That’s HTS code 84799041, on the Section 301 hit list released today. Mr. Trump has the thanks of a grateful Nation for stopping intellectual property theft in this important category.
The entire list is here.
There’s a 30 60 day consultation period. Since around $50 billion of goods is targeted, China will likely impose proportional measures if and when retaliation occurs.
Menzie
Unlike your flippant, disrespectful, and even unpatriotic title of this post, the 301 investigations is of real and substantial issues.
Based on the information obtained during the investigation and the advice of the
Section 301 Committee, and as reflected in the publicly-available report on the findings
in the investigation, the Trade Representative has made the following determination
under sections 301(b) and 304(a) of the Trade Act (19 U.S.C. 2411(b) and 2414(a)): the
acts, policies, and practices covered in the investigation are unreasonable or
discriminatory and burden or restrict U.S. commerce, and are thus actionable under
section 301(b) of the Trade Act. In particular:
1. China uses foreign ownership restrictions, such as joint venture requirements and foreign equity limitations, and various administrative review and licensing processes, to require or pressure technology transfer from U.S. companies.
2. China’s regime of technology regulations forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market-based terms that favor
Chinese recipients.
3. China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate the transfer of technology to Chinese companies.
4. China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies to access their sensitive commercial
information and trade secrets.
As even as you know and read, Menzie, the issues are more meaningful than your pathetic reference to floor polisher parts. Lose the leftist agitation mode for a while, Menzie, and get serious.
Truly disappointed in you,
Ed
Ed Hanson: And that is why we are imposing tariffs on floor polisher parts.
I’ve said it before and I’ll say it again—Menzie, you missed your true calling as a comedian—I’m not the type of person who sitting alone reading a computer monitor chuckles out loud. You’ve done it to me a few times now. That’s a near Letterman standard quip in my book.
Ed Hanson
Regarding items 1 and 2: No one is holding a gun to the heads of US based CEOs and forcing them to accept technology transfers. There is no law that says a company must expand its operations to China. So this is just special pleading and isn’t a serious complaint. These are free will transfers.
Item 3 is similar. No one is forcing US based companies to accept Chinese investment. If the Chinese are acquiring US based companies, then it’s because those same US based companies are allowing Chinese buyers to take ownership stakes.
Item 4 is the only item that has any merit. Of course, the Chinese are hardly the only actors who engage in “unauthorized intrusions into, and theft from, the computer networks” of companies all over the globe. And dare I say it, some U.S. based companies engage in exactly the same practices. And then there’s Trump’s buddy Putin. And you might want to ask the Israelis about theft of intellectual property. Or ask the Iranians if certain western powers compromise computer networks.
Finally, you need to get beyond this mercantilist notion that there’s such a thing as a US company. Companies have no loyalty except to internal management and shareholders. Just because a company’s headquarters might be in the US, that does not mean you have any special claim to that company’s income. It’s completely alien to you. Yes, some American workers might have jobs in that company, but the same could be true of Japanese or German companies that hire US workers. Budweiser beer is owned by a Dutch company. Should I care if the Chinese steal brew master secrets from Budweiser? As far as I’m concerned that’s Budweiser’s problem, not mine. Why should US consumers have to pay higher prices just because American based companies can’t secure their own computer networks?
slug,
different from my last post back to you, This is back to your high standards, Not that I agree, but that is not how I set my standards.
You are writing to the wrong person. I am looking forward to your complete work up and submission to the public comment to the Section 301 Committee. I hope you will copy us on it.
Ed
PS. Don’t tell anyone, its rice.
Slug,
my responses to you may be slow, as this is a huge subject and vitally important. I appreciate your seriousness as much as I was disappointed with Menzie and his flippant title. Here is my current resource for information. I have only begun to read the first witness, but have found interesting things already.
https://ustr.gov/sites/default/files/enforcement/301Investigations/China%20Technology%20Transfer%20Hearing%20Transcript.pdf
Witness Richard Ellings with the Commission of the Theft of American Intellectual Property. Quotes in block bold.
Today is America’s opportunity to appreciate that the successful integration of China into an international system that accords with rule of law and other democratic values requires U.S. policies based not on hope and platitudes but on strength and leverage.
The problems of IP theft and its pernicious twin, forced IP transfer, as bad as they have been, we estimate the cumulative cost to America of just IP theft over the past 4 years at $1.6 trillion. Over the past 15 years, the costs of theft are millions of American jobs directly and through stolen opportunity with the accompanying personal and societal costs damaged or ruined of thousands of American companies; reduced new business creation research, development, and innovation at home reduced productivity at home; and lowered GDP growth with prospects for even lower growth.
