EU trade chief proposes mutual tariff freeze to Washington

Brussels suggested the EU and its major overseas partner suspend tariffs imposed on billions of dollars of imports for six months, EU trade chief Valdis Dombrovskis told Germany’s main news platform, Der Spiegel.

The measure would go beyond the latest four-month suspension of import duties that the parties agreed in March.

“We have proposed suspending all mutual tariffs for six months in order to reach a negotiated solution. This would create a necessary breathing space for industries and workers on both sides of the Atlantic,” Dombrovskis said.

Last month, the two transatlantic partners agreed to suspend mutual tariffs that had covered $7.5 billion of EU imports of American goods and some $4 billion of US products shipped to the bloc. The freeze is set to expire in four months.

The bitter EU-US trade dispute over aerospace subsidies to plane makers Airbus and Boeing dates back to 2004. Then Washington challenged European subsidies of Airbus that reportedly had “adverse effects” on the US.

The EU filed a retaliatory complaint against the direct support given to Boeing in the form of regional tax breaks and government grants.

So far, tit-for-tat duties on various goods have affected nearly $50 billion in mutual trade. The list of EU products on which the US imposed taxes came in at $25 billion. $7.5 billion was authorized by the World Trade Organization (WTO). In comparison, the EU’s list totaled a mere $20 billion. WTO approved $3.99 billion.

US axes Trump-era Scotch whisky tariffs for four months in bid to resolve aircraft trade war with UK

The US said on Thursday it will suspend 25 percent tariffs on Scotch whisky and retaliatory import taxes on other UK products in a bid to resolve the two parties’ on-going transatlantic trade row due to aircraft subsidies.

Then-US President Donald Trump slapped the UK and other EU member states with tariffs on whisky, wine, cheese and other foodstuffs in 2019 in return for European plane maker Airbus being given illegal subsidies by the bloc. 

The World Trade Organization (WTO) ruled in 2018 that EU governments had failed to comply with US requests to stop funding Airbus, which had caused its American rival Boeing to lose $7.5 billion a year.

Airbus had already filed a similar complaint with the WTO against Boeing in a dispute between the two manufacturers stretching back to 2004.

On Thursday the US and the UK said in a joint statement that “the United States will now suspend retaliatory tariffs in the Airbus dispute from March 4, 2021, for four months.”

The move is the latest of Trump’s policies to be overturned by President Joe Biden, whose administration will now turn its focus toward rising civil aviation powers “such as China,” the statement says.

Reacting to the news, UK Prime Minister Boris Johnson hailed the tariff climbdown as “fantastic news” for the transatlantic trading relationship, as well as for Scotch whisky distillers and other businesses.

In December the UK International Trade Secretary Liz Truss announced Britain would suspend retaliatory tariffs against the US, ahead of Brexit and the expected new trading relationship with the US under Biden.

As well as whisky, Trump’s original tariffs in response to the WTO ruling targeted UK cashmere, German coffee and tools, Spanish olive oil, as well as cheese, meat and other products from various EU nations.

Akademik Chersky headed for Nord Stream 2

The Akademik Chersky pipe-layer headed towards Nord Stream 2. The Danish Energy Agency has reported, citing the operator’s schedule, that the vessel plans to begin completing the second string of the gas pipeline in Danish waters at the end of March

The pipe-layer Akademik Chersky left the area of ​​the Curonian Spit near Kaliningrad and headed towards Nord Stream 2. According to the Vesselfinder navigation portal, this afternoon, March 30, the vessel left the area where it was undergoing sea and pre-operational tests. It went along the route that it had previously taken to Germany.


The supply vessels Vengery and Ivan Sidorenko left the Curonian Spit before the pipe-layer in the direction of Nord Stream 2. “Akademik Chersky” has indicated since March 4 that he is at work at sea. Therefore, the exact direction of movement is unknown.

Also, something else is known. The Danish Energy Agency reported that completion of the second string of Nord Stream 2 in Danish waters will begin in March.

“I can confirm that we have received an updated timetable from Nord Stream AG 2 for branch A. It says that work on the pipeline will begin this month”. It is reported EADaily head of the press service of the Danish Energy Agency (DEA) Tour Falbi-Hansen .

Branch A contains the longest unfinished section of Nord Stream 2. 68.5 kilometers in Danish waters and 16.5 kilometers in German waters. Earlier, in early March, the ship left the German port of Wismar and arrived at the Curonian Spit near Kaliningrad. Operator Nord Stream 2 AG announced that the pipe-layer will undergo sea trials and pre-operational tests and begin work in Danish waters.

