China Beyond Trump’s Axing of TPP Gift: To Emerge is a Grouping After Trump’s Deficit Study, & Coming Policy & Actions

Most credible and respected people and units have said that Trump’s axing Obama’s Pacific trade deal, the TPP, is a gift for China to step in and fill the vacumm. And indeed, that is an opportunity.

But China has been slow to consolidate that opportunity, mostly, because it does not want to give Trump more excuses for Trump to take anti-China position. In fact, China, has taken a step in the other direction in trying to please Trump, with contacts and deals, on the personal level with Trump. However, this has produced muted results, as Trump has made many strong attacks on China, and watering them down is a difficult proposition to sell, even China emerging as a major importers of American agriculture products, that are produced in many key GOP states.

Then North Korea is as aggressive as ever and Trump, has blasted China for doing little to reign in North Korea, and said America will go it alone, even saying pre-emptive attack on North Korea could be made. But obviously, that means North Korea will throw its military might, against South Korea & North Korea already have a few nuclear weapons.

But beyond TPP and current North Korea issue?

Trump has recently ordered a study of all countries America has a trade deficit with, to help formulate policy towards those countries, brushing aside issues like comparative advantage and other, such as some countries just simply make products that are better than others, meaning American products cannot compete with.

Depending on the policy and actions, after that study, the global economy may be divided into a new grouping. Where China fits into that grouping is to be seen.

But as always with Trump, this study may be just a smoke screen, used to water-down Trump’s tough talk on trade, which went from Globalization and multilateralism, to Trump’s bilateralism.

Trump to Order Study of

‘Trade Abuse’ Contributing to Deficits (source):

President Donald Trump ordered on Friday a comprehensive study to identify every form of “trade abuse” that contributes to U.S. deficits with foreign countries.

“The theft of American prosperity will end,” Trump said at an Oval Office ceremony announcing the study, along with another directive to step up enforcement of existing trade penalties. “Thousands of factories have been stolen from our country, but these voiceless Americans now have a voice in the White House.”

Trump announced the trade initiatives less than a week before his first meeting with Chinese President Xi Jinping, leader of the country Trump has blamed most frequently for trade deficits and job losses. Commerce Secretary Wilbur Ross, who briefed reporters in advance, said the two executive actions weren’t intended as a warning to China.

The trade study, to be completed within 90 days, will examine deficits “country by country and product by product” to assess the extent they are caused by “cheating or inappropriate behavior,” Ross said. He said the findings, which also will cover currency misalignments, disadvantageous provisions in trade deals and “constraints” imposed by the World Trade Organization, will help guide Trump’s trade policies.

Trump also ordered strengthened enforcement of existing countervailing duties and anti-dumping penalties against foreign products to address under-collection, said Peter Navarro, director of the White House National Trade Council. Anti-dumping penalties target exporters that sell goods below the cost of production and countervailing duties are intended to compensate for foreign-government subsidies to producers.

Navarro said such duties have been under-collected by a cumulative $2.8 billion since 2001. Last year, the nation collected $1.5 billion in the penalties, he said.

Representative Rosa DeLauro, a longtime critic of U.S. free-trade deals, mocked Trump’s directives as underwhelming.

“Working and middle class Americans deserve real actions to level the playing field with fair trade, DeLauro, a Connecticut Democrat, said in an emailed statement. “While initiating a new a federal report is a common way to avoid fixing problems, the real test will be whether the Administration takes action to create jobs and reduce the trade deficit. ”

Trump made addressing what he called unfair foreign trade practices a centerpiece of his presidential campaign. At the Oval Office ceremony on Friday, he said public discontent over trade is “probably one of the main reasons I’m here today.”

One of Trump’s first acts as president was to withdraw from the Trans-Pacific Partnership trade deal his predecessor negotiated. Yet key promises, such as renegotiating the North American Free Trade Agreement, imposing border taxes on companies that move production overseas and labeling China a currency manipulator, remained unfulfilled.

Read more: Trump’s fear of trade gaps — a QuickTake Q&A

Trump sent out a tweet Thursday evening suggesting he remains irritated with China over trade.

“The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits and job losses,” Trump said via his Twitter account. “American companies must be prepared to look at other alternatives.”

