AS CHINA DEAL UPS PRESSURE, WILL TRUMP SKIP NEXT WORLD MEETINGS? The end of this week will bring two major international meetings that, if the past is any indication, Trump is likely to spurn.
On Friday, the members of the Asia-Pacific Economic Cooperation group will meet for a virtual forum hosted by Malaysia. That group includes 21 Pacific Rim nations, including the U.S., China and Russia.
Then, on Saturday and Sunday, the Group of 20 developed economies will meet for the annual G20 summit, hosted this year by Saudi Arabia. That meeting is expected to focus on economic relief for nations still recovering from the coronavirus pandemic.
But whether the outgoing U.S. head of state will make an appearance remains in doubt. Trump skipped the meeting of the Association of Southeast Asian Nations last week, even as the economic bloc signed a new trade agreement with U.S. allies like Japan, South Korea and Australia, and its major geopolitical rival, China.
Instead, Trump sent hardline national security adviser Robert O’Brien, who ruffled feathers in East Asia this summer by comparing Chinese Premier Xi Jinping to Josef Stalin, to the meeting for the second year running. That sparked criticism from the main U.S. trade group responsible for business interests in Southeast Asia.
“We are deeply disappointed by the Trump Administration’s repeated decision to have neither the president, vice president nor a Cabinet member lead the U.S. delegation to these critical summits in the last two years,” said Alexander Feldman, head of the US-ASEAN Business Council. “Showing up matters.”
Despite the criticism, the White House did not reply to a request for information on who would attend the global conventions this week.
BIDEN FOREIGN POLICY TEAM STARTS TO ENGAGE: Foreign leaders from some of the G20 countries, like Conservative British Prime Minister Boris Johnson, have been calling Biden to congratulate him on his victory, despite Trump’s refusal to concede the election.
The Biden transition has been apprehensive to comment on any of Trump’s last minute actions, reminding reporters there is only one president at a time. But his foreign policy team is starting to engage all the same.
Last week, Taiwan’s envoy to the U.S., Representative Bi-khim Hsiao, called Biden’s foreign policy adviser Tony Blinken to “express congratulations” for Biden’s “successful election campaign on behalf of the government of Taiwan,” according to a press release from the Taipei government.
Biden’s adviser, rather than the president-elect, took the call to avoid stoking tensions with China, which still views Taiwan as a breakaway province. That differs from Trump’s approach as president-elect in late 2016, when he spoke directly to Taiwanese president Tsai Ing-wen, breaking decades of “strategic ambiguity” with Taipei.
Once Biden takes office, he may well face conflicting advice from his advisers on China, with his national security team pressing him to re-engage on the Trans-Pacific Partnership, and trade and labor advisers reminding him how unpopular the deal has become with progressives, said Bill Reinsch, a former Clinton trade official now at the Center for Strategic International Studies.
“He will square that circle the way Democrats have always done it — declaring the existing agreement inadequate, negotiating some changes, and pronouncing them sufficient to justify rejoining,” Reinsch said. “That’s what Clinton did on NAFTA, Obama on Korea, and the House Democrats on USMCA. Time-tested strategy.”
US AGRICULTURE SECTOR FEARS FALLOUT FROM VIETNAM PROBES: Groups representing U.S. dairy and poultry producers are worried that USTR’s investigations into Vietnam’s currency practices and alleged use of illegally harvested lumber could hurt sales to a fast-growing market.
“First, USTR should be aware of the already large, but still increasing, significance of the Vietnam market for U.S. poultry exports,” the USA Poultry and Egg Export Council said in comments filed with the trade agency. “In 2019, total sales to Vietnam had reached more than $140 million annually. For 2020, U.S. exports are on pace to maintain those same high levels despite the difficulties of trade during the worldwide pandemic.”
Tariff worries: The poultry group said it had seen no evidence that Vietnam’s allegedly undervalued dong had made it harder to make sales to the Southeast Asian nation. But they did express concern about losing sales if the United States applies tariffs on Vietnamese goods.
“In our view, the current 301 investigation is structured in a way that will invite trade retaliation on U.S. exports, and U.S. poultry will be a likely candidate for that retaliation,” the group said.
The National Milk Producers Federation sounded a similar concern in comments they filed in conjunction with the U.S. Dairy Export Council.
“USDEC and NMPF urge that the Administration refrain from taking steps through this investigation that could damage the progress we have achieved with Vietnam. Given the very significant barriers U.S. exporters continue to face in other markets, we believe that U.S. efforts can most constructively be directed at these barriers, rather than in a market in which progress has been occurring and in which we expect progress to continue,” the groups said.
The US-ASEAN Business Council, which represents American corporate interests in Vietnam, echoed many of the agriculture sector’s concerns in its comments, writing that new tariffs could disrupt plans from U.S. companies to shift production away from China and to Vietnam.
CHINA INVESTMENT BAN IMPACT QUESTIONED: As the dust settles on Trump’s decision to ban U.S. investment in certain Chinese military-linked firms, analysts say it may be largely symbolic.
The ban includes 31 companies in the energy, infrastructure and telecom industries that the White House says assists the Chinese military, but investment experts say many of the companies are private or have such small holdings held by Americans that the impact will be muted.
The most significant of the banned companies is China Mobile, wrote Brendan Ahern, chief investment officer at Krane Funds Advisors, in a blog post on Friday. That company’s holdings comprise more than one percent of the MSCI China Index, which covers more than 700 Chinese firms, but “the other public companies are rounding error holdings.”
China Mobile did take a hit from the order, but analysts say that alone won’t be fatal for the company.
“China Mobile U.S. ADR was down only 4 percent on the day of the announcement (and another 4 percent [Friday)],” said Adam Lysenko, Associate Director at Rhodium Group. “That is certainly some pain for investors, but not 50 percent or 90 percent losses.”
And the order gives U.S. investors a year to unwind any of their current holdings, he added. That should “be enough time to unwind from these positions without unconscionable pain.”
Whether the order will ever be fully implemented is in doubt as well. Biden’s presidential transition declined to comment on the order, but Ahern figures the chances of the ban being enforced by his administration are “infinitely small.”