South Korean Prime Minister Moon Jae-in is the Asian version of Barack Obama, and much like North Korean Chairman Kim Jong-un essentially irrelevant in this geopolitical confrontation.  Take a seat, or make a sandwich…. it matters not.

Behind the fanciful Korean ‘denuclearization talks‘ and lofty ‘peace initiatives‘ a far more consequential geopolitical economic battle is taking place between the worlds largest two economies.  U.S. President Donald Trump and Chinese Chairman Xi Jinping are engaged.

The Sandwich Maker Summit –  (Reuters) – “South Korean President Moon Jae-in held a surprise meeting with North Korean leader Kim Jong Un on Saturday in an effort to ensure that a high-stakes summit between Kim and U.S. President Donald Trump takes place successfully, South Korean officials said.

[…]  Their two hours of talks at the Panmunjom border village came a month after they held the first inter-Korean summit in more than a decade at the same venue. At that meeting, they declared they would work toward a nuclear-free Korean peninsula and a formal end to the 1950-53 Korean War.

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The MSM is insufferable in their intentional disconnect of the dynamic behind the North Korean denuclearization talks.  It was Chinese Chairman Xi Jinping who brought the DPRK to the table; and it was Chinese Chairman Xi Jinping who pushed North Korea away from the table in their manipulative efforts to extract trade concessions. Every other review of the geopolitical gamesmanship is chaff and countermeasures.

U.S. President Trump is holding massive steel and aluminum tariffs as an economic sword of Damocles over the head of Beijing during ongoing trade negotiations.  Chairman Xi sought to increase his own leverage by pulling North Korea’s Chairman Kim Jong-un away from bilateral peace and denuclearization talks.  However, POTUS Trump responded to the Beijing power-play by announcing a Section 232 trade review over the entire auto-industry; and then bolstered his counter-move by cancelling talks with Kim Jong-un.

Red Dragon didn’t expect President Trump to respond so effectively to the customary schemes notoriously famous in any Chinese negotiation encounter. I really believe Chairman Xi underestimates how adept POTUS Trump is at cutting through the obfuscation and obtuse moves.

President Trump simply doesn’t operate in the land of traditional diplomatic discomfort… he doesn’t have any inclination to play these insufferable games.

Within minutes of President Trump withdrawing from the June 12th summit, Beijing realized all of their trade leverage was just wiped out.  Playing deceptive panda isn’t going to work this time.

(Via AP) – North Korea says it is still willing to sit down for talks with the United States “at any time, at any format” after President Donald Trump abruptly canceled his planned summit with Kim Jong Un.

Vice Foreign Minister Kim Kye Gwan issued a statement Friday saying North Korea is “willing to give the U.S. time and opportunities” to reconsider talks.

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Big picture move by President Trump today that has massive, and generally misinterpreted, ramifications for any trade deal with China, EU and most importantly NAFTA.

China is using U.S. nuclear negotiations with North Korea as leverage for more beneficial trade outcomes; the communist regime is in full manipulative dragon-mode. President Trump can see through the economic play and is dropping the Panda outreach.  Eagle-one now hits back at Chairman Xi for deploying such dangerous tactics.

If you have been following trade nuance, the Automobile Sector is one of the biggest points of contention within varying trade negotiations. In the NAFTA discussion the auto-sector, via rules of origin, runs at the heart of NAFTA’s fatal flaw.

The fatal flaw is the use of Asian, mostly Chinese, auto components within auto manufacturing. Mexico and Canada arguing to allow more Chinese auto parts in North American manufacturing; and President Trump demanding more North American parts for North American auto manufacturing.

Many U.S. Auto manufacturers have moved to Mexico to exploit the NAFTA loophole (fatal flaw). Vehicles assembled in Mexico use cheaper Chinese parts and are shipped into the U.S. without any tariff under NAFTA rules.

It didn’t take long before EU auto-manufacturers, mostly German, to begin taking the same approach. Albeit to a lesser extent, German auto companies also invested in building vehicles in Mexico/Canada for tariff-free transfer into the U.S. This works out great for Canada and Mexico auto-workers, but not for the U.S.

In essence, the auto-sector is representative of much of the manufacturing exploitation by multinational corporations beyond vehicle production. China has supported this approach because they produce the components for multiple sectors (furniture, appliances etc).

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President Trump met with NATO Secretary General Jens Stoltenberg at the White House today for a bilateral meeting on EU security and trade issues.  During the Oval Office press availability both made remarks but president Trump took the opportunity to have an impromptu presser on other current issues.   WATCH:

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Hopefully everyone paid attention to the North Korea topic. It was not coincidental the stompy-feet assertions of Kim Jong-un and the DPRK were timed at the exact moment Chinese Vice-Premier Liu arrived in the U.S. for important trade talks. Once again Chairman Xi Jinping is using his proxy province of N-Korea to leverage economic benefits:

WASHINGTON – Chinese President Xi Jinping’s special envoy and Vice-Premier Liu He arrived in Washington on Tuesday afternoon. Liu, also a member of the Political Bureau of the Communist Party of China Central Committee and chief of the Chinese side of the China-US comprehensive economic dialogue, is leading a Chinese delegation for the talks.

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Earlier today President Trump welcomed President Mirziyoyev of the Republic of Uzbekistan to the White House for a diplomatic meeting. Among the issues discussed were regional security issues important to Uzbekistan, and engagement in economic partnerships with U.S. companies to enhance a growing trade relationship:

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Recap video below:

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It is interesting to watch the Trump Cabinet debate the Obama Cabinet (U.S. media). In this interview between White House National Security Advisor John Bolton and ABC’s Martha Raddatz the central topic is Iran; the detailed conversation is deep weeds therein.

