Thursday, August 9, 2018

US Trade Sanctions Bite on Three Fronts as New Measures Announced

(and More Threatened in the Near Future)
Shipping News Feature
US – CHINA – IRAN – RUSSIA – It seems US President Donald Trump is intent on punishing any and all who he feels are a problem and this week all three of the countries listed are in the spotlight. The Office of the United States Trade Representative (USTR), the body responsible for developing and coordinating US international trade, commodity, and direct investment policy, and overseeing overseas negotiations, has this week released a list of approximately $16 billion worth of imports from China that will be subject to a 25% additional tariff which it says is part of the American response to what it calls 'China's unfair trade practices related to the forced transfer of US technology and intellectual property'.

The 10 page list (here) contains 279 of the original 284 tariff lines that were on a proposed list announced on June 15. In March 2018, USTR released the findings of its Section 301 investigation that found China’s acts, policies and practices related to technology transfer, intellectual property and innovation are unreasonable and discriminatory and burden US commerce.

The investigation concluded that China conducts and supports cyber intrusions into US commercial computer networks to gain unauthorised access to commercially valuable business information. It also uses various commercial instruments to require or pressure technology transfer from US companies whilst depriving American companies of the ability to set market based terms to license such technology. It noted that China participated in directing and facilitating ‘the systematic investment in, and acquisition of, US companies and assets to generate large-scale technology transfer’.

Meanwhile the latest round of sanctions against Iran seems to have only just begun if the President is to be believed. Whilst most people are aware that the tearing up by Donald Trump of the nuclear deal signed in 2015 has led to sanctions on oil products the effect of the restrictions bite into many aspects of Iranian life, aviation being a good example as detailed in a recent Time story. As mentioned in the Time piece, military conflict is not such a distant possibility with the threat of ever harsher sanctions by November, threats by the US to anyone dealing with Iran, and the ever present danger that, if driven too far, the Iranians could blockade the Straits of Hormuz, stifling oil deliveries from elsewhere and risking all out war.

And lastly Russia, today the US has announced that, convinced that the novichok attack on father and daughter Sergei and Yulia Skripal was a deliberate act by state agents, there will be sanctions on a variety of electronic and other technologically advanced products. Both sides have used the word ‘draconian’ in their rhetoric, the Russians on the current sanctions, the US describing how severe the next round will be if they do not receive satisfaction.

This of course is extremely unlikely as presumably it would mean that Russia acknowledge it had at least colluded in a chemical weapon attack on its own nationals whilst in a foreign country. These latest sanctions add to Russian woes after five Russian companies and several individuals were sanctioned after alleged cyber attacks against America. In truth the Skripal attack, in Salisbury, England in June, merited these latest sanctions, and the previous expulsion of 60 or so diplomats in that, by unequivocally condemning Russia for using a military grade chemical weapon as the US confirmed it believed, legislation from 1991 automatically calls for the mandatory imposition of such restrictions.

The question of course on everyone’s lips, yet often unspoken, is where do we go from here? The unpredictability of the US President may be his greatest strength yet present the major danger to peace and equable world trade. With potential conflict, both commercial and possibly military on three fronts, the next few months will prove to be testing for all involved.

Photo: Four leaders in conflict: Hassan Rouhani, Iran; Xi Jinping, China; Vladimir Putin, Russia all under the eye of Donald Trump.