Month: May 2018

China told the World Trade Organization’s dispute settlement body on Monday that U.S. accusations that Beijing forced companies to hand over technology as a cost of doing business in China were groundless.

U.S. President Donald Trump has accused China of stealing American ideas and announced a plan for a $50 billion tariff penalty against Chinese goods.

Both sides launched legal complaints at the WTO over the issue earlier this year.

“There is no forced technology transfer in China,” Chinese Ambassador Zhang Xiangchen told the meeting, according to a copy of his remarks provided to Reuters.

“According to the U.S.’s view, China forces the U.S. companies to transfer technologies by imposing joint venture requirements, foreign equity limitations and administrative licensing procedures,” Zhang said.

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies.”

Zhang said the U.S. argument involved a “presumption of guilt.” The U.S. Trade Representative believed U.S. firms in China faced an obligation to hand over technology, while failing to produce a single piece of evidence.

Some of its claims were “pure speculation,” he said, adding that the USTR saw Chinese M&A activity as a Chinese government conspiracy.

‘Diligence and entrepreneurship’

Technology transfer was a normal commercial activity that benefited the United States most of all, he said, while Chinese innovation was driven by “the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property.”

Legal experts say Washington needs WTO backing to implement its tariffs as far as they relate to WTO rules, while China has rejected the tariff plan wholesale and resorted to WTO action to stop it.

Under WTO rules, if disputes are not settled amicably after 60 days, the complainant can ask for a panel of experts to adjudicate, escalating the dispute and triggering a legal case that takes years to settle.

The United States, which launched its complaint on March 23, could have used the dispute meeting on Monday to take that step. China could do so at next month’s meeting.

But since the dispute erupted, U.S.-China trade policy has been the subject of high-level bilateral talks. Trump tweeted cryptically that “our trade deal with China is moving along nicely” but that it probably needed a “different structure.”

The United States put China’s technology transfer policies on the agenda of Monday’s meeting, without elaborating. A copy of the U.S. remarks was not immediately available.
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New Zealand will slaughter more than 100,000 cows in an effort to eradicate a bacterial disease.

The government and agricultural leaders announced Monday that it will spend over $600 million over the next decade to rid the country of Mycoplasma bovis, which causes udder infections, pneumonia, arthritis and other illnesses. The bacteria is not a threat to humans, but can cause production delays on farms.

“This is a tough call,” said Prime Minister Jacinda Ardern. “But the alternative is to risk the spread of the disease across our national herd.”

Mycoplasma bovis has been detected on more than three dozen farms since it was first detected in New Zealand last year, leading to the slaughter of about 26,000 cattle. The country is the world’s largest exporter of milk and dairy products.

 
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Myanmar’s anti-corruption commission has in recent weeks sued a senior bureaucrat and begun investigating a disgraced minister, indicating a crackdown on corruption promised by the government is finally happening. Often criticized as weak and unambitious, the commission’s stepped-up efforts suggest the Southeast Asian country is joining a regional trend.

On May 25, the Myanmar President’s Office confirmed the resignation of Planning and Finance Minister Kyaw Win, after the Anti-Corruption Commission revealed he was being investigated for bribery. The commission is also pursuing a criminal case against Food and Drug Administration Director-General Than Htut for allegedly demanding more than $11,000 in bribes from a construction company.

Anti-Corruption Commission chairman Aung Kyi told VOA that, at this stage in the probe against Kyaw Win, “I do not have any obligation to reveal what type of corruption he committed.” The commission has announced they delivered the investigation report to the President’s Office on May 25, but its findings aren’t yet public.

Last week, Myanmar’s upper house of parliament passed amendments to the Anti-Corruption Law that would grant the commission powers to investigate conspicuously wealthy office-holders on their own initiative. Currently, the commission, which was reconstituted in November, must wait for complaints to be submitted to it with “strong evidence.”

Political will

The commission had previously only pursued cases against low-ranking officials, and was noticeably absent in large scandals. One example was the multi-million-dollar misappropriation of development funds by the former chief minister of Magwe Region, who was merely ordered to return a portion of the money last year.

Ko Ye, national coordinator for the Myanmar Alliance for Transparency and Accountability, told VOA the recent moves seemed to signal genuine “political will,” which he considered the most important ingredient in any anti-corruption fight.

Marie Cauchois Pegie, advisor to the United Nations Office on Drugs and Crime — which is helping Myanmar meet its commitments under the U.N. Convention against Corruption it ratified in 2012 — told VOA the amendment was clearly a step forward.

However, the inadequate protection of whistle-blowers remains a critical shortcoming. Complainants risk counter-suits in a court system that many see as beholden to powerful interests.

