Incentives are strong for China and the U.S. to retain the phase one trade deal, an economist at S&P Global wrote May 14, in a report called “U.S. and China Kick Trade Deal Can Down The Road.” While the report's author said it's possible the Trump administration would hike tariffs on China to punish that country for COVID-19, “we have long thought that, from an economic perspective, technology not trade is the core issue in the U.S.-China relationship. Technology has been and will continue to be the key driver of growth in China. It is at the heart of intellectual property, market access, and level playing field debates.” Chief Economist Shaun Roche said the two countries are on a path toward technological decoupling, no matter how the purchases shake out that are promised in the phase one deal.
Exports to China
China recently added 46 cities and areas to its list of cross-border e-commerce pilot zones, according to a May 14 report from the Hong Kong Trade Development Council. The move is part of China’s plan to “stabilise foreign trade and investment,” the report said. The zones will promote “international trade liberalization” and include certain tax exemptions (see 1912270019).
World Trade Organization members should do more to prevent export restrictions on medical goods and keep medical and food supply chains open, said Zhang Xiangchen, China’s ambassador to the WTO. Zhang also called on more cooperation between WTO members to combat the pandemic, which he said hasn’t materialized and has helped cripple the WTO. “The reason behind the poor performance [of the WTO] is not only due to the nature and the scale of the crisis,” Zhang said during a May 12 webinar hosted by the Asia Society, “but also the lack of leadership and the diminishing trust among members.”
China’s Nansha District, located in the Guangdong province, recently announced a three-year plan to improve its business environment, which features a “free trade zone requiring no certificates,” according to a May 13 report from the Hong Kong Trade Development Council. Currently, companies operating in the zone must submit “numerous certificates,” but the changes will allow companies to skip submissions of certificates, “data enquiries” and other administrative “verification” performed by the government. The government will instead use “data-sharing platforms” to “complete administrative procedures without requiring applicants to submit different certificates,” the report said.
China will allow imports of U.S. blueberries and barley, the country’s General Administration of Customs said in May 13 notices, according to an unofficial translation. China also issued quarantine and phytosanitary requirements for imports of U.S. alfalfa hay, “almond shell granules” and timothy hay. The measures, which took effect May 13, provide requirements that imports must meet for entry into China. The measures were announced as China tries to fulfill its agricultural purchase commitments under the phase one trade deal, which some say may not be possible due to the COVID-19 pandemic (see 2005130042 and 2005080010).
House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., and Rep. Peter DeFazio, D-Ore., want the U.S. to withdraw from the World Trade Organization. If their resolution, and the resolution introduced by Sen. Josh Hawley, R-Mo., were to pass before the deadline set up in the agreement that founded the WTO, and Trump either signed it, or they overrode his veto, the U.S. would exit the institution. “It is time for the United States to withdraw from this institution and start prioritizing American workers over international corporations,” Pallone said in a press release.
China is unlikely to meet its purchase commitments under the phase one deal, due to the COVID-19 pandemic, which could lead to China invoking a force majeure clause and further postponing the prospects of a phase two agreement, China trade experts said. “Given the COVID-19 crisis, the target set in the phase one deal will be very hard to achieve,” Xu Gao, chief economist at Bank of China International, said during a May 13 webinar hosted by the National Committee on U.S.-China Relations.
China temporarily banned beef imports from four Australian beef exporters after “repeated violations of inspection and quarantine requirements,” China’s Foreign Ministry spokesperson said during a March 12 press conference. The spokesperson said China will no longer process import declarations for those four Australian companies and asked Australia “to conduct a thorough investigation to find the cause and address the issue.” The measure banned imports from Kilcoy Pastoral Company, the Northern Cooperative Meat Company and two plants belonging to JBS Australia, which are among Australia’s “largest” beef meat processors, according to a May 12 Reuters report.
Another round of negotiations for the Regional Comprehensive Economic Partnership will take place this month, according to an unofficial translation of a May 13 notice from Japan’s Ministry of Economy, Trade and Industry. The negotiations, featuring the Association of Southeast Asian Nations as well as Japan, China, South Korea, Australia, New Zealand and India, will take place May 15-20 via videoconference, the notice said. Countries had expected in 2019 to finalize RCEP negotiations this year (see 1911040016), but now it is unclear if the COVID-19 pandemic will lead to more delays.
Export Compliance Daily is providing readers with some of the top stories for May 4-8 in case you missed them.