[CTC] Democrats on Trump’s Ethics and China

[Arthur Stamoulis]

Washington Trade Daily
Volume 27, Number 108 Wednesday, May 30, 2018
Democrats on Trump’s Ethics and China
More than 60 House Democrats are calling for an ethics investigation into President Trump’s
business ties to China in the wake of the President’s decision to help keep Chinese telecommunications
company ZTE in business even after it violated US sanctions law (WTD, 5/28/18).
In a letter to US Office of Government Ethics Acting Director David Arpol, the lawmakers
questioned whether the President’s decision on ZTE might have been influenced by the fact that the
Chinese government just gave a $500 million loan to the Trump Organization for the construction of a
theme park and Trump-branded resort in Indonesia.
“We believe that these events raise several potential constitutional and ethical violations,” the
lawmakers – led by Rhode Island Democrat David Cicilline – said in the letter. “...[T]he extremely short
time period between the Chinese government’s loan and President Trump’s order to roll back penalties
on ZTE warrants a review of any applicable federal ethics regulations.”
The President’s failure to fully divest himself from his business ventures – and the fact that his
children continue to run the Trump Organization – suggests that Mr. Trump is benefitting from the
Chinese loan, the lawmakers said.
“The Chinese government’s loan provides a clear financial benefit to President Trump,” the
lawmakers wrote. “Despite the nearly unanimous recommendations by legal experts that he divest from
his business interests before assuming the Presidency, he failed to do so, instead placing his adult
children in charge of day-to-day operations.”
The House Democrats asked the Ethics Office to investigation whether the Administration
improperly obtained the $500-million loan for the Trump Organization and whether federal ethics laws
were violated by the President’s decision to assist ZTE.
 
China Tariffs
The White House yesterday attempted to clear up a continuing question over if and when the
United States will impose stiff tariffs on goods from China under a Section 301 case mostly focusing on
the protection of US intellectual property rights in the country (WTD, 5/28/18).
Yesterday the White House published two statements saying the tariffs will be set in place
“soon”.
 
China’s Reaction
 
China’s Ministry of Foreign Commerce issued the following reaction to the White House papers:
 
We were surprised at the strategic statement issued by the White House. This is obviously
contrary to the consensus reached between the two sides in Washington not long ago. No matter what
measures the United States takes, China has confidence, ability, and experience to safeguard the interests
of the Chinese people and the country’s core interests. China urges the United States to act in
accordance with the spirit of the joint statement.
 
Commerce Secretary Wilbur Ross will be in Beijing later in the week to discuss bilateral trade
issues.
 
Below are the two White House statements –
 
Statement on Steps to Protect Domestic Technology and Intellectual Property from China’s
Discriminatory and Burdensome Trade Practices
 
On March 22, 2018, the President signed a memorandum announcing that the United States would take
multiple steps to protect domestic technology and intellectual property from certain discriminatory and
burdensome trade practices by China. These actions were announced following a report of the Office of
the U.S. Trade Representative regarding China’s practices with respect to technology transfer,
intellectual property, and innovation. In accordance with the March 22 memorandum, the President has
been updated on the progress of the announced actions as follows:
1. To protect our national security, the United States will implement specific investment restrictions
and enhanced export controls for Chinese persons and entities related to the acquisition of industrially
significant technology. The proposed investment restrictions and enhanced export controls will be
announced by June 30, 2018, and they will be implemented shortly thereafter.
2. The United States will continue to pursue litigation at the World Trade Organization for violations
of the Agreement on Trade-Related Aspects of Intellectual Property Rights based on China’s
discriminatory practices for licensing intellectual property. The United States filed the case regarding
these violations on March 23, 2018.
3. Under Section 301 of the Trade Act of 1974, the United States will impose a 25 percent tariff on $50
billion of goods imported from China containing industrially significant technology, including those
related to the “Made in China 2025" program. The final list of covered imports will be announced by
page 2 Washington Trade Daily
June 15, 2018, and tariffs will be imposed on those imports shortly thereafter.
In addition, the United States will continue efforts to protect domestic technology and intellectual
property, stop noneconomic transfers of industrially significant technology and intellectual property to
China, and enhance access to the Chinese market. Likewise, the United States will request that China
remove all of its many trade barriers, including non-monetary trade barriers, which make it both difficult
and unfair to do business there. The United States will request that tariffs and taxes between the two
countries be reciprocal in nature and value. Discussions with China will continue on these topics, and
the United States looks forward to resolving long-standing structural issues and expanding our exports by
eliminating China’s severe import restrictions.
 
