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— The United States has collected nearly $100 billion in tariffs on Chinese goods since former President Donald Trump started his trade war with Beijing nearly three years ago.
— The timing of USTR’s top-to-bottom China review remains unclear, five months after Sen. Rob Portman (R-Ohio) suggested the undertaking at U.S. Trade Representative Katherine Tai’s confirmation hearing in February.
— Singapore’s prime minister used an informal APEC leaders meeting on Friday to push for more regional economic integration, while Chinese President Xi Jinping and President Joe Biden offered competing visions of what that could mean.
It’s Monday, July 19. Welcome to Morning Trade. British singer Tom Jones wasn’t exactly one of my musical heroes when I was growing up. But David Crosby, Stephen Stills, Graham Nash and Neil Young definitely were and this collaboration from 1969 holds up pretty well. I saw Joni Mitchell was also a guest on his two-season variety show and wondered if there was a clip of them performing together. No such luck. That would have been fascinating to see.
TRUMP’S CHINA TARIFFS NEAR $100 BILLION MARK: Trump’s trade war with China has racked up nearly $100 billion in duties over the past three years, even though the rate of collections has slowed as companies switched to other foreign suppliers, new figures from U.S. Customs and Border Protection show.
As of Wednesday, CBP had collected about $96.4 billion in tariffs that Trump imposed on more than $350 billion worth of Chinese goods. That dwarfs the $10.9 billion CBP has collected from Trump’s steel and aluminum tariffs by a ratio of nearly 10 to one.
Trump’s duties on an initial batch of $34 billion worth of Chinese goods went into force on July 6, 2018, followed by duties on another $16 billion shortly afterward. When China retaliated, Trump kept raising the stakes by hitting more goods.
A broad coalition of business groups has pressed the Biden administration to lift the tariffs, saying they have raised costs for American consumers, contributed to a slowdown in American manufacturing and made U.S. companies less competitive internationally.
In lieu of an immediate removal, they are also asking Tai to reinstate the process for companies to request “exclusions” from the tariffs for certain goods. The Senate recently approved a packet of amendments directing USTR to take that step, and the business community is pressing the House to take similar action.
THE MYSTERY SURROUNDING TAI’S TOP-TO-BOTTOM CHINA REVIEW: Tai told Senate appropriators in April that she planned to look at the issue of tariff exclusions as part of USTR’s top-to-bottom review of trade relations with China. Asked then how long the unstarted review would take, Tai said she was unsure but, “I do know that time is of the essence.”
The following month, Tai promised the Senate Finance Committee the review would include “a robust engagement process” where companies can “tell us exactly what their concerns are, and what their plans are so that we can take them into account.”
At the time, a USTR official said Tai was referring to plans to hold a public comment period. But two months later, the agency has not initiated any such effort.
Members of the New Democrat Coalition pressed Tai last week on when the review would be complete and were asked for “more patience,” said Rep. Suzan DelBene (D-Wash.), the coalition’s chair. “We want the ambassador to make sure she looks deeply into this issue, but it also is an issue where we do have a sense of urgency,” she added.
USTR’s press office hasn’t responded to queries about the review. However, Treasury Secretary Janet Yellen told The New York Times in an interview that she believes Trump’s tariffs have “hurt American consumers.”
TPA timeline: DelBene said lawmakers also emphasized to Tai the need to engage with Congress on trade policy and wanted to hear her timeline for renewing the recently expired Trade Promotion Authority. Tai told the coalition she views renewing TPA as a longer-term objective.
“She acknowledged that it is on her radar, but she wasn’t concerned right now, as they’re … focused on setting their broad agenda going forward and continuing to look at addressing issues with respect to China,” DelBene said.
Annual WTO compliance review: USTR is fast approaching the time when it will start its annual review of China’s compliance with World Trade Organization rules as mandated by Congress. That usually begins in August with a request for public comment, followed by a hearing in September or October and the release of the annual report in December or January.
USTR’s press office did not respond last week when asked if the trade agency intended to keep the two China reviews distinct, or if they could merge together.
SINGAPORE PM: DON’T TAKE RESHORING ‘TOO FAR’: Singapore’s Prime Minister Lee Hsien Loong urged Biden and other Asia-Pacific leaders not to give up on free trade as they work to reduce supply-chain disruptions caused by the pandemic.
“Understandably, countries are working towards more self-reliance, especially for essential goods, but we should not take this too far,” Lee said during an informal APEC leaders’ meeting on Friday. “Free trade is still essential to global economic recovery and prosperity and prompt implementation of the WTO Trade Facilitation Agreement will make trade faster and cheaper, and strengthen our supply chains.”