Meanwhile, as reported by EADaily , the barge Fortuna has already covered half – 24.5 km – of the unfinished section of Line B in Danish waters.

In February, the Danish Maritime Office clarified in a warning to seamen that work on Nord Stream 2 (the second string) is planned to be carried out by the end of September and the pipelayer Akademik Chersky will participate in them.

USA continue pressure with illegal sanctions

The Akademik Chersky is a more technically suitable vessel for Nord Stream 2 and can lay up to two kilometers per day after retrofitting. Therefore, obviously, the deadline for completing the completion of branch A in Danish waters was taken with a gap, and the pipe-layer will be able to complete it at the same time as “Fortuna” – at the end of May – June. In this case, Nord Stream 2 may be ready to launch by autumn.

Recall that the United States has imposed sanctions against the vessels of the project and the vessels of Russian companies are used on it. In addition, Washington has banned companies involved in the retrofitting of ships, insurance, inspection, testing and certification of gas pipelines from participating in Nord Stream 2. It is not known whether Gazprom solved this problem. German media reported that Washington offered Berlin conditions under which it would not impose sanctions on project participants. 

Among them are guarantees that the gas pipeline will be cut off if Gazprom stops Ukrainian transit; an increase in Russian gas supplies through Ukraine; and investment in Ukrainian infrastructure for the production and transportation of hydrogen.

The EU wants to impose carbon tariffs on Australian exports

What Australian politicians call carbon tariffs, the European Union labels a carbon border adjustment mechanism.

While one sounds bad (the WTO has rules that restrict tariffs) the other sounds understandable. If the EU is imposing a carbon tax on its own products, surely it is reasonable to impose it on products from overseas.

The argument is that if a German steel manufacturer has to pay a tax of, say, $77 a tonne for the carbon it emits while making the steel, an Australian manufacturer should be charged the same when its product enters the country, unless it has already paid the same tax here.

To do otherwise would give the Australian product an unfair price advantage — it would create “carbon leakage” of the kind Australian businesses used to warn about in the leadup to Australia’s carbon price.

The European Union approved the idea in principle on March 10.

The details are less than clear. In part because it is possible that carbon tariffs are not permitted under the rules of the WTO.

WTO rules might help Australia…

The rules say taxes or “charges of any kind” can only be imposed on imported products the same way as they are domestically.

That appears to mean that they can be imposed on importers but not on producers. However it isn’t quite what the European Union has in mind.

Ideally the WTO would be able to provide guidance. However, (in part because of the actions of the US Trump administration) it isn’t really in a position to do.

…if only they were enforceable

The WTO has a new director general in Ngozi Okonjo-Iweala. He took office this month. However it will remain unable to make rulings for as long as its appellate body is unable to hear disputes.

Under Trump, the US kept vetoing appointments to the appellate body until the expiration of terms of its existing members meant it no longer had a quorum.

Disputes can still be initiated by countries such as Australia, forcing consultations. But without final determinations.

EU says it wants to ensure that its adjustment mechanism complies with the WTO’s rules. However, it hasn’t ruled out the possibility of relying on provisions that allow exceptions.

Both sides could make a case

Exceptions are allowed for the protection of human, animal or plant life or health or the protection of an exhaustible natural resource.

The catch is these exceptions are not allowed to discriminate between countries and must not be disguised restrictions on trade.

It is arguable that an adjustment mechanism designed to protect the competitiveness of European industries will breach these provisions.

Russia looks to replace Australian coal exports to China

Russia’s coal miners could boost exports to China. Beijing slapped tariffs on Australian imports amid a growing trade rift.

Chinese authorities completely halted supplies of coal from Australia in late 2020. Triggered by Canberra voiced its support for an international inquiry into China’s handling of the coronavirus crisis.

However, China’s appetite for energy imports steadily increasing. Russia is looking to fill the void by boosting coal exports to its neighbor.

“As imports of coal from Australia to China are expected to decline, Russia has a chance to replace at least part of it with its own coal,” said TS Lombard analyst Madina Khrustaleva, as quoted by SCMP, a Hong Kong-based English-language news outlet.

The expert noted that Russia has several large coal deposits ready to begin supplying China. Transport being the only hurdle.

Mutual trade between Russia and China has been growing since 2014, and China has since become Russia’s biggest trade partner.

Russia is in pole position to substitute imports from Australia

“Russia is clearly in pole position to substitute imports from Australia. The increase in oil prices is also helping Russia. All in all there are really tailwinds for Russia,” Alicia García-Herrero, chief economist for Asia-Pacific at Natixis, told the media.