China accounts for approximately 80 percent of international IP theft. IP theft is government directed and government encouraged, the latter unleashing enterprising Chinese business people whose belief in IP is weak and national loyalty and motivation to make money strong.
The testimony here is the start of the fact that a lack of a gun to the head may not be the most apt depiction of doing business in China.
Ed
IP theft? Seriously? Apple steals IP from Samsung and then sues them. Google steals IP from Apple. This kind of stuff is a typical day in the U.S. high technology world.
BTW anyone who thinks all IP has been created in the US is a complete moron. In terms of hi tech, the Koreans and Japanese clean our clocks.
Wow – that was well said. I have worked with multinationals and I could have not said it better myself. Trump. Navarro, and Ross are the 3 stooges.
Gee – I’m glad you did cut and paste the entire 58 page document. 13 pages of babble followed by 45 pages of products. What a waste of paper.
“China’s regime of technology regulations forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market-based terms that favor”.
This one is really funny in light of the transfer pricing litigation involving Coca Cola. The IRS thinks that the US parent deserves royalties no less than 20% of sales from Coke’s foreign affiliates. Coca Cola is presenting a lot of testimony that suggests the appropriate royalty rate is less than 10% of sales. It sounds like this bizarre document takes the IRS view. Sorry dude – but the rest of the world is snickering at this American arrogance.
Menzie
What would your pathetic title be if in stead you highlight-
88024000 ……….. Airplanes and other powered aircraft, nesoi, with an unladen weight over 15,000 kg
or if you like parts so much how would it look if –
88031000 ……….. Parts of airplanes and other aircraft, propellers and rotors and parts thereof
This is a serious issue, and China is in the wrong. So I repeat
End your leftist agitation mode and be serious.
Ed
Ed. Please be serious. You are embarrassing yourself. Please note that the conversation is about floor parts and carpet sweepers, or more accurately parts thereof.
Akk. Please correct “floor parts” to “floor polishers.” Apologies for the mistake. We all know what a stickler Mr. Hanson is regarding these things.
Ed Hanson: There once was a time when free trade was viewed as conservative (i.e., not left wing) position. The times have changed. Conservatives (or at Trumpists) view Russia as our friend, and protectionism as a conservative virtue…
A true patriot would want a sensible (not reactive and unthinking) approach to trade policy. I have no problems with CFIUS restricting acquisitions on national security grounds. I write as somebody who has experience in this arena, more I suspect than you do. However, I do not approve of sanctions based on faux national security arguments, such as steel production and Section 232. This is counterproductive.
You might not know the story of how Dr. Hassett (CEA Chair) brought $30 billion worth of targeting for the Section 301, and Mr. Trump said “double it”. That’s why you’ve got tons of irrelevant HTS items on the hit list. Once again, I believe that intellectual property violations are ongoing. I think it’s likely Section 301 measures could be valid. However, I think the Administration is pursuing its goals in a profoundly stupid, uncoordinated fashion which is likely to backfire.
When I worked for the Executive Office of the President, I took an oath to defend the Constitution and the Nation. I did so proudly. To be a patriot means stopping the Nation’s policymakers from doing stupid things (and corrupt practices, too). Save your criticisms for those who were happily willing to work for Russia.
Menzie
Free trade is neither a right, left, conservative or progressive position. You will find proponents and those who oppose in each of those camps. In fact, you would have to go far to find someone who is a proponent greater than me. But I will not fall into the trap of opposing what is happening currently by a mythical appeal that somehow free trade is at stake. There never has been free trade and in particular, the trade between the US and China is not free trade, At one time, the opening of China to trade with the world was a good and welcome event, big enough to forgo reciprocal rules of trade between the countries. But that has not been true for a long time now. China is no longer a third world struggling economy, but a full member of the elite economies of the world. It is they who must join the world and strive for free trade. It is China that must honor patent, copy right, and IP the world has determined is proper. It is China who needs to lower its trade barriers. It is China that must act responsibly.
And Menzie, so you say defend the Constitution. All for it. There is no Constitutional issue. The administration is acting within the Acts of Congress which has set these procedures in law.
No, “to be a patriot” does not “mean stopping the Nation’s policymakers from doing stupid things” That is what the vote means. Checks and balances are well regarded and entrenched to keep stupid things to a minimum. Leftist propaganda and agitation is not patriotic, but recognizable as a power move for its agenda. And enough of the straw man Russia. You want to post that topic fine and good, but it not relevant to the current trade dispute.
