GHY Tradelines

(Peter Coy – Bloomberg)

Recommending that the U.S. and China work toward a free-trade deal is a bit like stepping into a prize fight and asking the boxers to settle their differences peacefully.

But some powerful people on both sides of the Pacific Ocean are doing exactly that. A report by a blue-ribbon, binational panel assembled by the China-United States Exchange Foundation said this week that the countries “should begin early-stage discussions of the opportunities and challenges of an eventual bilateral free-trade agreement.”

The foundation, although little known to the general public, carries enough weight that Henry Kissinger, the former secretary of state who was present at China’s opening to the world in the 1970s, showed up to launch the report at a packed event on May 21 at the Asia Society on New York’s Upper East Side. Read more here.
 

(Keith Bradsher – NYT)

The Obama administration and the European Union have each decided to negotiate settlements with China in the world’s largest antidumping and antisubsidy trade cases involving China’s roughly $30 billion a year in solar panel shipments to the West, officials and trade advisers in Beijing, Brussels and Washington said.

The plan that is starting to take shape would essentially carve up the global solar panel market into a series of regional markets. It would sharply raise the price of solar panels exported from China, the world’s dominant producer, by requiring Chinese companies to charge more while limiting the total number of solar panels they could ship.

In exchange, Chinese companies would no longer be charged steep taxes on their exports of solar panels. The United States is already collecting tariffs totaling about 30 percent while the European Union is expected to impose similar tariffs of about 50 percent on June 5, and may backdate them to March 5. Read more here.
 

(IndustryWeek – AFP)

Visiting Premier Li Keqiang promised Tuesday to open China’s vast domestic market wider to India and forge a “dynamic trade balance” to deepen economic ties and ease tensions between the Asian giants.

The trade push, which the countries say will supply “new engines” to lift the stumbling global economy, came amid efforts by the nuclear-armed powers to put a military dispute along their contested Himalayan border behind them.

“We have the ability to mitigate the trade imbalance between our two countries,” Li told business leaders in New Delhi, responding to Indian worries over trade that is heavily skewed in China’s favor. “The Chinese side is willing to provide facilitation for more Indian products to access the Chinese market,” added Li, who chose to make India his first foreign stop after taking office two months ago. Read more here.
 

(BBC)

Karel De Gucht said that China had to take responsibility for the global trading system, just as the EU did.

Mr De Gucht’s comments come just days after the EU said it may investigate claims that Chinese telecom firms have been paid subsidies, allowing them to flood markets with cheap equipment.

The EU fears illegal payments may give Chinese firms an unfair advantage. [...]

“China has become a very big economy and they have to take responsibility, just as we do, for the global trading system,” Mr De Gucht told the BBC. Read more here.
 

(Stanley Lubman – WSJ)

If a diner in the U.S. consumes a lunch of tilapia, mushrooms and spinach, there’s a decent chance the entire meal was imported from China. And the overwhelming odds are that none of those foods were inspected by the Food and Drug Administration when they arrived in the U.S.

This week’s revelation that nearly half the rice sold in the southern Chinese city of Guangzhou was found to be tainted with cadmium is just the latest in a long string of eye-catching stories that illustrate the dangers of eating in China. But lost in the exhaustive media coverage of the polluted foods that find their way on to Chinese tables are serious questions about what happens — or doesn’t happen — when Chinese food products make their way into the U.S.

Chinese food product imports to the U.S. are continuing to rise, but inspections in both China and the U.S. aren’t keeping pace, posing a growing danger to consumers. Many of the imports are used by restaurants, institutions and food processors; as a result, consumers see no labels, keeping them unaware of the origins of what they’re ingesting. Read more here.
 

(BBC News)

Barack Obama and Xi Jinping will meet from 7-8 June at an estate in Rancho Mirage, a U.S. statement said. Topics on the agenda are likely to include North Korea, cyber espionage, tensions in the South China Sea and Syria.