Over the past year, a political rift between China and Australia has spilled over into the economic world. Chinese authorities applied import duties on a wide range of Australian produce, including wine, lobster, meat, barley, timber, and coal. Canberra hit back with tariffs on Chinese aluminum, paper, and steel.

Last week, Russian President Vladimir Putin called for boosting coal exports to Asia by at least 30 percent over the next three years. Putin also approved financing for expanding the country’s rail routes for transporting coal to the continent from the Kuzbass region, Russia’s key mining area.

Russia has invested in modernizing the Baikal-Amur and Trans-Siberian railway networks, the nation’s key rail routes. The expert also said that Russian coal companies are developing joint ventures with Chinese firms to boost coal trade.

In December, Elgaugol, the company behind the Elga coal project in the Russian Far East, agreed to launch a joint venture with China’s Fujian Guohang Ocean Shipping Group that will export metallurgical coal to China. The Elga project aims to ship 30 million tons of coal to China in 2023, almost doubling Russia’s total coal exports to China, which stood at around 33 million tons in 2019.

Here is the view from Australia by ABC News (Australian Public Broadcast Service)

China seeks self-sufficiency as chip shortage hits car production

The situation is not likely to get better until the third quarter, while the country’s dependence on international chipmakers could take years to overcome

By Iris Hong

China strives to strengthen self-sufficiency of chips by matchmaking automakers and suppliers. And by stockpiling chipmaking machines as the global shortage of computer chips forces auto plants to halt production. However, analysts expect the disruption to auto production to continue until at least the third quarter.

While Covid-19 has disrupted chipmaking around the world, a 7.1 magnitude earthquake near Japan’s northeast coastal prefecture of Fukushima and winter storm blackouts that struck the US semiconductor hub Texas last month only exacerbated the situation. Several chipmakers such as Infineon, NXP, and Samsung halted their chip production in Austin, Texas, and Japan-based Renesas Electronics closed its plant. 

The world’s largest carmakers such as Volkswagen, Ford, General Motors, and Honda as well as China’s Changan Auto are bracing for production disruptions from chip shortage. Tesla also shut down a Model 3 production line at its factory in Fremont, California, for two days amid an industry-wide microchip shortage. 

China became the world’s first economy to recover from the pandemic. Its auto sales also outperformed global sales in 2020. However, January auto sales decreased 11.6% month-on-month to 2.5 million units. Auto production was down 15.9% from the previous month.

Excluding years 2017 and 2020 when auto production decreased exceptionally in January, the slowdown this year is larger compared with the years 2016, 2018 and 2019, CAAM said. 

Li Shaohua, secretary-general of CAAM, said chip shortage was one of the key factors that caused car production to drop in January. 

A rise in demand for smartphones and stay-at-home technologies that offer higher profit margins has also squeezed the production of automotive chips, according to Li. 

Amid an industry-wide chip shortage, Chen Hong, chairman of SAIC Motor and a deputy to the National People’s Congress, has called for more policy support for a self-sufficient supply chain of automotive-grade chips. 

He suggests that Beijing provide research grants and subsidies for automotive chip development and production, and that insurers develop product liability insurance policies for the chips. 

MIIT matchmaking bid to boost chip supply-chain

China, which accounts for 30% of the world’s car sales, only produces less than 5% of the world’s automotive chips. 

China’s Ministry of Industry and Information Technology (MIIT) held a workshop with automakers and semiconductor companies. Then it released a directory for supply-demand matchmaking.

The directory includes information on over 500 chip products provided by 59 semiconductor companies. They include computing chips, control chips, power chips, memory chips, communication chips… It cover 80% of the types of chips needed for auto production. 

The directory also includes over 1,000 listings of demand information from automakers. As well as auto part companies such as Desay SV Automotive and CATL.

Chip shortage since the fourth quarter of last year highlights the insufficient supply capacity of China’s automotive semiconductor industry. 

Domestic semiconductor companies are less experienced in developing and marketing their products to the auto industry. The directory is intended to facilitate collaboration across the supply chain.

Old chip machines being snapped up

Chinese semiconductor makers are snapping up used chipmaking machines. It is driving up equipment prices in Japan’s secondary market.

A report by Nikkei Asia on Sunday said machines “worthless several years ago” now sell for $1 million. 

Chinese businesses bought almost $32 billion of equipment last year used to produce computer chips. From Japan, South Korea, Taiwan and elsewhere, a 20% jump from 2019. 

