Port of Mobile adding automotive terminal
The terminal will cost $60 million.
Daniel Sutter: Did we win the Chinese trade war?
President Donald Trump recently announced a partial trade settlement with China. Does this mean we have won the trade war? Details remain sparse, and the present deal may merely forestall further tariff hikes. It may be a truce rather than a peace treaty. Nonetheless, avoiding escalation of the trade war is good news. To think about trade with China or other nations, we should not view nations as trading. Individuals and businesses trade through buying. As consumers, we face a range of options for cars, clothes, phones, and so forth. Sometimes a “foreign” product better serves us, or offers comparable value at a better price. Businesses similarly consider who can best supply the inputs they use. Today’s global supply chains make the difference between foreign and domestic manufacturers a matter of degree. Viewing trade as individual action helps us recognize that trade makes consumers better off. Overseas sales boost American firms’ revenues and make their customers across the globe better off too. Voluntary trade in markets benefits all involved, even when they live in different countries. All nations’ governments limit their citizens’ freedom to trade internationally. This is unfortunate; a world economy with everyone participating would be more prosperous. And governments use their tax dollars to help their companies sell in foreign markets. These export subsidies hurt the world economy by making products artificially attractive to consumers. What can we do if other nations keep their citizens from buying American products? As a rule, I think we should engage in trade to the extent possible. Limited trade still produces benefits. The charitable interpretation sees President Trump’s trade war as trying to make China open their markets. Tariffs on Chinese imports threaten the profits Chinese companies earn selling here. A trade war tries leveraging this pressure for a better deal. If successful, the costly trade war would yield future benefits. Yet pressuring governments on trade is problematic. A government which restricts imports demonstrates relatively little concern for their citizens’ well-being. For many years Japan limited rice imports, an important staple of their national diet. If Japanese rice growers were so important that politicians were willing to make households (who could vote against the politicians in elections) pay more for rice, could we possibly have enough leverage to force a policy change? The dispute with China also involves allegations of unfair trade. One element of unfairness is government assistance to companies exporting to the U.S. Another component is currency manipulation, or keeping the value of China’s currency, the yuan, low to make exports artificially cheap. (Intellectual property and technology transfer are also concerns but these issues are sufficiently involved to warrant separate treatment.) Government export assistance raises fairness concerns and harms the world economy. We might accept it when American companies lose out in fair competition against companies from Canada, Europe, or Asia. Export subsidies inflict pain on Americans with no gains for the world economy. Why should we let American companies go out of business and American workers lose their jobs due to government-assisted exporters? Yet establishing the unfairness and even existence of specific forms of assistance when governments are extensively involved in the economy is exceedingly difficult. Are the tax breaks and worker training provided by Alabama and other states unfair assistance in international trade? International finance economists do not agree whether China is currently manipulating the yuan to aid exports. Absent some way to clearly identify unfair assistance, every American company facing international competition will seek protection. The details on this agreement and any follow up agreements will tell us if President Trump’s trade war have increased the freedom of Americans and Chinese to trade. Wars sometimes result in bloody stalemates, with leaders then peddling a deal restoring the status quo ante as victory. The cost of trade wars and shooting wars makes peace with honor, if possible, an attractive alternative. Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Terri Sewell introduces bipartisan bill to bolster US-Caribbean trade
On Wednesday, Alabama 7th District U.S. Rep. Terri Sewell introduced a bill extending the Caribbean Basin Trade Partnership Act (CBTPA), which is currently set to expire in 2020, through 2030. Since it was established back in 2000, the CBTPA has allowed for the duty- and quota-free import of goods made with U.S. yarns, fabrics and threads from Caribbean countries. “Extending the U.S. Caribbean Basin Trade Partnership Act will expand the United States’ trade with Caribbean basin countries and increase our nation’s economic growth,” Sewell explained. “Improving trade with countries like Haiti and Jamaica by reauthorizing CBTPA encourages future investment, promotes job creation and lays the foundation for long-term economic development.” Sewell introduced the bill with her House colleague, Republican U.S. Rep. Brad Wenstrup. “Since its establishment nearly twenty years ago, the CBTPA has provided the dual benefit of expanding U.S. exports while stimulating job growth and economic development in these Caribbean nations,” added Wenstrup. “It is my pleasure to join Rep. Sewell in maintaining these critical trade partnerships by extending the CBPTA for another ten years.” CBTPA works in conjunction with the Caribbean Basin Economic Recovery Act (CBERA) to facilitate the development of 17 independent countries of the Caribbean Basin region. Sewell previously introduced this bill in 2017, but now with only one year until the CBTPA expires it’s causing uncertainty for various US retailers who source from the Caribbean, which is why she wants to extend the CBTPA until 2030. Eligible CBTPA countries include: Barbados, Belize, Curacao, Guyana, Haiti, Jamaica, St. Lucia, and Trinidad and Tobago.
