China suspended its tariff increase on U.S. imports scheduled to take effect Dec. 15, according to a report from Xinhua, China’s state-run news agency. The decision to suspend the tariffs, which resulted from an agreement on a phase one deal between the two sides (see 1912130035), covered a planned 10 percent and 5 percent increase on certain goods, Xinhua said. The country will also “continue to suspend” additional tariffs on U.S. vehicles and auto parts and continue to work on tariff exemptions for certain U.S. imports, including pork and soybeans (see 1912060033).
Exports to China
Thailand and Hong Kong will soon begin a “pre-negotiation feasibility” study on a potential free trade agreement and hope to begin talks in 2021, according to a Dec. 16 report from the Hong Kong Trade Development Council. The feasibility study is expected to begin in February, the report said. Both countries also recently signed a series of memorandums of understanding aimed at increasing trade, better connecting industries and collaborating on innovation and technology. The two sides also discussed a “higher number” of Hong Kong companies potentially moving production sites to Thailand to avoid tariffs from the U.S.-China trade war.
The phase one trade deal (see 1912130035) between the U.S. and China has reduced Chinese “market uncertainty” and the two sides should cancel the remaining tariffs, a spokesman for China’s National Bureau of Statistics said during a Dec. 16 press conference. “It has strengthened market confidence and promoted economic and trade development, both for China and the United States, and for the world,” Fu Linghui said, according to an unofficial translation. “[It is] positive.” He also said the countries are continuing negotiations and should cancel “the levy of tariffs in stages, contributing more power to world economic growth.”
China’s “advance classification advisory service” for samples of imports will start Dec. 20, according to a Dec. 13 report from the Hong Kong Trade Development Council. The measure will help companies gain a “preliminary ruling” on the classification of commodities for both imports and exports, the report said. To use the service, Chinese importers are required to apply to their local customs office when importing goods that have completed safety and quality assessments “via pre-shipment inspection,” or when importing samples of goods imported at a later date, the HKTDC said.
China recently announced plans to increase penalties for violations of intellectual property rights, according to a Dec. 12 report from the Hong Kong Trade Development Council, an issue at the center of the U.S.-China trade deal negotiations. China will raise its penalty from “three times the actual damages incurred” to “five times the actual damage,” the HKTDC said. The announcement is part of a China initiative to improve intellectual property rights protections in two phases by 2025, the report said.
The government of Canada issued the following trade-related notices as of Dec. 13 (note that some may also be given separate headlines):
BOSTON -- If the Commerce Department follows through on plans to expand the limits of the Export Administration Regulations to further control foreign shipments to Huawei, it will have a “dramatic” impact on international supply chains, said Kevin Wolf, a trade lawyer with Akin Gump and Commerce’s former assistant secretary for export administration. The measures, which Commerce confirmed it was considering earlier this month (see 1912100033), include expanding the Direct Product Rule and broadening the de minimis rule to make more foreign-made goods subject to the EAR.
With the last round of consumer goods imported from China spared, and a reduction in Section 301 tariffs on about $120 billion in goods that were first subject to additional tariffs Sept. 1, some business interests welcomed the de-escalation, but warned that the U.S. should stay focused on more significant economic reforms in China. The tariffs on List 4a, which are at 15 percent and apply to about 3,800 8-digit tariff lines, will go to 7.5 percent.
The State Department announced sanctions on three Iranian entities linked to weapons proliferation and eight entities involved in weapons smuggling from Iran to Yemen, the agency said Dec. 11. The announcement targets the Islamic Republic of Iran Shipping Lines (IRISL), its China-based subsidiary, E-Sail Shipping Company, and the Iranian airline Mahan Air. The Treasury’s Office of Foreign Assets Control previously sanctioned E-Sail in 2018, Mahan Air in 2011 and IRISL in 2008.
The Chinese “irreversibly accelerated” their Made in China 2025 industrial program since the summer, taking a sharp protectionist turn as the U.S.-China trade war persisted with no negotiated breakthrough, Photronics CEO Peter Kirlin said on a fiscal Q4 call Dec. 11. “They ain't turning back,” said Kirlin, whose company drew more than half its Q4 revenue from the photomasks it supplied Chinese panel makers, produced at Photronics factories throughout Asia, including in Xiamen and Hefei, China.