Meanwhile, Li from CAAM expects chip shortage to continue crippling China’s auto production for another six months. “The sales and production of cars are expected to recover in the second half, which will gradually offset the decrease in the first half,” he said. 

Auto analyst with a Ministry of Industry and Information Technology-affiliated think tank, believes the market has over-panicked about chip shortage. 

“There has not been a price surge in China’s auto market. T indicates that supply is enough to meet demand. Besides, the majority of cars sold in China are traditional models. They have no screen or small screens, which need fewer chips,” he said.

US chip ban on Huawei 

A widening US technology ban has exposed the vulnerability of China’s semiconductor sector. 

China’s largest chipmaker, SMIC, was also added to an export control blacklist by Trump. That restricts its access to chipmaking equipment for advanced nodes that are 10-nanometer and below. SMIC does not yet mass produce chips that are below 10nm. However, the US sanctions will hamper its ability to develop advanced chips to meet upcoming demand.

China, a market with 28 million units of auto sales per year, imports over 80% of key components needed for auto production.

“The automotive semiconductor industry is highly concentrated. It is dominated by companies like Texas Instruments, Infineon, NXP, Renesas Electronics, and Samsung. There are very few Chinese companies that can provide automotive-grade chips. These are crucial to the car’s safety, such as those used for the engine control unit. Many semiconductor start-ups have emerged. However, it will be unlikely for them to increase their global market shares in a short-term,”

A few Chinese companies such as NavInfo Co Ltd and Horizon Robotics have launched automotive-grade semiconductors for autonomous driving. However, they rely on contract chipmakers such as TSMC to make the chips. 

Automakers developing their own semiconductor capability

Chinese automakers such as BYD Auto have developed their own semiconductor capability. BYD Auto set up its own semiconductor company in 2004. It launched China’s first homegrown Insulated Gate Bipolar Transistor (IGBT) chip in 2009 and the first 32-bit microcontroller chip 2019. 

BYD Auto said in December that its homegrown chips are sufficient for its own use. And there are extra that can be provided to other automakers. 

There is only one Chinese company – namely Nexperia – among the world’s top 20 automotive semiconductor companies, according to Roland Berger’s report.

Given China’s semiconductor sector is almost two generations behind, it may take Chinese companies three to four years to catch up with the global leaders. With a widening US technology ban the outlook does not look rosy.

How China won its war on poverty?

Documentary with Lawrence Robert Kuhn

When the history of the 21st century is to be written, there is no doubt that the story of China’s eradication of poverty – i.e. lifting about 700 million people out of it – will be seen as a milestone, a turning point for humanity.

China’s poverty rate fell from 88 per cent in 1981 to 0.7 per cent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms.

On November 23rd 2020, China announced that it had eliminated absolute poverty nationwide by uplifting all of its citizens beyond its set ¥2,300 (CNY) per year, or less than a dollar per day poverty line.

This result has been achieved within just four decades, after Chinese leader Deng Xiaoping declared the Open Door Policy in December 1978.

Very few Western mainstream media have seen it fit to report this. We should wonder why.

US President Lyndon B. Johnson declared his war on poverty in 1964. At that time, the official poverty rate was about 15 per cent. 60 years later, it’s 12.3% – according to the US Census Bureau. These are national averages; poverty hits various social groups very differently. An interesting source here: “Approximately 16.4 million American children – 22 per cent of the population younger than 18 – live in poverty. The rate for people 65 and older is 8.7 per cent…”

At TFF we believe that China’s development – for good and for bad – is important for us all, for the world’s future and for a fair, broad-minded understanding of contemporary China. And that this speaks volumes about respect for human rights.

That’s why we give our visitors here a series of links (under the documentary) to more information. In this documentary, one of the most impressive Western connoisseurs of China, Lawrence Robert Kuhn, guides you to a broader understanding of the question that first comes to mind: How did the Chinese government and people go about achieving this amazing result?

 Jan Oberg, editor

This article was originally published by TRANSNATIONAL

On the other side we have “world’s only super-power” that has lost its own war on poverty (just as many other wars). United States declared unprovoked trade war (and even more fierce propaganda war) against China. It was all wrapped as something that “unpredictable” Donald Trump has done himself. As usual, that is not true. Here we have new president of US who is continuing exactly the same way.

According to US officials and numerous Think Tank organisations closely connected to American government and even their “deep state” – Chinese advance in technology or anything else is – challenge to America. They even claim it is targeting their “way of life” that they are forcing upon the rest of the world through their dominance in media, social media and Internet as a network itself.