Donald Trump sees mixing trade, foreign policy as good politics
When President Donald Trump pulled the plug on an upcoming trip to North Korea by his secretary of state, he pointed a finger of blame at China and the global superpower’s trade practices. In his recent trade breakthrough with Mexico, Trump praised the country’s outgoing president for his help on border security and agriculture. Both developments offered fresh evidence of how Trump has made trade policy the connective tissue that ties together different elements of his “America First” foreign policy and syncs up them with his political strategy for the 2020 presidential election. Trump’s 2016 triumph was paved in part by his support among blue-collar voters in Midwestern manufacturing states that narrowly supported him over Democrat Hillary Clinton, including Michigan, Wisconsin, Ohio and Pennsylvania. His aggressive trade tactics, epitomized by tariffs and standoffs with longtime economic partners and allies, are aimed at reversing what he has long viewed as unfair trade deals while maintaining support among largely white, working-class voters who have been hurt by the loss of manufacturing jobs. “Trump understands that economic policy is foreign policy and vice versa,” said Stephen Moore, a former Trump campaign adviser and visiting fellow at The Heritage Foundation. “The most important element of foreign policy is to not just keep the world safe but to also promote America’s economic interest. That’s what Trump does — this is America First.” It’s also good politics, in Trump’s view. “It’s a populist position. But it’s also a popular position with a lot of Americans,” Moore said. As he puts a high premium on trade gains, Trump is intertwining the issue with a host of top foreign policy concerns. Trump, asked by reporters last week about North Korea living up to its commitments to denuclearize, said “part of the North Korean problem is caused by our trade disputes with China,” pointing to the U.S. trade imbalance with China. “We have to straighten out our trade relationship because too much money is being lost by us,” Trump said. “And as you know, China is the route to North Korea.” Trade has been a common refrain at the president’s rallies, where he has vowed to pursue “fair and reciprocal trade.” “We don’t want stupid trade like we had for so long,” Trump said during a rally in Duluth, Minnesota, in June. Trump’s second year as president has been marked by a number of trade disputes with traditional U.S. allies and global rivals alike, an approach cemented by his tweet that “trade wars are good.” He imposed tariffs on steel and aluminum imports in March, prompting retaliation from the European Union and other American allies. Later in the month, Trump announced tariffs on China to combat what he called the theft of U.S. technology from a wide range of goods and services. China struck back with its own sanctions on a variety of U.S. products, including Midwest farm-produced soybeans in a way to hit hard against the president’s base of voters. The two sides have clashed during the spring and summer, raising the stakes in their trade fight. In late July, Trump and European Commission President Jean-Claude Juncker reached a temporary deal at the White House to avert tariffs on automobile imports and a ramping up of their trade dispute — although the threat still remains. After a breakthrough with Mexico, Trump’s team has been engaged in talks with Canada aimed at creating a new version of the 24-year-old North American Free Trade Agreement. While previous administrations have often used a carrot-and-stick approach to trade as a way to forge agreements, before Trump’s arrival trade agendas had emphasized multi-lateral and bilateral deals aimed at maintaining U.S. leadership around the world, promoting American values and improving human rights. This administration, by contrast, “is leveraging foreign policy tools to achieve its trade goals,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. Critics say Trump’s insistence on trade concessions could hamper his ability to move forward in other areas. On North Korea, for example, Trump has sought to turn his meeting with Kim Jong Un into a vivid example of how his unconventional style can bring longstanding U.S. adversaries to the bargaining table. But by raising China’s trade practices as essential to any progress to ensuring North Korea gets rid of its nuclear weapons, Trump runs the risk of getting bogged down in both areas — and having little to show for it. Mixing foreign policy and trade policy introduces so many variables it’s “virtually impossible to close on a precise policy decision,” said Daniel Ujczo, a trade attorney with Dickinson Wright PLLC in Columbus, Ohio. “You’re constantly chasing after the next issue as opposed to having a very targeted approach to the objective.” Republished with permission from the Associated Press.