With the amendment, the commission sought a reduction in maximum prison sentences for complainants providing “false” information from five years to six months. However, the upper house only approved a reduction to three years.

The corruption law mandates that “necessary protection” be provided to those supplying evidence. But, as Pegie notes, “implementation is not really foreseen,” and the country lacks a witness protection program.

Going after tigers

At the start of his tenure as finance minister in 2016, Kyaw Win earned a reputation for dishonesty by listing a Ph.D. on his resume from a made-up university. He has since presided over a slowdown in the economy and growing frustration among businessmen and investors, making him a politically expedient target.

Myanmar’s new president Win Myint, at his inauguration in March, declared fighting corruption a top priority. His first public meeting was with the Anti-Corruption Commission, in which he commanded them to be bolder in the face of interference from powerful figures.

Ahead of the 2020 election, the National League for Democracy government is anxious to deflect widespread criticism over the slowing pace of reform.

Myanmar political analyst Yan Myo Thein told VOA pervasive corruption in everyday life could turn an anti-graft drive into a vote winner. Yet, he said this would require the government to keep “going after tigers, not just flies.”

However, Hunter Marston, analyst at the Brookings Institution in Washington, told VOA it was possibly too late for such a drive to pay electoral dividends by 2020. Given Myanmar’s sluggish court system, this is plausible. He suggested a winning strategy might better focus on rural poverty-alleviation measures.

A regional mix

Elsewhere in Southeast Asia, the region’s mix of one-party states, multi-party democracies and military regimes make it hard to draw clear lines between the aims or approaches of governments conducting anti-graft drives.

In Vietnam, a crackdown since 2016 has seen ex members of the Communist Party Politburo and Central Committee sentenced, and dozens tried in single cases.

Carl Thayer, emeritus professor at the University of New South Wales in Canberra, told VOA this has addressed a genuine spiraling of graft over the previous ten years, mostly linked to giant state-owned enterprises and associated banks.

However, he said a desire by the Communist Party to reassert control of the state has been a key impetus, and he downplayed the role of public opinion. Any recent popular dividend, he said, may have been “cancelled out by a crackdown on free expression and Internet communication.”

Aung Tun, a Myanmar independent researcher on corruption, said this authoritarianism made Vietnam an inappropriate model. He suggested Indonesia, a multi-party democracy with a strongly empowered anti-corruption commission and robust civil society, could point the way ahead.

However, Indonesia’s commission has pursued high-level targets since 2003, while corruption remains endemic. Its example suggests that clean government requires a degree of societal change that could take a generation, or more.

 
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Ivanka Trump’s brand continues to win foreign trademarks in China and the Philippines, adding to questions about conflicts of interest at the White House, The Associated Press has found.

On Sunday, China granted the first daughter’s company final approval for its 13th trademark in the last three months, trademark office records show. Over the same period, the Chinese government has granted Ivanka Trump’s company provisional approval for another eight trademarks, which can be finalized if no objections are raised during a three-month comment period.

Taken together, the trademarks could allow her brand to market a lifetime’s worth of products in China, from baby blankets to coffins, and a host of things in between, including perfume, make-up, bowls, mirrors, furniture, books, coffee, chocolate and honey. Ivanka Trump stepped back from management of her brand and placed its assets in a family-run trust, but she continues to profit from the business.

Noah Bookbinder, the executive director of Citizens for Responsibility and Ethics in Washington, said on Twitter that the recent approvals create “more conflicts of interest and more potential for using the White House for self-enrichment.” His government watchdog group was behind one of several lawsuits against President Donald Trump for violations of the emoluments clause of the constitution, which bars officials from accepting gifts from foreign states unless they are approved by Congress.

As Ivanka Trump and her father have built their global brands, largely through licensing deals, they have pursued trademarks in dozens of countries. Those global trademarks have drawn the attention of ethics lawyers because they are granted by foreign governments and can confer enormous value. Concerns about political influence have been especially sharp in China, where the courts and bureaucracy are designed to reflect the will of the ruling Communist Party.

Chinese officials have emphasized that all trademark applications are handled in accordance with the law.

More approvals are likely to come. Online records from China’s trademark office indicate that Ivanka Trump’s company last applied for trademarks — 17 of them — on Mar. 28, 2017, the day before she took on a formal role at the White House. Those records on Monday showed at least 25 Ivanka Trump trademarks pending review, 36 active marks and eight with provisional approval.

The World Intellectual Property Organization’s global brand database also shows that her company, Ivanka Trump Marks LLC, won three trademarks in the Philippines after her father took office. Two of them cover clothing, including lingerie and baby clothes, were filed on Feb. 8, 2017 and registered in June and November. The third, filed on Mar. 1, 2017, covers clothing and footwear and was registered in July.

