Trump Reaffirms Commitment to Tariffs but Opens Door to Compromise
March 6, 2018 by admin
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“We’re not backing down,” the president said at the White House on Monday, as he reeled off a familiar litany about trade deals that he said had driven out factories and deprived American workers of jobs.
But Mr. Trump did open the door to a compromise, at least with Canada and Mexico, which are in negotiations with the United States to revise the North American Free Trade Agreement. If the two countries agree to a “new fair” Nafta, they could be exempt from the tariffs, Mr. Trump said in a tweet on Monday morning.
The debate over tariffs has become a litmus test for Mr. Trump, putting his longstanding suspicion of free trade up against the equally fervent support for it among Republicans and members of his own administration.
Inside the White House, the debate has pitted hard-liners like Peter Navarro, the president’s trade adviser, and Commerce Secretary Wilbur Ross against more pro-trade voices, like Mr. Trump’s chief economic adviser, Gary D. Cohn, who argue that the measure could disrupt international alliances and global supply chains.
Republican lawmakers have criticized tariffs as undercutting the $1.5 trillion tax cut that they worked in lock step to pass last year, saying tariffs are essentially a tax increase that would slow economic growth. On Monday, they floated the idea of congressional action to try to block tariffs, should the president impose them.
Representative Kevin Brady, Republican of Texas and chairman of the House Ways and Means Committee, circulated a letter Monday expressing concern over the tariffs. Senator Dan Sullivan, Republican of Alaska, said he spent the weekend speaking with members of Congress and “senior administration officials” about his opposition to the president’s plan.
“As you know the administration is split itself,” Mr. Sullivan said from the annual CERAWeek energy conference in Houston, noting that details of the tariffs remain sparse.
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Mr. Trump has heard all sides’ arguments, but his view has remained steadfast, one White House official said.
Still, the official said, the president is mindful enough of the arguments against potentially tanking the stock market that he has been somewhat open to a move to narrow the scope and effects of the tariffs while avoiding the perception that he was relenting. That would echo the approach the administration took to winding down the president’s promises on the Deferred Action for Childhood Arrivals, or DACA, program, which has protected young immigrants brought illegally to the United States as children.
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The unsettled nature of a final policy was magnified by a conversation on Sunday between Mr. Trump and Prime Minister Theresa May of Britain.
Ms. May, a person briefed on the call said, warned Mr. Trump how dangerous the tariffs would be. Mr. Trump disagreed, but concluded the conversation by telling Ms. May that he had not made a final decision on what to do.
The president originally announced that he wanted to put new tariffs into effect this week, but a legal review has not been concluded. On Sunday, Mr. Navarro said the tariff announcement could come this week or the following week at the latest. He also reaffirmed that companies might be able to seek exemptions for certain foreign products they need for their business, a process likely to lead to months of furious lobbying.
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A coalition of 25 industry associations representing farmers and companies that use steel and aluminum has started lobbying the administration and lawmakers, arguing that the tariffs are far broader than necessary and would create higher prices on American companies that buy and use metals.
The president and his advisers have repeatedly maintained that any tariffs will be imposed on imports from all countries without exception. The Commerce Department has concluded that imports of steel and aluminum pose a threat to national security, a determination that gives the president broad authority under United States law to impose tariffs.
But that legal standing will undoubtedly be challenged by other countries and companies, both in court and at the World Trade Organization, which requires that members treat all other members equally on trade. Creating exceptions for countries like Canada and Mexico for non-national security reasons like Nafta could invite challenges at the World Trade Organization, said Jennifer Hillman, a professor at Georgetown University Law Center.
“Unequivocally, I think there will be cases filed at the W.T.O., and there is plenty of ground to challenge this,” Ms. Hillman said.
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On Monday, Robert Lighthizer, the United States trade representative, said Mr. Trump decided to link a tariff exemption to a revised Nafta deal “a couple of days ago” as Mr. Lighthizer prepared to travel to Mexico City to meet with his Mexican and Canadian counterparts.
