01-16-2020, 10:44 PM
*** 17-Jan-20 World View -- US and China sign Phase I of the US-China trade deal
This morning's key headlines from GenerationalDynamics.com
****
**** US and China sign Phase I of the US-China trade deal
****
![[Image: g200116b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g200116b.jpg)
Chinese Vice-Premier Liu and Donald Trump shake hands after signing the agreement (SCMP)
There are two ways to look at the US-China Phase I trade deal that was
signed in Washington on Wednesday.
One way is that is that it accomplished so little that it's nothing
more than a temporary ceasefire in the US-China trade war.
The other way is that it was a good first step and accomplished some
things in forcing China to open up its markets, but that there's a
long way to go in Phase II.
Let's start with the basics: As I've said many times in the past,
North Korea will not give up its nuclear weapons and missiles, no
matter what Trump does, and China will not give up stealing
intellectual property and trade secrets, no matter what Trump does.
Trump knows that too. China's criminal activities are deeply embedded
in China's culture, which considers Americans to be barbarians, and
they could never be resolved without a war. All that Donald Trump can
do in negotiations is to postpone the worst effects of these Chinese
and North Korean policies, and do everything possible to protect the
United States and the West from the inevitable World War III that
China and North Korea are preparing against Japan, Taiwan and the
United States.
Donald Trump said that he is not removing any of the existing tariffs
or sanctions on China at this time, because he needs them in place "as
cards" to negotiate with in Phase II, but they will all be removed at
the successful completion of Phase II. Negotiations for Phase II will
not begin until after the November elections.
****
**** Peter Navarro: China's seven deadly sins
****
Peter Navarro is President Trump's Director of Trade and Manufacturing
Policy. He's considered to be a "hardliner" on the China
negotiations. He appeared on television in August, and recited a list
of seven structural issues in China's economy that have to be resolved
by trade negotiations:
In a television interview on Wednesday, Navarro reviewed the US-China
agreement, in view of the above list of China's "seven deadly sins."
According to Navarro, America got the following in the agreement:
These are all nice promises, but China has always made nice promises,
and then simply ignored them the day after they were made. Navarro
claims that this time it's different, because there's an enforcement
mechanism:
<QUOTE>"The judge, jury and executioner is on our side of the
fence. This is not WTO (World Trade Organization) rules where you
take three years and get nowhere. This deal calls for a 90 day
clock, controlled by [U.S. Trade Representative Robert]
Lighthizer. If there's an issue, it comes to him, and he
negotiates with this counterpart in China. If we don't get
satisfaction, we unilaterally have the authority to take
proportionate measures."<END QUOTE>
Whether you believe that this enforcement mechanism will make a
difference is up to you.
According to Navarro, that was a "solid Phase I," and some things have
been left for Phase II:
****
**** Cracking down on Amazon, Walmart, Alibaba and Shopify
****
Navarro said that the US will crack down on companies like Amazon,
Walmart, Alibaba and Shopify who have served as "facilitators" for the
import of contraband goods from China.
Navarro said that a million packages come into New York's Kennedy
airport every day. The U.S. Customs and Border Protection (CBP)
agency ran a project called Operation Megaflex, which sampled
thousands of these packages coming in from China, and found that 15% of
them contained contraband. Half of them are counterfeits, and the
other half are controlled substances, like fentynol, and also gun
parts, and fake drivers licenses.
Navarro expects China to police these operations, but on the American
side, distribution companies that make a great deal of money by
importing and selling this contraband will also have to police them,
or will face civil fines or penalties or loss of import licenses.
****
**** China shifts to regional trade
****
According to analysts, the Chinese are breathing a sigh of relief
because, even though the existing tariffs will not be lifted, this
agreement means that any new tariffs will be postponed. And since
Phase II negotiations won't even begin until after the November
election, the new tariffs will be postponed indefinitely.
As I've described in the past, Trump administration has placed
additional restrictions on Huawei to slow down the company's rapid
takeover of portions of the internet. Huawei is heavily subsidized by
China's government to undersell foreign competitors with routers and
other networking equipment that many people (including me) believe
contain "backdoors" allowing China's military to control those devices
at any time. In fact, in 2017, China passed a National Intelligence
Law that compels every Chinese company to take exactly those kinds of
steps. Trump's tariffs have affected not only Huawei, but also the
supply chains of many military-related firms in China. Obviously,
these steps can slow down China's military, but not stop it.
Trump's restrictions on trade with America has been a benefit to
China's neighbors, with whom Chinese firms are actively seeking to
trade. This has resulted unexpectedly in quick agreement on a free
trade agreement for Asian nations, the Regional Comprehensive Economic
Partnership (RCEP).
