Posts Tagged ‘trade’

‘Substantial progress’ made on massive China trade deal that excludes US, Li Keqiang says

November 14, 2018

Substantial progress has been made on hammering out a China-backed trade deal, Singapore’s leader said Wednesday, driving ahead the world’s largest commercial pact which the United States is excluded from.

World leaders gathered in the tropical city state this week for a summit where a massive Beijing-backed agreement covering half the world’s population has dominated discussions.

Diplomats have been trying to nail down details as Beijing entices its neighbours to join a commercial alliance seen as an antidote to President Donald Trump’s “America First” protectionist trade policy.

© AFP | During a meeting with Southeast Asia leaders, Chinese Premier Li Keqiang said he was hopeful talks would “break through the ceiling” and take regional trade “to new heights”

The US has imposed tariffs on roughly half of what it imports from China, prompting Beijing to retaliate with its own levies.

Beijing’s leaders have recast themselves as the defenders of global commerce — with the United States under Trump relegated to the sidelines.

China, Japan and India are among 16 Asia-Pacific countries negotiating the Regional Comprehensive Economic Partnership (RCEP).

“Substantial progress has been made this year to advance the RCEP negotiations,” Singaporean Prime Minister Lee Hsien Loong said Wednesday evening, adding talks were now “at the final stage”.

“With the strong momentum generated this year, I am pleased to note that the RCEP negotiations are poised for conclusion in 2019,” he added.

But he cautioned any further delays could risk “losing credibility” for a deal — which has already taken six years to negotiate.

– Trump absent –

This week’s meetings are the biggest in a series of annual gatherings organised by regional bloc the Association of Southeast Nations (ASEAN), and are attended by 20 leaders.

RCEP was given extra impetus after US President Donald Trump pulled the US out of the rival Trans-Pacific Partnership (TPP) in early 2017.

That deal was spearheaded by his predecessor Barack Obama and aimed to bind fast-growing Asian powers into an American-backed order to counter China.

The TPP is still alive even without Washington — and will come into effect in December — but RCEP, if realised, will be the world’s biggest trade deal.

However, the Beijing-backed pact is much less ambitious than the TPP in areas such as employment and environmental protection.

Beijing had hoped to have the meat of the deal done by the end of this year, but the timetable has now slipped to 2019.

However, this has not stopped Chinese leaders from basking in the progress already made.

During a meeting with Southeast Asia leaders, Chinese Premier Li Keqiang said he was hopeful talks would “break through the ceiling” and take regional trade “to new heights”.

Trump is not at the Singapore summit, nor will he attend a subsequent gathering of world leaders in Papua New Guinea at the end of the week, having sent Vice President Mike Pence instead.

National Security Advisor John Bolton, however, told reporters in Singapore that the president’s no-show should not be seen as a lack of commitment towards the region.

He blamed a “schedule crunch” after a particularly frenetic few weeks that included the midterm elections, attending the World War I armistice commemorations in France and preparing for the G20 in Argentina later this month.

– Sticking points –

There are still major sticking points in RCEP talks — with regional rival India particularly nervous about giving Chinese companies greater access to its markets, and wealthier nations wanting to see more progress on labour reforms.

Disagreements on intellectual property rights, goods tariffs and financial services are also on a long list of issues that still need to be concluded.

Also, the spectre of possible leadership changes with several general elections scheduled early next year — India, Thailand and Indonesia — have also complicated the timeline for a deal.

Aaron Connelly, an expert on Southeast Asian politics at the International Institute for Strategic Studies, said the fact that RCEP negotiations were not concluded at this year’s ASEAN could indicate China has some way to go to convince neighbours to sign up.

“It’s interesting that when Beijing is at its most vulnerable on trade, with US tariffs biting, they weren?t willing to concede enough to their neighbours in terms of market access to get a deal done,” he told AFP.

At the same time, trade ministers across Asia Pacific have sounded a largely positive tone this week, saying they expect the pact to be agreed sooner rather than later.

“The future lies in RCEP,” Indian trade minister Suresh Prabhu told reporters earlier in the week.




US security and economy ‘undoubtedly put at risk’ by China

November 14, 2018

Image result for china, flag, map

Belt and Road masks use of Asian ports by Chinese navy, congressional panel warns

Members of China’s military carry the nation’s flag during the opening ceremony in October of the China-ASEAN Maritime Exercise.   © Reuters

WASHINGTON — China’s hegemonic ambitions pose certain risk to U.S. security and economic interests, a bipartisan congressional panel said in a report released on Wednesday.

The 2018 report by the U.S.-China Economic and Security Review Commission criticizes Beijing’s attempt to turn Asian seaports into military supply bases.

It also warned that the country may steal information from U.S. corporations by taking advantage of key technologies for data distribution.

