Trump Administration Plans Trade Actions Against China
This week, among the chaos of the Trump administration, talks of trade actions against China swirled after Reuters reported that Trump was expected to issue a memorandum which specifically cited issues of Chinese IP theft. It was expected to be announced today, but has been postponed.
Two weeks ago at the Comprehensive and Economic Dialogue, the trade war narrative concerned a little known section of a 1962 trade law to impose tariffs on steel. Now the focus has shifted to another obscure section under a 1974 trade statute, which according to The Financial Times, "has not been employed widely since the 1995 creation of the World Trade Organization." Section 301 would allow the U.S. to eschew the WTO for unilateral action against Chinese companies engaging in IP theft. The FT quoted Deborah Elms who authored a dissertation on Section 301 cases, saying that in this types of cases, "[The US Trade Representative's office] is exclusively the judge, jury and executioner."
Why is the Trump administration seeking to work around the WTO? A Tuesday op-ed in the Wall Street Journal by U.S. Commerce Secretary Wilbur Ross specifically took issue with the WTO's effectiveness, citing the 403 outstanding WTO cases against 42 countries. He further criticized that "the WTO consistently casts the increase of trade enforcement cases as evidence of protectionism by the countries lodging the complaints. Apparently, the possibility never occurs to the WTO that there are more trade cases because there are more trade abuses."
The American Chamber of Commerce in China was not aware that the U.S. would be using Section 301, and also warned the U.S. side to be prepared for countervailing measures by China. Bloomberg reports that one potential tit-for-tat measure by China could involve stemming the amount of soybeans imports, which already numbers 12.5 million tons. "Autos, aircraft and rare-earth commodities have also been identified as potential categories for restriction," according to Bloomberg. Here is more information on the other key industries essential to U.S.-China bilateral trade. The Brookings Institution also has a good roundup on what the potential Trump administration actions could mean for trade, writing, "Previous U.S. forays into protectionism—such as the Smoot-Hawley tariffs or Reagan's voluntary restraint agreements with Japan—were followed by increases, not decreases, in the U.S. trade deficit. Talk of getting tough with China on trade runs into the classic problem that small actions are mostly symbolic and big actions hurt the U.S. and world economies."
Interestingly, according to the U.S. Commerce Department figures released today, the bilateral trade deficit with China widened during the initial months of Donald Trump's presidency. While the U.S. trade deficit did decline nearly 6 percent in June, as a result of rising exports and a slight decline in imports, the bilateral goods trade deficit with China totaled $170.7 billion from January through June, compared to $161.0 billion in the first half of 2016.
More Armchair Diplomacy on North Korea
Last Saturday, Pyongyang announced another successful test of an intercontinental ballistic missile (ICBM), one that allegedly proved its ability to strike the United States. Some headlines suggested that the new ICBM could even reach New York City and Washington, and even more alarmist headlines suggested that a hydrogen bomb could be completed in six to eighteen months. Most agree that both the U.S. and North Korea face the risk of serious miscalculation, and that economic sanctions on North Korea is among the best options to deter further nuclearization on the peninsula.
Weighing in on the matter this week were David Ignatius at the Washington Post, who uncharacteristically agreed with Trump's policy of pressuring China to do more to reign in the North Korean leader, suggesting that "China should invite the other key players — the United States, Japan, South Korea, perhaps Russia — to gather in New York during the U.N. General Assembly meeting for talks about how to handle the North Korea problem. The model would be the 'P5+1' group that sponsored the Iran nuclear talks. China was an observer back then; this time it would be the convener. Xi Jinping's global status would be enhanced as he heads toward this fall's big party congress that will shape his future as president."
Support for talks has been pushed by Chinese observers, as well as U.S. pundits who think Trump should incentivize China to do so. China-US Focus contributor He Yafei says a long-term solution to the Korean Peninsula crisis must to contain three elements – nuclear, regional security, and balance between major powers. He also opined on how "little" sanctions can do to bring North Korea to its knees, and that the U.S. is unduly shifting responsibility in solving the issue to China.
The Economist warned, "to contain Mr Kim, America and its allies should apply pressure that cannot be misconstrued as a declaration of war." This week Secretary Tillerson did just that, indicating again that the U.S. doesn't seek to topple the North Korean government and would start talks with North Korea "at some point." His remarks also elicited favorable response from Chinese foreign minister Wang Yi, who promptly summed up the U.S. positions as the "Four Nos." principle. More details from Tillerson's speech can be viewed here.
Tillerson is expected to prod China and ASEAN countries to take tougher actions against North Korea at regional meetings next week in Manila.
China's Multimillion Dollar Search for Aliens
In one of the more unusual job postings this week, China's "Five-hundred-meter Aperture Spherical radio Telescope," also known as FAST, is looking for a chief director for scientific operation -- a job specifically reserved for a foreigner, and offering a roughly $1.9 million research grant. As Newsweek reported, "The pool of contenders is shallow, as the job requires more two decades of experience, including previously heading a large-scale radio telescope project and holding a scientific position at a leading university or institution. But local experts said being in charge of what's been called humanity's best chance yet to discover extraterrestrial life is a worthwhile position."
Xinhua has more on the world's largest radio telescope's potential for understanding the universe. "Radio telescopes have made major astronomical discoveries, such as pulsars, quasars and cosmic microwave background radiation. Among the 10 Nobel Prizes in physics awarded for discoveries related to cosmology and space, six were attributed to radio telescopes."
The South China Morning Post reported that the world's largest dish, recently built in the mountainous region of Guizhou, "can pick up previously undetectable signals from the universe and provide new clues to a wide range of questions, ranging from mysterious pulsar outbursts to the existence of intelligent alien life."
This Week in Chinese History
On August 1, 1955, the United States and the People's Republic of China opened a series of ambassadorial-level talks in Geneva to discuss the repatriation of nationals and other issues of mutual concern. Because the two countries did not have formal diplomatic relations, the talks were the principal form of contact between them for the next sixteen years. China proposed the negotiations because Sino-American tensions were high, causing concern to bystanders throughout the region.