The participants in RCEP are the ten members of the the Association of
Southeast Nations (ASEAN) -- Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam --
plus five additional nations -- Australia, China, Japan, New Zealand
and South Korea, with India eventually deciding not to participate.
The RCEP trade agreements will fill any holes left by the US-China
trade tariffs. China's military will be slowed down by the tariffs,
but will not be stopped.
John Xenakis is author of: "World View: War Between China and Japan:
Why America Must Be Prepared" (Generational Theory Book Series, Book
2), June 2019, Paperback: 331 pages, with over 200 source references,
$13.99 https://www.amazon.com/World-View-Betwee...732738637/
Sources:
Related Articles:
KEYS: Generational Dynamics, China, Peter Liu,
Peter Navarro, Robert Lighthizer,
Amazon, Walmart, Alibaba, Shopify,
U.S. Customs and Border Protection, CBP, Operation Megaflex,
Huawei, Regional Comprehensive Economic Partnership, RCEP
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- US and China sign Phase I of the US-China trade deal
- Peter Navarro: China's seven deadly sins
- Cracking down on Amazon, Walmart, Alibaba and Shopify
- China shifts to regional trade
****
**** US and China sign Phase I of the US-China trade deal
****
Chinese Vice-Premier Liu and Donald Trump shake hands after signing the agreement (SCMP)
There are two ways to look at the US-China Phase I trade deal that was
signed in Washington on Wednesday.
One way is that is that it accomplished so little that it's nothing
more than a temporary ceasefire in the US-China trade war.
The other way is that it was a good first step and accomplished some
things in forcing China to open up its markets, but that there's a
long way to go in Phase II.
Let's start with the basics: As I've said many times in the past,
North Korea will not give up its nuclear weapons and missiles, no
matter what Trump does, and China will not give up stealing
intellectual property and trade secrets, no matter what Trump does.
Trump knows that too. China's criminal activities are deeply embedded
in China's culture, which considers Americans to be barbarians, and
they could never be resolved without a war. All that Donald Trump can
do in negotiations is to postpone the worst effects of these Chinese
and North Korean policies, and do everything possible to protect the
United States and the West from the inevitable World War III that
China and North Korea are preparing against Japan, Taiwan and the
United States.
Donald Trump said that he is not removing any of the existing tariffs
or sanctions on China at this time, because he needs them in place "as
cards" to negotiate with in Phase II, but they will all be removed at
the successful completion of Phase II. Negotiations for Phase II will
not begin until after the November elections.
****
**** Peter Navarro: China's seven deadly sins
****
Peter Navarro is President Trump's Director of Trade and Manufacturing
Policy. He's considered to be a "hardliner" on the China
negotiations. He appeared on television in August, and recited a list
of seven structural issues in China's economy that have to be resolved
by trade negotiations:
- Cyber intrusion into business networks
- Forced technology transfers in exchange for market access
- Intellectual property theft
- Dumping into our markets
- State owned enterprises which are heavily subsidized
- Currency manipulation
- Killing Americans with fentanyl.
In a television interview on Wednesday, Navarro reviewed the US-China
agreement, in view of the above list of China's "seven deadly sins."
According to Navarro, America got the following in the agreement:
- Strong protections for intellection property, worth $300-500
billion per year.
- A start on ending forced technology transfer.
- A strong currency manipulation provision.
- Full ownership of a business in China by an American company
permitted.
- Access by American financial firms -- banks, credit cards,
insurance companies -- to the Chinese marketplace, which has previously
been completely closed off.
- $200 billion of additional purchases over the 2017 benchmark,
spread over two years, spread over four sectors -- agriculture,
energy, financial services, manufacturing.
These are all nice promises, but China has always made nice promises,
and then simply ignored them the day after they were made. Navarro
claims that this time it's different, because there's an enforcement
mechanism:
<QUOTE>"The judge, jury and executioner is on our side of the
fence. This is not WTO (World Trade Organization) rules where you
take three years and get nowhere. This deal calls for a 90 day
clock, controlled by [U.S. Trade Representative Robert]
Lighthizer. If there's an issue, it comes to him, and he
negotiates with this counterpart in China. If we don't get
satisfaction, we unilaterally have the authority to take
proportionate measures."<END QUOTE>
Whether you believe that this enforcement mechanism will make a
difference is up to you.
According to Navarro, that was a "solid Phase I," and some things have
been left for Phase II:
- Unfair subsidies of state-owned enterprises.
- Cyber intrusions. "Uniformed members of China's military sit in
Shanghai and hack into computers in the US. They'll sit there for a
year and steal information. They promised in 2015 to stop doing it,
but they haven't."
- China is continuing to kill Americans with fentanyl.
****
**** Cracking down on Amazon, Walmart, Alibaba and Shopify
****
Navarro said that the US will crack down on companies like Amazon,
Walmart, Alibaba and Shopify who have served as "facilitators" for the
import of contraband goods from China.
