US attempt to Isolating China?

Ray

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Why Obama's key trade deal with Asia would actually be good for American workers

China may not join the Trans-Pacific Partnership trade agreement, but the U.S. still stands to win.

Opponents of giving President Obama fast-track authority to negotiate the Trans-Pacific Partnership (TPP) — the pending trade pact between the United States and 11 countries in Asia and the Americas — cite the job-killing impacts of globalization as a prime reason for their objection. The free-trade agreement would lower tariffs and remove other barriers to imports from member countries, which opponents fear would create steep competition for U.S. industries domestically. There is indeed substantial evidence that import competition from low-wage countries has contributed to the momentous decline in U.S. manufacturing employment in the last two decades. We even researched and published some of that empirical evidence. Still, we believe blocking the TPP on fears of globalization would be a mistake.

There are several reasons to support the TPP despite globalization concerns. First, the TPP — which seeks to govern exchange of not only traditional goods and services, but also intellectual property and foreign investment — would promote trade in knowledge-intensive services in which U.S. companies exert a strong comparative advantage. Second, killing the TPP would do little to bring factory work back to America. Third, and perhaps most important, although China is not part of the TPP, enacting the agreement would raise regulatory rules and standards for several of China's key trading partners. That would pressure China to meet some of those standards and cease its attempts to game global trade to impede foreign multinational companies.

Since 2000, America has lost 5 million manufacturing jobs. Regions that specialized in apparel, footwear, furniture, home electronics, toys and sports equipment — industries in which China achieved explosive growth — have seen factories close and wages for local workers flatten. Our research indicates that rising import competition from China accounted for 21 percent of the overall decline in U.S. employment in manufacturing industries during the 1990s and 2000s. The wave of automation that replaced middle-class jobs available to workers without a college education added to those losses. We sympathize with the regions and families that suffered, but halting TPP would not assist U.S. manufacturing or benefit U.S. workers. The reality is that the globalization of manufacturing is a fait accompli. Those manufacturing jobs are not coming back.

Further, the TPP's lower trade barriers would barely affect import competition faced by U.S. manufacturers. The World Trade Organization counts 160 members, including every major economy and most importantly China, which joined in 2001. According to the World Bank, WTO members can export manufacturing goods to the U.S. market at an average tariff of just 2 percent. Within the proposed TPP, the United States already has bilateral trade deals that have eliminated all manufacturing tariffs with five of the 11 members: Australia, Canada, Chile, Mexico, and Singapore. Cutting already rock-bottom U.S. manufacturing tariffs to zero for the remaining TPP countries would thus have negligible effects on U.S. producers. These countries already enjoy largely unfettered access to U.S. markets. The results of existing economic analyses on the responsiveness of global trade to manufacturing tariffs suggest that the consequences of the TPP for U.S. manufacturing employment likely would be slight.

But if the TPP has little downside for the U.S., what's the upside? Why bother with the deal at all? The reason is that the TPP is about much more than manufacturing. Most notably, it promises to liberalize trade in services and in agriculture, sectors in which the United States runs large trade surpluses, but which the World Trade Organization, despite 20 years of trying, has failed to pry open internationally. Successfully exporting information and computer services, where the U.S. maintains substantial technological leadership, requires more than low tariffs. It also requires protecting patents against infringement and safeguarding business assets and revenues against expropriation by foreign governments. To the extent that Obama succeeds in enshrining these guarantees in the TPP, the agreement would give a substantial boost to U.S. trade.

Americans have to take advantage of a new reality: Today, U.S. companies rely on global production networks for their success. When a trading partner exports a product to the U.S., the domestic economy gains because the U.S. often has exported the parts, components, or ideas for that product to that country. China's manufacturing growth, for instance, would have been inconceivable without its import of U.S. technology from multinational companies, which generates income for the domestic economy and gainful employment for engineers, programmers and other skilled occupations. The phenomenal sales of the iPhone 6, which Apple designs in California, rests on the capability of Foxconn's plants in China to assemble handsets at reasonable cost.

Rising Chinese consumer affluence also generates a virtuous circle for U.S. firms. China is poised to surpass the U.S. as the largest consumer market for the iPhone. Apple's experience is unusual, but not unparalleled. The Bureau of Economic Analysis reports that 24 percent of U.S. service exports are now accounted for by telecommunications, information technology, and royalties from licensing intellectual property. For the U.S. to derive maximum benefit from its advances in technology-intensive products, such as smartphones, U.S. companies need strong global protection of intellectual property. The TPP seeks to harmonize such protections across member countries.

If passed, the TPP also would create a powerful template for future trade deals, including with China, which would move the U.S. closer to resolving conflicts the WTO has been unable to handle. Consider, for example, the case of Qualcomm, a highly successful San Diego-based maker of chipsets for wireless communications that earns half of its global revenues in China. The company's substantial share of the Chinese chip market attracted the attention of the Chinese government, which proceeded to extract $1 billion in fines for alleged anti-competitive practices. In the U.S., where Qualcomm also sells its chipsets, the company has faced no such anti-trust penalties.