“Many aspects of China’s attempts to seize leadership have undoubtedly put at risk the national security and economic interests of the United States, its allies and partners,” the report states.

The commission, whose members include former government officials and China experts, wields a great deal of influence over congressional policies.

The annual report specifically says China is developing and operating seaports under its Belt and Road Initiative — ostensibly aimed at creating a vast economic bloc — but in fact is using them as fuel and supply bases for its navy. The report continues, saying China uses protection of infrastructure needed for development as the pretext for deploying its naval forces overseas.

It also raises concerns that China’s aggressive spending on next-generation defense technologies may eclipse U.S. military supremacy in the medium to long term.

Regarding denuclearization of the Korean Peninsula, the report said China appears to have started to relax its sanctions against North Korea, weakening the U.S. policy of applying maximum pressure on Pyongyang. It also says China places a low priority on the denuclearization issue.

“Beijing appears to have already started to loose enforcement of sanctions on North Korea, undermining the U.S. ‘maximum pressure’ campaign,” it said.

The report notes that China is aggressively supporting development of devices related to the internet of things, technology that connects objects online to each other. As these devices find their way into America’s infrastructure, they may give China covert access to personal and corporate data.

In trade and investment, China is demanding that U.S. companies transfer technology in exchange for access to its vast market, according to the report. It may not be efficient, the report says, to use multilateral trade frameworks, such as the World Trade Organization, to resolve issues arising from China’s commercial practices.


New report to US Congress supports an increasingly hawkish view on China

November 14, 2018

US security and economy ‘undoubtedly put at risk’ by China

Belt and Road masks use of Asian ports by Chinese navy, panel warns

 Xi Jinping seeks to change the global order to facilitate Beijing’s ambitions

China’s global rise has “undoubtedly put at risk the national security and economic interests of the United States, its allies, and its partners”, according to a commission that advises the US Congress on national security implications of the US-China trade and economic relationship. “But China does not pose an existential threat to American civilisation.”

By Owen Churchill
South China Morning Post

Image result for xi Jinping, china, photos

The warning came in a 525-page report by the US-China Economic and Security Review Commission (USCC), which calls on lawmakers to enact a broad range of measures to better monitor and counter China’s global expansion strategies, trading practices, and influence campaigns abroad.

The commission contends that Chinese President Xi Jinping is seeking to fundamentally change the global order to facilitate China’s ambitions and warns US policymakers that the country is on track to reverse the strategic philosophy once espoused by the reform-minded leader Deng Xiaoping that China should “hide [its] capabilities, bide [its] time, and never take the lead” in international affairs.

The report offers a hawkish view on China that is finding increasing resonance within mainstream US politics, against the backdrop of an administration pursuing – with broadly bipartisan support – an aggressive rebuke of perceived unfair trade practices on the part of China.

The report, to be delivered on Wednesday to Senator Orrin Hatch, the chairman of the Finance Committee, and House speaker Paul Ryan, was compiled on the basis of classified and unclassified hearings with witnesses from government, academia and the private sector, as well as research trips to Taiwan and Japan.

Commission members were not granted visas to visit China to conduct research in-country.

Senior Chinese officials have on a number of occasions denied that Beijing seeks to challenge US global dominance, and have played down the geopolitical and strategic nature of foreign policy endeavours like Xi’s signature “Belt and Road Initiative”.

That campaign, launched five years ago, partners China with dozens of countries around the world through largely state-facilitated infrastructure and development programmes.

Such declarations have been met with scepticism in Washington, with the USCC telling Congress that belt and road objectives included “bolstering energy security, expanding China’s military reach and advancing geopolitical influence by moving China to the centre of the global order”.

The report concludes that such criticism will likely be met with strong opposition from Beijing. China, it says, “will be quick to cast any pushback or legitimate criticism as fear, nationalism, protectionism, and racism against the Chinese people”.

Image result for Robin Cleveland, USCC, photos

The commission called on Congress to insist that the director of national intelligence investigate the security ramifications of China’s growing access to the countries and regions along the belt and road route.

The commission also recommended that Congress establish a fund to provide assistance to countries deemed to be “a target or vulnerable to Chinese economic or diplomatic pressure”.

“China asserts itself with unique leverage” in countries unable to raise funds anywhere else due to poor credit ratings, said Robin Cleveland, the chairwoman of the USCC.

“We’re not going to be able to dollar-for-dollar compete when it comes to the trillion that the Chinese are willing to put on the table,” said Cleveland, who was appointed to the position by Senate majority leader Mitch McConnell.

“But I think that we can target assistance in the same way we did in Ukraine, Georgia and some of the Eastern European countries post-wall,” she said, referring to the fall of the Berlin Wall in 1989.