Alabama Farmers Federation calls Trump’s farm bailout ‘a step forward’
The Alabama Farmers Federation’s (ALFA) is calling President Donald Trump‘s farm bailout “a step forward” for farmers. The U.S. Department of Agriculture (USDA) on Monday announced the plan to distribute $6.3 billion as a bailout to assist U.S. farmers whose markets have been disrupted through trade retaliations as a result of President Donald Trump’s trade negotiations. “Although we’re hopeful trade negotiations will end with better conditions for farmers, this package is a step forward in helping farmers deal with current uncertain markets,” said Mitt Walker, the Federation’s National Legislative Programs director. At $1.65 per bushel, soybean farmers are slated to receive $3.6 billion of the $4.7 billion in total direct payments through the Market Facilitation Program (MFP). Pork farmers will receive $290 million total, at $8 a head. Farmers can apply after harvest is complete and total 2018 production can be reported. The rate depends on the severity of trade disruption and period of adjustment to new trade patterns. Applications are available Sept. 4 and the first round of payments will be based on 50 percent of a farmer’s 2018 production. If a second payment is approved for the remaining 50 percent of production, the amount will be determined by USDA. Remaining commodities and initial payment rates are Cotton: 6 cents per pound Corn: 1 cent per bushel Milk: 12 cents per hundredweight Sorghum: 86 cents per bushel Wheat: 14 cents per bushel MFP payments are capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat. Meanwhile MFP payments for dairy or hogs are capped at a combined $125,000. The Food Purchase and Distribution Program will purchase up to $1.2 billion in commodities targeted by retaliation. USDA’s Food and Nutrition Service will distribute products to through the Emergency Food Assistance Program and child nutrition programs. Commodities and target payments include: Beef: $14.8 million Dairy: $84.9 million Pecans: $16 million Pork: $558.8 million USDA will also devote $200 million to developing foreign markets for U.S. crops, through advertising, public relations, participation in trade fairs and market research. Applications for the Agricultural Trade Promotion Program are due Nov. 2.
Canada says Alabama could be at risk if trade negotiations disintegrate
A representative of the Canadian government on Friday warned Alabama jobs could be at risk if NAFTA negotiations are to disintegrate between the U.S. and Canada. In May, Commerce Secretary Wilbur Ross announced new tariffs on steel and aluminum from some of United State’s biggest trading partners – including Canada. In retaliation Canada has imposed new tariffs on a numerous amount of American goods, from steel and aluminum to whiskey and toilet paper. The country has been the top export market for Alabama since at least 2014. With over $4.1 billion being exported to the country in 2017, and $4.2 billion in 2016; the trade relationship between the Yellowhammer State and Canada has created 111,200 jobs. According to the Alabama Newscenter in 2016 alone, 13 different Canadian firms provided new investments in the state totaling $145 million and creating nearly 530 jobs. But Ashante Infantry, the Communications officer for the Canadian Consulate General in Atlanta warns that the relationship between the two entities could be at risk. “The United States and Canada enjoy one of the closest relationships between any two countries in the world,” Infantry said, according to the Alabama Political Reporter. “Since 1994, The North American Free Trade Agreement (NAFTA) has encouraged the trading of goods and services between the U.S. and Canada to promote economic vitality for both countries, but that future is uncertain. If current NAFTA negotiations break down, American jobs could be at risk, and the prices for items such as groceries to cars would likely rise.” “Because of NAFTA, Alabama has seen new businesses form, new job openings posted, and a more vibrant economy,” Infantry continued. “We must ensure that NAFTA is modernized for the future—so that its benefits are more widely shared, and, importantly, so that Alabama’s economy continues to prosper.” Read more on Alabama-Canadian trade relations below: Alabama-Canada Agricultural Trade
Donald Trump accuses China of using ‘vicious’ trade tactics