The meeting will be the first between the two since Mr Xi was named president of China in March. Mr Xi, 61, made his first visit as president to Russia, followed by three African nations. He has visited the U.S. in the past, and spent time there as a young man.

The two men would hold “in-depth discussions on a wide range of bilateral, regional and global issues”, the White House said. “They will review progress and challenges in U.S.-China relations over the past four years and discuss ways to enhance co-operation, while constructively managing our differences, in the years ahead.” Read more here.
 

(CBSA)

Dumping case number: AD/1399
Dumping file number: 4214-38
Subsidy case number: CV/135
Subsidy file number: 4218-36

The Canada Border Services Agency (CBSA) has extended the investigations with respect to the alleged injurious dumping and subsidizing of unitized wall modules, with or without infill, including fully assembled frames, with or without fasteners, trims, cover caps, window operators, gaskets, load transfer bars, sunshades and anchor assemblies; excluding non-unitized building envelope systems such as stick systems and point-fixing systems, originating in or exported from the People’s Republic of China.

Pursuant to paragraph 39(1)(a) of the Special Import Measures Act, the President of the CBSA extended the 90-day period for making preliminary decisions, pertaining to all or part of the investigations, to 135 days, due to the complexity and novelty of the issues presented by the investigations.

Consequently, the decisions to issue the preliminary determinations or to terminate all or part of the investigations will be made on or before July 18, 2013.

Contact:
Dean Pollard 613-954-7410
Robert Wright 613-954-1643
 

(Deutsche Welle)

China has urged the EU to stop raising new trade barriers or face consequences. This comes in response to EU punitive tariffs on Chinese solar exports and EU efforts to launch a probe into the country’s telecom products.

Attempts by the European Union to raise hurdles for Chinese exports to the EU would meet “assertive” measures to defend China’s lawful interests and rights, Shen Danyang, a spokesman for the Ministry of Commerce, told a regular news conference Thursday.

“Any consequences caused must be borne by the party which provoked the friction,” he added, referring to recently announced plans by the European Executive Commission to shield the 27-nation bloc from Chinese price dumping on certain goods. Read more here.
 

(RTTNews)

China has indicated that the recent appreciation of yuan is hurting exporters’ profit margins despite improved global demand conditions.

“Yuan appreciation is having a big negative impact on export firms,” Commerce Ministry spokesperson Shen Danyang was quoted as saying in Beijing on Thursday. According to the ministry, export orders also remained weak.

Shen, meanwhile, signaled concern over the continued weakness in yen as a result of the recent monetary easing by Bank of Japan.
 

(BJ Siekierski – iPolitics)

The Chinese must be starting to wonder if the Harper government has something against their exports.

On the heels of the decision to graduate the Chinese and others from the General Preferential Tariff — announced first in the Canada Gazette, but only widely noticed in Budget 2013 — the government has quietly targeted China again, along with Vietnam, by amending the Special Import Measures Regulations in late April.

These regulations, in conjunction with the Special Import Measures Act, are the basis for Canada’s trade remedy legislation — they provide the rules of the game for determining when goods from a country are being dumped or subsidized, and therefore ‘injuring’ Canadian industries.

But most importantly, they allow for anti-dumping or countervailing duties to be applied when injury is determined. Read more here.
 

(Global Times)

The US Commerce Department announced Tuesday that it was launching anti-dumping investigations on prestressed concrete steel rail tie wire from China, Mexico and Thailand.

The investigations are in response to the petition filed on April 23, 2013 by the Insteel Wire Products Company based in North Carolina and Davis Wire Corporation based in Washington.

They alleged the steel wire imported from China, Mexico and Thailand were sold in the US market with dumping margins of 67.43 percent, 159.44 percent and 53.72 percent, respectively.

The US International Trade Commission (ITC) is scheduled to make its preliminary injury determination on or before June 7, 2013. Read more here.
 