USCC’s recommendations come two days after the US government’s Overseas Private Investment Agency (OPIC) signed a trilateral memorandum of understanding with Japan and Australia, which, according to OPIC, will see that the three countries “collaborate on urgent issues facing the Indo-Pacific including enhancement of connectivity, shared development objectives, and the promotion of women’s economic empowerment”.

OPIC was initially earmarked for erasure in the early part of Donald Trump’s presidency, but was given a lifeline this summer as part of the administration’s “Indo-Pacific Economic Strategy” – widely regarded as a counter to Beijing’s belt and road plan, albeit on a much smaller scale, and will see OPIC’s finance cap double to US$60 billion, from US$30 billion.

The commission’s wide-reaching recommendations included a call to examine the security threat posed by Chinese technology or services being put to use in 5G networks around the US.

Another recommendation was to investigate whether the intellectual property of US researchers and firms is adequately protected in cases of US-China joint ventures and whether the Chinese military is benefiting from US taxpayer-funded research.

The commission also wants a determination on the applicability of US laws to sanction Communist Party affiliates involved in the coercion or threatening of US residents.

We are no longer considered outliers, and it’s not because we’ve changed our views. It’s because the debate has shifted

The USCC also calls on the Department of Justice to clarify that materials disseminated by bodies determined to be “foreign agents” – a classification recently imposed on Chinese state news agency Xinhua and television broadcaster CGTN – must carry a prominent label identifying the publisher as such.

The commission’s 11 members were once considered to be “outliers and very hawkish”, said Carolyn Bartholomew, the body’s vice-chairwoman. “We are no longer considered outliers, and it’s not because we’ve changed our views. It’s because the debate has shifted.”

The depth and breadth of the issues the report raises add weight to analysts’ warnings that any deal Trump and Xi might strike as a result of their expected meeting at the G20 summit at the end of the month will fail to resolve many of Washington’s fundamental grievances against Beijing.

Even simply within matters of trade, according to Justin Thomson, chief investment officer of equity at the asset management firm T Rowe Price, “the two sides will be able to agree on 70 per cent of the issues but not the rest”.

“China isn’t going to back down on what makes China China, which is to advance its technology.”

In remarks delivered at the Asia Society in New York on Tuesday, former US treasury secretary Henry Paulson warned that “underlying tensions will persist” beyond any resolution to the trade war, but said leaders should make it a priority to “alter the downward spiral for the well-being of all nations of the world”.

Speaking out against advocates of an economic “decoupling” between the US and China, Paulson, who served under George W. Bush and later founded the Paulson Institute, called on the Trump administration to “dial down the rhetoric” and suggested that perceptions of China’s threat to the US were overblown.

“Strategic competition is a fact,” he said.

“But China does not pose an existential threat to American civilisation. In the 242nd year of our great democratic experiment, we should have more confidence in America and the resilience of our system.”

Additional reporting by Jodi Xu Klein

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US security and economy ‘undoubtedly put at risk’ by China

US, China revive trade talks ahead of Argentina meeting, Ross says

November 14, 2018

Image result for china, US, flags, pictures

American and Chinese negotiators have revived trade talks in the hopes of reaching a draft agreement before President Donald Trump and Chinese leader Xi Jinping meet face-to-face on the sidelines of the G20 meeting in Argentina.

