THE US and China on Sunday “made new progress” on the issues of trade balance and intellectual property following a phone call involving officials from both countries, China’s commerce ministry said.

Washington and Beijing have been engaged in a bitter trade war but relations but temperatures have cooled since Chinese President Xi Jinping and US President Donald Trump agreed to a 90-day truce.

“On December 21, China and the US conducted a phone conversation at a vice-ministerial level, exchanging views on issues such as trade balance and strengthening intellectual property protection, and made new progress,” the Ministry of Commerce said in a brief statement, as quoted by the AFP.

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On Wednesday, the two sides discussed “economic and trade issues” which makes Sunday’s phone call the second such engagement in a week.

A lack of fair access for foreign companies in China, as well as rampant theft of intellectual property, have long been a bone of contention for US and European officials with Beijing.

The calls came amid Chinese legislators’ move to consider new laws governing foreign investment in hopes of streamlining existing rules and to prevent the forced transfer of technology.

A Chinese official adjusts a Chinese flag before the start of a meeting between Foreign Minister Wang Yi and Indian Foreign Minister Sushma Swaraj in New Delhi, India, Dec 21, 2018. Source: AFP

According to the official Xinhua news agency, the new “unified law” will replace three existing laws on Chinese and foreign equity joint ventures, non-equity joint ventures and wholly foreign-owned enterprises.

The Standing Committee of the National People’s Congress (NPC) meeting which began Sunday was presented with a draft of the proposed legislation.

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If legislated, the new law would bar local governments from restricting market access for foreign firms and from forcing them to transfer technology.

The law will ensure foreign investors would enjoy the same privileges as Chinese companies in most sectors except those excluded on a “negative list”, according to the AFP.

“In order to further expand opening up, actively promote foreign investment, protect the legitimate rights and interests of foreign investment, and promote the formation of a new pattern of comprehensive opening, the State Council has proposed a bill,” the Standing Committee said is a statement about the meeting posted on the NPC website.

Source: https://asiancorrespondent.com/2018/12/us-china-cool-trade-tensions-after-phone-call/

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SYDNEY — Amid deepening confusion over U.S.-China trade relations, Australia finds itself both hopeful and anxious as two of its most important trade partners exchange threats. While Australian wine producers will likely benefit from higher Chinese tariffs on U.S. goods, the country’s iron ore and pork industries could be squeezed if trade tensions continue to escalate.

The U.S. imposed broad restrictions on steel imports in March, but “on its own, the tariff is a relatively small intervention, particularly in Asia,” said Andrew Mackenzie, CEO of major iron ore exporter BHP Billiton.

Australia was exempted from the curbs, along with South Korea and Brazil, but ultimately the problem lies with how China’s steel production affects its iron ore imports. Mackenzie is not worried. “The vast majority of the products that are made in Asia using our raw materials are not exported to the United States,” he said.

Industry peers agree. “The U.S. ranks 26th as a destination for China’s steel, receiving just 1% of annual exports,” Australian iron ore producer Fortescue Metals Group CEO Elizabeth Gaines told Nikkei. “We do not expect the tariffs to impact Fortescue.”

The calm expressed by Australia’s major resource producers stems from confidence that China is tackling its steel overcapacity problem, and that domestic demand for steel remains firm.

But if protectionist sentiment spreads, global free trade will be threatened, said Mackenzie. Market watchers are worried that a protectionist domino effect emanating from the U.S. would affect markets for resources and goods over the long term.

Iron ore at a Fortescue Metals mine. As long as protectionist sentiment does not spread, Australia’s resources market should be spared fallout from the U.S.-China trade tiff.   © Reuters

China is Australia’s largest trade partner, importing 110 billion Australian dollars ($82.5 billion) worth of goods for the year through June 2017 — more than double the A$44.6 billion of Japan, its second-largest partner.

Resources account for most of China’s imports from Australia, but agricultural products also play a role. When China imposed high tariffs on U.S. wine and farm products in April, Australia’s wine producers stepped in to grab a larger share of the Chinese market.

“Australian wine exporters [have] a competitive advantage over key producers such as France, Italy and Spain” due to lower tariffs, said Wine Australia, the government’s promotional agency for wine. According to the agency in April, annual wine exports into China, Hong Kong and Macau topped A$1 billion for the first time, with exports to the region rising more than 50% on the year.

Tony Battaglene, chief executive of the Australian wine producers’ lobby, was also upbeat, saying, “Australia is well-placed to fill demand for wine in China, especially at the premium end of the market.”

According to the Australian Trade and Investment Commission, Chinese imports of Australian wine are second only to French vintages. A 2015 trade agreement between China and Australia has progressively lowered tariffs, with high duties on U.S. wine promising a further tail wind.

But it is not all good news for Australia, as the country’s pork industry could face trouble.

The U.S. exports more than A$500 million worth of pork to China annually. Higher tariffs could drive U.S. pork from China into Australia, pushing prices down in a blow to domestic pig farmers.

Unlike its brisk overseas sales of beef and lamb, Australia exports little pork. And even under normal circumstances, domestic pork faces stiff competition from pork producing nations.

Australian Prime Minister Malcolm Turnbull has repeatedly said, “There are no winners in a trade war,” urging an end to U.S.-China trade friction while stressing the importance of free trade.

But political tensions between Australia and China are mounting, with both the ruling Liberal Party and Labor opposition scandalized by donations linked to Beijing. In light of this, early reports from wine industry players note that shipments by some exporters to China have stalled.

In this uncertain climate, Australia may find it difficult to avoid a double-edged sword unless the U.S. and China sort out their trade problems.

Sources: https://asia.nikkei.com/Economy/Trade-tensions/Australia-faces-a-double-edged-sword-amid-US-China-trade-standoff

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