U.S.-China technology competition and Trump administration restrictions on Huawei likely dashed prospects of a phase two trade deal, China experts said. Robert Dohner, of Atlantic Council and former Treasury Department official, called the deal “dead,” adding the U.S. approach to protecting technology damaged future negotiations. “I think the technology policies, particularly the pursuit of Huawei, have made it impossible now to go back and negotiate with China on technology policy or domestic industrial policy,” Dohner told a council webinar Tuesday. Leland Miller, a Chinese economy expert with the Atlantic Council, said the administration needs to reassess how it wants to approach Huawei and needs to better follow through on threats. Companies are trying to determine what they can “get away with,” said Dexter Roberts, also of the council. “All the restrictions in the world are going to be very, very hard to implement as long as Huawei is providing fast, cheap chips and cheap telecom gear that countries around the world want.” The White House declined to comment Thursday. The office of U.S. Trade Representative didn't comment.
Rep. Suzan DelBene, D-Wash., is worried the participation of “so many countries” at the World Trade Organization in e-commerce talks -- including China -- will mean the result won't be a high-standard agreement. The House Ways and Means Committee member who also leads on trade in the New Democrat Coalition, DelBene represents a western Washington district that includes Microsoft headquarters. During a Washington International Trade Association interview Wednesday, she agreed tax policy should be rethought, and no longer so focused on physical goods, but said digital services taxes proposed in Europe are discriminatory. She said negotiations at the Organization for Economic Cooperation and Development need to be given time to work. U.S. Trade Representative Robert Lighthizer testifies next week in virtual hearings by the Ways and Means Committee and Senate Finance Committee.
The Office of the U.S. Trade Representative is starting Trade Act Section 301 investigations into digital services taxes (DSTs) that were adopted or are under consideration, the agency said Tuesday. Investigations focus on Austria, Brazil, the Czech Republic, EU, India, Indonesia, Italy, Spain, Turkey and the U.K. Comments are due July 15. Evidence "suggests the DSTs are expected to target large, U.S.-based tech companies," USTR said. "The European Commission is considering a DST as part of the financing package for its proposed COVID-19 recovery plan." The EU's delegation to the U.S. didn't comment. The "investigation initially will focus on the following concerns with DSTs: discrimination against U.S. companies; retroactivity; and possibly unreasonable tax policy," the USTR said. While the Information Technology Industry Council "hoped to avoid further escalation of tensions, increasingly-expansive unilateral tax measures have necessitated a stronger response,” said CEO Jason Oxman. “ITI continues to support the U.S. government’s efforts to investigate these complex trade issues." Tariffs are a possible result of Section 301 investigations. The agency previously started a Section 301 investigation into France over such taxes and tariffs that were proposed but not implemented (see 1912030002). “An increasing number of countries have proposed or enacted discriminatory and unilateral digital taxes in recent months, despite ongoing [OECD] negotiation," noted Internet Association Director-Trade Policy Jordan Haas. "The U.S. must continue sending a strong message to trading partners that targeted discriminatory taxes against U.S. firms are not an appropriate solution." Instead of "unilateral DSTs, the world needs a multilateral solution," said U.S. Chamber of Commerce Head-International Affairs Myron Brilliant. "The Chamber supports efforts to address these challenges through multilateral negotiations under the aegis of the OECD. We urge all parties to double down on those negotiations.”
NAB's Dennis Wharton, executive vice president-communications, retiring effective July 1, continuing as senior adviser; Executive Vice President-Communications Michelle Lehman becoming EVP-public affairs as association combines communications and marketing departments into new public affairs department; Senior Vice President-Communications Ann Marie Cumming becoming primary spokesperson ... Newly formed Open RAN Policy Coalition (see 2005050030) names Diane Rinaldo, ex-NTIA, executive director.
China, India, Indonesia and Chile are among the top countries the U.S. is targeting for weak intellectual property protections, the Office of the U.S. Trade Representative said Wednesday in its annual special 301 report (see 1904250052). In a controversial move, the administration singled out Amazon. President Donald Trump and the company have been at loggerheads over some issues.
The FCC is poised to act against four companies it alleges are controlled by China's government. The agency issued show cause orders Friday to China Telecom Americas, China Unicom Americas, ComNet and Pacific Networks. They are asked to explain why the commission shouldn't “start the process of revoking their domestic and international section authorizations enabling them to operate” in the U.S. The materials are here.
Executive branch agencies recommended the FCC revoke China Telecom's U.S. authorizations for international telecom services. DOJ, which led the review, said the agencies found "substantial and unacceptable national security and law enforcement risks," including Chinese government malicious cyber activity targeting the U.S., and concerns China Telecom -- a U.S. subsidiary of a Chinese government-owned telecom company -- is vulnerable to China's "exploitation, influence, and control." It said China Telecom made inaccurate statements to U.S. authorities about recordkeeping and made inaccurate public representations of cybersecurity practices. The 71-page redacted recommendation filed with the International Bureau said China Telecom "will be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight." It also said the company's U.S. operations are a route for Chinese state-sponsored actors "to engage in economic espionage and disrupt and misroute U.S. communications traffic." The "security of our government and professional communications, as well as of our most private data, depends on our use of trusted partners from nations that share our values and our aspirations for humanity," said Assistant Attorney General-National Security John Demers. DOJ said the recommendation was by it and the Departments of Homeland Security, Defense, State, Commerce and the U.S. Trade Representative. The FCC and China Telecom didn't comment.
President Donald Trump doesn’t oppose deferring tariffs on Chinese imports for 90 days during the pandemic, he told a White House briefing Tuesday. “I’m going to have to approve the plan,” said Trump. “I approve everything. And they haven’t presented it to me.” He sees “nothing wrong” with deferring the levies. Sen. Susan Collins, R-Maine, wrote Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer Friday to back a 90-day delay because “the response to COVID-19 has now added another layer of pressure as businesses are facing severe cash flow problems” (see 2003300012). The U.S. Chamber of Commerce also came out Wednesday in support of “tariff relief,” saying it would “provide some welcome breathing room for American businesses and consumers.”
Inconsistencies abound in the List 4A Section 301 tariff exclusions that the Office of the U.S. Trade Representative granted to Chinese smartwatch imports classified under the 8517.62.00.90 product code. The exclusions are retroactive to Sept. 1 when the tariffs took effect and expire after one year, said a USTR notice Thursday. The exemptions apply to devices “suitable for wearing on the wrist” with “time-display functions” and the ability to link to a “network." USTR granted exclusions to the Apple Watch and a range of Fitbit smartwatches and fitness trackers, but also to Tile for a Bluetooth tracking device that has no wrist-worn or time-display component. The Tile device links to a smartphone app for finding misplaced items like keys or glasses. Sonos also landed exemptions for the wireless mesh network speakers and audio components it imports from China under the same 8517.62.00.90 classification as smartwatches. But exclusion requests for wireless speakers from Bose, Sound United and others remain in a Stage 2 administrative review at USTR, as do smartwatches from Fossil. A wide range of additional 8517.62.00.90 goods also remain in a Stage 2 hold, including Apple AirPods and JLab Bluetooth headphones. USTR didn’t comment Friday.
Wolfe Research taps John Janedis, from Tegna, as managing director and head-media ... In FaceBank acquiring fuboTV (see 2003230065), combined company to be led by fuboTV CEO David Gandler and called fuboTV.