Companies register for trademarks for a variety of reasons. They can be a sign of corporate ambition, but in many countries, like China, where trademark squatting is rampant, companies also file defensively, to block copycats from grabbing legal rights to a brand’s name. Trademarks are classified by category and may include items that a company does not intend to market. Some trademark lawyers also advise clients to register trademarks for merchandise that is manufactured in China, even if it’s not sold there.

Ivanka Trump does not have a large retail presence in China, but customs records show that the bulk of her company’s U.S. imports are shipped from China.

The brand’s secretive Chinese supply chains have been the subject of some controversy. A year ago Monday, three men working for China Labor Watch, a New York-based non-profit, were arrested while investigating labor abuses at Ivanka Trump suppliers in China. After thirty days in detention, they were released on bail, but continue to live under police surveillance.

Li Qiang, the group’s founder, said Monday that he hopes bail will be lifted soon and that the case will not go to trial.

Police in Ganzhou, the southeastern Chinese city where the men were detained, could not be reached for comment. The Chinese law firm that handles Ivanka Trump’s intellectual property in China also did not immediately respond to requests for comment.

 
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Vietnam is imitating China in its efforts to grow economically and lags its larger neighbor only by about a decade, experts say.

The two communist countries, though political rivals, have built up their state-controlled economies on job creation through factory work for export. 

China opened that effort to foreign investment in 1978 and Vietnam got started 10 years later. Now Vietnam is grappling with corruption, traffic gridlock and the sinking performance of state-run companies as its middle class grows, all hallmarks of China’s development.

In the latest sign of similarity, Vietnam’s National Assembly is examining a bill to let the country run three special economic zones. It has a chance of passing next month. The zones would offer foreign factory investors tariff exemptions and long land leases, Vietnamese news website VnExpress International says. China created its first four zones in 1979 to attract foreign investment. It now has 32.

“I don’t know whether it’s deliberate or otherwise, but it seems there is that hint of taking that page from the CPC playbook — Chinese Communist Party,” said Song Seng Wun, economist in the private banking unit of CIMB.

“Vietnam has a Communist Party, so I suppose there is that kind of ‘if China is doing it, we can also perhaps adapt it to Vietnamese conditions.’”

Controlled economy and factory work

Governments in both countries turned to factory work to employ large, uneducated populations, said Ralf Matthaes, founder of the Infocus Mekong Research consultancy in Ho Chi Minh City.

Reliance on factory work, especially for export, drove Chinese economic growth of about 10 percent per year over the decade to 2010. Vietnam’s economy has expanded at more than 6 percent annually since 2015.

Vietnam, like China a decade ago, depends largely on production of low-tech exports such as garments, furniture and car parts. China is moving up the value chain into high tech, and leaning more on services.

Companies from Japan, Singapore, South Korea and the West often offshore factory work to China as well as Vietnam to save on labor costs. China has been dubbed the “world’s factory” and Vietnam a “China+1” destination for investors looking to expand production to a cheaper country.

“How do you employ a bunch of unskilled workers?” Matthaes said. “Obviously mass manufacturing is one way. I think even though Vietnam holds Singapore in high regards in terms of ‘Singapore’s our greatest model,’ it’s China.”

Five years ago Vietnam’s ambassador to Singapore called relations with the fellow Southeast Asian country a model as trade links were growing then. Vietnam, though dependent on China for trade, regards China as a political rival. They fought a border war in the 1970s and now dispute sovereignty over parts of the South China Sea.

Managing outcomes of fast growth

Outcomes of factory-driven economic growth that China saw a decade ago are showing now in Vietnam, analysts note.

The number of Vietnamese who are middle class and higher will double between 2014 and 2020 to about one-third of the country’s population of 93 million, the Boston Consulting Group says. China says just 3.1 of its 1.38 billion people lived in poverty last year.

In other signs of following China, Vietnamese workers are known for job hopping within a few months for higher pay and showing it off with expensive smartphones, new cars and meals at expensive restaurants. Traffic is starting to thicken in the financial center Ho Chi Minh City as it has in China’s major cities such as Beijing and Shanghai since 2000.

Vietnam’s crackdown on corruption that went public in 2017 also followed the Chinese anti-graft campaign that experts say became more rigorous in 2012.

It’s Vietnam’s turn now to make its state-owned firms perform well or be sold off, analysts say. State-owned enterprises, another feature of communist countries, dominated the Vietnamese stock exchange from its inception in 2000 through 2005 as those assets were sold, said Kevin Snowball, chief executive officer with PXP Vietnam Asset Management in Ho Chi Minh City.

