Finance Framework in sustainability push
RIYADH: Public and private participation in climate financing in Saudi Arabia is poised to receive a boost with the introduction of the Green Finance Framework.
This initiative, launched by the Ministry of Finance, is aimed at propelling the nation toward its sustainability goals and achieving net-zero emissions by 2060, Saudi Press Agency reported.
The framework is expected to contribute to the efforts aimed at reducing emissions through a circular carbon economy approach, along with positioning Saudi Arabia as a regional leader in sustainable finance.
It was in October 2021 that Saudi Arabia announced its ambitious goal to achieve net-zero emissions by 2060.
With this framework, the Kingdom aims to significantly reduce greenhouse gas emissions by 278 million tonnes annually by 2030, aligning with the commitments under the Paris Agreement.
The Paris Agreement is an international treaty on climate change that was produced in 2015 and compels signatories to work toward limiting the global temperature increase to 1.5 °C above pre-industrial levels.
The Kingdom has been spearheading several initiatives including the Saudi Green Initiative to combat the adverse effects of climate change over the past few years.
On March 27, the Kingdom celebrated its first Saudi Green Initiative Day highlighting the importance of fostering a sustainable legacy for future generations.
The celebration was organized under the theme “For Our Today and Their Tomorrow: KSA Together for a Greener Future” and it highlighted the collaboration of more than 80 public and private sector projects that are part of the SGI.
To date, Saudi Arabia has deployed 2.8 gigawatts of renewable energy to the national grid, powering more than 520,000 homes, with additional projects underway to increase capacity.
Moreover, more than 49 million trees and shrubs have been planted throughout the Kingdom since 2021, and extensive land rehabilitation efforts have been undertaken.
Additionally, energy giant Saudi Aramco, in collaboration with the Kingdom’s Ministry of Energy is building a carbon capture and storage hub in Jubail, which will have 9 million tonnes annual storage capacity upon its completion in 2027.
Closing Bell: Saudi main index slips to close at 12,565
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Thursday, losing 42.09 points, or 0.33 percent, to close at 12,565.89.
The total trading turnover of the benchmark index was SR10.53 billion ($2.8 billion) as 54 stocks advanced, while 170 retreated.
Similarly, the Kingdom’s parallel market, Nomu, dropped 385.72 points, or 1.43 percent, to close at 26,622.88. This comes as 20 stocks advanced while as many as 42 retreated.
Meanwhile, the MSCI Tadawul Index rose 7.54 points, or 0.47 percent, to close at 1,599.02.
The best-performing stock of the day was Modern Mills for Food Products Co. The company’s share price surged 9.46 percent to SR68.30.
Other top performers include the Mediterranean and Gulf Insurance and Reinsurance Co. as well as Al Yamamah Steel Industries Co.
On the announcements front, Red Sea International Co. announced its annual consolidated financial result for the period ending Dec. 31.
According to a Tadawul statement, the entity’s revenues reached SR1.37 billion in 2023, reflecting an increase of 241 percent when compared to 2022 figures.
The rise in sales is mainly attributed to the strategic acquisition of a 51 percent stake in Fundamental Installation for Electric Work Co., or First Fix, with the recognition in RSI’s consolidated financial statements starting in the final quarter of the year.
Additionally, the company has tactically increased its focus on enhancing its supply chain and adopting competitive pricing strategies while advancing procurement techniques.
On a similar note, the firm’s net profits during the same period hit SR2.17 million, up from a net loss of SR198 million, which was recorded in the same period in 2022.
This rise is mainly linked to positive impact of the First Fix acquisition, in addition to the improvement in revenues and operating performance.
Moreover, Riyadh Steel Co. has also announced its annual financial results for 2023.
A bourse filing revealed that the firm’s net profit reached SR11.14 million in the period ending on Dec. 31, reflecting an increase of 118.8 percent compared to the corresponding period a year earlier.
The increase in net profit is primarily attributable to a reduction in the cost of revenue and secondarily to a rise in other income in comparison to the previous year.
Furthermore, Al-Baha Investment and Development Co. also announced its annual financial results for the period ending on Dec.31.
According to a Tadawul statement, the company’s net profit hit SR4.94 million in 2023, up from the net loss of SR8.09 million that was recorded in 2022.
