President Trump announced Sunday that the US and China had made “substantial progress” in their trade talks. USTR Robert Lighthizer, testifying before the House Ways and Means Committee on Wednesday, confirmed that in response the U.S. wouldn’t raise levies on $200 billion in Chinese imports on March 1.
The President said in a Tweet that the progress included “important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.”
The breakthrough apparently came after four days of negotiations in Washington with Treasury Secretary Steven Mnuchin and USTR Robert Lighthizer on the American side and the Chinese led by Vice Premier Liu He, President Xi's top economic adviser.
The President said that assuming that a deal can be completed, he was planning a summit meeting with Chinese President Xi Jinping at his Mar-a-Lago resort in Florida for a formal signing.
President Trump had threatened to raise the tariffs on $200 million worth of Chinese exports from 10% to 25% on March 1 if no deal was reached. The Chinese economy has stumbled badly in recent months, in part because of the tariffs but also because of other domestic economic factors.
The President met with Liu in the Oval Office and praised the Chinese President. The two delegations, which had met Thursday and Friday, then agreed to work through the weekend, but no details of an agreement have been released.
One area of major concern was the Chinese requirement that American companies wanting to do business in China had to form a joint venture with a Chinese company. Americans are required to share trade secrets with their Chinese counterparts, which has led to accusations that China was stealing intellectual property.
President Trump signaled that he is ready to move towards trade peace with China in a tweet that lifted global stock markets. But while broad tariffs on Chinese imports brought Beijing to the negotiating table, the President has grown impatient with the talks, and a consensus is growing in Washington that he may ultimately accept a weaker deal than many in his administration had been hoping for.
However, the United States Trade Representative told lawmakers during testimony this week that he and his negotiators are maintaining a tough line with the Chinese, repeatedly using the word ‘if’ when talking about the potential for reaching a deal with Beijing.”
He also insisted that President Trump isn’t losing patience. “His instructions to me are: You have to get a great agreement. If we have no agreement, we’ll just wait until we can get a great agreement,” Mr. Lighthizer said.
American and Chinese negotiators have wrestled over trade terms in rounds of talks over the past year, including in Washington last week. Chinese negotiators have largely repackaged old promises about opening their markets to foreign companies and offered large purchases of American products that are designed to impress a President who is focused on reducing the bilateral trade deficit.
The Chinese have so far declined to make the concrete commitments to reform their economy that the administration has demanded, including ending China’s practice of subsidizing companies, engaging in cybertheft and forcing American companies to hand over intellectual property to Chinese partners in order to do business there.
President Trump continues to insist that any deal with China will end “unfair” trade practices, including any theft of American technology and intellectual property. Negotiators are also trying to insert an enforcement mechanism into any deal that would require China to return to the bargaining table if it fails to make these structural changes, a person familiar with the talks said.
But the hardened position that prompted the President’s unprecedented imposition of sweeping tariffs on Chinese goods appears to be weakening, giving Beijing more room to maneuver and undermining Mr. Lighthizer’s goal.
On Sunday, citing “substantial progress” in trade talks, President Trump backed off his March 1 deadline to impose higher tariffs on $200 billion worth of Chinese goods. That date had been described by Mr. Lighthizer in December as a “hard deadline” and was viewed as critical to getting Beijing to agree to significant changes since its economy, already hurting from tariffs, would suffer more from higher levies.
With the Chinese now making only vague concessions on structural reforms, Mr. Lighthizer would prefer to stay tough and let the bite of American tariffs persuade them to make bigger promises. While he has shared with Mr. Trump the view that the Chinese are not ready to make significant concessions, the President has continued to press for a deal.
“Bob Lighthizer has made it a priority to get this China deal right,” said Myron Brilliant, an executive vice president and the head of international affairs at the U.S. Chamber of Commerce. “He understands that this is the moment in time in which there’s an opportunity to make a real change in the trajectory of the U.S.-China relationship, and he’s focused on the bottom line: what he can get from the Chinese that will improve the U.S.-China economic relationship.” In trying to pin down the Chinese on making ambitious reforms to their economy, he has an unenviable task.
Opportunity Zones, a new tax incentive to spur economic development in depressed communities, many of which also have FTZs, are getting a fresh look, and substantial investment, from Wall Street.
Hedge funds, investment banks and money managers are trying to raise tens of billions of dollars this year for so-called opportunity funds, a creation of President Trump’s 2017 tax package meant to steer money to poor areas by offering potentially large tax breaks.