Chinese negotiators will arrive in Washington “shortly” with the aim of ironing out an informal deal, Commerce Secretary Wilbur Ross said Tuesday at a panel event in Washington, though he did not specify an exact time frame for a meeting.
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Commerce Secretary Wilbur Ross
Trade will be one of the issues up for discussion when the delegation arrives, a Treasury spokesperson told CNN.
The fresh momentum comes after months of widening stalemate between the world’s two largest economies over trade, a key issue for Trump.
White House economic adviser Larry Kudlow said later Tuesday morning on CNBC that the restart of talks is “a good thing.”
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Larry Kudlow
Trump was scheduled to meet with members of his trade team on Tuesday to discuss a separate issue: auto tariffs. The US government is weighing whether to impose tariffs on Japanese and European SUVs, vans and auto parts, ostensibly to protect national security interests. It’s unlikely a decision is imminent, according to a US official.
That issue is separate from the Chinese tariff talks.
Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He spoke by phone on Friday, a spokesperson for the agency confirmed Tuesday, an effort to restart trade discussions ahead of the two leaders meeting, which Trump has boasted would be a “good meeting.” The call was first reported by the Wall Street Journal.
Image result for Steven Mnuchin , Liu He, photos
Chinese Vice Premier Liu He and U.S. Treasury Secretary Steven Mnuchin
So far, Chinese government officials have declined to comment directly on the reported call between Mnuchin and Liu, but have acknowledged recent communications following a phone conversation earlier this month between Trump and Xi.
“The two countries’ economic teams are in touch to implement the consensus reached by the two leaders,” Chinese Assistant Commerce Minister Li Chenggang said at a news briefing in Beijing on Tuesday. “We hope to achieve positive results with efforts from both sides.”
Ross was slightly more equivocal Tuesday in his comments at the Yahoo! Finance’s America Financial Future summit. When asked if the two sides were in the final innings of their negotiations, Ross replied, “We are where we are.”
He also addressed rumors that the President is considering replacing him with the head of the Small Business Administration Linda McMahon. “I’ll serve as long as the President wants, and I have no indication to the contrary,” he said.
The United States is demanding that China come up with a clear offer before negotiations on a trade deal can start, but Beijing wants to talk first and then make a firm proposal later, according to the WSJ’s report, citing people familiar with discussions.
Both sides have been working toward a path to end the trade war, which has left investors jittery over the lasting effects on American consumers and corporations.
President and CEO of the Business Roundtable Joshua Bolten speaking at the same Yahoo summit said the Trump administration had made “mistakes” in its strategy with China by slapping rounds of tariffs as the opening gambit.
“It would have been much more productive to hold those threats [of tariffs] and sit down and try to have some constructive negotiations with the Chinese,” said Bolten, who previously served as President George W. Bush’s chief of staff and budget director. “This is not a country that’s going to be easily bullied.”
Top Trump administration officials have sent conflicting signals in recent weeks.
Mnuchin on the sidelines of the International Monetary Fund meeting in Bali, Indonesia, last month dismissed the idea the US had set any pre-conditions for the leaders’ meeting, leaving the decision in the hands of the President. “To the extent we can make progress toward a meeting, I would encourage that and that is something we are having discussions about,” he said.
Shortly thereafter, Kudlow warned of the differences between the two sides when he said last month, “China has not responded positively to any of our asks.”
The Trump administration has been divided between free traders — including those with Wall Street backgrounds like Mnuchin and Kudlow — and hardliners like US Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro.
Just last week Navarro took a shot at Wall Street, warning “globalist elites” against meddling with the Trump administration’s policy on China. “If and when there is a deal, it will be on President Donald J. Trump’s terms — not Wall Street terms,” Navarro said during a speech at the Center for Strategic and International Studies in Washington.
Speaking to reporters on the White House lawn Tuesday, Kudlow said Navarro, a former economics professor, “misspoke” and “wasn’t authorized” to speak on the matter.
In New York, former Treasury Secretary Hank Paulson offered a dim view on rising tensions between the two countries, calling on China to “do no harm” and the US to “dial down the rhetoric” in a sweeping speech at the Asia Society.
Image result for Hank Paulson, photos
Hank Paulson
“The US-China strategic interaction is by far the most consequential in the world,” said Paulson. “I am very sobered by the trajectory we are on.”
He called on US leaders to work with like-minded partners to reach a multi-party investment agreement with China by jointly withholding access to the US, European Union and Japanese markets, to test Beijing’s willingness to open up its markets.
The United States has imposed tariffs on Chinese products ranging from food seasonings and baseball gloves to network routers and industrial machinery parts. China’s retaliatory tariffs have hit thousands of US exports including meat, alcoholic drinks, chemicals, clothes, machinery, furniture and auto parts.
And doubts remain over whether the two economic superpowers can reach a deal anytime soon.
“The issue with China is not just tariffs,” said Ross at the Yahoo! panel. “If it was just tariffs, I think we could work it out very, very, very quickly.”
“The real issue is intellectual property rights, forced technology transfers, industrial espionage, that kind of thing. We can’t tolerate abuses of that sort,” he said.
The Trump administration has already slapped tariffs on $250 billion in Chinese products since July. The tariffs on $200 billion of those goods are set to increase to 25% from 10% on January 1, which would further escalate the conflict.
China has so far retaliated with tariffs on $110 billion of US products and is likely to respond with more if the United States goes ahead with the increase at the start of January.
Trump has made it a priority to take an aggressive stance against China for what he says are unfair trade practices, including intellectual property theft and forced technology transfers. He’s threatened to escalate the trade war further by imposing tariffs on all the remaining goods that China sells to the United States.
Many American manufacturers, farmers and lawmakers from both sides of the aisle say they appreciate the administration’s efforts to change China’s trade policies. But some argue the tariffs aren’t the best way to address the problems. They pose a dilemma for US importers who must decide whether to absorb the higher cost of the goods or pass it on to consumers, and some exporters are hurting from China’s retaliatory tariffs.

Updated 7:40 PM ET, Tue November 13, 2018

Britain’s conspiracy of silence over the Brexit deal

November 13, 2018

The UK can only secure frictionless trade with the EU by losing control of the rules

Dominic Raab, on the left, and Michel Barnier at the podium

Dominic Raab, UK Brexit secretary, left, and Michel Barnier, chief EU negotiator, in Brussels in August © Reuters

By Peter Mandelson

The paradox at the heart of Brexit is only now becoming apparent. It was brutally exposed by Jo Johnson when he spoke of “vassalage” in his resignation from the UK government last week. The very event that was intended to give Britain greater control outside the EU can only be implemented by ceding even greater control to it. No wonder the cabinet is struggling to agree a position.