Ross echoed that criticism in an interview Friday with Bloomberg Television.

“My view is that the United States is about the least protectionist of the major countries –and that China is one of the most protectionist,” Ross said. “There’s an inherent clash between those two even though China uses a tremendous amount of free-trade rhetoric.

China is the biggest U.S. trade partner, as well as the nation running up the biggest deficit in trade of goods — $347 billion in 2016, almost half of the U.S. total. But China also is among the top three export markets for 33 states.

At a White House briefing for reporters previewing Friday’s actions that began barely 15 minutes after Trump’s tweets on China, Navarro dismissed questions about whether the orders should be read as a warning to the nation.

“Nothing we’re saying tonight is about China,” Navarro said at a Thursday evening briefing. “Let’s not make this a story about China. This is a story about trade abuses.”

Navarro said the administration will seek better collection of duties imposed as trade penalties by directing the secretary of Homeland Security to work with the U.S. Trade Representative and Commerce Department to impose bonding requirements and take other legal actions based on risk assessments.

Another goal is to step up the seizure of counterfeit and pirated goods, Navarro said.

The White House on Thursday also distanced itself from a document suggesting it was softening its goals for a renegotiation of Nafta.

A letter sent to key members of Congress as part of a consultation process required before triggering a renegotiation suggested the administration would seek more modest changes and would leave in place controversial pieces of the trade deal, including an arbitration panel that lets investors bypass the court system to redress claims under the pact.

White House press secretary Sean Spicer said Thursday that the letter “is not an accurate statement of where we are at this time.”

Trump executive orders

to tackle trade deficit, tariff enforcement  (source

President Donald Trump is expected to sign two executive orders on Friday, which aim to fulfill key campaign promises to make trade more fair.

The first commissions a report on trade practices that contribute to the trade deficit, while the second seeks better collection of anti-dumping and countervailing duties.

The report, spearheaded by the Commerce Department and U.S. Trade Representative, aims to identify every trade abuse and “non-reciprocal practice” that contribute to the trade deficit.

Within 90 days, the report will go back to the Oval Office detailing specific causes for the deficit, country by country, product by product.

Commerce Secretary Wilbur Ross repeatedly emphasized that this report will provide the White House with an empirical basis on which to make decisions about trade. It will allow the Trump administration take a “measured and analytical approach” and not do anything too casually or abruptly, he said.

“What’s driving it is that the U.S. has the lowest tariff rates and the lowest non-tariff barriers of any developed country. While other countries talk about free trade, they actually are far more protectionist than we are,” Ross said on Thursday.

It’s likely that the report will find multiple reasons for the trade deficit, which Ross said could include lax enforcement, asymmetrical rules or currency misalignment. He said, however, that in some instances, the report will find that no real action should be taken because the deficit with a particular country isn’t related to bad behavior.

The U.S. isn’t oil self-sufficient, so it imports a lot of the commodity, Ross said. In other cases, there may be an imbalance simply because other countries are better at manufacturing a specific product or can do so more cheaply than the U.S.

The second executive order seeks to deal with what Peter Navarro, head of the National Trade Council, called the “long-festering problem of undercollection of anti-dumping and countervailing duties.” Both types of tariffs aim to protect the competitiveness for U.S. products, by bridging the gap between cheaper imports and American manufactured goods.

Navarro said on Thursday, “It does our workers and domestic manufacturers no good for the Department of Commerce to impose countervailing duties if they go uncollected at the border.”

The second order is also expected to direct the Department of Homeland Security to better combat violations of U.S. trade and customs laws and enable enhanced seizure of counterfeit and pirated goods.

Earlier Thursday, Trump tweeted that his upcoming meeting with Chinese President Xi Jinping at Mar-a-Lago will be a “very difficult one in that we can no longer have massive trade deficits and job losses.”

Yet when pressed on Thursday if these executive orders are meant to put China “on notice” or target the country, Ross and Navarro disagreed with those characterizations.

Ross had pointed out that the United States’ largest trade deficit is with China, but that fact was simply meant to be used as a reference and not a ranking of targets. Navarro said that these orders are meant to shed light on trade abuses in general.

 

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