From Archives
Thursday, May 9, 2019
TRADE WARS: GETTING DESPERATE
The US and China are locked in a fierce trade war with a number of uneasy issues hidden its underbelly. The recent international events and the ongoing trade talks suggest much deeper turbulence that may surface up to impact globally.
The US President’s announcement that he would hike the tariffs on Chinese goods this week amidst the ongoing trade talk with China, shook up stock markets, and the oil prices grid.
Some facts in the chronology of the events that are shaping up before and amidst the ongoing trade talks give an ample indication of the things to come. The US accused China of hiding some trade-distorting subsidy program from international scrutiny. The US sends queries regarding this to the World Trade Organization about Chinese subsidies against fair trade policies.
It’s necessary to understand that the American companies are not competing with its counterpart- Chinese companies , but the Chinese government is sufficient to underline the difference.
The US and China are engaged in high-level trade talks. The Chinese delegation is headed by Chinese Vice Premier itself, an indication of how much importance China has given to these trade talks. The US is represented by Robert Lighthizer, an experienced ‘Trade Representative’ of the United States
Many things are coming up through the analysis of the events before the actual trade talks begin and while the talks are going on.
This largely involves Threatening imposing duty on exported goods, selecting and targeting companies that are growing in stature and threatening to take a business portion from the existing ones. Technological innovations in the fields of communication and development of all sorts of data and its induced variations. Bio-genetics and Artificial Intelligence are some of the fields along with the daring experiments to invest in the trade developments encompassing and including all countries to increase the market size, like we have seen in Belt and Road Initiative by China.
Diplomacy, border disputes, spying, invented and sponsored terrorism, ruling styles, values, traditions, and culture are all being scrutinized, modified, and developed to win the ultimate race to control the world. The trade talks are the only visible part of this gigantic world race to control the world.
The trade talks are more or less largely shaped up after the US observations about the trade practices of China and the US president’s strong urge to shape up everything around his declared policy of America first.
So it was not surprising that US President Donald Trump wanted bilateral trade that brings jobs and industry back on to American shores. China also prepared its policy of retaliation as it was inching closer to its ambition of world’s largest economy and a superpower.
The race has begun and it soon became apparent which fields they were competing fiercely to claim supremacy- Trade & tariff, Communication technology , International grouping, efforts to invent new markets or increasing tariffs, market size to earn more profits, Energy resources and bio-genetics are to name a few.
The US soon started a global campaign against Chinese firms from trading latest telecommunication technologies and controlling cyberspace and the internet.
It appears to be a necessary step as the conventional methods of war and the weaponry are replaced by technological advances.
5G is the constantly updating and very adaptable super-fast network consisting of complicated switches and routers, it’s downloading and updating speed is beyond the speed of existing networks.
The new weapon, destructive and constructive, just like atomic energy, is the 5G technology.
Whoever controls it controls the net and the user data. The controller then can make any desired change in the receiving or sent data; can delete it, can distort its meaning, can copy it without any awareness to its user.
5G technologies will be used in a network to serve the sensors, robots, autonomous vehicles and in the operations where a large amount of data is constantly fed and analyzed and also on the basis of which complicated works can proceed without or with least human intervention.
On the other hand, it provides ample scope for its misuse by hacking and in spying. That’s why the White House is issuing orders that are likely to ban the use of Chinese made equipment for telecommunication by US companies.
The 5G network technology development would be worth 12 trillion US dollars of economic output and so could be a major part of a trade war between the two nations.
The world is in awe of the astonishing progress made by Chinese commercial giants at the international level. The US has accused Chinese firms of conditioned dealing for techniques and trade secrets and intellectual assets of American companies.
The US and the Chinese telecommunication giant Huawei are also engaged in a legal battle. Meng Wanzhou – Chinese giant Huawei’s chief financial officer and daughter of Huawei’s founder was arrested in Vancouver recently. She was charged with violation of American sanctions on Iran.
According to the US justice department, Huawei, in spite of the US sanctions, is doing business with Iran through a hidden subsidiary as reported by Reuters in 2012-13. Huawei denied it, and a court case started.
Huawei also rejected the charge of stealing robotic technology from T-mobile US Inc. by saying that the dispute was already settled in 2017. The trade war subject was highlighted when the US president hinted that he can use his say in Meng case if it serves to close the trade deal with China.
