Tag: Trump and Canada

The New York Analysis of Policy and Government concludes its review of unfair trade practices confronting the United States.

Beijing’s offenses range beyond mere trade barriers. China is the world’s principal sponsor of intellectual property theft, which costs the U.S. economy as much as $600 billion annually.

As noted in a GOP analysis, among China’s more egregious misuses and theft of U.S. intellectual property:

• Chinese actors associated with the military are alleged to have broken into the computer systems of U.S. companies and stolen proprietary information for commercial gain.
• S. companies across various sectors have suffered from Chinese applicants illegally registering their trademarks in bad faith to profit off of U.S. companies’ global reputation.
• China has blocked U.S. telecommunications, credit card, and film companies from operating in the country.
• China has sponsored the subsidization and dumping of cheap steel and aluminum which have weakened internal U.S. producers and impaired U.S. national security.
• China has used faulty science and other bad faith tactics to block the importation of U.S. beef products, poultry, and corn despite China’s World Trade Organization market access obligations.

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According to The Commission On The Theft Of American Intellectual Property,   “China Is The World’s Principal IP Infringer, And Is ‘Deeply Committed’ To Industrial Policies, Such As The ‘Acquisition Of Foreign Technology And Information’ That Contribute To ‘Greater IP Theft.’ ‘China, whose industrial output now exceeds that of the United States, remains the world’s principal IP infringer. China is deeply committed to industrial policies that include maximizing the acquisition of foreign technology and information, policies that have contributed to greater IP theft.’”

On May 29, the White House  provided specific objections to China’s trade practices, and the responses the Trump Administration will engage in to address the problem:

YEARS OF UNFAIR TRADE PRACTICES: China has consistently taken advantage of the American economy with practices that undermine fair and reciprocal trade.

• For many years, China has pursued industrial policies and unfair trade practices—including dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial subsidies—that champion Chinese firms and make it impossible for many United States firms to compete on a level playing field.
• China’s industrial policies, such as its “Made in China 2025” plan, harm companies in the United States and around the world.
• China imposes much higher tariffs on United States exports than the United States imposes on China.
  • China’s average tariff rate is nearly three times higher than the average United States rate.
  • Certain products are even more imbalanced, for instance the United States charges a 2.5 percent tariff on Chinese cars, while China currently maintains a 25 percent tariff on cars from the United States.
• China has banned imports of United States agricultural products such as poultry, cutting off America’s ranchers and farmers from a major market for their goods.
• China has dumped and unfairly subsidized a range of goods for the United States market, undermining America’s domestic industry.
  • In 2018 alone, the Trump Administration has found dumping or unfair subsidies on 13 different products, including steel wheels, cold-drawn mechanical tubing, tool chests and cabinets, forged steel fittings, aluminum foil, rubber bands, cast iron soil pipe and fittings, and large diameter welded pipe.
• In January 2018, the Trump Administration found that China’s overproduction of steel and aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair America’s national security.
• The United States has run a trade in goods deficit with China for years, including a $375 billion deficit in 2017 alone.

UNDERMINING AMERICAN INNOVATION AND JOBS: China has aggressively sought to obtain technology from American companies and undermine American innovation and creativity.

• The cost of China’s intellectual property theft costs United States innovators billions of dollars a year, and China accounts for 87 percent of counterfeit goods seized coming into the United States.
• United States Trade Representative’s (USTR) Section 301 investigation identified four of China’s aggressive technology policies that put 44 million American technology jobs at risk:
  • Forced technology transfer;
  • Requiring licensing at less than economic value;
  • Chinese state-directed acquisition of sensitive United States technology for strategic purposes; and
  • Outright cyber theft.
• China uses foreign ownership restrictions, administrative review, and licensing processes to force or pressure technology transfers from American companies.
  • China requires foreign companies that access their New Energy Vehicles market to transfer core technologies and disclose development and manufacturing technology.
  • China imposes contractual restrictions on the licensing of intellectual property and technology by foreign firms into China, but does not put the same restrictions on contracts between two Chinese enterprises.
• China directs and facilitates investments in and acquisitions of United States companies to generate large-scale technology transfer.
• China conducts and supports cyber intrusions into United States computer networks to gain access to valuable business information so Chinese companies can copy products.

STANDING UP TO CHINA’S UNFAIR TRADE PRACTICES: President Trump has taken long overdue action to finally address the source of the problem, China’s unfair trade practices that hurt America’s workers and our innovative industries.

• In January 2018, the President announced his decision to provide safeguard relief to United States manufacturers injured by surging imports of washing machines and solar products.
  • This was the first use of Section 201 of the Trade Act of 1974 to impose tariffs in 16 years.
  • These actions responded to injurious trade practices by China and other countries, including attempts to avoid legally imposed antidumping and countervailing duties.
  • Following the decision, Whirlpool announced 200 new jobs in Ohio.
• USTR and the Department of Commerce are working together to defend the right of the United States to continue treating China as a non-market economy in antidumping investigations until China makes the reforms it agreed to when it joined the World Trade Organization (WTO).
• President Trump’s Administration has successfully litigated WTO disputes targeting unfair trade practices and upholding our right to enforce United States trade laws.
  • In February 2018, USTR won a WTO compliance challenge against China’s unfair antidumping and countervailing duties on United States poultry exports and China announced the termination of those duties.