###
 
PRESIDENT DONALD J. TRUMP IS CONFRONTING CHINA’S UNFAIR TRADE POLICIES
“From now on, we expect trading relationships to be fair and to be reciprocal.” – President Donald J.
Trump
 
YEARS OF UNFAIR TRADE PRACTICES: China has consistently taken advantage of the American
economy with practices that undermine fair and reciprocal trade.
! For many years, China has pursued industrial policies and unfair trade practices—including
dumping, discriminatory non-tariff barriers, forced technology transfer, over capacity, and industrial
subsidies – that champion Chinese firms and make it impossible for many United States firms to
compete on a level playing field.
! China’s industrial policies, such as its “Made in China 2025" plan, harm companies in the United
States and around the world.
! China imposes much higher tariffs on United States exports than the United States imposes on
China.
! China’s average tariff rate is nearly three times higher than the average United States rate.
! Certain products are even more imbalanced, for instance the United States charges a 2.5 percent
tariff on Chinese cars, while China currently maintains a 25 percent tariff on cars from the United States.
! China has banned imports of United States agricultural products such as poultry, cutting off
America’s ranchers and farmers from a major market for their goods.
! China has dumped and unfairly subsidized a range of goods for the United States market,
undermining America’s domestic industry.
! In 2018 alone, the Trump Administration has found dumping or unfair subsidies on 13 different
products, including steel wheels, cold-drawn mechanical tubing, tool chests and cabinets, forged steel
fittings, aluminum foil, rubber bands, cast iron soil pipe and fittings, and large diameter welded pipe.
! In January 2018, the Trump Administration found that China’s overproduction of steel and
aluminum, and the resulting impact on global markets, is a circumstance that threatens to impair
America’s national security.
! The United States has run a trade in goods deficit with China for years, including a $375 billion
deficit in 2017 alone.
 
UNDERMINING AMERICAN INNOVATION AND JOBS: China has aggressively sought to obtain
technology from American companies and undermine American innovation and creativity.
! The cost of China’s intellectual property theft costs United States innovators billions of dollars a
year, and China accounts for 87 percent of counterfeit goods seized coming into the United States.
! United States Trade Representative’s (USTR) Section 301 investigation identified four of China’s
aggressive technology policies that put 44 million American technology jobs at risk –
! Forced technology transfer;
! Requiring licensing at less than economic value;
! Chinese state-directed acquisition of sensitive United States technology for strategic
purposes; and
! Outright cyber theft.
! China uses foreign ownership restrictions, administrative review, and licensing processes to force
or pressure technology transfers from American companies.
! China requires foreign companies that access their New Energy Vehicles market to transfer core
technologies and disclose development and manufacturing technology.
! China imposes contractual restrictions on the licensing of intellectual property and technology by
foreign firms into China, but does not put the same restrictions on contracts between two Chinese
enterprises.
! China directs and facilitates investments in and acquisitions of United States companies to
generate large-scale technology transfer.
! China conducts and supports cyber intrusions into United States computer networks to gain access
to valuable business information so Chinese companies can copy products.
 
STANDING UP TO CHINA’S UNFAIR TRADE PRACTICES: President Trump has taken long
overdue action to finally address the source of the problem, China’s unfair trade practices that hurt
America’s workers and our innovative industries.
! In January 2018, the President announced his decision to provide safeguard relief to United States
manufacturers injured by surging imports of washing machines and solar products.
! This was the first use of Section 201 of the Trade Act of 1974 to impose tariffs in 16 years.
! These actions responded to injurious trade practices by China and other countries, including
attempts to avoid legally imposed antidumping and countervailing duties.
! Following the decision, Whirlpool announced 200 new jobs in Ohio.
! USTR and the Department of Commerce are working together to defend the right of the United
States to continue treating China as a non-market economy in antidumping investigations until China
makes the reforms it agreed to when it joined the World Trade Organization (WTO).
! President Trump’s Administration has successfully litigated WTO disputes targeting unfair trade
practices and upholding our right to enforce United States trade laws.
! In February 2018, USTR won a WTO compliance challenge against China’s unfair antidumping
and countervailing duties on United States poultry exports and China announced the termination of
those duties.
 
PROTECTING AMERICAN INNOVATION AND CREATIVITY: President Trump has worked to
defend America’s intellectual property and proprietary technology from theft and other threats.
! In August 2017, the Administration initiated a Section 301 investigation into China’s practices
related to forced technology transfer, unfair licensing, and intellectual property policies.
! After USTR completed its Section 301 report in March 2018, the President directed the agencies to
explore numerous actions to protect domestic technology and intellectual property.
Under President Trump’s leadership –
! The United States will impose a 25 percent tariff on $50 billion of goods imported from
China containing industrially significant technology, including those related to the “Made in China
2025" program. The final list of covered imports will be announced by June 15, 2018.
! USTR will continue WTO dispute settlement against China originally initiated in March
to address China’s discriminatory technology licensing requirements.
! The United States will implement specific investment restrictions and enhanced export
controls for Chinese persons and entities related to the acquisition of industrially significant technology.
The list of restrictions and controls will be announced by June 30, 2018.
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