President Donald Trump on Wednesday accused China of “vicious” tactics on trade as he prepared for tough negotiations with European leaders in an escalating trade battle among world powers. Trump tweeted that China was specifically targeting U.S. farmers with retaliatory tariffs because “they know I love & respect” them. His defense came after his administration announced a plan to provide $12 billion in emergency relief for farmers who have been slammed by the president’s trade disputes with China and other countries. Addressing the China trade relationship, Trump wrote on Twitter, “They are being vicious in what will be their failed attempt. We were being nice – until now!” The president was meeting at the White House later Wednesday with European Commission President Jean-Claude Juncker and other European officials as their trade dispute threatens to spread to automobile production. Trump has placed tariffs on imported steel and aluminum, saying they pose a threat to U.S. national security, an argument that the European Union and Canada rejects. He has also threatened to slap tariffs on imported cars, trucks and auto parts, potentially targeting imports that last year totaled $335 billion. The European Union has warned that it will retaliate with tariffs on products worth $20 billion if Trump puts duties on cars and auto parts from Europe. On Tuesday, Trump suggested in a tweet that “both the U.S. and the E.U. drop all Tariffs, Barriers and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready – but they won’t!” The Trump administration has imposed tariffs on $34 billion in Chinese goods in a dispute over Beijing’s high-tech industrial policies. China has struck back with duties on soybeans and pork, affecting Midwest farmers in a region of the country that supported the president in his 2016 campaign. Trump has threatened to place penalty taxes on up to $500 billion in products imported from China, a move that would dramatically ratchet up the stakes in the trade dispute involving the globe’s biggest economies. The moves have been unsettling to lawmakers with districts dependent upon manufacturers and farmers affected by the retaliatory tariffs. The Agriculture Department said it would tap an existing program to provide $12 billion in direct payments to farmers and ranchers hurt by foreign retaliation to Trump’s tariffs and other assistance, such as the purchase of excess crops. With congressional elections coming soon, the government action underscored administration concern about damage to U.S. farmers from Trump’s trade tariffs and the potential for losing House and Senate seats in the Midwest and elsewhere. The administration said the program was just temporary. “This is a short-term solution that will give President Trump and his administration the time to work on long-term trade deals,” said Agriculture Secretary Sonny Perdue as administration officials argued that the plan was not a “bailout” of the nation’s farmers. But that provided little solace to rank-and-file Republicans, who said the tariffs are simply taxes and warned the action would open a Pandora’s box for other sectors of the economy. “I want to know what we’re going to say to the automobile manufacturers and the petrochemical manufacturers and all the other people who are being hurt by tariffs,” said Sen. John Kennedy, R-La. “You’ve got to treat everybody the same.” Sen. Pat Toomey, R-Pa., said the Agriculture Department was “trying to put a Band-aid on a self-inflicted wound. The administration clobbers farmers with an unnecessary trade war then attempts to assuage them with taxpayer handouts. This bailout compounds bad policy with more bad policy.” Trump pushed back against critics of his plan on Wednesday, telling them to “be cool” because “the end result will be worth it!” On Twitter, Trump said people “snipping at your heels during a negotiation” will only delay the process. He wrote: “Negotiations are going really well, be cool. The end result will be worth it!” The program is expected to start taking effect around Labor Day. Officials said the direct payments could help producers of soybeans, which have been hit hard by retaliation to the Trump tariffs, along with sorghum, corn, wheat, cotton, dairy and farmers raising hogs. The food purchased from farmers would include some types of fruits, nuts, rice, legumes, dairy products, beef and pork, officials said. Agriculture officials said they would not need congressional approval and the money would come through the Commodity Credit Corporation, a wing of the department that addresses agricultural prices. The officials said payments couldn’t be calculated until after harvests come in. Brad Karmen, the USDA’s assistant deputy administrator for farm programs, noted that the wheat harvest is already in, so wheat farmers could get payments sooner than other growers. Soybeans are likely to be the largest sector affected by the programs. Soybean prices have plunged 18 percent in the past two months. The Agriculture Department predicted before the trade fights that U.S. farm income would drop this year to $60 billion, or half the $120 billion of five years ago. Mark Martinson, who raises crops and cattle in north-central North Dakota and is president of the U.S. Durum Growers Association, said the $12 billion figure “sounds huge” but there are many farmers in need. “I don’t think this will cover us for a very long time — and it might not even buy me a tank of diesel. I think it will only put out the fire a little bit.” Republished with permission from the Associated Press.