Little noticed at first, the Opportunity Zone provision has unleashed a flurry of investment activity by wealthy families, some of Wall Street’s biggest investors and other investors who want to put money into projects ostensibly meant to help struggling Americans.
More than 80 of the funds have sprung up since January 2018, even though the Trump administration has not finalized regulations governing them. Those who championed the provision, which provides for a hefty tax break on long-term investments, believe the money can help distressed towns and neighborhoods that are still feeling the effects of the financial crisis and have barely benefited from the nine-year economic expansion.
The provision that created Opportunity Zones was added to the tax law by Senator Tim Scott, Republican of South Carolina, and had been supported by Democrats and Republicans in previous legislation. It lowers capital gains taxes — potentially dramatically — for investors who finance projects in about 8,700 so-called Opportunity Zones spread across the 50 states, the District of Columbia and Puerto Rico.
Local officials selected the zones from a group of areas deemed eligible for the designation under a federal formula that factors in income and poverty levels. The federal government has not finished setting guidelines for what types of projects qualify or what information fund managers must provide to investors and to the government.
The law permits an investor to roll over capital gains — proceeds from the sale of stocks or a home, for instance — into an opportunity-zone fund. The fund can then put the money in a zone by investing in, say, a condo project or affordable-housing units.
An investor who keeps money in a such a fund for 10 years is able to exclude 15 percent of the original capital gain from taxation. And — potentially much more lucratively — the investor would not owe taxes on any gains that accrued if the investment increased in value in that time.
With just over a month to go before Britain is scheduled to leave the European Union, Prime Minister Theresa May could U-turn on her commitment to keeping the Brexit schedule. And the British opposition leader, Jeremy Corbyn, under heavy pressure, has promised to support a second public vote, which, should it come to fruition, could potentially cancel Britain’s exit from the E.U.
The Prime Minister, who has repeatedly insisted that Brexit will occur on March 29, will now allow her colleagues “to discuss extending the deadline”, according to Bloomberg.
And Mr. Corbyn has made a big concession to pro-Europeans. He had long resisted a second Brexit referendum, but has had to reconsider after several pro-E.U. lawmakers quit his Labour Party.
As British lawmakers acknowledged that they may have ask the European Union to allow a delay in the Brexit schedule, European leaders warned that an extension would not be automatic, and the deadline is coming up quickly.
With just 30 days to go until Britain is scheduled to leave the European Union, Parliament last Wednesday endorsed Prime Minister Theresa May’s concession that if the lawmakers cannot agree on a deal to sever ties with the continent, Brexit might have to be delayed.
But beyond a consensus about possible postponement, the gridlock that has seized the British political class continued.
Last month, lawmakers overwhelmingly rejected May’s 585-page withdrawal agreement, negotiated over two years with her European counterparts. May hasn’t yet managed to sweeten the deal enough to entice Parliament.
On Wednesday, Parliament decisively voted against a one-page outline of a Brexit plan proposed by the opposition Labour Party and its leader, Jeremy Corbyn.
Labour’s vision for a soft Brexit would have seen Britain remain closely aligned with E.U. customs, tariff and regulatory regimes and the continent’s single market. Such a relationship would have meant that Britain would continue to allow E.U. migrants to live and work in the United Kingdom, while withdrawing from the E.U. governing body. Amid fears of further defections from within its ranks, the Labour Party announced earlier this week that it would support a second referendum if its own Brexit proposal was rejected.
While momentum for a second referendum has grown in recent months — and advocates swarmed Westminster on Wednesday — it’s not clear how many lawmakers actually want a do-over.
A second referendum would enrage parts of the British public, including many of the pro-Brexit demonstrators outside of Parliament on Wednesday, some holding aloft placards that read “leave means leave” and “Brexit means Brexit — not blackmail.”
The recent shutdown caused the U.S. Foreign-Trade Zones Board to extend all deadlines and due dates by the 40 effective days that the Department was furloughed. That means that Grantees now have until May 10th to submit their Annual Report information. Many Grantees have likewise extended their reporting deadlines as companies were unable to submit their information through the Online FTZ Information System (OFIS), which was shut down for the duration of the furlough.
That did not change any of the deadlines for annual reports due to U.S. Customs and Border Protection. Grantees and Operators should keep in mind that their Annual Reconciliation Reports and Annual System Review Letters are due according to the normal times. Questions? Ask away at FTZine@iscm.co .