Another day, another surprise or two

WSJ, and note the charming Schumer comments:

OSAKA, Japan—President Trump and Chinese President Xi Jinping agreed to a cease-fire on trade that will remove some curbs on Huawei Technologies Co. buying high-tech equipment from the U.S., for the moment lifting one cloud over the global economy. Under the cease-fire, the U.S. agreed to put off additional tariffs on Chinese goods indefinitely. In response, China will start buying large amounts of American farm products, Mr. Trump said.

Until the two leaders sat down for an 80-minute lunch meeting Saturday on the sidelines of a Group of 20 meeting, the U.S. was poised to hit China with tariffs on the roughly $300 billion in goods that aren’t currently covered by 25% tariffs. Afterward, Mr. Trump said the sides were ready to start talking again.

“We’re going to work with China on where we left off to see if we can make a deal,” he said at a news conference. “I’m not rushed,” he said, calling the talks “intricate.” Mr. Trump said he was leaving the Huawei issue until the end of negotiations, but for now, the Chinese telecommunications giant looks to gain a significant reprieve. The president said American firms could ship goods to Huawei, which parts of the U.S. government have called a national-security risk.

He added that the U.S. would hold meetings shortly on how to deal with Huawei. The company is on a so-called entity list, which prevents suppliers from selling U.S.-origin technology to Huawei without government approval. The National Security Council has been examining ways of narrowing the restrictions on Huawei so they focus on sales of U.S. technology used in “chokepoints,” where Huawei technology could control wireless networks, people familiar with the discussions said.

Mr. Trump was clearly making Huawei a part of any trade settlement, although his top advisers, including Treasury Secretary Steven Mnuchin, have said the administration was keeping Huawei separate from trade talks. “We’re talking about equipment where there’s not a great national-emergency problem with it,” Mr. Trump said. The Wall Street Journal reported earlier this week that Beijing viewed a Huawei reprieve as a precondition for reaching a trade deal with Washington.

The abrupt turnaround is bound to open the president to criticism from Democrats and hawkish Republican lawmakers who see Huawei as a threat. Secretary of State Mike Pompeo, Federal Communications Commission Chairman Ajit Pai and others have described the company similarly.

“Huawei is one of few potent levers we have to make China play fair on trade. If President Trump backs off, as it appears he is doing, it will dramatically undercut our ability to change China’s unfair trades practices,” said Senate Minority Leader Chuck Schumer (D.-N.Y.) in a statement Saturday. Sen. Marco Rubio (R.,Fla.) threatened legislation to keep the pressure on Huawei. “If President Trump has in fact bargained away the recent restrictions on #Huawei, then we will have to get those restrictions put back in place through legislation,” Mr. Rubio said in a tweet. “And it will pass with a large veto proof majority.”

But business groups applauded the resumption of talks. They had maintained that the $300 billion in threatened new tariffs would hammer businesses and consumers. “Pulling back from the brink of further tariff escalation is a good sign for retailers and their customers,” said David French, senior vice president of government relations for the National Retail Federation. Jay Timmons, the chief executive of the National Association of Manufacturers, said “a trade deal, not a trade war, is exactly what manufacturers have advocated over the last year and a half, and today’s meeting brings us closer to that goal.”

No doubt there’s a plan re Huawei, despite the political yapping above. More importantly, via AEI:

Senators and Representatives have introduced legislation that would force foreign companies to delist from American stock exchanges unless they come into compliance with US accounting practices within three years.The effort has been spearheaded by Sen. Marco Rubio (R-FL). Under the terms of the proposed legislation, upon passage all foreign firms which have not allowed US regulators to view their audits will be immediately subject to increased disclosure requirements by the Public Company Accounting Oversight Board (PCAOB) and, as noted, removed from US listings unless they fulfill the transparency obligations traditionally required of all foreign corporations.

China and Chinese companies are the real targets. For years, China has thwarted US and other foreign accounting regulators by refusing to allow disclosure of domestic audits, claiming national security (“state secret”) considerations. This lack of transparency has finally resulted in a public warning to investors by the PCAOB and the US Securities and Exchange Commission, stating that it was false to assume that for a listing by a Chinese company on a US exchange, regular “US rules and regulatory oversight apply.” For Chinese companies, they do not.

Just imagine what HNA’s annual report would look like if if they had to use GAAP and get audited by a tough firm (sadly, not Arthur Andersen). As we said re bailout cost: $5B? $10B? $20B? More? Hmmm. BTW, exactly what job is Rubio trying to get?

One Response to “Another day, another surprise or two”

  1. Neil Says:

    Hmmm… Why does Schumer all of a sudden have a problem with Huawei? Since when do Democrats care whether China competes fairly with American companies? The plot thickens…

Leave a Reply