This conclusion is not the consequence of any failure on Theresa May’s part. It is ridiculous to blame the prime minister’s weak leadership or lack of negotiating skills — or, indeed, her lack of a parliamentary majority.

Nor is it due, as the more hot-headed Brexiters suspect, to a pro-European conspiracy in the civil service. The paradox is intrinsic to Brexit: we can only secure continuity of frictionless trade by complying with the rules but without a say in them once the UK has left the EU. (This would be the case even without the complicating factor of losing further sovereignty, so as to avoid a hard border between Northern Ireland and the Irish Republic.)

Prospective Labour ministers might imagine that, through patient and friendly negotiation, they could find a magic formula that gives Britain both autonomy and full market access outside the EU. But this is a delusion. For those who think this paradox is going to ease with time, I have disappointing news. If anything it will worsen.

The longer Britain lingers inside either the single market or the customs union, or both, either through indecision, the operation of the Irish border backstop or a desire to put off the consequences of leaving, the more onerous the conditions will become. As a former member of the European Commission, I have been on the opposite side of the negotiating table.

I saw what happened in Switzerland’s case. EU states, bound by a tough rule book inside the EU, will simply not allow more flexibility for a country outside it that wants preferential market access and customs privileges. Notwithstanding the trade benefits for both sides, the EU will not welcome the inevitable tensions and arguments that will be sparked in administering these arrangements.

Brussels will impose rigid conditions for operating such a system and the European Court of Justice, or a surrogate body, will be the final court of appeal.

The closer Britain remains to the single market, the stronger will be the EU’s demand for a level playing field on all matters affecting competition. Every industrial sector in Britain will be required to operate on the basis of the same directives, the same environmental standards and probably the same energy pricing as those in the EU. We will have no say in any new legislation imposed on us.

This is what “vassalage” will mean. It is astonishing that many British business leaders, whether producing cars, aircraft, chemicals or pharmaceuticals, should be so sanguine about becoming rule takers.

I understand their need for continued frictionless trade in Europe. But they are used to having British ministers representing their interests — banging the table if necessary. Once the UK leaves, this defence of their interests will cease.

Nor will they benefit from UK-negotiated trade deals around the world to secure preferential market access. This was one of the great claims advanced in favour of Brexit yet these will be precluded. The cause is not EU vindictiveness.

These avenues will be closed off because being in any sort of customs union means having a common non-negotiable external tariff. There is presently a conspiracy of silence that embraces the government, Labour’s front bench and business in disguising the slow, inexorable, grinding reality of the Brexit deal that is being forced on us.

It is no good arguing that “the public has decided and we have to respect the result”. The government is not being honest about the result it is shaping. Far from “taking back control”, Britain is in danger of becoming an appendage to the EU.

The Labour party leader Jeremy Corbyn said in an interview with the German news organisation Der Spiegel last week: “Brexit cannot be stopped.” He is right in that parliament cannot do so. Only the voting public can, if they are given the chance. We have reached an existential fork in the road for Britain and our future as a trading nation.

An ignominious outcome in which we become economic supplicants is too profound a choice for parliament alone to make. The public must have the right to decide whether they want this. The alternative is that everyone is left dissatisfied, no one is reconciled and the argument goes on for ever.

The writer is a former EU trade commissioner and UK business secretary

Ministers defer agreement on RCEP trade deal to 2019

November 13, 2018

Asia-Pacific pact risks bogging down as some member nations go to polls

However, the deal lacks the protections for labor, human rights and the environment set by the TPP.

SINGAPORE — Economic ministers representing members of the proposed Regional Comprehensive Economic Partnership on Monday postponed the year-end target for reaching a “substantial conclusion” to the free trade deal, throwing its prospects into doubt.

The ministers on Monday gathered in Singapore hoping to resolve sensitive issues, including lowering tariffs, but they failed to reach an agreement. RCEP members are expected to continue the talks next year, but it is now unclear whether a deal can be reached.

“We made significant progress [but] not the final conclusion,” New Zealand agriculture minister Damien O’Connor told reporters after Monday’s meeting, adding that he hoped a conclusion would come “next year.”

Leaders of the RCEP countries will hold a summit on Wednesday in Singapore, where they are expected to commit to continuing the talks.

Japan’s trade minister, Hiroshige Seko, told reporters that the members closed some of the chapters at the meeting, saying that the discussions had gone as far as they could at the ministerial level.

Separately, Indian Commerce Minister Suresh Prabhu told reporters: “We are very happy that India’s concerns have been taken on board, and we feel that we should conclude in a way that will be long-term sustainable so that every country will benefit from it.”

