Equality key to China-US trade talks

Source:Global Times Published: 2019/7/25 23:03:40

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Photo: IC

China and the US have confirmed that the China-US high-level trade consultations will
resume on Tuesday in Shanghai. US Trade Representative Robert Lighthizer and US
Treasury Secretary Steven Mnuchin will once again lead a delegation to meet with the
Chinese team headed by Vice Premier Liu He.

The two countries will face arduous negotiations given huge differences in their positions.
China requests equal negotiations and a practical resolution to the problems in China-US
trade, and hopes the resolution will benefit both sides. The US, however, still wants to use
levers, including tariffs, to maximize China's concessions, making the negotiations a
unilateral process.

For China, a trade agreement should be combined with China's measures to expand opening-
up. Outside pressure can motivate us to promote opening-up measures, but it should not
sabotage China's economic system. After more than 40 years of reform and opening- up,
China deeply understands the importance of an orderly adjustment and controllable process.
We will not let foreign countries drive China's development.

Some US policymakers have been trying to forcibly transform China. They hope to force
China to change its path and "defeat" China through the trade war.

The White House may focus more on trade and the economy, but as shown by an open letter
signed recently by 130 retired US military officials and former intelligence officials, US
hawks are unleashing their power to affect the US position on China.

The trade war has greatly mobilized opposition between Chinese and American societies.
Both sides believe the ties have been declining, and returning to the previous relative stability
appears impossible. It is widely believed that trade talks will take a long time.

Washington still holds the initiative in the trade talks. Since placing pressure has not brought
about a deal, the US should realize that only a win-win mind-set can lead to an agreement.

The US needs to truly implement the consensus reached by the two state leaders at the Osaka
summit, making equality the key to breaking the deadlock.
Washington should be aware that the trade war may not lead to restructuring its trade with
Beijing, but would drag the US into a costly and lengthy battle with limited political gain.

Can a trade deal be reached before the 2020 US presidential election campaign reaches fever
pitch? The schedule was clearly in the White House's original design. However, because the
strategic defense against each other between Beijing and Washington has greatly expanded,
frictions ranging from cross-Straits, South China Sea to human rights have been tough to
control. Both sides' original plans and expectations have become uncertain.

If Washington continues to put pressure on China, the chance of reaching an agreement

acceptable to each other might be missed.

Washington must not think that it firmly holds the initiative and can reach an agreement
whenever it wants. The US can't unilaterally set the conditions for a deal.

Even within the US, the White House does not have the final say on every issue. The longer
the trade war, the closer the presidential election, the smaller space the White House has to
make a decision.

China's attitude is clear. The US must understand China's stance and not arbitrarily deny the
legitimacy of China's pursuit. Because such disavowal would be fermented in the US and turn
into a stumbling block on the path to reaching a fair agreement with China.
Editorial: FedEx’s misbehavior hurts globalization

Photo: IC

Chinese authorities investigating US delivery firm FedEx found that the firm's previous statement of
"operational error" in re-routing Huawei's packages to the US was inconsistent with the facts. In
addition, FedEx is suspected of holding back more than 100 packages sent from overseas to Huawei
in China. Such findings provided preliminary evidence for public suspicion that the firm may be
manipulated by the US government.

The courier industry is very special and must be undertaken by those who are absolutely
trustworthy. As a multinational enterprise having important businesses in China, FedEx has seriously
violated the spirit of contract, professionalism and ethics, and even breached relevant laws and
regulations. This is unacceptable to Chinese enterprises, the Chinese government and the public.
FedEx will inevitably be punished by the market and law. If relevant authorities treated the company
with leniency, more multinational enterprises will challenge China's bottom line and Chinese law.

FedEx misrouted packages on purpose, and then lied. Investigators also found other violations. The
company, with "live to deliver" as a slogan, is bruising its reputation.

By doing so, FedEx cannot gain any benefits but risks losing the huge China market and being stained
in the world market. What drove the company's reckless actions? FedEx attributed it to the
"unclear" order issued by the US Commerce Department's Bureau of Industry and Security. In other
words, it was the US government that made FedEx do things wrong. This is not an isolated case.
After the US launched its crackdown on Huawei, US original equipment manufacturer Flex Ltd
privately detained materials and equipment belonging to Huawei in China, violating China's judicial
sovereignty.

Economic globalization has now penetrated various industries and fields, but the US has for many
years tried to make international companies act in accordance with US interests and positions and
even serve the political goals of the US government through long-arm jurisdiction. Washington,
without any evidence, has long accused Chinese companies of being controlled by the state. The fact
is it's the US government that has a grip on US enterprises, manipulating them to crack down on
foreign counterparts.

