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article imageFeds to slap China with investment restrictions, export controls

By Karen Graham     Jun 25, 2018 in Business
Washington - The Trump administration plans on rolling out new rules this week that would block firms with at least 25 percent Chinese ownership from buying U.S. companies in “industrially significant” technologies.
The White House appears to be leaning toward putting into place aggressive investment curbs favored by U.S. Trade Representative Robert Lighthizer and White House trade adviser Peter Navarro - discarding a more conservative policy favored by Treasury Secretary Steven Mnuchin.
Using the same "emergency powers" found in Section 232 of the Trade Expansion Act of 1962 he used as the reason for tariffs on steel and aluminum, the Trump administration's investment restrictions and export controls are intended to pressure China to stop unfair trade practices that threaten U.S. technological leadership.
The announcement on administering this new restriction on Chinese investment is expected to be made on Friday this week by Treasury Secretary Steven Mnuchin. He will report that the president in invoking his emergency powers to protect national and economic security in putting the restrictions in place.
In another of his now accustomed policy veers  US President Donald Trump said he is moving ahead wit...
In another of his now accustomed policy veers, US President Donald Trump said he is moving ahead with sanctions on China even as officials try to resolve the brewing trade dispute
Mandel NGAN, AFP/File
One rule for China and another for the rest of the world
The restrictions will be handled by an inter-agency government panel called the Committee on Foreign Investments in the US, or CFIUS.
Lighthizer has said the investment restrictions and the export controls will cover any high-tech industries China hopes to develop under its Made in China 2025 subsidy program. Politico is reporting that earlier this month while on Fox News, Lighthizer said the White House will be using “a broader definition of national security” to justify the investment restrictions and the export controls.
And while many agree that we must protect U.S. intellectual property and forced technology transfer, doing so with unilateral tariffs on the rest of the world is unfair.
"Our allies would be delighted to work with us in seeking structural change of Chinese trade and investment policies that have an equally adverse effect on their companies. Regrettably, that does not seem to be a clear priority of the United States," said Dan Price, a former George W. Bush administration White House official now at Rock Creek Global Advisors.
Lighthizer and Navarro are basically wanting to have two separate U.S. investment regimes — one for China and one for everyone else. But there is the real possibility that China will end up relying more on internal innovation - putting foreign technology and innovation at a disadvantage.
“There's going to be a Chinese standard for their 1.4 billion people and there's going to be a U.S. standard for our 300 and whatever million people,” Bruce Andrews, a former deputy secretary of Commerce said last week.
We will just have to wait and see how this all plays out as the week progresses.
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