RCEP is envisioned as a huge framework for economic cooperation in Asia that encompasses China, Japan, South Korea, India, Australia, New Zealand and the 10 members of the Association of Southeast Asian Nations. The 16 countries together account for about 50% of global population and roughly 30% of the world’s gross domestic product.

If RCEP takes effect, members will gain access to new export markets, draw more cross-border investment and encourage international movement of labor. Having a common set of rules should also make the region more attractive to multinational corporations.

Progress on the negotiations has been slow since they began in 2013, due to wide differences among the members in their levels of economic development and trading interests.

But U.S. President Donald Trump’s protectionist policies have spurred the discussions forward. The signing in March of another regional trade agreement, the Comprehensive and Progressive Trans-Pacific Partnership, or TPP-11, which takes effect on Dec.30, was another encouragement to RCEP negotiators.

Earlier this year, the ministers agreed to aim for a “substantial conclusion” to the talks by year’s end, overcoming the main obstacles to an agreement. But sensitive issues, including the scrapping of tariffs on agricultural products, facilitating cross-border movement of labor and setting up common rules for e-commerce must still be dealt with. Only five of the 18 “chapters,” or major negotiation topics, had been closed before the Singapore meeting.

One concern about the negotiations being postponed is that some members will hold elections next year, including Indonesia, India and Thailand. Political decisions over sensitive issues may be put on hold as the votes draw near.

U.S. Futures, Europe Stocks Rally After Tech-Driven Selloff

November 13, 2018

Japan was the hardest-hit market in Asia-Pacific

Mnuchin’s ‘resistance’ to Trump’s Iran policy… and other commentary
Steve Mnuchin AFP/Getty Images

Global stocks recouped some of their steep early-week falls Tuesday, after tech-sector jitters and sliding oil prices contributed to heavy selling in Asia.

U.S. stocks were set to claw back some of their losses, with futures pointing to gains of 0.7% and 0.5% for the S&P 500 and the Dow Jones Industrial Average, respectively.

European stocks rallied in the opening minutes of trading, with the Stoxx Europe 600 trading 0.8% higher. European technology stocks were up 1.2%, after the sector drove sharp falls in the U.S. Monday and in early Asian trading Tuesday.

Japan was the hardest hit in Asia, with the Nikkei 225 index falling more than 2%. Other Asian indexes staged partial recoveries, although Taiwan’s tech-dominated benchmark was still down 0.6% and the South Korean Kospi index was down 0.4%.

The downbeat trade was sparked by Apple Inc.’sAAPL -5.04% 5% tumble Monday, after two of its suppliers slashed their earnings outlooks, raising concerns about demand for the iPhone.

Japan Display Inc., which supplies screens for the iPhone XR, cut its earnings estimates, saying orders for its latest LCD panels would be much lower than its initial expectations. Its shares fell 9.5%. Other Tokyo-listed tech firms, like industrial robot maker Fanuc Corp. and electronics giant Sony Corp., fell by about 2.5% and 4%.

The latest wave of tech selling followed frequent turbulence last month, which hit stocks, bonds and commodities. Hedge funds around the world slid 3.1% on average in October, their worst monthly performance since September 2011, according to data provider eVestment, with investors reassessing their outlooks for global economic growth and its impact on corporate earnings.

Concerns over souring trade relations between the U.S. and China have also weighed on sentiment for both global growth and the tech sector, although those jitters were soothed late last week with a resumption in high-level talks between Beijing and Washington.

Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He on Friday about a deal to ease trade tensions ahead of a meeting between President Trump and President Xi, set for the end of the month at the Group of 20 nations summit in Buenos Aires.

But sentiment has been dealt another blow by Trump administration plans to broaden its China trade battle to address intellectual property theft, investors say.

“What the White House is discussing regarding intellectual property has led to increased fears of what this means for tariffs. We seemed to have some momentum toward a deal everyone might be happy with and this has upset the apple cart a bit,” said JJ Kinahan, chief market strategist at TD Ameritrade.

The impact of statements from the White House was also registering in commodities, with Brent crude oil down 0.8% at $69.56 a barrel, set to extend its losing streak after Mr. Trump tweeted Monday that he hoped the Organization of the Petroleum Exporting Countries wouldn’t press ahead with a production cut, and that “oil prices should be much lower based on supply.”

Elsewhere, investors remained focused on the European political uncertainty that boosted the U.S. dollar to an 18-month high Monday.

Italian lawmakers were due to respond to European Commission demands for changes to its 2019 budgetary plans, while market participants were weighing U.K. Prime Minister Theresa May’s rejection of the European Union’s latest Brexit proposal.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was last down 0.1%, although remained 1.2% higher over the past five days.