(Ethan Billy – Reuters)

The European Commission said on Wednesday it was ready to launch an investigation into anti-competitive behaviour by Chinese producers of mobile telecommunications equipment, opening a new front in a trade offensive against China. […]

The EU currently has 31 ongoing trade-related investigations, 18 of them involving China. The largest to date is that into 21 billion euros ($27.25 billion) of imports from China of solar panels, cells and wafers, for which it is proposing punitive duties.

The proposed telecoms investigation would mark a new twist in the EU’s trade defence against China because it would be launched by the European Commission itself and not in response to a complaint by industry. Read more here.
 

(Toboc.com)

China, arguably the fastest growing economy in the world, and one of European Union’s biggest trading partners, isn’t looking good to get that elusive Free Trade Deal with the EU anytime soon.

The EU, a global trading behemoth, is open to establishing free trade deals with the United States and Japan but feels that a planned investment accord is the most sensible next step when dealing with China. As quoted by an unnamed EU official, the Free Trade Agreement (FTA) could present itself as the logical next step in this evolving relationship.

EU is China’s largest market in terms of sales volume and revenue generated and a Free Trade Agreement (FTA) would obviously help the Chinese cause. Last month, when EU foreign affairs head Catherine Ashton visited China, the FTA issue was the prominent item on the table next to the spicy Shezwan Rice and Peking duck. EU’s current stand holds on the fact that a FTA with the United States at this point will have a kickback effect that will positively influence EU’s trading relations with China too. Read more here.
 

(Reuters)

China has raised concerns about European Union plans to negotiate an ambitious free trade deal with the United States, fearing it is a protectionist move, a senior EU official said on Tuesday.

Chinese officials queried EU foreign policy chief Catherine Ashton about the issue when she visited Beijing at the end of April for talks with Foreign Minister Wang Yi and other Chinese leaders. [...]

China worried about whether the plan was “a pulling of the wagons into a circle to … insulate the transatlantic economy from the rest of the world or is it, as we argue, even greater opening of both economies?” the EU official said, briefing journalists on condition he was not further identified. Read more here.
 

(Global Times)

The recent news about Japan eagerly joining the Trans-Pacific Partnership (TPP) talks touched a raw nerve in China. Combined with similar plans from Vietnam and some other Southeast Asian neighbors, China’s worries about the TPP are growing.

The TPP did not attract much attention in 2003, when it was founded, but its potential was enormously strengthened since the US announced its interest in the original four-party partnership.

The entry of the US has not only added weight the influence of the new free-trade zone, but spurs the member states to form new trade rules outside the framework of the WTO. Read more here.
 

(AFP)

China must fall into line by July 31 with a World Trade Organisation order to change its restrictive policy on certain steel imports from the United States, an arbitrator said Friday.

A WTO dispute settlement hearing decided that Beijing had failed to prove why it needed more time to adapt its rules in order to respect a decision handed down by global commerce’s rule-setting body in November. [...]

The dispute dates back to September 2010, when Washington accused China of breaching trade rules by not providing sufficient evidence that anti-dumping duties were needed on US imports of electrical steel used in the power sector. Read more here.
 

(Peter Lee – Asia Times)

Oscar Wilde wrote, “When the gods wish to punish us, they answer our prayers.” Perhaps this is how Kurt Campbell feels today.

Campbell, after all, as assistant secretary for East Asia in Hillary Clinton’s State Department, was a key architect and proponent of the “pivot to Asia”, which was meant to elicit satisfactory behavior from China – and, in the process, demonstrate US leadership and relevance – by confronting the PRC with a phalanx of Pacific democracies (plus Vietnam of course) determined to impose liberal security, economic, and human rights norms on the rogue superpower.

The inevitable result of US backing has been an increased willingness of the Philippines, Vietnam, and Japan to stand up to China, which has contributed a virtuous cycle of Chinese hostility and a further defensive cleaving of the smaller nations to the United States. Read more here.
 