The US advocates respect for the market, but what it is doing is damaging the market for its own
interests. Some analysts have pointed out that what really concerns the US over Huawei are not
security issues, but that after Huawei's technology is widely used worldwide, it would be difficult for
the US to keep other countries under surveillance through telecommunications.

It's unfortunate that FedEx has played a role in helping the US government monitor others. The
multinational company betrayed the Chinese company it served for the interests of the US, it would
also betray companies of other countries. This will arouse vigilance from other foreign companies.
The intentional misrouting of FedEx will make the suspicion over the multinational companies' ethics
spread like a flu virus, eroding the contributions of globalization to development and prosperity.
July 11, 2019 / 8:38 PM / 15 days ago

Exclusive: Walmart told U.S. government India e-commerce rules

regressive, warned of trade impact
Aditya Kalra

NEW DELHI (Reuters) - Walmart told the U.S. government privately in January that India’s
new investment rules for e-commerce were regressive and had the potential to hurt trade ties,
a company document seen by Reuters showed.

FILE PHOTO: Walmart signs are displayed inside a Walmart store in Mexico City, Mexico, March 28,
2019. Picture taken March 28, 2019. REUTERS/Edgard Garrido/File Photo

The lobbying effort yielded no result at the time - India implemented the new rules from Feb.
1 - but the document underlines the level of concern at Walmart about the rules. Differences
over e-commerce regulations have become one of the biggest issues in frayed trade ties
between New Delhi and Washington.

“It came as a total surprise ... this is a major change and a regressive policy shift,” Walmart’s
Senior Director for Global Government Affairs Sarah Thorn told the Office of the United
States Trade Representative (USTR) in an an e-mail on Jan. 7.

Just months earlier, Walmart had invested $16 billion in Indian e-commerce giant Flipkart, its
biggest ever acquisition globally.

In a statement to Reuters on Thursday, Walmart said it regularly offers input to the U.S. and
Indian governments on policy issues and this was a “past issue and Walmart and Flipkart are
looking ahead”.

“Walmart has had good consultations with the government of India,” a company
spokeswoman added.

The USTR did not respond to a request for comment.

In the January letter to the USTR, Walmart said it wanted a six-month delay in the
implementation of the rules, but that did not happen. Washington did raise concerns about
the policy with New Delhi, but India gave a non-committal response, an Indian trade
ministry official told Reuters at the time.

Walmart’s problems in India highlight the regulatory complications it faces as it restructures

its international business to boost growth and online sales. Mexico’s competition regulator
recently blocked its acquisition of delivery app Cornershop, while in Britain it was stopped
from merging its British arm Asda with rival Sainsbury’s.

These issues, however, have failed to unnerve Walmart investors. Walmart shares have risen
21 percent, compared with a 19 percent increase for the S&P 500 since the start of the year.
NEW INDIA RULES

A USTR delegation led by Christopher Wilson, Assistant U.S. Trade Representative for
South and Central Asia, was to meet Indian officials in New Delhi on Friday to resume
discussions on trade ties and the e-commerce issue was likely to be high on the agenda.

In its January representation, Walmart told the USTR that India’s new policy wasn’t good for
global businesses, highlighting that its foreign direct investment would help Flipkart grow
and result in “significant” tax revenues for New Delhi.

“Changing rules to hinder international business following major investments ... will have
important implications for India FDI goals and add unnecessary pressure to trade
discussions,” Walmart said in its note.

The new rules barred companies from selling products via firms in which they have an equity
interest and also from making deals with sellers to sell exclusively on their platforms.

Amazon.com Inc removed thousands of products from its India website briefly in February as
it initially struggled to comply with the new policy. Flipkart was forced to rework some of its
vendor relationships, sources told Reuters at the time.

The policy, implemented by Prime Minister Narendra Modi months before his re-election in
May, was seen aimed at winning the support of small Indian traders, who had long
complained they were losing business due to the steep discounts offered by foreign e-
commerce giants.

“The action appears in every respect ... intended to placate Indian companies and local
traders,” Walmart told the USTR.

SMALL TRADERS VS BIG RETAILERS

Reuters obtained the two-page representation Walmart sent to the USTR through a
Freedom of Information Act request first filed in January. The USTR in February provided
a heavily-redacted version of the document, citing confidentiality reasons. In consultation
with Walmart, it withdrew most of those redactions this week following an appeal from
Reuters.

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Although Reuters asked for both Amazon and Walmart’s communications, the USTR
responded saying it found only one e-mail with Walmart’s representation between Dec. 22
and Jan. 28, the period for which the records were searched.

Since the policy has been announced, Indian oil-to-telecoms conglomerate Reliance
Industries has repeatedly talked about its plans to diversify into e-commerce.