Ed
Let’s see. Reagan imposed some really stupid “voluntary export restraints” on Japanese cars 25 years ago. His steel tariffs were also very bad policy. Who said so – his own Council of Economic Advisers. But the political hacks ruled anyway. Same thing happened with Bush43’s steel tariffs.
Trump is different – he put the political hacks in charge of giving economic advise. Kudlow, Navarro, and Ross are documented nitwits. Hassett knows better but he is too busy kissing up to the boss to tell the truth here.
Sorry Ed – but you protests here show you really have no clue how a White House is supposed to work.
That’s a 5-star comment by Menzie, viewed from my bird perch.
Today’s lesson on preparing coconut sponsored by “Hanson International Trade Policy Advisers LLC”, where their motto is “We can’t be wrong ALL the time”:
https://www.youtube.com/watch?v=7PZNnGp7XM0
Get a clue Ed. We export a lot more in the way of planes than we import. And guess what – China will impose tariffs on our exports of planes.
fair trade is a leftist term and leftists use it because they do not understand how trade works. Whinging about losing is something they do with monotany.
I am old enough to remember it with Japan the big bogey man with the same fallacious reasons.
If you believe there is a problem you go to the WTO. Only a moron would start a trade war and then only an imbecile would believe you can win one.
Tramp
Menzie speaks of free trade as if it is a fact in this world. It is not. You speak of fair trade, and I agree it is a leftist term of obfuscation. But if you read the Trade Reps announcement, you would read that a WTO process has been started and is part of this move, and WTO process allows for these 301 moves. And by the way, only a moron would entertain the thief and thank him for selling back the ill gotten gains. That is China and that is the real world.
The VSG, Donald Trump, is now using “leftist” terms according to the two village idiots Trampis and Ed Hanson. If nothing else, entertaining,
Ed Hanson You speak of fair trade, and I agree it is a leftist term of obfuscation.
Nonsense. “Fair trade” is a term people use when they don’t want to live with free trade. “Fair trade” is a marketing term that makes protectionism sound respectable. And it’s neither a left nor right wing term. No one ever called Pat Buchanan a leftist, but he is one of the loudest voices out there for “fair trade”. The free trade/fair trade axis tends to be geographic rather than political. Politicians on the coasts tend to support free trade while politicians from flyover states (especially in the south and the rustbelt) tend to support protectionist policies…oops, I mean “fair trade” policies.
spot on 2slugs. if you ever notice, we had a bunch of “free trade” and “free market” ideologues who all of a sudden had complaints because the system was no longer tilted in their favor. then we moved to the idea of “fair trade” in order to implement constraints on the system and return it to their benefit. for instance, trade became unfair when many of the asian countries found they could produce with much lower labor costs. now this was considered “unfair” because our businesses here could not compete. those folks then moved into the accusation that the asian countries were undercutting businesses with government subsidies that allowed for the low wages and cheaper production. china has a vast resource of low cost labor, but now in trumps world this is simply the chinese government interfering with the free market, and creating an unfair playing field. most of the “unfair” folks out there simply do not want to acknowledge the reality that not all parts of the world operate the way they want-which would tilt the world back in their favor. they cry foul when this happens.
sorry mate But I would on trade, Very lefist just like trump
Sorry Ed, If you believe something is against the WTO rules you do not put on tariffs for alleged reasons. You go straight to the WTO. If there is a case then every nation gains not just the USA ( although by imposing tariffs they are losing).
You have an administration that believes in free markets not competitive markets as you would have from a property developer who simply does not understand economics nor trade.
I would be very afraid to be a Yank now. you clearly have a President who is ahem not very smart but worse has officials who are in the same boat.
Still reading your paper Menzie. And you should know by now that I read a lot but I read at glacial pace. On on page 10 on your JacksonHole paper (which main reason I love so far is no math equations yet). And a thought occurred to me on something that would make a fascinating academic paper for you and one you could probably do better than many others?? A paper which asks the question, “How many mainland Chinese are using cryptocurrency to move/transfer assets outside of China??” Xi Jinping has been big on capital controls lately yes?? But you know Chinese are sharp and will try to find a way around it (probably some of the Politburo cats themselves) Wouldn’t it be fascinating to dig into how pervasive that is—and also make a paper on a topic not many are covering currently?? I bet Nathaniel Popper of NYT could point you in the right direction.