Donald Trump’s $12 billion bailout for farmers draws mixed reactions in Alabama
On Tuesday the Trump administration announced it would extend $12 billion in emergency aid to American farmers impacted by tariffs imposed by China on American farm goods. In Alabama, the announcement drew a mix of reactions. The decision for aid came after China imposed a 25 percent retaliatory tariff last week on several crops Alabama farmers export like soybeans and cotton. The aid programs will assist agricultural producers to meet the costs of disrupted markets through market facilitation, food purchase and distribution, and trade promotion. Agriculture Secretary Sonny Perdue announced the aid in a call to reporters, saying the programs “are a firm statement that other nations cannot bully our agricultural producers to force the United States to cave in.” Here’s what Alabamians are saying: Alabama 4th District U.S. Rep. Robert Aderholt: President Trump and Secretary Perdue took action to stand by farmers who are suffering from illegal trade retaliation. Secretary Perdue called me earlier Tuesday to discuss these measures. The actions and funding announced, demonstrate that the President has not forgotten the American farmer and that agricultural producers will not bear the brunt of unjustified retaliation by foreign governments. As Chairman of the Agriculture Subcommittee of the House Appropriations Committee, I have worked to ensure that protective measures and funding would be available should our nation’s agriculture producers be confronted with such abusive policies enacted by foreign leaders. Any funds spent will be temporary. This will ensure that our farmers are able to make ends meet while the Trump Administration works out more fair deals for farmers, ranchers, and producers who want to sell their products overseas. I applaud President Trump for standing-up to China and other foreign government’s unfair trade practices. If our markets here are open to their goods then their markets should be open for American agriculture and manufacturing. Mallory Hagan | Democratic Candidate for Alabama’s 3rd U.S. Congressional District Nearly every farm in Alabama is a family farm. Farm families need confidence to know they can get their products to market so they can put food on the table. Thanks to the whiplash of Donald Trump’s rollercoaster trade war, they don’t have confidence they can make ends meet right now. This $12 billion ‘band-aide’ addresses a problem we can fix for free – unnecessary tariffs blocking American farmers and manufacturers out of markets around the world. Taxpayers should never foot the bill for unsustainable policies. In their silence and failure to act, Congress and Rep. Mike Rogers are supporting bad trade policy and government bailouts along the way. That’s irresponsible and unacceptable. Rogers’ complicity in this insane trade war is hurting Alabama families and killing jobs. It’s time to put the brakes on this administration’s trade disaster. Getting out Uncle Sam’s credit card is not the solution. Alabama Farmer’s Federation: We appreciate President Trump’s administration recognizing the impact intense trade negotiations are having on U.S. farmers and providing assistance to weather tough economic times,’ said Walker, the Federation’s director of national programs. ‘Alabama farmers remain hopeful the ultimate solution will be a healthy trade environment where U.S. agriculture can compete on a level playing field with the rest of the world. Doug Jones | U.S. Senator (via Twitter) Many of your tariffs are not the greatest—they’re the worst. Your auto tariff/tax threatens 57k AL jobs & $11B in exports. Retaliatory tariffs/taxes threaten $170M in AL soybean exports 2 China annually. Your tariffs/taxes are great for 1 thing: killing US jobs. John McMillan | Alabama Commissioner of Agriculture and Industries These three programs will allow the administration to continue to work on long-term trade deals. The end goal is to have an even playing field for our country’s producers.
Trade rocks already unstable U.S., China relations
President Donald Trump’s trade battle with China will exacerbate relations with Beijing that are already fraying on several fronts as the U.S. takes a more confrontational stance and an increasingly powerful China stands its ground. The gloves came off Friday as the world’s two largest economies imposed tariffs on billions of dollars of each other’s goods amid a spiraling dispute over technology. It comes at a time when Washington needs China’s help in ending its nuclear standoff with North Korea. Trump’s much-vaunted personal rapport with Chinese President Xi Jinping, whom he hosted at his Mar-a-Lago resort three months after taking office, won’t help patch up differences, experts and former officials say. “The notion that there’s a personal relationship which will somehow supersede China’s strategic interests and the well-being of the Communist Party — including its ability to manage its own economy consistent with its political interests — is absurd,” said Daniel Russel, top U.S. diplomat for East Asia under President Barack Obama. “There’s no scenario in which an affectionate relationship, real or imagined, is going to stay Xi’s hand,” Russel said. Troubles in the bilateral relationship go beyond trade. China has chafed about the scope of U.S. relations with Taiwan; U.S. complaints about its