0.1693
900 319 0030
x

US-China Trade Talks

iasparliament Logo
September 20, 2019

Why in News?

Senior US and Chinese officials are meeting in Washington in an attempt to settle their ongoing trade war.

What is the need for a meeting?

  • There are lot of issues to address like tariffs on specific products, Intellectual Property (IP) theft, global supply chains etc
  • Since trade negotiations between them broke down in May 2019, both the countries have added tariffs on the each others’ goods.
  • This is compounded by broken good faith promises, and by trading public insults.
  • The trade war has hardened into a political and ideological battle that runs far deeper than tariffs and could take years to resolve.

Why tariffs are at stake?

  • The Trump administration has rolled out stiff tariffs on Chinese imports since 2018, believing it gives White House officials leverage in talks.
  • Chinese officials want these wiped out before they agree to any deal.
  • The US has put 25% tariffs on some $250 billion of Chinese products, and China has retaliated with tariffs on $110 billion of US imports.
  • The US is scheduled to raise existing tariffs to 30% on October 2019 and tax another $156 billion in products in December.
  • Both sides made some concessions ahead of this week’s talks by suspending some planned tariffs, in a sign of goodwill.

What blacklists and bans are at stake?

  • Beijing is smarting from Trump’s decision to blacklist Huawei, the telecommunications equipment maker, which effectively banned US firms from doing business with the company.
  • It has prompted many non US-based companies to cut their own ties to the firm.
  • China wants the US to lift those restrictions but US is lobbying other countries to reduce dealings with Huawei.
  • Legislation in the US Congress would prevent Chinese rail company CRRC and drone-maker DJI from bidding on US contracts that involve federal money.
  • China has said it would draft its own list of foreign companies that it deems had harmed Chinese companies.
  • China has indicated it may strike back through limiting rare earth supplies to the United States.
  • Rare earth, are minerals important to manufacturers of high-tech consumer goods and China is the dominant supplier.
  • Trump has called on US companies to pull manufacturing facilities out of China.

Why intellectual property (IP) and technology transfer are at stake?

  • Before the talks broke down in May 2019, US officials had said the two sides made progress on IP protection and that China made proposals on a range of issues that went further than Beijing had gone before.
  • They also added that China for the first time discussed forced technology transfer as a widespread problem.
  • US companies complain they are pressured to hand over their competitive secrets as a condition for doing business in China.
  • US officials also cited progress on cyber theft, services, currency, agriculture, and non-tariff barriers to trade.
  • After the deal fell apart, China had backtracked on commitments on digital trade issues, including the US access to cloud computing services in China.
  • China isn’t willing to negotiate on the fundamental way that it manages the country’s economy, including support for state-owned enterprises and subsidies.

What is the backdrop?

  • China is determined to upgrade its industrial base in 10 strategic sectors by 2025, including aerospace, robotics, semiconductors, artificial intelligence and new-energy vehicles.
  • One of the biggest US complaints is that China has used coercion and outright theft to systematically obtain American IP and trade secrets and advance its standing in many high-technology industries.
  • China’s subsidies to state enterprises have led to a build up in Chinese industries like steel that has depressed global prices and hurt producers in the US and elsewhere.
  • US officials argue that makes it hard for US companies to compete on a market-driven basis.
  • Chinese officials generally view the US actions as a broad effort to thwart the Asian country’s rise in the global economy.
  • They previously denied China required or coerced technology transfers, saying that any such actions are commercial transactions between American and Chinese firms.
  • The Trump administration has aggressively stepped up prosecutions of IP cases, and scaled back visas for Chinese students and researchers.
  • US lawmakers are writing bills that limit visas, banning students with ties to the Chinese military. Chinese authorities reject such accusations.
  • In June 2019, Beijing warned students and academics about risks in the US, pointing to limits on the duration of visas and visa refusals.
  • It warned companies operating in the US they could face harassment from US law enforcement, gun violence, robberies and thefts.

 

Source: The Indian Express

Login or Register to Post Comments
There are no reviews yet. Be the first one to review.

ARCHIVES

MONTH/YEARWISE ARCHIVES

Free UPSC Interview Guidance Programme