Under current trade law, Qualcomm has little recourse to appeal its treatment by the Chinese government. Under a trade agreement with China like the TPP, however, Qualcomm and other U.S. companies would have access to an investor-state dispute settlement mechanism. Contrary to criticism from Sen. Elizabeth Warren (D-Mass.), this mechanism would protect U.S. firms against predatory regulatory interventions by member governments. Anti-competitive asymmetries in the world trade system disproportionately harm U.S. firms at present. Enactment of the TPP would establish protections against these asymmetries for U.S. companies.

Expanding global trade has remade manufacturing, forcing workers, businesses, and entire regions to endure often painful adjustments. However, much as we might like to return to 1970 when manufacturing comprised a quarter of U.S. nonfarm employment, that's impossible without massive protectionist barriers that would isolate the U.S. economy and lower U.S. living standards. Blocking the TPP because of justified unhappiness over manufacturing's lost glory would amount to refighting the last trade war — beggaring the future as retribution for the past. A responsible trade agenda should instead seek to provide the supporting policy structure – protections for intellectual property and freedom from confiscatory regulations – that allows U.S. companies to excel in the sectors where they are strong.

Why Obama’s key trade deal with Asia would actually be good for American workers - The Washington Post
Yet another way to corner China and isolate it?

Also see the video in the link

Why China isn't part of Asia's trade deal
BBC News - Why China isn't part of Asia's trade deal
 

tarunraju

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Nah, it's just a strategy for China to tell its workers not to get greedy, they won't do it themselves, to they're using market-pressure (read: the US), to do that. It's just a gentle nudge.
 

sorcerer

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Will Alibaba Be the First Chinese Company Punished by Trump?

In an interview with Reuters on January 17, U.S. President Donald Trump made it clear that he is going to take retaliatory trade action against China soon.

“We have a very big intellectual property potential fine going, which is going to come out soon,” Trump said, “We’re talking about big damages. We’re talking about numbers that you haven’t even thought about.”

As The Diplomat reported earlier, in August last year, U.S. Trade Representative (USTR) Robert Lighthizer officially initiated an investigation of China’s intellectual property practices under Section 301 of the Trade Act of 1974. The investigation particularly focused on China’s policies on technology transfer, intellectual property, and innovation; if USTR finds such practices are unreasonable or discriminatory and burden or restrict U.S. commerce, it has the authority to take all appropriate and feasible action, under Section 301.


It’s worth noting that just days before Trump’s exclusive interview with Reuters, the USTR put China’s e-commerce giant Alibaba Group’s Taobao, among others, on the 2017 Notorious Markets List for “engaging in and facilitating substantial copyright piracy and trademark counterfeiting. ”

“Marketplaces worldwide that contribute to illicit trade cause severe harm to the American economy, innovation, and workers,” said Lighthizer. “The Trump administration is committed to holding intellectual property right violators accountable and intensifying efforts to combat counterfeiting and piracy.”

Regarding Taobao’s problem specifically, the USTR’s report reads:

A high volume of infringing products reportedly continue to be offered for sale and sold on Taobao.com and stakeholders continue to report challenges and burdens associated with IP enforcement on the platform. In particular, SMEs continue to have problems accessing and utilizing takedown procedures on Taobao.com.

In response to the USTR’s report, Alibaba Group President Michael Evans claimed on January 12 that the accusation was made upon political bias. He said:

t’s clear that no matter how much action we take and progress we make, the USTR is not actually interested in seeing tangible results. Therefore, our inclusion on its list is not an accurate representation of Alibaba’s results in protecting brands and IP, and we have no other choice but to conclude that this is a deeply flawed, biased and politicized process.

Biased or not, this report would conveniently provide Trump more legitimacy to punish China’s companies with “very big fine.” Taobao, in particular, can be a good start for penalty if the Trump’s administration wants to punish some individual as an example to others.

As The Diplomat noted earlier, Jack Ma (or Ma Yun), the founder of Alibaba Group and one of China’s richest men, has been widely seen as the leader of Chinese business community.

In July last year, Ma, together with Stephen Schwarzman, the CEO of Blackstone Group, co-chaired the first U.S.-China Business Leaders Summit held in Washington, D.C. Twenty business tycoons from both China and the United States came for the one-day closed-door dialogue. Even U.S. Commerce Secretary Wilbur Ross attended the meeting.

If Trump starts a retaliatory trade war by hitting Alibaba, he will undoubtedly achieve a stunning impact among the whole Chinese business community.


https://thediplomat.com/2018/01/will-alibaba-be-the-first-chinese-company-punished-by-trump/


 

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