Walmart’s document released to Reuters did not name Reliance, but the Bentonville,
Arkansas-based company argued the policy discriminated against foreign firms, and not just
in favour of small domestic players.
“The purported rationale of such regulations is to protect small retail players who are seen to
be threatened,” Walmart said, but added: “This argument does not account for why there
should be differentiated treatment between large foreign eCommerce companies, and large
domestic companies.”

In the past six months, several Walmart executives have also weighed in publicly on India’s
new e-commerce policy, including Chief Executive Doug McMillon, who said in February
the company was disappointed by the Indian government’s decision.

“We hope for a collaborative regulatory process going forward, which results in a level
playing field,” he said.

DEFENDING E-COMMERCE

India’s Commerce Minister Piyush Goyal has said the government was committed to
protecting small traders, but open to ironing out policy-related issues. Goyal said on Twitter
on Wednesday he had met Walmart International’s CEO, Judith McKenna, and discussed
ways of boosting sales of Indian-made products.

In a closed-door meeting last month, however, Goyal warned both Flipkart and Amazon to
comply with the new rules in letter and spirit, and questioned them on their discounting
policies, Reuters has reported.

The Walmart spokeswoman on Thursday said that, in line with the company’s commitment to
India, it looked forward to contributing to the country’s retail ecosystem.

Amazon was not aware of Walmart’s January representation to the USTR, according to a
person with direct knowledge. The company in a statement said it continued to engage with
New Delhi to enhance infrastructure and create jobs.

Walmart told the USTR in January that its unit Flipkart, as well as Amazon, had opened
many new distribution centres over the past three years in India, creating thousands of jobs
and greatly benefiting to consumers.

It warned of “serious consequences” if the new policy was implemented hastily. “The lack of
policy stability makes it very difficult for companies to continue planned investments, both in
the eCommerce sector and beyond,” Walmart wrote.
The Economist explainsThe nuclear deal fuelling tensions between
Iran and America
The ins and outs of the JCPOA

The Economist explains

Jul 22nd 2019

by A.K.

PRESIDENT BARACK OBAMA called it “the strongest non-proliferation agreement ever

negotiated”. President Donald Trump derided it as “one of the worst deals ever”. Now the
Joint Comprehensive Plan of Action (JCPOA)—the unwieldy name given to the
multinational nuclear deal signed between Iran and six world powers in 2015—is on life
support. Mr Trump dealt it a near-fatal blow last year by withdrawing America from the
accord. And Iran inflicted more wounds in July by breaching some of the agreed limits, on
the size of its stockpile of low-enriched uranium and on the concentration of fissile material.
As tensions rise in the Gulf, America and Iran seem to be on a collision course. So what,
exactly, is the JCPOA?

In 2002 the world learned of a large, secret Iranian uranium-enrichment site buried deep
underground. Iran claimed it was intended to make low-enriched uranium for nuclear-power
stations. The rest of the world suspected it was part of a clandestine nuclear-weapons
programme, intended to give Iran the ability to produce the highly enriched stuff that goes
into bombs. In 2003, shortly after President George W. Bush declared his “global war on
terror” and America invaded Iraq, Iran announced that it would suspend all enrichment-
related activities, as part of diplomacy with Europe. But as regional tensions rose over the
next decade, its nuclear programme mushroomed. Western powers, fearing the development
of an Iranian nuclear weapon and the Middle Eastern arms race that might follow, piled on
increasingly draconian sanctions to force Iran to back down. Rumours swirled that Israel
might launch air strikes, as it had on an Iraqi reactor in 1981 and a Syrian site in 2007.

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In July 2015 Iran reached a bargain with the permanent five members of the UN Security
Council (America, Britain, France, Russia and China) as well as with Germany and the
European Union. It mothballed thousands of centrifuges (machines that enrich uranium). It
agreed to enrich uranium only to low levels not suitable for a bomb and to accumulate no
more than 300kg. It poured concrete into the core of its heavy-water reactor at Arak, which
might otherwise have yielded plutonium for a bomb. And it agreed to the most stringent
inspections regime anywhere in the world. In return, some of the sanctions were lifted,
providing relief for Iran’s battered economy.

The deal’s proponents argued that the restrictions left Iran more than a year away from being
able to produce a bomb’s worth of fuel, as opposed to a few months. “Military action would
only set back Iran’s programme by a few years at best, which is a fraction of the limitations
imposed by this deal,” pointed out Mr Obama. And even if Iran cheated, went the theory, it
could only move slowly to avoid being found out. Less impressed, hawks in America, Israel
and the Gulf states scoffed that Mr Obama had given away too much. Iran, they complained,
would be permitted to continue some enrichment and to expand its programme as restrictions
fall away (the first expire after a decade). In the meantime, it would receive billions of dollars
that could be funnelled to allied militant groups in the region.

