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This Week In Trade

U.S.-China businesses in the crosshairs as Trump, Xi set to address UN

Posted: September 21, 2020

Tensions between the U.S. and China have reached a new height as the Trump administration has increased its scrutiny of Chinese businesses operating in the U.S., while Beijing has issued a long-awaited unreliable entities list that is expected to serve as a means of retaliating against U.S. businesses operating in China.

The Trump administration on Sept. 18 announced restrictions effectively banning two major Chinese social medial applications -- TikTok and WeChat -- before delaying the prohibitions on TikTok pending a deal in which Oracle and Walmart are slated to take a minority stake in the company and house its data. The Commerce Department initially said that as of Sept. 20, consumers would not be allowed to download TikTok or receive updates to the app. On Sept. 19, Commerce delayed that action until Sept. 27, citing “positive developments.”

President Trump, speaking to Fox and Friends on Monday, said China “will have nothing to do” with TikTok because of the deal “and if they do we just won’t make the deal.” However, Oracle reportedly will gain only a 12.5 percent stake in TikTok, while Walmart will have a 7.5 percent share.

The president, however, is claiming Oracle and Walmart will have “total control” and a “controlling interest” in the social media company. TikTok was labeled a national security threat because of its ability to gather personal data from U.S. citizens. According to TikTok, Oracle will be entirely responsible for securing users’ data. Trump said if there is any risk, the U.S. won’t make the deal.

“Our plan is extensive and consistent with previous [Committee on Foreign Investment in the U.S.] resolutions, including working with Oracle, who will be our trusted cloud and technology provider responsible for fully securing our users' data,” TikTok said in a statement. “We are committed to protecting our users globally and providing the highest levels of security.”

Developments in Beijing, however, could further complicate the business environment in China for U.S. companies. Throughout the U.S.-China phase-one trade negotiations and amid other developments -- U.S. restrictions on Huawei and ZTE and U.S. legislation reacting to human-rights abuses in the Xinjiang province, for example -- Beijing has threatened to release an “unreliable entities list” that would restrict the ability of designated U.S. companies to operate in China. China’s Ministry of Commerce on Sept. 19 issued regulations implementing the use of an unreliable entities list, but no companies have yet been designated.

President Trump and Chinese President Xi Jinping on Tuesday will address the United Nations General Assembly. The two leaders are not scheduled to meet.

Trump has said he has not spoken with Xi since the coronavirus pandemic spread across the U.S. The president has attempted to make China a scapegoat for the spread of the virus in the U.S. and in June threatened to withdraw from the phase-one deal signed in January.

Those threats have subsided as of late. On Monday Trump again lauded the purchases China is making pursuant to the pact. However, because of the coronavirus, Trump says he has “a whole different feeling” about the deal and China.

WTO search enters second phase

The World Trade Organization’s search for its next director-general enters its second phase this week after three candidates were cut on Friday. Remaining are Amina Mohamed of Kenya, Ngozi Okonjo-Iweala of Nigeria, Yoo Myung-hee of Korea, Liam Fox of the UK and Mohammed Al-Tuwaijri of Saudi Arabia.

The second phase of the selection process is expected to last until Oct. 6, when a triumvirate of WTO committee leaders will announce the two candidates that have garnered the most support.

Mohamed and Okonjo-Iweala are seen as frontrunners in the race, with Yoo also considered a strong candidate. The inclusion of Fox and Al-Tuwaijri in the second group was a surprise to some observers.

COVID and trade

Trade ministers from G20 countries will gather virtually on Tuesday to discuss WTO reform and how best to handle the economic fallout of the coronavirus pandemic. This is the group’s third meeting of the year. At the last meeting, U.S. Trade Representative Robert Lighthizer cautioned against launching new tariff-cutting negotiations.

The U.S. International Trade Commission on Wednesday will hold a virtual hearing on its investigation into supply-chain challenges created by the pandemic and what trade actions could help to ease economic pressures in the U.S. The investigation was requested by House Ways & Means Committee leaders Richard Neal (D-MA) and Kevin Brady (R-TX) and Senate Finance Committee Chairman Chuck Grassley (R-IA).

Events

  • The Washington International Trade Association on Monday will hear from World Trade Organization deputy director-general Alan Wolff and others about the “art of trade negotiating.” Other panelists include former Deputy U.S. Trade Representative and Asia Society Policy Institute Vice President Wendy Cutler; former Assistant USTR for the WTO Dorothy Dowskin, now a principal at d2Strategies LLC; former USTR Director for Eastern Europe and Eurasia Katrin Kuhlmann, now the president and founder of New Market Labs; former Commerce Policy Director Arun Venkataraman, senior director at Visa; and former USTR Chief Agricultural Negotiator Darci Vetter.
  • The U.S. Chamber of Commerce's International Affairs Division on Tuesday will hold a webinar on “foreign policy, global trade and national security” with former Deputy Secretary of State Tony Blinken, now senior foreign policy adviser to the Biden campaign; and Myron Brilliant, Chamber executive vice president and head of international affairs.
  • Ways & Means trade subcommittee Chairman Rep. Earl Blumenauer (D-OR) on Tuesday will participate in a WITA discussion about the trade agenda for the next Congress.
  • The American Institute for Contemporary German Studies on Wednesday will host a webinar on how to enhance trans-Atlantic trade and economic cooperation with BusinessEurope Deputy Director Luisa Santos, Federation of German Industries' External Economic Policy Department head Stormy-Annika Mildner, Hudson Institute senior fellow Thomas Duesterberg, and Peter Rashish, a senior fellow at the American Institute for Contemporary German Studies.
  • Sen. Marco Rubio (R-FL) on Wednesday will discuss U.S. relations with China, Latin American and Iran during a webinar hosted by the Hudson Institute.]
  • The Atlantic Council on Wednesday will host a webinar on supply chains disrupted by COVID and the possibility of reshoring with Melvin Greer, chief data scientist for the Americas at the Intel Corporation; Meddah Hadjar, chairman and CEO of the SLM Solutions Group AG; Andrea Little Limbago, vice president for research and analysis at Interos Inc.; and Matthew Putman, CEO of Nanotronics.
  • WITA on Thursday will host a webinar on how trade agreements address environmental issues. Panelists include three former assistant USTRs for environmental and natural resources: Jennifer Haverkamp, David Shark, and Mary Latimer. They will be joined by Alexander von Bismarck, the executive director of the Environmental Investigation Agency.
  • The East-West Center on Thursday will host members of the Government Accountability Office international affairs and trade team for a webinar on protecting U.S. national security at universities. Participants include GAO International Affairs and Trade Director Kimberly Gianopoulos; assistant Director Drew Lindsey; senior analyst Amanda Bartine; and analyst Taylor Bright. East-West Center Director Satu Limay and the Sejong Institute's Center for Chinese Studies Director Seong-hyon Lee will also participate.
  • Mayer Brown on Thursday will host a virtual discussion on the challenges of implementing the U.S.-Mexico-Canada Agreement. Mayer Brown’s Duane Layton, Warren Payne and Tiffany Smith will participate.
  • The Center for Strategic and International Studies on Friday will host a discussion about trade’s role in the post-COVID economy with CSIS senior vice president for economics Matthew Goodman and Amy Celico, a principal and China lead at the Albright Stonebridge Group. -- Brett Fortnam (bfortnam@iwpnews.com)

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