China knows how to deal with Trump

China knows that Trump wants "tweetable result", and so they gave him the 100-day plan. According to the report of Financial Times,

Some doubt what can realistically be achieved. “Will Trump even have a full team in place to conduct the negotiations effectively within 100 days, since he does not have either a China strategy or a China-Asia team in place?” asks Steve Tsang, director of the SOAS China Institute in London. “This is at best aspirational.”

Phil Levy wrote in Buying A Little Time On China Trade,

One of the headlines that emerged was official impatience – a 100-day deadline to make notable progress. At the senior leadership level, the Trump administration took office so deeply confused about trade deficits that President Trump had to order a 90-day study. As that will run contemporaneously with the China deadline, they seem unlikely to sort out a strategic vision in time. Meanwhile, the norm of summitry is that the leaders agree on a path and instruct their minions to make it so. The problem is that there is a distinct shortage of Senate-confirmed minions. The normal follow-up would involve Deputy U.S. Trade Representatives and Assistant Secretaries of State shuttling from Washington to Beijing and overseeing arduous discussions about details. It is invariably this sort of preparatory work that allows the leaders to later convene and issue proclamations of success. But President Trump has yet to nominate any Assistant Secretaries of State or Deputy U.S. Trade Representatives. Once nominated, they will require Senate confirmation – a lengthy process that has currently entangled the nominee for U.S. Trade Representative, Robert Lighthizer. Given the paucity of vision among senior officials and the outright paucity of junior officials, the one thing the Trump administration seems to need badly is more time. Yet they emerged from the summit trumpeting tight deadlines.

Still, what the US wants, . . .

According to Andrew Nathan, a Sinologist at Columbia University, plenty of low-hanging fruit is on offer. “US negotiators are pushing on a door that is relatively easy to open when they place a priority on improving the trade balance not by limiting Chinese exports to the US, but by increasing US exports to China,” he said.

China can offer .

China will offer the Trump administration better market access for financial sector investments and US beef exports to help avert a trade war, according to Chinese and US officials involved in talks between the two governments.

Because China knows how to deal with leaders like Trump,

Chinese officials have told visitors to Beijing that they think they can navigate what they expect to be Mr Trump’s transactional approach to the relationship. “They are taking the sort of approach that they take to developing countries: How much will it take to buy you off?” said one person who recently met with policy makers in the Chinese capital.
“It sets up a negotiation process tailor-made for Trump-type announcements about concrete deals for the export of this or the export of that, which make a splash but are too discrete to have a structural effect on the overall US trade deficit,” Prof Nathan said.

On the other hand, Trump Administration is preparing for an executive order focusing on anti-dumping, another short term tool.

The Trump administration is working on an executive order that would initiate investigations into "unfair" product dumping from foreign companies — an action that could lead to tariffs on a wide range of products. These plans are very fluid, and internal disagreements remain about how aggressive this order should be. Here's what I've learned from administration sources:

  • Steel and aluminum will be targeted.
  • Other products, including household appliances, could be targeted as well.
  • If the investigations result in new import duties — as some senior Trump officials believe should happen — it could make some consumer goods more expensive and could hurt the stock prices of American companies that rely on cheap steel imports. A good number of American manufacturing companies, however, could benefit from this hit to their low-cost competitors.

Also by Phil Levy

Former Treasury Secretary Larry Summers argues that many of the Trump administration’s fixations in China trade – such as bilateral trade deficits and currency manipulation – are misguided. There is an opportunity cost to pursuing them. Time spent demonstrating that China is not manipulating its currency is time not spent on more fundamental issues, such as the health of the institutions propping up the global economic system. Summers concludes that the United States and China need a high-level strategic dialogue. This is not a new idea. The Bush administration established a Strategic Economic Dialogue (SED) with China. The Obama administration was inordinately proud of itself for inserting an ampersand and pursuing a Strategic & Economic Dialogue. The reporting did not make clear what the Trump administration’s moniker would be, but there will be high-level dialogues with China. They will be strategic. And economic. The value of such dialogues depends critically on two things – the strategic vision of the lead players, and the ability of more junior officials to lay the groundwork.

As always, battle on trade within the administration continues.

In addition, an official said, the White House is moving out a senior economy policy official, Andrew Quinn, who had helped negotiate the Trans-Pacific Partnership, former President Barack Obama’s signature trade initiative. Mr. Quinn had become the subject of a battle between two camps in the White House: economic nationalists, who wanted him out, and more mainstream backers of free trade, who defended him.

Alas, when China has the upper hand, a trade war is temporarily averted, which would help the US from digging a deeper hole. Who would think of that?

EU considering excluding UK from trade talks before Brexit

Brussels is eyeing the exclusion of Britain from updates on EU trade talks amid concerns that the UK could take advantage of sensitive information [in its own post-> > After a briefing last month by Michel Barnier, the EU’s chief Brexit negotiator, the European Commission warned that there needed to be a “discussion about the treatment of sensitive information in the context of certain trade negotiations, to which the UK would continue to have access to while it remained a full member of the union”.

. . .

