This trade war business is beginning to remind me of the classic film Groundhog Day, except without the comedy or happy ending. You’ll recall that’s the one where Bill Murray plays a weatherman who relives the same day over and over. He eventually breaks out of the time warp and lives happily ever after, leaving the audience smiling and in tears at the same time. I give it two snaps up.
Yeah, sounds just like the way things are going in the trade disputes with China and the European Union. Nothing is ever finally settled. Previously announced decisions get postponed, revised or expanded, and next week or month we get to do it all over again.
A case in point involves the additional 5 percent tariff on Chinese products that was slated to go into effect on October 1. Following a negotiated “partial” agreement on a few of the many bones of contention, that increase has been suspended. Whether the second part of the “Round 4” tariffs will take place on December 15 remains up in the air.
The other front of the trade war with China, on technology, saw an expansion of the Entity List to include 20 Chinese government organizations and 8 companies. The ostensible reason is these parties’ repressive actions in the Xinjiang Uighur Autonomous Region, which qualify as “activities contrary to the foreign policy of the United States.” The named companies include leaders in artificial intelligence and video surveillance. Their designations are intended to cut them off from access to U.S. products and technologies, which should do wonders for their competitive development.
All items subject to the Export Administrations Regulations are now prohibited for export, reexport or transfer to the named parties, unless the Commerce Department grants an export license and good luck with that. As the agency stated:
For the twenty-eight entities described above that are being added to the Entity List, BIS imposes a license requirement for all items subject to the EAR and a license review policy of case-by-case review for Export Control Classification Numbers (ECCNs) 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983, and 2E983. A policy of case-by-case review also applies to items designated as EAR99 that are described in the Note to ECCN 1A995, specifically, items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products. BIS has adopted a license review policy of presumption of denial for all other items subject to the EAR.
Our third blast from the recent past involves the large passenger aircraft dispute between the U.S. and EU. Though retaliatory tariffs were effective October 18, our friends at the Trade Representative’s office already issued “technical changes in order to implement the intended scope of the action, and to correct other errors.” Among other “corrections”, they added Scotch and Irish whiskies. Now they’re making it personal, the heathen.
Maybe there will be a grand resolution of these disputes at some point. Until then, I expect we’ll remain stuck in a loop of postponements, expansions and corrections. Or, as Bill Murray put it, “Well, what if there is no tomorrow? There wasn’t one today.”