China reportedly ordered its state-controlled companies to stop buying certain U.S. agricultural products after the U.S. certified last week that Hong Kong no longer qualifies for special trade treatment. The decision also came after President Donald Trump said the U.S. will sanction Chinese officials, increase export controls on dual-use technologies, and end the special customs territory in response to Beijing’s so-called national security law (see 2005290047), which the State Department said threatens Hong Kong’s autonomy (see 2005270026).
Exports to China
The Commerce Department again renewed an export denial order for Mahan Airways because the airline continues to violate the order and the Export Administration Regulations, according to a May 29 notice. The Iranian airline has been on the banned list since 2008, and the notice renewed the ban for 180 days, until about Dec. 2, 2020, Commerce said. Since last renewing Mahan’s denial order in December (see 1912050032), the U.S. sanctioned a China-based logistics company for operating as a sales agent for Mahan Airways (see 2005190020 and 2005200027).
The Committee on Foreign Investment in the U.S. is increasing scrutiny on transactions involving basic medical supplies and sensitive technologies, trade lawyers said. Companies may also be seeing more CFIUS-related delays and a heavier involvement by political appointees in the CFIUS process as the Trump administration seeks to place more pressure on China, the lawyers said.
The U.S. will officially strip Hong Kong of its special trade treatment, which will include changes to U.S. export controls and sanctions against Chinese officials, President Donald Trump said May 29. Trump said the export controls will impact dual-use technologies and sanctions will target both Hong Kong and mainland China officials.
A North Korean bank and 28 North Korean and Chinese citizens were charged with evading U.S. sanctions, according to an indictment unsealed May 28. The scheme -- which included branches of North Korea’s state-owned Foreign Trade Bank in Thailand, Libya, Austria, Russia, Kuwait and China -- involved a series of front companies used to access the U.S. financial system. The scheme allowed the banks to process at least $2.5 billion in illegal payments through more than 250 front companies, which provided funding for North Korea’s nuclear missile programs.
President Donald Trump said that the administration will begin the process of revoking Hong Kong's differential treatment from China, including its more lenient "export controls on dual-use technologies, with few exceptions."
China will ban imports of Indian pigs, wild boars and their products due to a recent outbreak of African swine fever in India, China’s General Administration of Customs said May 27, according to an unofficial translation. China said it will destroy all imported Indian pigs, boars and pig products, and if incoming ships or aircrafts have pigs or boars from India on board, they will be “sealed up” and not opened “without customs permission” during the cargo’s time in China. Violators of the ban will face customs penalties, China said.
The House of Representatives passed a bill on May 27 that would authorize U.S. sanctions against Chinese officials for abuses of the country’s Uighur population. The sanctions included in the bill, which passed 413-1 in the House and cleared the Senate on May 14, have been criticized by China and will likely lead to heightened U.S.-China trade tensions (see 1912040046). The bill now awaits President Donald Trump’s signature.
Mexico's Economy Minister Luz de la Mora said that the uniform regulations that pertain to issues outside the auto industry will be ready by July 1 -- but strongly suggested that the uniform regulations will not be ready by the date of entry into force of the U.S.‐Mexico‐Canada Agreement. “There has been great progress on non-auto URs, and they will be ready by July 1, as for the auto rules of origin, we expect to advance substantially in coming weeks,” she said during a Cato Institute interview May 27. She said that Mexico wants “to make sure the transition to the new regime is effective, efficient.”
Although China, the U.S. and the European Union have taken actions during the COVID-19 pandemic that are damaging to the goal of free trade, Canadian diplomats and scholars at the Peterson Institute for International Economics said that doesn't mean we're headed for a new round of sphere-of-influence-style trading chains rather than global integration.