Eurasia News Online

Biden sends warning to China on chips and rare earths

US President signs executive order for a review of supply chains for semiconductor chips, rare earth elements, pharmaceuticals and large batteries; said he would seek $37 billion to supercharge chip manufacturing in the US; gets bipartisan support for these efforts

(ATF) President Biden sent an effective warning to China on Wednesday February 24 as he signed an executive order for a review of supply chains that will cover semiconductor chips and rare earths.

Biden signed the executive order after a meeting with both Democratic and Republican politicians that he hailed as “like the old days” of agreeing on shared goals.

He did not mention China by name at the signing, but said: “We should not rely on a foreign country, especially one that does not share our interests or our values.”

Biden announced a 100-day review that will cover chips, rare earths, pharmaceuticals and the large capacity batteries that are key for electric vehicles. A broader one-year review will cover multiple other sectors including food production and technology.

The US President said he would seek $37 billion in funding for legislation to supercharge chip manufacturing in the United States as a shortfall of semiconductors has forced US automakers and other manufacturers to cut production.

“I’m directing senior officials in my administration to work with industrial leaders to identify solutions to the semiconductor shortfall,” Biden said on Wednesday. “Congress has authorised a bill but they need … $37 billion to make sure that we have this capacity. I’ll push for that as well.”

The executive order directs six sector reviews, modelled on the process used by the Defence Department to strengthen the defence industrial base. It will focus on defence, public health, communications technology, transportation, energy and food production. 

The United States has been besieged by supply shortages since the onset of the pandemic, which squeezed the availability of masks, gloves and other personal protective equipment, hurting frontline workers.

Most pressing issues

A global chip shortage is the most pressing issue for US firms, with some automakers forced to temporarily suspend work and industry trade groups relentlessly urging action from the government. China is also scrambling to source more chips for its own industrial needs.

Biden’s new national economic council director Brian Deese moved last week to secure a greater share of chip supply from Taiwan for the US, while Japan and European countries are also trying to increase their supplies. Any moves by foreign governments to forge closer ties with Taiwan will almost inevitably raise tensions with China.

Rare earths could emerge as the next most important point of stress between the US and China, however. An internal debate appears to be taking place within China over whether or not to try to use an ability to control the price of many rare earths to demonstrate goodwill towards the new Biden administration, or as a weapon in an ongoing conflict with the US.

Reports said Chinese government officials recently asked industry officials how badly companies in the US and Europe, including defence contractors, would be affected if China restricted rare earth exports during a bilateral dispute.

China has in the past had mixed success in trying to use its dominance of rare earth production as a geopolitical tool, as previous price rises encouraged creativity in rare earth mining in other countries and ended up reducing the overall global Chinese share in some metals.

“Critical minerals are an essential part of defence, high-tech, and other products. From rare earths in our electric motors and generators to the carbon fibre used for airplanes — the United States needs to ensure we are not dependent upon foreign sources or single points of failure in times of national emergency,” a White House statement said on Wednesday before Biden signed the new executive order.

China has increased production quotas for the start of this year, but rare earth prices renewed their upward drive after the end of the recent Lunar New Year holiday, indicating that underlying demand will remain the main market driver – regardless of whether US/Chinese tensions mount or ease.

The secret spy dinner behind coordinated assault on Huawei

Five-nation intelligence-gathering bloc steps up campaign to limit China’s reach

The arrest of Huawei executive Meng Wanzhou by Canadian authorities produced attention-grabbing headlines in recent weeks, but the police action is just one part of a coordinated effort to target the Chinese telecommunications giant.

An account in The Sydney Morning Herald on Thursday describes how intelligence chiefs from the Five Eyes nations – the US, the UK, Canada, Australia and New Zealand – hatched a plan to push back on Huawei’s global ambitions.

The debate among the spy chiefs during a dinner in Nova Scotia on July 17 centered on one question, the Herald said: “Should the agencies go public with their concerns about China?”

While not all agreed to speak publicly on the issue, after that meeting, a campaign to block Huawei from supplying equipment for fifth-generation (5G) wireless networks has gained steam.

The UK’s largest mobile network provider announced it would shed Chinese-made gear just days after Meng’s arrest. The US, Australia and New Zealand have already said they will not use Huawei equipment for next-generation mobile networks.

While Ottawa has yet to ban Huawei from 5G networks, Canada’s top intelligence official publicly warned of the dangers of not doing so on the same week that Meng was arrested. The Herald said that “a formal ban on Huawei and ZTE from Ottawa is expected within weeks.”

“A new Great Game was afoot and the West had been slow to act,” went the narrative voiced at the gathering in Nova Scotia. “But it is acting now.”