The official, albeit preliminary, U.S.T.R. delegation from the United States is on the ground in China to begin initial discussions of “technical details” surrounding the ongoing trade dispute. The preliminary talks are today (Jan 7th) through Wed (Jan 9th).
The prior notice from USTR announced the delegation: •Ambassador Jeffrey Gerrish, Deputy U.S. Trade Representative (pictured above – center); •Ambassador Gregg Doud, USTR Chief Agricultural Negotiator; •Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney, U.S. Department of Agriculture; •Under Secretary of Commerce for International Trade Gilbert B. Kaplan, U.S. Department of Commerce; •Assistant Secretary for Fossil Energy Steven Winberg, U.S. Department of Energy; and •Under Secretary for International Affairs David Malpass, U.S. Department of the Treasury.
The delegation will be accompanied by senior officials from the White House, USTR, and the U.S. departments of Agriculture, Commerce, Energy, State, and Treasury. (link)
Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing is quoted as saying Beijing’s first phase will be focused on technical details before more important voices “make hard political decisions.”
The Trump administration should be able to sense if Beijing is just playing Panda games to delay and outlast the administration. It is widely anticipated China will deploy their historic strategy, giving the illusion of progress in order to avoid tariffs that are scheduled to trigger on March 1st, 2019. However, the problem for China is their adversary, President Trump, is well aware of their traditional approach.
The Chinese government will also be relying on support from lobbyists throughout Washington DC, specifically the U.S. Chamber of Commerce, hired by Chinese interests to undermine the position of U.S. Trade Representative Robert Lighthizer and President Donald Trump.
Despite several threats, so far U.S. CoC President Tom Donohue has not been able to influence Trump, but he does control Senate Majority Leader Mitch McConnell and roughly 15 United States Senators, known collectively as “The Decepticons.” The Chinese communist government and the U.S. Chamber of Commerce currently have a joint financial enemy in the White House.
The Chinese economy is under a great deal of pressure from the aggregate approach being deployed by President Trump well beyond the issue of tariffs. The Chinese have recently admitted they underestimated the resolve of President Trump.
Each time China takes aggressive action (red dragon) China projects a panda face through silence and non-response to opinion of that action;…. and the action continues. The red dragon has a tendency to say one necessary thing publicly, while manipulating another necessary thing privately. The Art of War.
President Trump is the first U.S. President to understand how the red dragon hides behind the panda mask.
It is specifically because he understands that Panda is a mask that President Trump messages warmth toward the Chinese people, and pours vociferous praise upon Chairman Xi Jinping, while simultaneously confronting the geopolitical doctrine of the Xi regime.
In essence Trump is mirroring the behavior of China while confronting their economic duplicity.
President Trump is putting on a MASSIVE economic squeeze.
♦Squeeze #1. President Trump and Treasury Secretary Mnuchin sanctioned Venezuela and cut off their access to expanded state owned oil revenue. Venezuela needs more money. China and Russia are already leveraged to the gills in Venezuela and hold 49% of Citgo as collateral for loans outstanding. China and Russia now need to loan more, directly.
However, China cannot engage in economic commerce with Venezuela or they risk losing access to the U.S. banking system. Therefore all current Chinese aid to Maduro comes in the form of IOUs. These ongoing loans are likely impossible to be repaid.
♦Squeeze #2. China’s geopolitical ally, Russia, is already squeezed with losses in energy revenue because of President Trump’s approach toward oil, LNG and coal. Trump, through allies including Saudi Arabia, EU, France (North Africa energy), and domestic production has influenced global energy prices. Additionally, President Trump is demanding NATO countries, specifically Germany, stop supporting financial dependence on Russia.
Meanwhile, and directly connected, Russia is bleeding out financially in Syria. Iran is the financial reserve, but they too are energy price dependent and President Trump is now putting pressure on Iran vis-a-vis new sanctions and new demands on allies.
♦Squeeze #3. In 2017 Trump and Secretary Tillerson, now Secretary Pompeo, put Pakistan on notice they need to get involved in bringing their enabled tribal “extremists” (Taliban) to the table in Afghanistan. Pakistan’s primary investor and economic partner is China. The U.S. removed $900 million in financial support to pressure Pakistan toward a political solution in Afghanistan, China has to fill void. [NOTE: Last month the World Bank began discussions about a financial bailout for Pakistan.] Again, more one-way bleed for China.
