The Global Effect of the U.S. China Trade War Despite a China Deal, Trade Offensives Continue
Meanwhile, U.S.-European Union trade talks will stall over disagreements on agricultural products, and the United States will place more tariffs on European goods. The White House could rely on a number of justifications to implement the tariffs, such as France’s digital services tax or U.S. national security concerns over auto imports. But compared to Washington’s trade war with Beijing, the scope and scale of its new trade assaults against Europe will remain small.
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U.S. efforts to demobilize the World Trade Organization’s appellate body by denying it sufficient members to hear dispute cases will stymie the appeals process through the mechanism throughout 2020. U.S. efforts to force new negotiations over WTO reform may start to gain traction over the year, but in the meantime, the WTO’s members will try to keep dispute cases moving by modifying the settlement process or finding alternatives. The nonexistent appeals process will prompt other countries to follow the U.S. lead in employing aggressive and unilateral action in trade disputes. This would include a European response to U.S. tariffs against Airbus and the ongoing WTO case involving U.S. subsidies to Boeing.
The Competition for Tech Supremacy Rages On
Amid growing competition among Europe, the United States and China for technological supremacy, more tech sectors will be classified as national and economic security priorities. This competition will continue to fray global tech supply chains. As auctions, rollouts and infrastructure buildout for 5G data networks expand significantly in 2020, the United States is likely to maintain its pressure on China’s Huawei Technologies by continuing to sharpen export controls to limit Huawei’s access to U.S. technology and suppliers.
Huawei represents but one facet of the sprawling global tech competition that will continue to rage between the United States and China.
Washington will also push its allies to similarly restrict the company, including barring its equipment from 5G networks, but those efforts will meet with limited success. Instead, most countries will try to appease both China and the United States by allowing Huawei access to their networks, albeit limiting the use of its equipment in those networks, increasing the cost of the global 5G rollout. Eventually, the United States could take punitive action against countries that continue to use Huawei’s equipment, further fraying U.S. alliances. Huawei represents but one facet of the sprawling global tech competition that will continue to rage between the United States and China. There is much at stake: Winning the race to develop a specific new technology will allow the victor, whether Washington or Beijing, to begin to set that technology’s global standards by default.
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China, Europe and the United States will prop up their domestic tech companies by using a wide range of support mechanisms and restricting access to foreign investment. EU efforts to expand the regulation of U.S. tech companies will increase in 2020. In response, Washington will open more investigations looking into anti-competitive behavior and could impose punitive trade measures. The European Union will also seek to increase control over efforts by state-backed Chinese companies to purchase European companies in strategic sectors. The United States will use increased sanctions and export controls to cut down China’s tech sector, particularly for companies involved in places like Hong Kong and Xinjiang and those involved in the development of strategic technologies, such as artificial intelligence.
Source: Stratfor | Google
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