Category Archives: Trade

G20 Avoiding Commitment to Strong Free Trade Endorsements

Trade, , ,
Steven Mnuchin’s Official Portrait as the 77th U.S. Secretary of the Treasury.

US finance officials attending the G20 summit in Baden-Baden, Germany, refrained from signing a document committing the US to free trade as a policy. The refusal is a 180-degree departure from a decade-old policy of supporting free trade. The non-move stymied the chance of any deal from being forged. US intervention also led to any cooperative actions from taking place to stem the tide of climate change.

The talks between the world’s 20 most important world powers, known as the G20, ended with no joint position statement that would have definitively renewed the country’s long-standing promise to develop and nurture free trade among the nations.

US Treasury Secretary Steve Mnuchin led the US delegation and its push-back against free trade. As a result, the G20 finance ministers’ statement reneged on past commitments made by the body, including an unequivocal rejection of protectionism and a strident backing of free trade.

The statement the ministers did issue was a mildly worded, non-committal statement that said that the G20 countries “are working to strengthen the contribution of trade to their economies.”
Also conspicuously missing were the usual commitments to multilateral trade systems, like the World Trade Organization (WTO).

The summit and the G20 are both an informal forum and a non-binding body of nations. Statements do not obligate any of the countries to any particular policy or practice. However, the discussions between the G20 nations and the statements they publish do have and impact on economic and financial policy in the year to come.

Intellectual Property Theft Costing US $600 Billion Each Year

News, Trade, , ,

NKIE & McDnoald’s [sic] sandals in China. Photo by Stephen Woolverton.
According to private watchdog group, the Commission on the Theft of American Intellectual Property, annual losses of intellectual property range from around $225 billion to as much as $600 billion. The breakdown is as follows:

  • Theft of Trade Secrets: between $180 billion and $540 billion.
  • Counterfeit Goods: between $29 billion and $41 billion.
  • Pirated Software: $18 billion.

China, including Hong Kong, is the biggest culprit, says the commission, accounting for about 87 percent of the counterfeit goods which are confiscated at the border. The report issued by the commission states that Chinese authorities actually encourage the theft of intellectual property.

The commission is headed by former governor of Utah and Republican presidential candidate Jon Huntsman, who was also a US ambassador to China; and a former director of US national intelligence, Admiral Dennis Blair.

“The vast, illicit transfer of American innovation is one of the most significant economic issues impacting U.S. competitiveness that the nation has not fully addressed,” Huntsman said. “It looks to be, must be, a top priority of the new administration.”

Seven Billion Dollar Deal Could Bring 50,000 Jobs to US

Companies, iPhone, Tech News, Trade, , , , , , ,
The top and side of an iPhone 5S, externally identical to the iPhone 5. Photo courtesy of Calerusnak

Two high tech giants, Foxconn and Apple, are considering a deal to build a panel factory in the United States at a cost of about $7 billion and could create between 30,000 and 50,000 jobs. Chairman Terry Gou of Foxconn said that an investment by Foxconn’s Sharp division will depend on the terms negotiated for the deal at the state and federal levels.

The announcement of the deal comes close on the heels of President Donald Trump’s inaugural address in which the new president promised to make “America First” as the backbone of his policies leading the nation. Trump stated in his speech: “We will follow two simple rules: buy American and hire American.”

One of Trump’s campaign promises was to try and persuade Apple to bring the manufacture of iPhones to US shores. Trump said that he was optimistic that Tim Cook, CEO of Apple, had his “eyes open” to the possibility. Foxconn is the biggest producer of iPhones.

Gou said that Trump-style protectionism was inevitable, but he is unsure how Americans will feel about spending hundreds of dollars more for a phone that does not work any better than a less expensive model that was made overseas.

Gou vowed to increase his investments in China. Apple is also dependent on China, not just for production, but also for sales. Last year China made up 22 percent of Apple’s total revenue, some $46.4 billion.

Mexico Moving Into First Place as Top Exporter of Cars

Automobile Industry, Trade, , , ,
Hondas on the assembly line in Mexico
Hondas on the assembly line in Mexico

Over the past twenty years, and especially the last ten, Mexico has been making major progress as a major exporter of cars and trucks to the United States. Although Japan and Canada still control the market share, Mexico has been making inroads that point to them surpassing and overtaking these wealthy first world countries as a major automobile supplier.

A new Honda plant is due to open later this week in Celaya, Mexico, in the central state of Guanajuato. At a cost of about $800 million, the factory will produce about 200,000 Fit hatchbacks per year. That will bring the total number of cars exported to the US from Mexico up to 1.7 million in 2014. That is about 200,000 more cars than the US will buy from Japan in 2014. And when another new plant begins production a week later, Mexico will take over Canada’s number spot as the largest seller of cars to the US in the world by 2015.

“It’s a safe bet,” said Eduardo Solis, president of the Mexican Automotive Industry Association. “Mexico is now one of the major global players in car manufacturing.”

The progress Mexico has been making can be traced back to the passage of the North American Trade Agreement, (NAFTA) which went into force on January 1, 1994.  Back then Mexico made only 6 percent of all the cars manufactured in all of North America. Today they produce 19 percent. Since 2007 total Mexican car production rose 39 percent, to almost 3 million cars a year. The value of those exports to the US has soared from $40 billion per year in 2007 to $70.6 billion today.

The Mexican car industry is now the country’s major source of foreign currency, passing oil exports and cash Mexican migrants to the US send back home.

US Business Groups Protest New Zealand Tobacco Branding Law

Trade, ,

Six umbrella groups representing US business interests issued a joint statement condemning a proposed New Zealand law which will de-brand cigarettes and package them in plain, generic packaging.

The groups, the Emergency Committee for American Trade, the National Association of Manufacturers, the National Foreign Trade Council, the U.S.-ASEANBusiness Council, the U.S. Chamber of Commerce and the United States Council for International Business say the law violates international trade obligations and intellectual property rights.

The law is part of New Zealand’s campaign to end tobacco use in their country by the year 2025. Australia has already passed a similar law, and if the New Zealand version passes in the Parliament this week New Zealand will be in line with Australia in its approach to eliminating tobacco use.

The business groups expressed their “deep concern” in a statement released on Monday.

“This Bill, in effect, eliminates the right of a business to use its trademarks in everyday commerce. We respect the right of New Zealand to regulate in the public interest, but this is the wrong approach. It will violate New Zealand’s international-trade obligations, while facilitating illicit trade and counterfeiting,” said the statement.

“We would hope that the government of New Zealand would be cognizant of the importance of complying with its international trade and investment obligations and that it will await the outcome of the multiple legal challenges to Australia’s legislation before going forward with this unwise plain-packaging legislation, especially given the recent indications the Australian policy experiment is not working as intended,” it continued.

“We see this as a systemic threat to rules which intellectual property rights and the trading system, with their nexus to regulation, are dependent upon. We encourage the New Zealand government to consider the concerns we have raised for the possible impact on New Zealand exports, such as dairy and wine, should other governments feel emboldened to take similar unwarranted measures.”

New Zealand has stated previously that it would wait before enacting this legislation for the outcome of a lawsuit brought by a Hong Kong subsidiary of a US tobacco company against Australia.