♦Squeeze #4. China’s primary economic threat (competition) is next door in India. President Trump has embraced India as leverage over China in trade and pledged ongoing favorable trade deals. The key play is MFN (Most Favored Nation) trade status might flip from China to India. That’s a big play. It would have massive ramifications.
♦Squeeze #5. President Trump launched a USTR Section 301 Trade Investigation into China’s theft of intellectual property. This encompasses every U.S. entity that does manufacturing business with China, particularly aeronautics and technology, and also reaches into the financial services sector.
In March of 2018 U.S. Trade Representative Robert Lighthizer completed a section 301 review of China’s trade practices. [SEE HERE] Section 301 of the U.S. Trade Act of 1974 authorizes the President to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. However, as talks with China progressed, President Trump shelved the 301 action to see where negotiations would end-up. The May and June, 2018, negotiations between the U.S. and China provided no progress. The 301 review of China was back off the shelf, and President Trump assembled his trade-war strategy. After the December G20 dinner and the agreement to pause (90-days) the 301 tariffs/sanctions; they are currently being held by U.S.T.R Robert Lighthizer pending the outcome of the current talks.
♦Squeeze #6. President Trump, Secretary Ross, Secretary Mnuchin and USTR Robert Lighthizer dissolved NAFTA in favor of the USMCA. One of the primary objectives of team U.S.A. is to close the 3rd party loopholes, including the dumping and origination trickery that China uses to gain backdoor access to the U.S. market and avoid trade/tariff restrictions. [China sends parts to Mexico and Canada for assembly and then back-door entry into the U.S. via NAFTA.]
♦Squeeze #7. President Trump was open, visible and vocal about his intention to shift to bilateral trade renegotiation with China and Southeast Asia immediately after Team U.S.A. concluded with NAFTA. [Current discussions with Japan are ongoing]
♦Squeeze #8. President Trump positioned the U.S. relationship with the E.U. as a massive potential loss for Europe (via Steel, Aluminum, and Auto tariffs) if they did not: (A) shift their trade relationship toward greater reciprocity; and (B) reconsider the size of their trade relationship with China. After initially trying to push-back, Europe acquiesced.
♦Squeeze #9. President Trump has positioned ASEAN (Association of Southeast Asian Nations) as trade benefactors for assistance with North Korea. Last year the KORUS (South Korea and U.S.) trade deal was renegotiated, and announced in March. The relationship between ASEAN nations and the Trump administration is very strong, and getting stronger. Which leads to…
♦Squeeze #10. President Trump has formed an economic and national security alliance with Shinzo Abe of Japan. It is not accidental that North Korea’s Kim Jong-un fired his last missile over the Northern part of Japan. Quite simply, Beijing told him to. However…
♦Squeeze #11. President Trump cut-off the duplicitous Beijing influence over North Korea by engaging directly with Kim Jong-un. The open exchange and ongoing dialogue has removed much of the ability of Beijing to leverage the DPRK nuclear threat for their own economic benefit. This dialogue was as much, if not more, about dismantling the Beijing geopolitical influence as it was about denuclearizing the Korean peninsula. However, no-one caught on to that part of the strategy.
Add all of this up and you can see the cumulative impact of President Trump’s geopolitical economic strategy toward China. The best part of all of it –as we previously stated– is the likelihood China never saw it, meaning the sum totality of “all of it”, coming…. at first.
(Via VoA) […] Beijing has tried in vain to recruit France, Germany, South Korea and other governments as allies against Trump. They criticize his tactics but echo U.S. complaints about Chinese industrial policy and market barriers.
The European Union filed its own challenge in the World Trade Organization in June against Chinese rules that the 28-nation trade bloc said hamper the ability of foreign companies to protect and profit from their own technology.
For their part, Chinese officials are unhappy with U.S. curbs on exports of “dual use” technology with possible military applications. They complain China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.
Some manufacturers that serve the United States have shifted production to other countries to avoid Trump’s tariffs.
UBS said Friday that 37 percent of 200 manufacturers surveyed by the bank have shifted out of China over the past 12 months. The threat of U.S. tariff hikes was the “dominating factor” for nearly half, while others moved because of higher costs or tighter environmental regulation.
“Most firms expect the trade war to escalate,” the bank said. (read more)