construction of military outposts on islands in the South China Sea; tougher screening of Chinese investment in the U.S.; visa restrictions; and accusations that it’s the main source of opioids. If not new, these are now deepening sources of tension between Washington and Beijing. Even as Trump has sought to cultivate his relationship with the increasingly dominant Chinese leader, his administration has chosen to confront an increasingly defiant China on pretty much all them. It also identified China, along with Russia, as a threat in the most recent U.S. National Security Strategy. In response, Beijing is hanging tough. “China has made it abundantly clear that it will never surrender to blackmail or coercion,” Chinese state news agency Xinhua said Friday. To what extent the trade tensions bleed into other aspects of the U.S.-China relationship, which has retained a mostly upward trajectory since the normalization of ties four decades ago, remains to be seen. But Mike Pillsbury, director of the Center for Chinese Strategy at the Hudson Institute, said U.S.-China relations are headed into “uncharted waters.” Recently returned from a visit to China, Pillsbury said he was told by government officials and businessmen that they were confused about what the Trump administration wanted them to do to get the U.S. to ease the trade tensions. They threatened to back off assisting the U.S. nuclear talks with North Korea. “They explicitly said that,” according to Pillsbury, who has written three books on China and has advised the Trump administration. “They said we will help you (the U.S.) less with North Korea if you start a trade war with us on July 6. Pretty clear, huh?” China has, in fact, already distanced itself somewhat from its significant cooperation with the U.S. on North Korea. After supporting tough U.N. sanctions and scaling back trade with the North after it ramped up nuclear and missile tests last year, Beijing has eased restrictions on its neighbor. That shift began after Trump in March abruptly decided to hold a summit with Kim Jong Un. Once again, China has again focused on rekindling its traditional alliance with Pyongyang — Xi has met Kim three times this year. Abraham Denmark, a former senior U.S. defense official on Asia, said China has welcomed Trump’s sudden shift from confrontation to diplomacy with North Korea and also his decision to halt large-scale military exercises with close U.S. ally South Korea. Yet China also views what happens with North Korea through the lens of the geopolitical rivalry between the U.S. and China, he said. North Korea long served as a buffer against America’s expanding its reach in Northeast Asia to China’s border. “If the U.S. is going to engage in a trade war, which is very troubling for China, politically, it’s going to reduce their willingness to cooperate on North Korea,” he said. Denmark, who is now director of the Asia program at the Wilson Center think tank, warned of a broader deterioration in relations, as Trump pursues more aggressive policies toward Beijing, and China stakes out a position as world player unwilling to be pushed around. “China under Xi Jinping has been more aggressive in its pursuit of its interests. I expect we’re going to see more tensions across the board: in trade, the South China Sea, Taiwan, Korea,” Denmark said. “These are all part of the same story, which is that China is feeling more confident and powerful, and more willing to accept friction and tension in the pursuit of its interests.” On recent trip to China, Defense Secretary Jim Mattis did some damage mitigation, talking up the importance of military cooperation despite his earlier decision to withdraw an invite for China to participate in a U.S.-led multinational naval exercise over its activities in the disputed South China Sea. Xi struck a similar note, calling military ties a “model component of our overall bilateral relations.” That may help to ward off the possibilities of unintended conflict between the two militaries, but it will not prevent a growing rift on other issues. The United States accuses China of using predatory tactics in a push to supplant American technological dominance. The tactics include forcing U.S. companies to hand over technology in exchange for access to the Chinese market, as well as outright cyber-theft. Trump’s tariffs are meant to pressure Beijing to reform its trade policies. On Friday, the Trump administration imposed tariffs on $34 billion worth of Chinese products. Within hours, China retaliated with taxes on an equal amount of U.S. products, including soybeans, pork and electric cars. Russel said that ultimately the Trump administration’s issuing of demands of China on trade and other issues could harden attitudes inside the country, weakening the hands of reformers and strengthening nationalists who vilify the United States. “The net effect of
Mexico’s victor reaches out to Donald Trump, seeks NAFTA deal