I’m sorry, I really make an effort to be broad-minded. Sometimes I find myself trying very hard. But this one is even too much for me.
https://www.economist.com/news/finance-and-economics/21739796-black-panther-resists-one-economic-myth-perpetuates-another-wakandanomics
This is like very near to the dumbest article I have ever read related to economics. I’m sorry, but if you’re this desperate to show any form of financial/economic achievement by your race you have to create a fictional world to do it, and then (on top of that) whine that the fictional world created still has some racial stereotype that bothers you???—Maybe it’s time to go back to the primordial drawing board back at Mesopotamia or something. WOW.
Well, I’m gonna make myself look like a damned liar by linking to Bloomberg. Oh well. Here is a well written story, and it proves one thing: We can find good news, even if it isn’t in the country we currently reside in.
https://www.bloomberg.com/news/articles/2018-04-04/euro-area-inflation-ticks-up-as-ecb-prepares-to-unwind-stimulus
Menzie, since this is a proposed action: “Notice of Determination and Request for Public Comment Concerning Proposed
Determination of Action…” out for public comment I sincerely hope Menzie et al, afflicted with TDS, have submitted or are preparing their comment submissions for consideration.
I sincerely hope Menzie doesn’t think his blog article(s) are sufficient to qualify as “the comment” for consideration to this proposal.
China has matched the administration’s proposed$50B tariff with their own proposed$50B tariff. all of this is being done while trade negotiations are on going.
None of these, on either side, have actually yet been implemented.
China has matched the administration’s proposed $50B tariff with their own proposed$50B tariff. all of this is being done while trade negotiations are on going.
None of these, on either side, have actually yet been implemented.
Wilbur Ross claims that he thought that no other country could afford to retaliate in this trade war. Yes – Wilbur Ross knows nothing.
And we just learned that China is escalating the trade war with tariffs on 106 additional goods, including soybeans and cars:
https://www.cnbc.com/2018/04/04/china-new-us-tariffs-including-soy-cars-and-chemicals.html
Yep. That Trumpster…he sure is a master negotiator.
Tramp
Yes that is exactly what the WTO rules allow, depending on the case and situation. And the other fact you need to face is this was what President Trump campaigned on. It was what the voters accepted as a promise of action. And unlike the last 4 Presidents, he delivers. That is how a Republic is suppose to operate. It acknowledges the voters desires transmitted through elections, and then subject to government limitations and checks and balances, it produces the actions the political process can deliver. It should be acknowledged that the trade actions taken by the administration is the most bipartisan action on a major issue taken so far by this administration.
Do you want this trade actions to resolve quicker? I do. Then tone down the rhetoric, and show a united front toward the stated goals of President Trump and his economic and trade advisors. That being a series of bilateral free trade agreements. A valid and worthy goal.
Ed
Ed Hanson I agree that Trump is doing what he promised regarding trade. The problem is that many of his supporters didn’t understand that. Farmers voted for Trump without apparently realizing that his trade policies would hurt them the most. I’m not sure if it’s because farmers don’t know shit from shinola when it comes to international trade, or if they suffer from cognitive dissonance, or if they are just in the habit of voting for the red team candidate. How else do you explain the support he got from Iowa’s Republican leadership? What did Sen. Joni Ernst and Sen. Charles Grassley expect? Did former Gov. Branstad think his being US Ambassador to China was going to make a difference to Iowa soybean and hog farmers? What were these idiots smoking?
It acknowledges the voters desires transmitted through elections
Again, the actual voters went for Clinton by a fairly large margin. Trump is President today because we have this ridiculous institution called the Electoral College, which has a long history of giving us very bad Presidents.
That being a series of bilateral free trade agreements. A valid and worthy goal.
Bilateral trade agreements are probably the worst way to go, as the British are finding out. The object should be to stand in the way of Trump’s obvious ignorance.
Trump and his economic and trade advisors
“economic and trade advisors”??? Sorry, but Trump doesn’t have anyone on his WH staff that knows jack about economics or trade. Wilbur Ross??? Peter Navarro? Treasury Secretary Steven Mnuchin? Stephen Moore? OMB Director Mick Mulvaney? These guys could find work in a clown show, but not as economists.
We should show a united front behind the stated goals of President Trump? I’m guessing that would be much like your position re: supporting President Obama and the nations who signed the Iran nuclear agreement. Or just about anything involving the former President since your own patriotism and support of your government has been so solid? My President, right or wrong. Correct?
Here’s a thought. In California, there are about 5,500 workers who “make” steel. And there are over 100,000 who “use” steel in various businesses and industries. Or, in other words, employees who are steel users outnumber steel makers bout 20 to 1.
But, using your logic, those who use steel should unite behind the President even though their employers will likely pay more for their steel, leading to layoffs (and worse) for them.