“It makes sense, since this is a major irritant, to have it be considered,” Mr. Lighthizer said in Mexico City after meeting with Economy Minister Ildefonso Guajardo of Mexico and Foreign Minister Chrystia Freeland of Canada. He said the situation could be modified for Mexico and Canada given a successful Nafta renegotiation, as well as “perhaps other countries in other contexts where we have those kinds of problems.”
Even if Canada and Mexico were exempted from the tariffs of 25 percent on steel and 10 percent on aluminum, officials said the United States would impose a quota on those countries’ exports to prevent them from being used as a conduit for metals shipments from other nations.
Neither Canada nor Mexico appeared mollified by the prospect of a tariff exemption in exchange for bending to United States demands on Nafta. Ms. Freeland reiterated comments that any action that ensnared Canada would be “completely unacceptable.”
“México shouldn’t be included in steel aluminum tariffs,” Mr. Guajardo said in a tweet. “It’s the wrong way to incentivize the creation of a new modern #NAFTA.”
Michael Camuñez, a former Commerce Department official who advises international firms doing business in Mexico, called the proposed tariffs and the tweet a “terrible development” for the Nafta negotiations “because all parties have indicated that they will not negotiate with a gun against their head.”
The talks in Mexico City produced no meaningful progress, and ultimately would be decided by one man — Mr. Trump, Mr. Camuñez said. Negotiators have continued to clash over provisions in the pact, including rules for auto manufacturing, and the United States has continued to insist on changes that its trading partners say are nonstarters.
Mr. Camuñez said Mexico and Canada would retaliate “with good reason” if the steel and aluminum tariffs were imposed, an outcome that could lead to a breakdown in negotiations. “That would escalate tensions and that could lead the president to conclude that these negotiations aren’t going anywhere and blame the Mexicans and the Canadians,” Mr. Camuñez said.
Mr. Trump has threatened additional retaliation if other nations erect their own trade barriers, saying in a tweet over the weekend that the United States would make it harder for the European Union to sell cars in the country if it imposes tariffs on American imports.
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USS Carl Vinson: The US woos an old enemy with a show of strength
March 5, 2018 by admin
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US Navy
The USS Carl Vinson, seen here in a file image, is one of the US naval “super carriers”
The immense nuclear-powered US aircraft carrier Carl Vinson has powered into Vietnamese waters, the first such visit since the end of the Vietnam War. The BBC’s South East Asia correspondent Jonathan Head looks at how the rise of China lies behind this.
The influence of the United States in Asia is much diminished these days, but it still has one spectacular card it can play.
That comes in the form of the deployment of a carrier strike group, a naval flotilla centred on one of 11 giant “super-carriers”, floating nuclear-powered air bases more than 300m long, carrying enough air power to flatten a small city.
The presence of a US carrier group can send a message of deterrence, as in the case of North Korea, or of support. The USS Carl Vinson’s arrival in Danang this week is a visible gesture of commitment by Washington to the country with which it fought a terrible war just two generations ago.
An absence of recrimination
The US-Vietnam rapprochement dates back to the restoration of diplomatic relations in 1995. Since then there has been a steady improvement in ties, through trade, cultural exchanges, diplomacy and military co-operation.
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Getty Images
China is one of a number of countries who lay claim to parts of the South China Sea.
Disagreements over the harsh treatment of political and religious dissidents in Vietnam have not been allowed to interrupt this progression, and there is a remarkable absence of recriminations over the past.
The fact that the USS Carl Vinson is docking just a few kilometres from the beach where US combat troops first landed in Vietnam in 1965, and not far from some of the bloodiest battlefields of the war, presents a poignant historic backdrop to this visit, but in no way overshadows it. This is the culmination of a quiet, careful courtship.
The rise of China is what drives it, for the Americans and for the Vietnamese.
Despite the better-known history of the US-Vietnam conflict, Vietnamese resentment of its giant neighbour goes back much further, embedded in the folk memory of a millennium of Chinese domination in ancient times.
Vietnam shares a border more than 1,000km (620 miles) long with China, through which more than $90bn (£65bn) in trade passes, but which in 1979 was the scene of a short war in which thousands of troops died on both sides.