The morning after his crushing election victory, Mexico’s president-elect Andres Manuel Lopez Obrador thanked President Donald Trump for his congratulation message and said he’ll contact the U.S. leader to “reach an understanding.” Lopez Obrador said in an interview Monday with the Televisa news network that Trump’s Tweet Sunday night “was very respectful. That is what we always want to maintain with the U.S. government, that there be mutual respect.” Trump tweeted Sunday that “I look very much forward to working with him. There is much to be done that will benefit both the United States and Mexico!” “We are never going to disrespect the U.S. government, because we want them to respect us,” Lopez Obrador said. “At the appropriate moment, we are going to get in touch, to reach an understanding” with the Trump administration. “We are conscious of the need to maintain good relations with the United States,” he added. Lopez Obrador had been compared to Trump for his populist, nationalist rhetoric and sometimes touchy personality — as well as his past skepticism about the trade deal. But Lopez Obrador said he supports reaching a deal on renegotiating the North American Free Trade Agreement with the United States and Canada. The talks have been stalled over the Trump administration demands for higher U.S. content and a “sunset clause” in the 1994 trade agreement. Lopez Obrador said he will propose that his own team of experts be included in the talks. The winning candidate said he will make that proposal in a meeting Tuesday with current President Enrique Pena Nieto. Lopez Obrador told Televisa that he will respect the current team of negotiators, and let them continue representing Mexico until he takes office Dec. 1. Lopez Obrador said he wants to have information on what’s being discussed and “to help as much as we can.” With just over half of votes counted on Monday, Lopez Obrador had about 53.7 percent of the votes, a remarkable margin not seen in the country for more than three decades. A prominent exit poll predicted his party allies were poised to score big victories in congressional and governorship races. Lopez Obrador, who campaigned on vows to transform Mexico and oust the “mafia of power” ruling the country, rode widespread voter anger and discontent with the governing Institutional Revolution Party, or PRI, of President Enrique Pena Nieto and had led opinion polls since the beginning of the campaign. The PRI, which dominated Mexican politics for nearly the entire 20th century and recaptured the presidency in 2012, was set to suffer heavy losses, not just for the presidency but in other races as well. In brief remarks at a hotel in central Mexico City late Sunday, Lopez Obrador called for reconciliation after a polarizing campaign and promised profound change but with respect for the law and constitutional order. “I confess that I have a legitimate ambition: I want to go down in history as a good president of Mexico,” said Lopez Obrador, who had lost in the previous two presidential elections. “I desire with all my soul to raise the greatness of our country on high.” Lopez Obrador said he would “seek to establish an authentic democracy and we do not intend to establish a dictatorship.” He said, “The changes will be profound, but in accordance with established order.” Conservative Ricardo Anaya of a right-left coalition and the PRI’s Jose Antonio Meade acknowledged defeat shortly after polls closed nationwide. The quick count had them around 22 percent and 16 percent, respectively. Lopez Obrador said individual and property rights would be guaranteed, promised respect for the autonomy of the central Bank of Mexico and said his government will maintain financial and fiscal discipline. He said contracts obtained under energy reforms passed under President Enrique Pena Nieto will be scrutinized for any corruption or illegality, but otherwise contracts will be honored. “There will be no confiscation or expropriation of assets. … Eradicating corruption will be the principal mission,” he said. Lopez Obrador also spoke of reducing Mexican immigration to the United States through economic development. “Mexicans will be able … to work and be happy where they were born,” he said. And rather than the use of force to fight spiraling violence, he will look to fix root causes such as inequality and poverty. Partial vote counts also showed probable gubernatorial wins for allies of Lopez Obrador’s Morena party in at least four of eight state races on the ballot plus for the head of government in Mexico City. The central state of Guanajuato was expected to go to a candidate of the conservative National Action Party. The polling firm Consulta Mitofsky predicted Morena allies would take between 56 and 70 seats in the 128-member Senate and between 256 and 291 spots in the 500-seat lower house. Republished with permission from the Associated Press.
Kay Ivey sides with Doug Jones, says import tariffs could hurt Alabama industry
Alabama’s Republican governor is separating herself from President Donald Trump on the issue of trade, saying import tariffs like those supported by the administration would hurt the state. Gov. Kay Ivey released a statement Monday saying import tariffs could cause retaliatory tariffs that would drive up the cost of items made in Alabama and sold abroad. The administration already has imposed duties on $50 billion worth of Chinese imports, plus steel and aluminum from China, the European Union, Canada and Mexico. Ivey says growth in Alabama’s auto industry could be harmed if tariffs are imposed on U.S. goods around the world. Almost 60,000 people work in automotive-related jobs in the state. Both of Alabama’s U.S. senators, Republican Richard Shelby and Democrat Doug Jones, have previously said they oppose the tariffs. Republished with permission from the Associated Press.