(Zhang Huwei – China Daily)

China remained the United States’ third-biggest export destination, behind Canada and Mexico, in 2012, having purchased nearly $109 billion U.S. goods, according to a report by the U.S.-China Business Council.

Each of 30 U.S. states exported more than $1 billion in goods to China while 10 others shipped more than $500 million. Leading industries were agriculture, transportation and electronics, the Washington-based organization said in an annual survey to be released on Thursday.

Although GDP growth in the world’s No 2 economy slowed last year, China still saw the value of imports from the U.S. increase by 6.5%, or $6.6 billion, the U.S.CBC says. That helped boost the U.S. economy and contribute to job creation, said John Frisbie, president of the council, which represents more than 200 U.S. companies that do business in China. Read more here.
 

(STR Trade Report)

The American Chamber of Commerce in China said this week that its 2013 Business Climate Survey found a more cautious but still generally optimistic assessment of business conditions in China. The report said the corporate outlook broadly accords with China’s own revised economic goals in an era of rebalancing: expectations for growth, but at a more tempered pace than seen just a few years ago; and investment expansion, yet at a more moderate rate than in the past. Respondents voiced continued concerns over pressure to transfer technology, inadequate protection of intellectual property rights, the potential for corporate data breaches, difficulties in obtaining business licenses, and inconsistent regulatory interpretations and unclear laws.

Risks
Rising labor costs and are now considered as great a business risk as a Chinese economic slowdown, followed by shortages of qualified employees and managers and increased Chinese protectionism. Just over a third of respondents believe they are disadvantaged by industrial policies that favor state-owned enterprises. 35% said de facto technology transfer as a requirement for market access is a concern, and 37% said this requirement is increasing, compared to 27% in 2012. Nearly three-quarters (72%) of respondents said IPR enforcement is ineffective or totally ineffective, up from 59% in 2012, though 47% said enforcement has improved over the past five years. The percentage of those saying that IPR infringement causes material damage to their Chinese operations rose from 22% to 34%. Over a quarter (26%) of respondents said proprietary data or trade secrets from their China operations have been breached or stolen, and 42% said this risk is increasing.

Revenues
71% of respondents said their revenues in China increased from the previous year, down from 85% in 2011 and 81% in 2012. Over 40% said their operating margins in China are better than the global average for their company, though 33% said they are lower.

Investment
The percentage of respondents ranking China as a top-three destination for global investment fell from 58% to 47% and 11% said China is not a high investment priority at all, up from 7% in 2012. Just over one-fourth (28%) said they anticipate improvement in China’s investment environment, down from 43% a year earlier, while 53% said they think the situation will stay the same, up from 36%. The expectation of slower growth in China or faster growth in other markets was the primary reason cited by those who plan to slow their investment in China, followed by market access barriers or disadvantageous government policies.

Sourcing
71% of respondents said their involvement in China is focused on producing or sourcing goods or services for the Chinese consumer and business markets, up from 61% in 2011 and 66% in 2012. 12% said they are focused on producing or sourcing goods or services for the U.S. market, compared to 10% in 2011 and 9% in 2012.
 

(CBSA)

The Canada Border Services Agency (CBSA) initiated investigations on April 22, 2013, under the Special Import Measures Act, respecting the alleged injurious dumping and subsidizing of silicon metal containing at least 96.00% but less than 99.99% silicon by weight, and silicon metal containing between 89.00% and 96.00% silicon by weight that contains aluminum greater than 0.20% by weight, of all forms and sizes, originating in or exported from the People’s Republic of China. The investigations follow a complaint filed by Québec Silicon Limited Partnership of Bécancour, Québec.

The goods in question are usually classified under the following Harmonized System classification number:  2804.69.00.00

Additional information about this investigation will be available in a Statement of Reasons that will be available within 15 days on the CBSA’s website at: www.cbsa-asfc.gc.ca/sima

Click here for full details.