Write to David Hodari at and Steven Russolillo at

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China’s Liu and Mnuchin Talk Trade for the First Time in Months

November 13, 2018
The Trump administration has said that it wanted a substantive response to a long list of demands for what it calls “structural” changes in Chinese industrial policy — But there is no sign that China will move in that direction….

U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He have resumed talks on trade, and a potential Washington visit by Liu is being considered before the nations’ top leaders meet later this month.

The two officials spoke by phone on Friday, according to people briefed on the matter, who asked not to be named due to the sensitivity of the topic. The conversation didn’t yield any concrete results, the people said. The Hong Kong-based South China Morning Post reported Tuesday that Liu was “expected” to visit Washington shortly. The Wall Street Journal first reported the phone call Monday.

Liu He  — Photographer: Qilai Shen/Bloomberg

The phone discussion followed a call between President Donald Trump and China’s Xi Jinping two weeks ago — the first publicly disclosed call in six months. The two leaders are slated to meet at the Group of 20 nations summit in Argentina, which is scheduled to take place from Nov. 30 to Dec. 1.

Asian stocks came off their lows after the report Tuesday, and the Australian and New Zealand dollars climbed. China’s yuan was poised to advance for the first time in five days.

U.S.-China talks have made little progress since May, when Trump put a stop to a deal that would have seen China buy more energy and agricultural goods to narrow the trade deficit. In Beijing, Trump’s move was seen as an insult to Xi, who sent Liu — his top economic policy official — to Washington for the negotiations, and cemented a view that Trump’s real goal was to thwart China’s rise.

“We are willing to negotiate with the U.S.,” Chinese Premier Li Keqiang said at an event Tuesday in Singapore, adding that the talks should be carried out on the basis of mutual respect, balance and good faith. He said he was confident China and the U.S. have the wisdom to “be able to find a solution that is acceptable to both sides.”

While Li acknowledged that China and the U.S. had disputes in areas other than trade, he said those disagreements could also be contained with dialogue. “As long as we respect each other’s core interests and major concerns, we will be able to contain and resolve the disputes,” Li said.

China’s Foreign Ministry didn’t immediately respond to a faxed request for comment on the call.

Steven Mnuchin —  Photographer: Andrew Harrer/Bloomberg

The two nations have levied several rounds of tariffs on each other’s goods, and tariffs on $200 billion Chinese imports are due to rise to 25 percent from January in the absence of a breakthrough in negotiations.

In a speech to a Washington think-tank on Friday, Peter Navarro — a White House trade adviser who is one of the most outspoken China hawks in the administration — warned “Wall Street” bankers not to get involved in shuttle diplomacy with Beijing. In a thinly-veiled broadside at Mnuchin and other advocates of a negotiated solution he also said no one but Trump or Robert Lighthizer, the U.S. trade representative, should be negotiating with Beijing.

The Trump administration has said that it wanted a substantive response to a long list of demands for what it calls “structural” changes in Chinese industrial policy. Trump has rejected a number of deals negotiated by aides such as Mnuchin and U.S. Commerce Secretary Wilbur Ross that were focused on increasing purchases rather than substantive reforms.

 Updated on 

— With assistance by Steven Yang, Shawn Donnan, and Miao Han


U.S., China Resume Talks to Cool Trade Tensions

November 13, 2018

High-level communication signals a willingness on both sides to reach an accommodation

Image result for china, cargo, ship, photos


U.S. Treasury Secretary Steven Mnuchin has resumed discussions with his Chinese counterpart, Vice Premier Liu He, about a deal that would ease trade tension, ahead of a meeting of the leaders of China and the U.S. set for the end of the month.

The two spoke by telephone on Friday, said people briefed on the conversation, as the U.S. demands that China put forward a concrete offer before negotiations on a trade deal can take place. Chinese officials are resisting and say they want to talk first before making a formal proposal. They worry that once they make a formal offer they will lose leverage, say officials in both countries.

The Friday conversation didn’t lead to any breakthrough in those issues but the renewed discussions indicate the two sides are trying to reach an accommodation, the officials say.

Some U.S. officials who take a hard line toward China say they think the Chinese will make an offer before the two leaders meet at the Group of 20 nations summit in Buenos Aires. At most, they say, the U.S. and China might be able to reach a kind of ceasefire in the trade battle, with the U.S. refraining from increasing tariffs. That could be followed by detailed negotiations. But even a limited ceasefire may prove difficult.

Chinese President Xi Jinping has required different ministries to come up with specific negotiations expectations so that both sides can keep talks going after the G-20 summit.

Chinese officials don’t expect to resolve the trade dispute at the G20 meeting. Instead, they are hoping for a broad framework of a deal, which would be followed by negotiations on the details.