After Bolton presents the administration position and reasoning for exiting the deeply flawed, unsigned and unenforceable Obama Iran “deal” (not treaty), essentially a JCPOA pathway to the land of broken promises, Ambassador Bolton then reaches the part of the discussion where sanctions against European companies come back into play.  This is the best part.  WATCH:

Massive U.S. economic leverage, and the strategic application therein, is an aspect that drives the left-wing Iranian apologists bananas.  A weaponized $20 trillion U.S. economy is the unavoidable atomic sledgehammer at the foundation of the Trump Doctrine.  It is far more powerful than a military weapon and drops all nations to their knees in compliance.

Everything is about the economics. E.V.E.R.Y.T.H.I.N.G. Every point of opposition; every forward MAGA policy; every initiative, including freedom; every move toward success; everything is about the economics.

Look at the immediate take-away published by Reuters.

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Critical Update – Critical Update – Critical Update

Those who are watching the NAFTA negotiations must pay close attention to the activity in the past 36 hours.  There is a key video at the bottom.  First the backdrop:

As most are aware the NAFTA fatal flaw, the “loophole”, surrounds Mexico and Canada structuring their economic manufacturing policy -and trade deals- through the exploitation of a back-door into the U.S. Market. Understanding this key issue is paramount to understanding President Trump’s approach therein.

Remove the NAFTA “loophole” and there is no longer an incentive for U.S. manufacturers to locate their operations in Mexico or Canada. However, the removal of this loophole also means China, ASEAN nations and the EU lose the same incentive.

There have been hundreds of billions of previous investment by multinational corporations in Mexico and Canada.  Every dollar spent was intended to continue this exploitation.

Then came Trump.

In terms of investment size and scale of manufacturing, the auto-sector is perhaps the primary industry attempting to position themselves to avoid any reversal of the NAFTA scheme; and it is a self-interested economic scheme. In the short term there are billions at stake; in the longer term there are trillions within the equation.

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Last year during punditry discussions of  North Korea, the traditional crowd were waxing philosophically about military expansionism, and the threat of nuclear war as a likely outcome.

However, all of those Gordian-knot sellers held references from a fundamentally flawed foundation; they viewed the DPRK as a separate nation from China.  There were a few voices who challenged geopolitical orthodoxy and presented a different view; the DPRK as a proxy province of China.

When you think of North Korea as a proxy province of China, everything changes.  Every possible action and consequence changes.  If the DPRK is inherently a proxy province of Beijing, then North Korea already had nuclear weapons; or at least access to nuclear weapons as needed; the argument to stop them was moot.

Additionally, if Beijing was structurally and factually controlling Pyongyang, attaining a peaceful Korean peninsula between Kim Jong-un and his South Korean neighbor Moon Jae-in, was entirely different.

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Generally speaking the corporate media have yet to have an honest outline about the fatal flaw within NAFTA that allows China, ASEAN nations and the EU to exploit previous investments in Canada and Mexico as a back-door to the U.S. market.

In a generalized aspect, the recent visit of top U.S. trade and economic policymakers to China was part of Trump’s exploration into the larger dynamic of bi-lateral trade between the U.S. and China knowing full well the NAFTA flaw remains unaddressed.  Without addressing the loop-hole (aka ‘fatal flaw’) any modernized NAFTA deal is moot; and by extension the foundation for any future trade deal between the U.S. and China is too byzantine to manage.

It is in China and the EU’s interests to continue exploiting the NAFTA access.  It is in Canada and Mexico’s interests to retain the subsequent investment influx.

It is in multinational corporate and Wall Street interests to continue the scheme. However, it is also entirely against U.S. Main Street interests.  Hence, NAFTA loggerheads reigns supreme; and in my opinion, we are soon to see President Trump cut the Gordian knot.

WASHINGTON (Reuters) – Senior Canadian, U.S. and Mexican officials trying to rescue slow-moving talks to update the NAFTA trade pact met on Monday in a new bid to resolve key issues before regional elections complicate the process.

With time fast running out to strike some kind of deal on the North American Free Trade Agreement, the three member nations are still far apart on major points.

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Commerce Secretary Wilbur Ross discusses the ongoing trade initiatives with China ahead of the U.S. delegation departing later tonight.  Secretary Ross, Treasury Secretary Mnuchin, U.S. Trade Representative/Ambassador Robert Lighthizer, Economic Council Chairman Larry Kudlow and White House Trade Adviser Peter Navarro are all heading to Beijing to meet with their Chinese counterparts.

Secretary Ross is like the Babe Ruth of trade-baseball. Wilburine has a way of taking complex issues pitched to him, and knocking them out of the ballpark with an extremely fast common sense bat.  He makes it look effortless.  Watch:

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Two quick thoughts. First, I think this is the first time every member of Team America (Ross, Mnuchin, Lighthizer, Kudlow, Navarro) has unified into one specific set of trade negotiations. That helps understand the scale of importance of the China trade relationship.

Second, there’s no traveling parallel contingent consisting of outside government members/advisers from of the U.S. Chamber of Commerce. This is a significant change from the past 30 years of Wall Street policy manipulation by the CoC. Many people may not be aware but until President Trump the U.S. government didn’t actually write the trade agreements.

For all prior administrations the actual negotiations and agreements were willingly sub-contracted out to U.S. Chamber of Commerce delegations. This is how the multinationals took control of trade policy and eventually the U.S. economy. CoC President Tom Donohue must be apoplectic now that he is facing an administration actually writing the trade agreements.

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