24 Nov 2017
U.S. Seeks to Strengthen Economic Relations with Asia as TPP Parties Agree on Core Elements of New Deal
During his nearly two-week trip to Asia President Trump discussed bi-lateral trade relations with the leaders of mainland China, Vietnam, the Philippines and other U.S. trade partners but came away with no specific deliverables. At the same time, the 11 remaining members of the Trans-Pacific Partnership advanced their effort to modify and implement that agreement. While President Trump vowed at the APEC summit in Vietnam to “make bi-lateral trade agreements with any Indo-Pacific nation that wants to be our partner and that will abide by the principles of fair and reciprocal trade,” it remains to be seen whether his apparent attempt to strenghten U.S. trade and economic relations with Asia, including mainland China, will produce any concrete and meaningful results, and how Hong Kong companies may benefit from such an effort.
A White House fact sheet on President Trumps’s visit to mainland China emphasised long-standing U.S. complaints but gave no indication of any agreement on joint efforts going forward. The president underscored the importance of “rebalancing” trade relations with the mainland in a way that “strengthens American jobs and exports.” He also called on Beijing to guarantee “fair and reciprocal treatment” to U.S. companies, provide greater market access to U.S. exports and firms, and accelerate the implementation of market-oriented reforms to reduce its trade surplus with the United States. Mr. Trump also criticised government intervention in the mainland Chinese economy, which he said “has caused stresses in the global trading system,” and reiterated that the United States “will use all available trade remedies to create a level playing field for United States workers and businesses.”
On a more positive note, the two sides announced plans to enhance co-operation in combatting drugs, including synthetic opioids. For example, the United States and mainland China committed to quickly take steps to regulate and control two fentanyl precursors, discuss the possibility of scheduling fentanyl as a class, enhance the control and increase intelligence sharing on drug precursors, and exchange tracking information on packages travelling between the United States and mainland China. Increased collaboration on cybercrime cases was also discussed, as was the importance of maintaining communication on such macroeconomic policy topics as fiscal, monetary and exchange rate policies, structural reform, and global economic governance. President Trump also expressed “great respect” for President Xi on international trade and said that he expects U.S.-Sino relations to be “tremendous” by making bi-lateral trade fairer.
For his part, U.S. Commerce Secretary Wilbur Ross welcomed the signing of business deals between U.S. and mainland Chinese companies worth more than US$250 billion that are expected to “bring thousands of new jobs to America” by increasing U.S. exports to the mainland and stimulating investment throughtout the United States. According to Mr. Ross, these deals “can provide a solid foundation for a stronger relationship that is more free, fair and reciprocal.” Presidents Trump and Xi were present for the signing of the 15 largest deals.
Conceivably as a sign of goodwill towards the United States and the Trump administration, Beijing unveiled plans to eliminate certain foreign ownership constraints, gradually reduce import duties on motor vehicles, and eliminate certain market access restrictions on its financial services sector. Mainland China also reportedly announced its intention to increase from 49 percent to 51 percent the limit on foreign ownership in joint ventures in futures, securities and funds markets.
Meanwhile, the United States and Vietnam said in a joint statement that they would work to “deepen and expand” their trade and investment relationship through formal mechanisms, including their trade and investment framework agreement. They welcomed the return of market access for U.S. distillers dried grains into Vietnam and new access for Vietnamese star apples into the United States and committed to seek resolution of remaining agricultural trade issues, including with respect to catfish, shrimp and mangoes. They also pledged to promote “free and fair” trade and investment in priority areas such as electronic payment services, automobiles, and intellectual property rights enforcement.
With respect to the Philippines, the United States said that it welcomed Manila’s interest in a bi-lateral free trade agreement and that the idea would be discussed further under the bi-lateral TIFA. The United States is also looking to the TIFA for progress on agricultural, IPR, customs, labour and other issues.
President Trump withdrew the United States from the TPP in January, raising questions about its future. On 11 November, however, ministers of the remaining signatories (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) said that after months of work on recrafting the agreement to achieve “a balanced outcome that maintains the significant benefits of the TPP” they had agreed on the core elements of what is now being called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. This includes suspending 20 sections of the original TPP (dealing with such matters as investment, express shipments, express delivery services, patents, copyrights, test data protections, biologics, technological protection measures and rights management information) that reportedly could be reinstated should the United States ever rejoin the agreement, as those sections were generally included at the insistance of U.S. negotiators. Ministers noted that consensus still needs to be reached on a few specific items and that technical work toward that end will continue.