Makes perfect sense. If you lack common sense, that is.
Is it possible that Ed Hansen is really Menzie? Menzie using the pseudonym (sock puppet) to create a teaching moment??? The World Wonders.
dilbert dogbert: If I were to do so, I would pick more intellectually sound arguments, and eschew accusations of lack of patriotism. No need for a foil to be so [fill in the blank].
Me thinks Ed is really Peter Navarro.
Kevin pgl: I don’t think Peter would impugn somebody’s patriotism on the basis of a difference of trade policy.
Maybe not. BTW – my new computer is playing games here. Not Kevin just PGL. That’s what I get for using a computer made in Korea!
Currency manipulation is potentially much more effective mercantilism policy than tariffs, and a much bigger distortion of “free trade.” Accompanied by capital controls (such as China has had recently, and Japan had during when the value of the yen was deliberately depressed), official foreign reserve accumulations improve a country’s trade balance dollar-for-dollar. The official purchases depress the local currency, simultaneously subsidizing the country’s exports and discouraging its imports. The policy seems to have been a favorite of Asian countries, after the example of Japan’s successful use of it. People on these boards have decried Trump’s recent tariffs as starting a “trade war” and interfering with “free trade.” The following data are presented merely to offer rough comparisons of Trump’s tariffs and those of currency interventions.
Together, China, Japan, Korea, Taiwan, Hong Kong and Singapore hold official currency reserves of $5.6 trillion. Their collective GDP is $20.8 trillion. The United States has $0.1 trillion in foreign reserves and GDP of $20.2 billion. Trump’s tariffs will amount (at most) to about $0.015 trillion annually (= 25% of $60 billion). Note that unlike the foreign reserve accumulations, tariffs do not translate into a like improvement in the country’s trade balance, as the bulk is likely to be offset by automatic currency adjustments, even absent any foreign retaliation. From the above, it should also be apparent that the “reserve currency” effect by itself, pales in comparison to the effect of official reserves amassed in order to depress the local currency.
We have been in a “trade war” for decades. U.S. consumers have gained, but many U.S. workers have lost. What Trump is doing now is way too little and way too late to have any substantive effect on U.S. industry or workers, but the cries of “trade war” and laments over the demise of free trade have never been louder. I think a little perspective is in order.
correction: U.S. GDP = $20.2 trillion (not billion).
don I don’t think Trump’s yawning fiscal deficits will help the problem of the Asian tigers holding lots of currency reserves, not to mention the effect on exchange rates. And those currency reserves represent levels, not flows. All of the reserve currency effects were baked into the cake long ago. Trump’s tariff threats represent a worsening of the status quo. At best your argument amounts to saying that Trump’s actions won’t be as bad as some might fear. I don’t hear you saying that Trump’s policies would be a good thing. It’s also important to keep in mind that the tariff tit-for-tat with China is only one piece of Trump’s ignorant trade policies. He pulled us out of TPP. He thinks the Brexit model of bilateral agreements is a good idea. In fact, he cheered the Brexit vote. He’s in a fight with the EU. He’s threatening to blow-up NAFTA. Offhand I cannot think of a single Trump policy initiative that makes any sense. The best that can be said of some of those policies is that they might not be quite as bad as some fear. That’s hardly a confident endorsement.
My comment was not about whether Trump’s policies were good for our economy, they were just meant to put things in perspective. And true, the currency reserves are levels and not flows. But how long at $0.015 trillion per year would it take to add up to $5 trillion? Where were the objections when the reserves were growing rapidly? Although I recall Hillary remarking that we “needed” the Chinese loans to support our housing (this before the bubble crashed).
Fun items on the US’ protectionism hit-list:
Surgical catgut; deicing antifreeze; aircraft tires; and a slew of marine, aircraft, turbojet, reaction, hydraulic, hydrojet, pneumatic and turbine engines and parts.
180 kinds of iron, steel, zinc, tin aluminum and other metals including iron or steel, nuts.
88 chemicals, vaccines and drugs.
nuclear reactors; Uranium depleted in U235; and X-ray tubes.
Dishwashers and clothes dryers; cash registers and chainsaws; non-recording cassette players and TVs incorporating VCRs (oh, how 1983!).
Golf carts and dirigibles.
Lasers, aircraft (or space) autopilots, artillery weapons (including both howitzers and mortars); rocket launchers; military rifles (yay!); bombs, grenades, torpedoes, mines, missiles and air combat ground flying simulators (we buy those from China?).
and just about anything made by John Deere (sorry, farmers).