The situation is complicated by the fact that the EU has the exclusive right to negotiate trade deals for member states, meaning the UK has no legal right to initiate formal bilateral talks with other countries before Brexit happens in 2019.

Trade experts say one option would be for the UK to opt out of the information loop during the Brexit process in exchange for an agreement with Europe to allow it begin bilateral talks before it leaves the bloc.

Financial Times

This option is not optimal. Does the UK have the resources to initiate formal negotiations before the Breixt? Does anyone have any ideas what to negotiate with the UK Before the deal between the EU and the UK is clear?

Unwired Planet v Huawei

Fresh off the press is today's decision from Mr Justice Birss in Unwired Planet v Huawei [2017] EWHC 711.

There are some interesting FRAND findings. I am curious about the reasoning about why the insistence on a worldwide listener is FRAND.

(6) FRAND characterises the terms of a licence but also refers to the process by which a licence is negotiated. Although an implementer does not owe a FRAND obligation to ETSI, an implementer who wishes to take advantage of the patentee’s FRAND obligation, must themselves negotiate in a FRAND manner.

(7) Offers in negotiation which involves rates higher or lower than the FRAND rate but do not disrupt or prejudice the negotiation are legitimate.

(8) An appropriate way to determine a FRAND royalty is to determine a benchmark rate which is governed by the value of the patentee’s portfolio. That will be fair, reasonable and generally non-discriminatory. The rate does not vary depending on the size of the licensee. It will eliminate hold-up and hold-out. Small new entrants are entitled to pay a royalty based on the same benchmark as established large entities.

(9) The non-discrimination limb of FRAND does not consist of a further “hard edged” component which would justify a licensee demanding a lower rate than the benchmark rate because that lower rate had in fact been given to a different but similarly situated licensee. If FRAND does include such a component, then that obligation would only apply if the difference would distort competition between the two licensees.

– by Annsley Merelle Ward in BREAKING: Birss J hands down first FRAND decision in Unwired Planet v Huawei

Not gonna be a clean break

Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it.

Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions.

Discussions with Apple regarding license agreement - Imagination Technologies

Trump-Xi meeting: How Trump seeks to push his trade agenda forward

Rather than a willingness to make fundamental changes to their economies, experts said the Chinese were more likely to come bearing political enticements, like promises of investments in manufacturing plants.

"The risk is that the Chinese see President Trump as very transactional by nature and they would be all too happy to say, 'OK tell us what you want us to buy of yours,' rather than focus on the fundamental changes they need to make to their economy," said Michael Froman, the former US Trade Representative under President Barack Obama.

– by Jeremy Diamond in Trump-Xi meeting: How Trump seeks to push his trade agenda forward on Trump-Xi meeting: How Trump seeks to push his trade agenda forward

Net Asian FDI falls to record low

A paper co-authored by Mr Wuttke, China Manufacturing 2025, spoke of restrictions being tightened in many areas, with foreign hybrid and electric carmakers facing “intense pressure to turn over advanced technology in exchange for near-term market access” due to new legislation, information technology companies “seeing market access constrict further”, and other sectors unbalanced by government subsidies to favoured domestic companies and biased government procurement rules.

Financial Times

They don't need you as badly as before.

Editorial of Wilbur Ross — Donald Trump will make trade fair again

And how much of the problem is lack of reciprocity? US tariffs on imported cars are 2.5 per cent, but American exports of similar vehicles carry tariffs as high as 25 per cent.

Financial Times

There are so many problems of this editorial. The above quote shows how deep the misunderstanding this administration has. Reciprocity has never been about the same product. The US has its bargain on other products and other agreements.

May suggests UK will not finalise EU trade talks before Brexit

“I’m clear that by that point at which we leave the EU, it’s right that everybody should know what the future arrangements, the future relationship, that future partnership between us and the EU will be. That’s the sensible thing. It’s a pragmatic way to look at this and I believe that’s what we’ll do.”

Financial Times

The "future arrangements" does sound like a framework arrangement.

Donald Trump’s North Korea warning sparks concern in Asia

Mr Graham said that Chinese diplomats felt they had the upper hand ahead of this week’s summit meeting between Chinese president Xi Jinping and Mr Trump because of the US president's lack of foreign policy experience.

“That inexperience raises the question of whether it's prudent to engage at such a high level with China so early on, when the basic elements of US Asia policy are yet to be sorted and appear incoherent,” he added.

Financial Times

Trump demands solution to US trade deficits with China and others

Donald Trump has ordered officials to find a solution to the US trade deficits with China and other major economies just days ahead of a meeting with Chinese President Xi Jinping.

The US president signed an executive order on Friday calling for a 90-day country-by-country and product-by-product study of the US’s $500bn annual trade deficit. China’s more than $300bn contribution to that will come under close scrutiny, administration officials said, and the study will examine possible solutions to be enacted even before it is finished.