U.S.-China trade talks center on rivalry over technology
A high-powered U.S. delegation arrived in Beijing on Thursday for talks with Chinese officials on defusing tensions that are propelling the world’s two largest economies toward a trade war. Treasury Secretary Steven Mnuchin is leading the group, which includes Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer. Liu He, President Xi Jinping’s top economic adviser, was heading the Chinese side in the talks, which analysts say appear unlikely to yield a breakthrough given the two sides’ intensifying rivalry in strategic technologies. President Donald Trump said he expected relations with Beijing to stay on an even keel. “Our great financial team is in China trying to negotiate a level playing field on trade!” he said on Twitter late Wednesday. “I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!” Trump is seeking to cut the chronic U.S. trade deficit by $100 billion and gain concessions over policies that foreign companies say force them to share technology with Chinese partners in order to gain market access. His administration has threatened to impose new tariffs on roughly $150 billion in Chinese goods — prompting China to announce its own tariffs on U.S. goods. The dispute has deepened as China stepped up efforts to overtake western industry leaders in advanced technologies, especially for semiconductors, the silicon brains required to run smartphones, connected cars, cloud computing and artificial intelligence. Under Xi, a program known as “Made in China 2025” aims to make China a tech superpower by advancing development of industries that in addition to semiconductors includes artificial intelligence, pharmaceuticals and electric vehicles. The plan mostly involves subsidizing Chinese firms. But it also does require foreign companies to provide key details about their technologies to Chinese partners. Beijing looks unlikely to cede any ground on that strategic blueprint. “The Made in China 2025 industrial policy concerns China’s long-term development plan, so the overall direction won’t change at all,” said Yu Miaojie, professor at Peking University’s National School of Development. Yu says China would rather cut the trade deficit by importing high-tech products from the U.S. that are currently tightly restricted. Striking an adamant tone, the state-run Global Times newspaper said Thursday in a commentary that it’s “our sovereign right to develop high-tech industry and it is connected to the quality of rejuvenation of the Chinese nation. It will not be abandoned due to external pressure.” Both sides have shown a diversity of opinions, with China recently moving to loosen a restriction on foreign ownership of automakers to minority stakes. But the rival views in Washington, reflected in the makeup of the U.S. team, could undermine the U.S. negotiating stance, the consulting firm Eurasia Group said in a research note. “The U.S. delegation headed to Beijing is too large and unwieldy to accomplish much; it is a reflection of inter-agency rivalry on the U.S. side and this will produce more posturing than actual negotiations with the Chinese,” the firm said. “The trip will produce few results and increases the risk that tariffs are adopted in the near future,” it added. Washington’s recent decision to ban Chinese telecom gear maker ZTE from importing U.S. components in a sanctions-related case drove home to Beijing its costly vulnerability to foreign sources for advanced microchips. The “Made in China 2025” plan calls for domestic producers to supply 70 percent of the country’s chip demand. The Trump administration’s efforts may actually spur China to ramp up efforts to develop its domestic industry as it strives to fulfill Xi’s vision, said Jian-Hong Lin, an analyst at research firm TrendForce. China now consumes nearly 60 percent of the world’s semiconductors but supplies only about 16 percent, according to PWC. The country spends more than $200 billion a year on foreign-made semiconductors, which in 2015 surpassed crude oil as the country’s biggest import. Experts say Chinese chipmakers are five years behind their U.S. and Asian rivals and that increasingly high technological hurdles and a meager talent pool are hindering the effort to catch up with dominant U.S., Japanese, South Korean and Taiwanese manufacturers. As Chinese researchers and chipmakers strive to catch up, the technology is evolving, with new materials transforming the future landscape of the electronics industry. The latest advanced chips are highly complex to make because of their increasingly tiny “nodes,” measured in nanometers, that make them faster and more power-efficient. Beijing has been backing up its towering ambitions in the semiconductor sector with money and tax breaks. The government set up the National Integrated Circuit Industry Investment Fund in 2014, seeded with 140 billion yuan ($22 billion) in capital to invest in chip companies. A second round of fundraising for as much as 200 billion yuan is underway, Chinese media report. The state-controlled Tsinghua Unigroup project, associated with Tsinghua University — China’s equivalent of MIT — has emerged as a national champion. It’s building two massive memory chip factories, including a $30 billion facility in Nanjing that will churn out 100,000 wafers a month and is expected to exert a “siphon effect,” drawing microchip industry suppliers and experts to the area. It’s unclear how successful those efforts will be as foreign regulators push back against Beijing’s strategy of acquiring overseas chipmaking-related firms. Washington has scuppered multiple China-linked bids for semiconductor-related firms following a call from a White House advisory panel to do more to protect the U.S. industry because of China’s industrial policies. Market leaders like Samsung, Intel and Taiwan Semiconductor Manufacturing are investing aggressively as they fight for market share. “Even though they’ve (the Chinese) committed a lot of money to the investment fund, the reality has sunk in that it’s harder than just throwing money at the problem. The Samsungs of the world, the TSMCs have a large head start,” said Alexander Wolf, an economist at Aberdeen Standard Investments. “Certain products, you can’t really reverse engineer.” Companies like Huawei and ZTE are avidly pursuing advanced semiconductor technology, but experts say overall Chinese research and development