The consequence of the Huawei representative’s arrest was the detention of 2 Canadians and a third on death row by China.
Huawei is China’s leading telecommunication producer from building in next-generation computers and phones with ample research on 5G telecommunication. Huawei has over 30 global contracts for 5G technology it possesses.
When the Canadian ambassador to China told Chinese media the US extradition of Meng Wanzhou is seriously flawed as Canada did not sign to the Iran sanctions, and Washington wants her extradition for, he was sacked by the Canadian PM Justin Trudeau. It is said that the US has pressurized other countries not to use the Huawei technology and prevented several countries from buying Huawei equipment.
China is fighting a major trade war with the US and EU at World Trade Organization over the accusation that China uses hidden trade distorting subsidy policies and is not open for international scrutiny.
The US complains about the Chinese cyber thefts of US trade secrets and systematic campaigns to acquire US technology firms. The US President threatened to raise tariffs to 25% on 200 billion dollars goods if the agreement was not reached. The earlier tariff rate was 10%. China retaliated by imposing its own tariffs on US goods.
In the month of February 2019, US intelligence officials told Congress that China is the biggest commercial and military threat to the US. The US think tank has come to the conclusion that Beijing will steal or copy technology it cannot make itself.
The US President Donald Trump, during his second Annual State of The Union (SOTU) address, said that to build on America’s incredible economic success, one priority is paramount- Reversing decades of calamitous trade policies.
China is targeting US industries and stealing intellectual properties, the theft of American jobs and wealth has come to an end.
The deficit in the bilateral trade between the US and China is 375 billion dollars. The US is planning to pass the United States Reciprocal Trade Act in answer to the unfair tariff on American products. It would enable the US to reciprocate with the same tariff on the same product sold to the US.
The US President even met Google CEO Pichai and discussed political fairness and the company’s business in China.
Day-Long talks were held in the month of March without much progress. Afterward, the Chinese Premier said that Beijing would expand market access for foreign banks, security companies, and insurance companies.
The bilateral discussions are on issues like technology transfer, protection of intellectual property rights, cyber theft, currency, services, agriculture, the bilateral trade balance, and an implementation system.
As the Chinese trade practices started to draw worldwide attention over trade talks, China lowered tariff rates on some consumer goods ranging from 15% to 13%. Tariff rates on Sporting goods, fishing supplies, textiles, and electronic appliances are also planned to lower down from 25% to 20%.
The US put forth demand that China must include industrial subsidies as a condition for a trade deal, but after a strong resistance from China, the US water down the demand.
On the other hand, trade talks between the US and the EU were soon to begin. The EU, perhaps learning from the ongoing rounds of talks between the US and China, legally secured a system to protect foreign companies for future trade agreements.
Meanwhile, the tariff imposed on each other’s goods by China and the US have disturbed supply chains and affected financial markets of both countries.
This trade war started nearly a year back in 2018, with tariffs imposed on Chinese goods. Afterward, whenever the US has levied tariffs on Chinese goods, China also reciprocates in the same measure.
The tariff increase to 25% in March 2019 was suspended until the conclusion of ongoing trade talks. The effects on bilateral trade are given by Reuters as Chinese export to the US failed 47% from June 2018. Imports from the US in March were 17% lower. Most analysts estimate direct US losses so far of o.1 – 0.2 per cent of gross domestic product, while for China, the damage could be 0.3-0.6 per cent of GDP
The US President Trump Yesterday, said that China broke the the deal, it had reached in trade talks with the US and vowed not to back down on imposing new tariffs on Chinese imports unless Beijing stops cheating our workers. Speaking to supporters in the rally in Florida, Trump accused China of breaking the deal and that Beijing would pay if no agreement is reached. Beijing has announced it would retaliate if tariffs rise. The US government says China had backtracked almost all aspects of a draft trade agreement, threatening to blow up the negotiations and prompting Trump to order the tariff increase.
Sources familiar with the talks said China’s latest demands for changes to a 150-page document that had been drafted over several months would make it hard to avoid the US tariff hike on Friday. That increase would affect Chinese imports from computer modem and routers to vacuum,cleaners, furniture, lighting, and building materials. And, if ,the trade talks fail, then it would start the competition and war for supremacy on several fronts simultaneously
the-curators.org 
Leave a comment