The United Kingdom’s Department for International Trade issued a March 9 guidance for businesses impacted by the coronavirus outbreak. The guidance provides information on how DIT is providing “supply chain disruption support” and other support for businesses that export to China.
Exports to China
In an annual report about China's compliance with its World Trade Organization commitments, the U.S. trade representative repeated complaints from last year's report (see 1902050024) about how U.S. imports are treated by Chinese customs authorities.
The government of Canada issued the following trade-related notices as of March 6 (note that some may also be given separate headlines):
If President Donald Trump is not re-elected, the next administration will remain focused on China, export controls and Entity List actions but will likely approach China with a more clear, predictable strategy, two former top Commerce Department officials said. “You would see a more well-defined, carefully thought-through approach to issues like Huawei,” Peter Lichtenbaum, who served as Commerce’s assistant secretary for export administration during the Bush administration, said during a March 6 International Trade Update panel at the Georgetown University law school. “Not because it's a Democratic [administration], but because it's a more regular-order administration and less policy made by tweet.”
Hundreds of vessels dredged sand in North Korea’s Haeju Bay before illegally exporting it to China, according to a March report from C4ADS, a nonprofit data analysis organization. The operation, which took place in May 2019, violated United Nations Security Council resolutions and demonstrates “a level of sophistication unlike other known cases of North Korean sanctions evasion at sea,” the report said, shedding light on North Korea’s ability to “execute complex operations” to export goods. The sand was dredged by a “large fleet” that sailed from Chinese waters to North Korea, spiking traffic in Automatic Identification System traffic in the waters, the report said. The traffic was unusual because vessels rarely transmit their AIS numbers, in order “to avoid scrutiny from sanctions monitors.” The sand can be used to construct concrete, glass and silicon chips used on electronic devices, the report said.
The coronavirus outbreak has had “severe” impacts on European Union companies operating in China, according to a Feb. 27 report by the European Union Chamber of Commerce in China. The report, which surveyed more than 550 companies, said that almost 90% reported a “medium to high impact” and about half forecasted a double-digit drop in revenue for the first half of 2020. Companies routinely face “unpredictable rules, highly restrictive quarantine demands and extensive pre-conditions to restart operations,” the report said, and often experience “multiple onerous restrictions” while passing through provinces, delaying deliveries. “The patchwork of conflicting rules that emerged from the fight against COVID-19 has produced hundreds of fiefdoms, making it next to impossible to move goods … across China,” Jorg Wuttke, European Chamber president, said in a statement.
China should address and clarify several of its proposed export control provisions announced in its draft export law (see 2002040059 and 2001100047), more than 10 U.S., European and Japanese trade associations said in comments. The comments, released in February by the Center for Information on Security Trade Control, said the country should take “careful consideration” before finalizing the law and said trade associations have “significant outstanding concerns.” The comments were endorsed by the U.S. Computing Technology Industry Association and the National Association of Manufacturers.
Senate Communications Subcommittee Chairman John Thune, R-S.D., introduced legislation on March 5 meant to make sure “U.S. communications infrastructure security is a clear negotiating objective of our country’s trade policy,” he said in a news release. “This legislation would ensure the security of equipment and technology that create the global communications infrastructure are front and center in our trade negotiations, because you can’t have free trade if the global digital infrastructure is compromised.”
The coronavirus outbreak is expected to decrease global exports by $50 billion as the spread of the virus continues to disrupt global supply chains, according to a March 4 report by the United Nations Conference on Trade and Development. The slowdown is directly tied to China’s manufacturing Purchasing Managers Index, which fell by 22 points in February, implying a 2% reduction in exports on an annual basis, the report said. The fact that China is a “central manufacturing hub” will have significant “repercussions” for countries reliant on trade with the country, the report said. “Any slowdown in manufacturing in one part of the world will have a ripple effect in economic activity across the globe because of regional and global value chains,” UNCTAD Secretary-General Mukhisa Kituyi said in a statement.
The Commerce Department is “pushing forward” on increased restrictions of foreign exports to Huawei that contain U.S. content, Secretary Wilbur Ross said during a March 5 Senate hearing. Sen. Chris Van Hollen, D-Md., told Ross he hopes Commerce follows through with the restrictions -- which would include changes to the de minimis rule and the Direct Product Rule (see 2002050047) -- adding that Commerce has been “appropriately aggressive” in pursuing more stringent controls on technology exports to Huawei and China. But Van Hollen noted that Commerce has faced pushback from other parts of the Trump administration, including the Defense and the Treasury Departments (see 2001240012).