Singapore has long played a leading role in regional economic integration in the Asia-Pacific. It is one of the four countries whose P4 trade agreement grew into the Trans-Pacific Partnership. At Friday’s meeting, Lee said, “APEC members should take the lead to reconnect our economies and pursue trade liberalization.”
He mentioned the possibility of digital trade agreements, something the Biden administration is already considering, as well as “Green Economy Agreements to facilitate trade and investment in environmental goods and services, and strengthen environmental governance and capabilities.”
Xi pushes for FTAAP completion: Xi called for the establishment of a “high-standard Free Trade Area of the Asia-Pacific at an early date,” referring to a long-time APEC goal that lost momentum after Trump was elected U.S. president and withdrew from the TPP.
Xi also touted regional integration in his remarks, noting that China is among the first to ratify the Regional Comprehensive Economic Partnership, a relatively low-standard agreement among 15 countries in the Asia-Pacific.
Biden, who has been criticized for not paying enough attention to Asia, promised the group the United States “will remain deeply engaged in the region for generations to come,” according to a White House readout of his remarks.
CHINESE PURCHASES OF U.S. FARMLAND SPOOK LAWMAKERS: So far, it’s not much more than a trickle, but Chinese purchases of U.S. farmland have captured the attention of many lawmakers and could lead to legislation restricting the activity.
By the start of 2020, Chinese owners controlled about 192,000 agricultural acres in the U.S., worth $1.9 billion, including land used for farming, ranching and forestry, according to the Agriculture Department. That’s a small percentage of the nearly 900 million acres of total American farmland and much less than 35 million acres collectively owned by Canadians, Europeans and other foreigners.
Still, it’s enough to make lawmakers nervous. “The current trend in the U.S. is leading us toward the creation of a Chinese-owned agricultural land monopoly,” Rep. Dan Newhouse (R-Wash.) warned during a recent House Appropriations hearing.
The committee unexpectedly adopted Newhouse’s amendment to the Agriculture-FDA spending bill (H.R. 4356 (117)) that would block any new agricultural purchases by companies that are wholly or partly controlled by the Chinese government and bar Chinese-owned farms from tapping federal support programs.
The measure is expected to reach the House floor before the end of July as part of a broader appropriations package. The Senate has not yet drafted its own version of the spending bill, but the idea is already finding its way into political speeches outside of Congress.
REPORT SHOWS CROSS-BORDER DATA RESTRICTIONS PROLIFERATING: The number of countries restricting the flow of data across borders has nearly doubled over the past four years, from 35 in 2017 to 62 now, according to a report released today by the Information Technology and Innovation Foundation, a leading think tank.
Those countries have implemented 144 measures that confine data within their borders — a practice known as “data localization”—up from 67 such barriers in 2017, the report said.
ITIF identified China as the most data-restrictive country, with 29 localization measures in force. It’s followed by Indonesia, Russia and South Africa. Governments often impose the measures to protect their citizens’ privacy or security, although ITIF argues cross-border data restrictions are not necessary to accomplish that. Some countries also impose the restrictions for nationalist or authoritarian reasons, ITIF said.
The measures come with a cost. The think tank estimates that a 1-point increase in a country’s data restrictiveness reduces its gross trade output by 7 percent, slows its productivity by 2.9 percent, and increases downstream prices for data-reliant industries by 1.5 percent over five years.
“China is the best example of how data-localization policies are self-defeating,” said Luke Dascoli, an economic and technology research assistant at ITIF, who co-authored the report. “The Chinese government is unwittingly throwing sand in the gears of its grand plan to dominate the industries of the future.”
The report’s recommendations include: Incorporating strict rules that protect data flows and prohibit data localization into the e-commerce deal now being negotiated among some WTO members.
If countries such as China and Russia object, they should be excluded from the final agreement. Like-minded nations should also create tools to retaliate against countries that enact digital protectionist rules. They should also pursue new digital economy agreements, such as those involving Australia, Chile, New Zealand and Singapore, the report said.
— U.S. clashes with Canada, Mexico over USMCA car rules, Bloomberg reports.
— Biden administration issues business advisory for Hong Kong, POLITICO reports.
— A U.S.-led digital trade agreement could be a hard sell in Asia, The South China Morning Post reports.
— Germany’s export-driven foreign policy is being challenged, The Economist reports.
— Britain will set out a plan on Monday to stimulate trade with 70 developing economies, Reuters reports.
—The New York Times examines the potential for the EU’s carbon emission reduction plan to create trade disputes.
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