In May 2018 Mr Trump pulled America out of the JCPOA and soon re-imposed sanctions on
Iran. European countries promised to protect trade as best they could, but most companies
preferred to sacrifice deals with Iran rather than risk losing business in the American market.
Iran kept its side of the nuclear bargain for a year. But in April 2019 Mr Trump ended
waivers that had allowed some countries to continue buying Iranian oil. That was the final
straw. In May Iran gave notice that it would begin walking away from the deal, provision by
provision, unless the Europeans could shield Iran’s economy.

Since then, hostilities between America and Iran have increased. Ships have been attacked in
or near the Strait of Hormuz, through which a fifth of global oil exports pass. In June, Iran
shot down an American drone; American bombers were ten minutes away from their targets
in Iran when Mr Trump called a retaliatory strike off. In July, America claimed to have
downed an Iranian drone. Meanwhile, the International Atomic Energy Agency verified that
Iran broke the 300kg limit on July 1st, followed by the 3.67% purity threshold on July 8th.

Unless America and Iran can find a way to talk again, Iran will creep back towards the ability
to make a nuclear bomb; and Mr Trump will face growing pressure from his hawks to bomb
Iran. What could stop either of these nightmares from becoming a reality? Probably a deal
that looks much like the JCPOA.
Maritime hostage
Not that the consequences of the British action were not anticipated by Mr Jeremy
Hunt’s foreign office; with the capture of a Britishowned oil tanker in the Gulf, some of
their worst fears have been realised.

Editorial | New Delhi | July 22, 2019 12:01 am

A picture taken on July 21, 2019, shows the British-flagged tanker Stena Impero anchored off
the Iranian port city of Bandar Abbas. Iran warned Sunday that the fate of a UK-flagged
tanker it seized in the Gulf depends on an investigation, as Britain said it was considering
options in response to the standoff. Authorities impounded the Stena Impero with 23 crew
members aboard off the port of Bandar Abbas after the Islamic Revolutionary Guard Corps
seized it Friday in the highly sensitive Strait of Hormuz. (Hasan Shirvani / MIZAN NEWS
AGENCY / AFP)

The waters of the Strait of Hormuz have become choppier still. The crisis in the Gulf has
deepened since Friday with what can be described as Iran’s counter-mobilisation after the
seizure by Britain last week of the Iranian-flagged Grace 1 in Gibraltar.

Not that the consequences of the British action were not anticipated by Mr Jeremy Hunt’s
foreign office; with the capture of a Britishowned oil tanker in the Gulf, some of their worst
fears have been realised. The Stena Impero and its crew of more than 20 are now in the hands
of the Iranian Revolutionary Guards. Clearly, the United Kingdom has been unable to protect
British shipping going through the waterways of the Strait of Hormuz.

To an extent, the maritime conflict between Iran and Britain has deflected the focus from
Brexit and also, of course, the choice of the next Prime Minister. The British insist that they
only impounded Grace 1 due to its suspected destination ~ a port in Syria ~ and because the
ship was carrying Iranian oil. Whitehall had argued that the European Union sanctions
against the regime of Bashir al Assad regime needed to be enforced to uphold the certitudes
of international law. Given its circuitous route, there was little doubt that the ship was bound
for Syria.

Yet, the fact remains that few previous shipments of oil to Syria have thus far been
impounded. Matters had become worse confounded with Spain’s claim that the British had
acted under the instructions of the Americans. The Trump administration is trying to freeze
all Iranian oil exports as part of its policy of maximum economic sanctions designed to force
the Iranians to reopen talks on the nuclear deal signed by Barack Obama in 2015, and binned
by the current occupant of the White House.

With the seizure of the British oil tanker, Hassan Rouhani’s Iran has launched its counter-
offensive at a critical juncture… when trilateral tensions between the US, Britain and Iran are
far from contained. The tanker-versus-tanker conflict is bound to muddy the waters further
still. Though Iran’s nuclear proliferation is at the core of the crisis, Britain opposes America’s
policy, arguing that it is counterproductive and might only strengthen the hands of hardliners
in Tehran. Carl Bildt, the former Swedish prime minister and co-chair of the European
Council on Foreign Relations, has mentioned the ambiguities of the British action in Gibraltar
~ “One refers to EU sanctions against Syria, but Iran is not a member of the EU.

And the EU as a matter of principle doesn’t impose its sanctions on others. That’s what the
US does.” Is the US nudging Britain into dangerous waters with Iran? The trilateral tension
has become ever so murky. In the Iranian perspective, the British action had nothing to do
with an EU embargo, and “everything to do” with supporting the US squeeze on Iranian oil
exports, the quickest route to bringing the Iranian economy to its knees. Apart from oil, the
British crew are now hostage.