PROTECTING AMERICAN INNOVATION AND CREATIVITY: President Trump has worked to defend America’s intellectual property and proprietary technology from theft and other threats.

• In August 2017, the Administration initiated a Section 301 investigation into China’s practices related to forced technology transfer, unfair licensing, and intellectual property policies.
• After USTR completed its Section 301 report in March 2018, the President directed the agencies to explore numerous actions to protect domestic technology and intellectual property.
• Under President Trump’s leadership:
  • The United States will impose a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the “Made in China 2025” program.  The final list of covered imports will be announced by June 15, 2018.
  • USTR will continue WTO dispute settlement against China originally initiated in March to address China’s discriminatory technology licensing requirements.
  • The United States will implement specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology. The list of restrictions and controls will be announced by June 30, 2018.

Illustration: Pixabay

There has been significant criticism of President Trump’s tough stance on trade deficits and unfair practices both with China and America’s allies and neighbors. Opposition to the White House move has come not only from the usual political opponents, but even allies within the GOP.  Indeed, Republicans who would never dream of endorsing unilateral disarmament in weapons negotiations appear all too willing to adopt that concept in economic relations.

Interestingly, much of the media, while criticizing the White House for confronting Canada and Europe for their trade practices and threatening retaliatory tmeasures, neglected to mention a key proposal Trump made at the recent G7 meeting: the elimination of all tariffs.

While bluntly confronting Canada and NATO partners and lumping them in with the adversarial Beijing regime may seem harsh, the reality is that the United States economy and job market has suffered significantly.  Remedial steps are required.

The Alliance for American Manufacturing  reports that “Unfair trade practices like dumping, export subsidies, and currency manipulation drove the loss of more than 6.1 million U.S. manufacturing jobs from 1998 to 2010. Today, there is no greater threat to the resurgence in American manufacturing than widening trade deficits and unfair trade practices that go unchecked. New trade agreements must give American workers and businesses tools to aggressively push back against unfair trade practices like currency manipulation, and create a level playing field. Trade agreements already on the books must be strictly enforced. And we need our policymakers to develop and implement a plan to end our trade deficit in manufactured goods, which directly threatens a potential resurgence for American manufacturing.”

U.S. agriculture faces a similar challenge. Mike Thompson, writing in Real Clear Politics  notes that “As global trade continues to expand, it’s important to remember that ‘free trade’ only works if it is ‘fair trade.’ Trade is good for America when that trade is fair. Only when our farmers and other suppliers of goods and services compete on a truly level playing field with their foreign competitors can ‘free trade’ become reality…”
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Stan Ryan, in a Seattle Times article, provides specifics: “… with the stroke of a pen, new Canadian government pricing regulations implemented in February are poised to unfairly take away our markets. The current U.S. administration was correct to stand up against Canada for shutting down U.S. exports of ultra-filtered milk — used to make cheese and yogurt — from farms in the Midwest and Northeast. This sudden change in pricing threatened the livelihoods of U.S. dairy farms. The new Canadian National Ingredients Pricing Strategy, which indirectly subsidizes exports, will further hurt U.S. dairy exports of milk proteins. Since farms across the U.S. depend on a healthy global export market, Canada’s strategy poses a threat to America’s dairy farmers, especially those in the Pacific Northwest, by unfairly underbidding world market prices.”

By far, the greatest offender is China. The Clinton Administration vigorously pursued greater openness to trade with China, and the results proved harmful both to the American economy as a whole and to U.S. manufacturing employment in particular.

The U.S.-China Economic and Security Review Commission’s 2017 “Report to Congress” disclosed that “The hand of the state is… evident in how Beijing treats foreign companies operating in China and in the impact its trade-distorting policies have on its trade partners. Beijing’s discriminatory treatment of U.S. companies and ongoing failure to uphold its World Trade Organization (WTO) obligations continue to damage the bilateral relationship. The U.S. trade deficit in goods with China totaled $347 billion in 2016, the second-highest deficit on record. In the first eight months of 2017, the goods deficit reached $239.1 billion, and is on track to surpass last year’s deficit. U.S. companies are feeling increasingly pressured by Chinese policies that demand technology transfers as a price of admission and favor domestic competitors. According to a survey by the American Chamber of Commerce in China, 81 percent of U.S. firms doing business in China reported feeling less welcome in 2016 than they did in 2015…China’s foreign investment climate continues to deteriorate as government policy contributes to rising protectionism and unfair regulatory restrictions on U.S. companies operating in China. The newly implemented cybersecurity law illustrates this trend. The law contains data localization requirements and a security review process U.S. and foreign firms claim can be used to discriminatorily advantage Chinese businesses or access proprietary information from foreign firms.”

The Report Concludes Tomorrow

Picture: Shanghai (Pixabay)