Financial Times on Trump demands solution to US trade deficits with China and others

China relaxes rules on software patentability – and the United States loses more ground

According to Huang, the revised guidelines draw a distinction between ‘computer programs per se’ and ‘inventions related to computer programs’, with the latter being patent-eligible. Here is his comment on the current status of software patents under Chinese statute, and how the incoming rules are likely to impact examination practice:

In the past, a software-related invention could be drafted only as a process claim or a ‘means plus function’ claim, and the latter is usually construed in a very narrow manner according to embodiments disclosed in the specification. Medium, computer program product and ‘processor plus process’ [claims] are not statutory subject matter in China. Consequently, patent protection for software-related inventions is weak and limited.

This problem may be addressed by the revised guidelines. Software claims such as ‘a computer program product’, ‘a machine-readable medium’, and ‘an apparatus comprising a processor configured to execute instructions on a computer-readable medium to perform steps of...’ shall become patent-eligible. A comprehensive protection for software-related patents is now expectable.

– in China relaxes rules on software patentability – and the United States loses more ground on Blog - Intellectual Asset Management (IAM) - Maximising IP Value for Business

Trump Advisers Are All Wrong about South Korea Trade Deal

The Trump Administration’s top trade advisers are entirely wrong about what happened when with respect to trade between the U.S. and South Korea. KORUS had no effect at all on U.S. imports of auto, chips, motors or pumps between 2009 and 2015, because the U.S. auto tariff was unchanged until 2016 (when overall U.S. imports fell) and most other industrial products were already tariff-free before KORUS.

The Korea-U.S. trade deficit in goods did not rise from 2011 to 2015 (or fall in 2016) because of U.S. auto tariff cuts in 2016, but because the U.S. economy strengthened after 2010 and the Korean economy weakened after 2014.

– by Alan Reynolds in Trump Advisers Are All Wrong about South Korea Trade Deal| Cato @ Liberty

This piece is simple and straight-forward.

US envoy says US-EU trade deal still a

Brussels (AFP) - Negotiations for a mega US-EU trade deal are still alive after they were suspended over elections and public opposition on both sides of the Atlantic, a senior US diplomat said Tuesday.

EU officials had feared US President Donald Trump would abandon the four-year talks for the Transatlantic Trade and Investment Partnership (TTIP) after he withdrew from the Trans-Pacific.

"I would really take issue with the notion that the TTIP is dead," said Adam Shub, who is running the US mission to the European Union pending Trump's appointment of a new ambassador.

US envoy says US-EU trade deal still alive

It is not such a surprise in that TTIP is a bilateral agreement, and form over substance seems to be the characteristics for Trump administration's trade policy.

Italy calls for G7 to challenge Donald Trump on trade

As host of the G7 summit, Mr Gentiloni is in a position to craft the agenda but other G7 leaders – who have been troubled by the US’s new stance on trade – appeared to agree that it was worth trying to force the issue when they meet Mr Trump in Sicily.

Financial Times on Italy calls for G7 to challenge Donald Trump on trade

Not much use in putting pressure on the man not in charge.

Another trademark dispute coming?

Heineken’s red star logo could be outlawed in Hungary under draft legal changes to prohibit the use of “totalitarian symbols” for commercial purposes, 28 years after the central European country ended Communist rule.

– in Financial Times on Hungary considers outlawing Heineken red star logo

EU digital commissioner attacks Germany’s hate speech bill

Speaking at the CeBIT technology trade fair in Hanover, Mr Ansip said it was “pretty dangerous” to prohibit internet hoaxes and said governments should instead “trust to people’s common sense”. “Fake news is bad, but a Ministry of Truth is even worse,” he said.

Financial Times on EU digital commissioner attacks Germany’s hate speech bill

Well said.

A short-sighted policy

“The results of this system have not lived up to expectations,” the report says. “These figures indicated that while the current global trading system has been great for China, a giant economy that does not act on the basis of market principles, the United States (and many other countries) that practise market-based capitalism have struggled over the last 16 years.”

Trump has WTO rulings in sights, leaked report shows

This view does not take into account the benefits obtained by the US in other forms, such as Services and IP. This also means the new direction will undermine the future gain in this area.

Fighting over the agenda

Ahead of meetings of G20 leaders in the first week of March in Berlin, the WTO secretariat has already presented its views. The presentations objected to by India are titled: E-commerce, WTO Rules and Regional Trade Agreements and Investment Facilitation: WTO’s Contribution to the TIWG Discussion. TIWG stands for Trade and Investment Working Group.

Coming down heavily on the presentations, India reportedly asked WTO director-general Roberto Azevêdo, who is also the chair of the trade negotiations committee: “Were the contents of these presentations discussed by members and was there a consensus on the propositions contained therein that the WTO should be encouraged to launch a dialogue on strengthening trade and investment policy coherence or that there should be further discussions towards a multilateral outcome on e-commerce?”

– by D. ravi kanth in India accuses WTO of raking up new issues

TPP Minus One

Australia’s trade minister says he will use the Chilean meeting to promote the idea of a “TPP minus one” deal that would build a pan-Pacific trade deal without the United States.

– by STEVEN CHASE in Canada, China to attend summit on free trade after TPP collapse on Canada, China to attend summit on free trade after TPP collapse - The Globe and Mail