Thousands of Vietnam’s state firms have been all or partly privatized. China began reforming its state firms about 20 years ago and is still pressing them to change following a decline in profits in 2015 due to issues with corporate governance and labor productivity.

“Vietnam established the stock market in order to sell state assets basically, because when it started, essentially everything that was listed was state owned up until the end of 2005,” Snowball said. 

“The government needs to spend probably 25 billion dollars a year on infrastructure development in order to keep encouraging (foreign direct investment) to come in, and sale of state assets is partially funding that,” he said.
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New shops appear in New York City every day, but Phluid Project, which recently opened its doors on Broadway, is different. One of the first gender-fluid boutiques in the world, Phluid Project sells clothing for men, women and everyone in between. Both the clothes and the mannequins here are gender-neutral, and as an added selling point, its store owners say the prices are more than affordable. Elena Wolf visited the one-of-a-kind store, where no one feels out of place.
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Russian state gas giant Gazprom said Saturday it had signed a protocol with the Turkish government on a planned gas pipeline and agreed with Turkish firm Botas to end an arbitration dispute over the terms of gas supplies. 

The protocol concerned the land-based part of the transit leg of the TurkStream gas pipeline, which Gazprom said meant that work to implement it could now begin.

Turkey had delayed issuing a permit for the Russian company to start building the land-based parts of the pipeline, which, if completed, would allow Moscow to reduce its reliance on Ukraine as a transit route for its gas supplies to Europe.

A source said in February the permit problem might be related to talks between Gazprom and Botas about a possible discount for Russian gas.

Turkish President Tayyip Erdogan said earlier Saturday that Turkey and Russia had reached a retroactive agreement for a 10.25 percent discount on the natural gas Ankara buys from Moscow.

Gazprom said in the Saturday statement, without elaborating, that the dispute with Botas would be settled out of court.

 
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Italy’s would-be coalition parties turned up the pressure on President Sergio Mattarella on Saturday to endorse their euroskeptic pick as economy minister, saying the only other option might be a new election.

Mattarella has held up formation of a government, which would end more than 80 days of political deadlock, over concern about the desire of the far-right League and anti-establishment 5-Star Movement to make economist Paolo Savona, 81, economy minister.

Savona has been a vocal critic of the euro and the European Union, but he has distinguished credentials, including in a former role as an industry minister.

Formally, Prime Minister-designate Giuseppe Conte presents his cabinet to the president, who must endorse it. Conte, a little-known law professor with no political experience, met the president on Friday without resolving the

deadlock.

“I hope no one has already decided ‘no,’ ” League leader Matteo Salvini shouted to supporters in northern Italy. “Either the government gets off the ground and starts working in the coming hours, or we might as well go back to elections.”

Later, 5-Star leader Luigi Di Maio said he expected there to be a decision on whether the president would back the government within 24 hours.

5-Star also defended Savona’s nomination. “It is a political choice. … Blocking a ministerial choice is beyond [the president’s] role,” Alessandro Di Battista, a top 5-Star politician, said.

Mattarella has not spoken publicly about Savona, but through his aides he has made it clear he does not want an anti-euro economy minister and that he would not accept the “diktat” of the parties.

Jittery markets

Savona’s criticism of the euro and German economic policy has further spooked markets already concerned about the future government’s willingness to rein in the massive debt, worth 1.3 times the country’s annual output.

The League and 5-Star have said Savona should not be judged on his opinions, but on his credentials. Savona has had high-level experience at the Bank of Italy, in government as industry minister in 1993-94, and with employers lobby Confindustria.

On his new Facebook page, Conte said he had received best wishes for his government in a phone call with French President Emmanuel Macron.

European Commissioner for Economic Affairs Pierre Moscovici was not hostile when asked about Savona in an interview with France’s Europe1 radio, saying he would work with whomever Italy named.

“Italians decide their own government,” Moscovici said. “Italy is and should remain a country at the heart of the eurozone. … What worries me is the debt, which must be contained.”

The prospect of Italy’s government going on a spending spree on promised tax cuts and welfare benefits roiled markets last week.

On Friday, the closely watched gap between the Italian and German 10-year bond yields, seen as a measure of political risk for the eurozone, was at its widest in four years at 215 basis points.

The chance that the new government will weaken public finances and roll back a 2011 pension reform prompted Moody’s to say — after markets had closed Friday — that it might downgrade the country’s sovereign debt rating.

Moody’s has a Baa2 long-term rating with a negative outlook on Italy. A downgrade to Baa3 would take the country’s debt to just one notch above junk.

Despite the recent surge, Italian yields are well below the peaks they reached during the eurozone crisis of 2011-12, thanks mainly to the shield provided by the European Central Bank’s bond-buying program.
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