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AFP
The relationship between Vietnam and China foundered in the 1970s over relations with Cambodia’s Chinese-backed Khmer Rouge regime.
The two Communist Parties once enjoyed a fraternal camaraderie – as close as lips and teeth, they used to say. Then they fell out during the Sino-Soviet split in the mid-1970s – Vietnam choosing the Soviet Union as a patron – and over Vietnam’s invasion of Cambodia in 1978 to oust the Chinese-backed Khmer Rouge regime.
That adversarial relationship only changed after the collapse of the Soviet Union in the late 1980s forced Vietnam’s communist leadership to rethink their position in the world and establish a foreign policy based, they said, on friendship regardless of ideological allegiances.
At that time they put a lot of diplomatic effort into rebuilding bridges with China. But their differences over the South China Sea remained a problem; both countries claimed parts of the Paracel and Spratly Islands, and have on occasion fought over them.
Keeping the US engaged
Strong anti-Chinese sentiment lies just below the surface in Vietnam, and is easily stirred up. In 2014 protests over China’s deployment of an oil rig into disputed waters set off violent protests in Vietnam targeting what they believed were Chinese-owned factories.
It was against a backdrop of increasing Chinese assertiveness in the South China Sea after 2002 that Vietnam began reaching out to its former American foe. That was when China agreed to a Declaration of Conduct with the Association of South East Asian Nations (Asean), four of whose members claimed islands in the disputed waters, which was supposed to halt island grabs and construction on coral atolls.
But that has not stopped China building air bases, missile bunkers and radar stations to fortify its hold on the islands.
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AFP
Firms with Chinese characters in their logos or signs were targeted in the protests in 2014
Distracted by wars in Iraq and Afghanistan, it was only in a landmark speech by Secretary of State Hillary Clinton at Asean in July 2010 that the US expressed its interest in maintaining freedom of navigation in the South China Sea, and in having disputed adjudicated through international law. Following that speech, the Obama administration announced a “pivot” back to South East Asia.
Moving closer to Vietnam was a core part of that. In 2016, during a state visit to Hanoi, President Barack Obama announced the lifting of all restrictions on sales of military equipment to Vietnam, ending the last legacy of the Vietnam War.
Vietnam was also party to the Trans-Pacific Partnership, a proposed free trade group of 12 countries championed by President Obama as a way of projecting US influence and values in a region where it had been losing ground to China. So the decision by President Donald Trump to abandon the TPP was a blow to Vietnam, a strong beneficiary from the deal. Undeterred, Prime Minister Nguyen Xuan Phuc made sure he was the first South East Asian leader to visit President Trump in Washington in May last year, and then hosted him during the APEC summit in November.
Keeping the US engaged is still a priority for Vietnam, part of a sophisticated and subtle web of diplomatic initiatives aimed at making its friendships as close as they can be without antagonising its all-important relationship with China.
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Reuters
President Obama in May 2016 announced that the Vietnam arms embargo would be lifted
The US does not yet have a strategic partnership with Vietnam. But the US military has been exploring new areas of co-operation with its Vietnamese counterparts.
So far these have largely been in non-traditional aspects of defence, like peace-keeping and disaster response. There has been no talk yet of the kinds of joint military exercises the US conducts with allies like Japan, South Korea and the Philippines, nor has Vietnam shown any interest yet in acquiring significant US military hardware. Such a move might be viewed as a provocation by China, something the current communist leadership in Vietnam will choose to avoid.
The presence of a US aircraft carrier in Danang, one which will be conducting so-called “freedom of navigation” passages through the disputed areas of the South China Sea, also sends a potentially provocative message to China – but only a symbolic one.
To date US expressions of concern over China’s actions in the sea have had no discernable impact on the construction of military facilities there.
The US carrier strike group looks impressive, but it is not clear what it can actually do to restrain China. Even as Vietnam’s top brass enjoy watching the full might of the superpower they once fought now paying court as a would-be ally, they must remain mindful of the continuing historic shift in the balance of power in their region away from the United States, in favour of China.