The increase was owed to a 39 percent surge in the group’s revenues and reduced financing costs by 73 percent, among other reasons.
Saudi Arabia leads the charge toward energy transition: report
RIYADH: Saudi Arabia is emerging as a proactive leader, pioneering green initiatives to mitigate economic challenges posed by the transformation toward sustainability, according to the International Monetary Fund.
A recent report by the IMF highlighted the intricate dynamics at play and underscored the Gulf Cooperation Council and Saudi Arabia’s strategic positioning in this evolving scenario.
Titled “Key Challenges Faced by Fossil Fuel Exporters during the Energy Transition,” the study discussed climate change mitigation efforts in many fossil fuel exporting countries.
As Saudi Arabia and its GCC counterparts continue to lead the charge toward sustainability, they set a precedent for the global community.
By embracing green initiatives, investing in renewable energy, and fostering economic diversification, these nations are paving the way for a sustainable future, balancing economic prosperity with environmental responsibility.
The report emphasized that the Saudi Green Initiative launched in 2021 aimed at combating climate change and reducing carbon emissions.
It explained: “The Green Initiative is centered around three objectives, including targets for increasing the share of renewable energy in electricity generation up to 50 percent by 2030 and the deployment of circular carbon economy technologies, including carbon capture utilization and storage.”
Key challenges
The IMF stressed the need for economic diversification to effectively mitigate the impact of declining fossil fuel revenues.
Highlighting Saudi Arabia’s progress in economic diversification, the report explained: “The non-oil sector growth has accelerated since 2021, reaching 4.8 percent in 2022 spurred by strong domestic demand, especially in the wholesale, retail trade, construction, and transport sectors.”
Similarly, Bahrain, Qatar, and the UAE are diversifying their economies away from hydrocarbons, the study added.
In the UAE, non-hydrocarbon GDP was expected to grow by 5.3 percent in 2022, driven by tourism and FIFA World Cup impacts.
Progress on the Comprehensive Economic Partnership Agreements will further boost trade, attract foreign direct investment, and enhance integration with global value chains, according to the report.
The IMF highlighted that in Saudi Arabia, “the share of high-skilled jobs has increased to more than 40 percent in 2022, and female labor force participation doubled in four years to reach 37 percent in 2022.”
In its report, the Washington-based lender said the governments heavily reliant on revenues from fossil fuel exports face challenges in maintaining fiscal sustainability as these revenues decline.
“Countries with significant exposure to the fossil fuel industry may experience higher financial sector risks, including balance sheet effects, asset devaluation, and increased vulnerability to international market fluctuations,” it said.
The report added that transitioning away from fossil fuels may result in job losses in the fossil fuel industry, necessitating retraining programs and support for affected workers.
It called for structural reforms to address all the issues. “Accelerating structural reforms to diversify export bases and develop alternative industries is critical for mitigating the adverse macroeconomic effects of the energy transition,”the report said.
The IMF stressed the need for coordinated global efforts to overcome all these challenges. “Collaborative efforts can help ensure a smooth transition, mitigate transition costs, and support affected countries in diversifying their economies,” the report said.
New service at Jeddah port to boost Saudi-India trade
RIYADH: Saudi and Indian traders are set to benefit from Jeddah Islamic Port’s new service, bolstering trade connectivity between the nations.
The Saudi Ports Authority, also known as Mawani, on Thursday said that Unifeeder, a Danish logistics company, has introduced the “RGI” shipping service at the Saudi port. This initiative connects the Kingdom to Indian checkpoints, facilitating trade between the two nations and offering expedited and secure solutions for exporters and suppliers.
In a statement, Mawani affirmed that this undertaking showcases investors’ confidence in the Kingdom’s terminals, bolsters maritime transport and logistics services, and solidifies Jeddah Islamic Port’s status.
It added that the seaport is the Kingdom’s first dock for exports and imports, and the first re-export point in the Red Sea, with 62 multipurpose berths and a capacity of 130 million tonnes.
The new shipping service connects the Jeddah terminal to the ports of Mundra and Nhava Sheva in India, Jebel Ali in the UAE, and Sokhna in Egypt through regular weekly trips, with a capacity of up to 2,824 twenty-foot equivalent units, Mawani noted.