Decoding Xi Jinping’s Strategy on Trade

Decoding Xi Jinping's Strategy on Trade

At a mega-trade show in China, global businesses and political leaders were looking for hints of Xi Jinping’s strategy ahead of planned trade talks with President Trump. Photo: Reuters

The White House’s National Economic Council is looking at what sort of offers on agricultural tariffs, technology transfer, cyber security and intellectual property protection would be acceptable. But the administration remains bitterly divided on China trade, with U.S. Trade Representative Robert Lighthizer arguing that the U.S. needs to continue with tariffs to get China to make necessary concessions.

At G-20 meetings, Treasury and the White House usually take leading roles, not USTR.

The discussions follow a phone call between Mr. Xi and President Trump on Nov. 1. A day later Mr. Trump said that “I think we’ll make a deal” with China. His remarks came shortly before the mid-term elections, making it difficult to judge whether Mr. Trump was evaluating prospects for a deal or looking for a way to calm markets before voting began.

The U.S. has put tariffs on $250 billion of Chinese imports. Of that, levies on $200 billion of goods are set to increase to 25% from 10% on Jan. 1, unless Mr. Trump agrees to suspend the increase. The U.S. is also putting the finishing touches on tariffs on most of the rest of China’s imports—about another $250 billion, although mobile phones and perhaps laptops may be exempted, say people familiar with the administration’s thinking.

Spokesman for the U.S. Treasury and Chinese Embassy in Washington didn’t return calls seeking comment.

Beijing has been sending signals that could be enticing to Mr. Trump. At a Shanghai import fair last week Mr. Xi said that China expected to import services worth $10 trillion over the next 15 years. Should that occur, U.S. firms would be in line to get a big share.

Around the same time, Chinese Premier Li Keqiang met with leaders of six multilateral institutions. They jointly pledged to support free trade and to “work together to de-escalate and resolve current trade tensions,” according to the group’s communique.

But many Trump administration officials, including Mr. Lighthizer, White House trade adviser Peter Navarro and officials in the defense establishment are deeply skeptical of China’s record in carrying out such pledges.

During the last two weeks, some former U.S. officials with long experience in China and solid connections with Trump officials, have been meeting with Chinese leaders. They include former Treasury secretary Hank Paulson and former Secretary of State Henry Kissinger, who engineered the U.S. opening to China in 1972.

Mr. Kissinger has been especially visible, with Chinese state media reporting his meeting with Mr. Xi and Mr. Liu, the Chinese negotiator. U.S. officials say he isn’t acting as intermediary.

“There is a consistency in the (Chinese) messages that can be seen by optimists as the outlines of a deal,” Michael Pillsbury, who consults frequently with the administration, said. “But it’s not an offer.”

Mr. Pillsbury’s book, “The Hundred-Year Marathon,” argues that Beijing uses stealth and misdirection to try to replace the U.S. as the world’s leading power.

Write to Bob Davis at and Lingling Wei at

Appeared in the November 13, 2018, print edition as ‘U.S., China Resume Talks To Cool Trade Tensions.’

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Pence says US wants ‘model’ trade deal with Japan

November 13, 2018

Japan and the United States will negotiate a bilateral trade agreement that will serve as a “model” for other countries, US Vice President Mike Pence said Tuesday in Tokyo.

Speaking after talks with Japanese Prime Minister Shinzo Abe, he reiterated Washington’s position that US businesses have faced unfair obstacles in Japan.

“The United States has had a trade imbalance with Japan for too long. American products and services too often face barriers to compete fairly in Japanese markets,” he said, standing alongside Abe.

© POOL/AFP | US Vice President Mike Pence and Japan’s Prime Minister Shinzo Abe have agreed to negotiate a bilateral trade pact

“The best opportunity for free, fair and reciprocal trade will come in a bilateral trade agreement.”

Abe and US President Donald Trump agreed in September to negotiate a trade pact, easing fears that Japan could be next in line in the White House’s tariff offensive.

“When completed we’re confident that this agreement will establish terms on goods and services,” Pence said.

“The coming US-Japan trade agreement will be a model for the Indo-Pacific.”

The United States and Japan, the world’s first and third largest economies, together make up about 30 percent of global GDP and have long had trade ties that are both fractious and interconnected.

Under Trump’s predecessor, both countries were part of the broad deal known as the Trans-Pacific Partnership (TPP), which was intended to serve as a bulwark against growing Chinese influence.

But Trump withdrew from the multilateral trade agreement shortly after taking office, and has been vocal about his preference for bilateral deals negotiated on terms more favourable for Washington.

Abe had hoped to see Washington return to the TPP, but agreed to the negotiations — expected to begin in January — as Trump upped the ante against other trading partners.

Pence was in Tokyo on a brief stop before attending several regional summits, including the ASEAN meeting in Singapore and APEC talks in Papua New Guinea.

Trump’s decision to skip the meetings has raised eyebrows in some quarters, and prompted questions about Washington’s commitment to the region, where China is increasingly influential.