Navarro said that a million packages come into New York's Kennedy
airport every day. The U.S. Customs and Border Protection (CBP)
agency ran a project called Operation Megaflex, which sampled
thousands of these packages coming in from China, and found that 15% of
them contained contraband. Half of them are counterfeits, and the
other half are controlled substances, like fentynol, and also gun
parts, and fake drivers licenses.
Navarro expects China to police these operations, but on the American
side, distribution companies that make a great deal of money by
importing and selling this contraband will also have to police them,
or will face civil fines or penalties or loss of import licenses.
****
**** China shifts to regional trade
****
According to analysts, the Chinese are breathing a sigh of relief
because, even though the existing tariffs will not be lifted, this
agreement means that any new tariffs will be postponed. And since
Phase II negotiations won't even begin until after the November
election, the new tariffs will be postponed indefinitely.
As I've described in the past, Trump administration has placed
additional restrictions on Huawei to slow down the company's rapid
takeover of portions of the internet. Huawei is heavily subsidized by
China's government to undersell foreign competitors with routers and
other networking equipment that many people (including me) believe
contain "backdoors" allowing China's military to control those devices
at any time. In fact, in 2017, China passed a National Intelligence
Law that compels every Chinese company to take exactly those kinds of
steps. Trump's tariffs have affected not only Huawei, but also the
supply chains of many military-related firms in China. Obviously,
these steps can slow down China's military, but not stop it.
Trump's restrictions on trade with America has been a benefit to
China's neighbors, with whom Chinese firms are actively seeking to
trade. This has resulted unexpectedly in quick agreement on a free
trade agreement for Asian nations, the Regional Comprehensive Economic
Partnership (RCEP).
The participants in RCEP are the ten members of the the Association of
Southeast Nations (ASEAN) -- Brunei, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam --
plus five additional nations -- Australia, China, Japan, New Zealand
and South Korea, with India eventually deciding not to participate.
The RCEP trade agreements will fill any holes left by the US-China
trade tariffs. China's military will be slowed down by the tariffs,
but will not be stopped.
John Xenakis is author of: "World View: War Between China and Japan:
Why America Must Be Prepared" (Generational Theory Book Series, Book
2), June 2019, Paperback: 331 pages, with over 200 source references,
$13.99 https://www.amazon.com/World-View-Betwee...732738637/
Sources:
- US business leaders don't see the 'phase one' China trade deal as a huge breakthrough (CNBC, 16-Jan-2020)
- Farmers could be biggest beneficiaries in new U.S.-China trade deal (Pittsburgh Post-Gazette, 16-Jan-2020)
- Rep. Jodey Arrington: Trump's Phase One China trade deal result of negotiator-in-chief's courage (Fox Business, 16-Jan-2020)
- Doubts Remain Over U.S.-China Phase One Trade Agreement (AgWeb, 16-Jan-2020)
- Asean, RCEP trade partners unlikely beneficiaries from US-China trade war, Deloitte economist says (South China Morning Post, Hong Kong, 16-Jan-2020)
- US-China trade deal: Five things that aren't in it (BBC, 16-Jan-2020)
- US-China trade deal: Winners and losers (BBC, 15-Jan-2020)
- Trump signs partial economic deal with China, calls trade pact a ‘momentous step’ (Washington Post, 16-Jan-2020)
- Trump trade advisor Peter Navarro lists what the US wants from China in 'phase two' trade deal (CNBC, 16-Jan-2020)
- Peter Navarro puts Amazon and eBay on notice: The China trade deal cracks down on counterfeits (CNBC, 16-Jan-2020)
Related Articles:
- US-China trade war seriously disrupts world trade (16-Aug-2019)
- Vietnam to gain from collapse of US-China trade talks (03-Jul-2019)
- Donald Trump and Xi Jinping agree to a 90 day moratorium in trade war (02-Dec-2018)
- Discontent with China's president Xi Jinping continues during 'trade war' (10-Aug-2018)
- Trump administration signals that trade war with China will escalate sharply (19-Jul-2018)
- China's economy destabilizes as Huawei introduces cheap smartphone (12-Jan-2019)
- China on path to repeat Japan's experience after Smoot-Hawley Tariff Act of 1930 (05-Apr-2018)
- Japan's Shinzo Abe blames WW II on the Smoot-Hawley Tariff act (15-Aug-2015)
KEYS: Generational Dynamics, China, Peter Liu,
Peter Navarro, Robert Lighthizer,
Amazon, Walmart, Alibaba, Shopify,
U.S. Customs and Border Protection, CBP, Operation Megaflex,
Huawei, Regional Comprehensive Economic Partnership, RCEP
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
