En­ergy, not tech or fi­nance, in CEO lineup for Trump’s China visit

Tech firms lim­ited by mar­ket ac­cess bar­ri­ers

Kuwait Times - - Business -

BEI­JING: US en­ergy and com­modi­ties firms will make up a major part of a busi­ness del­e­ga­tion vis­it­ing Bei­jing at the same time as US Pres­i­dent Don­ald Trump goes to China in Novem­ber, ac­cord­ing to an ini­tial list seen by Reuters.

Prom­i­nent tech­nol­ogy and fi­nan­cial com­pa­nies are mostly ab­sent from the list, re­flect­ing the slow progress Wash­ing­ton has made in open­ing up China in those sec­tors.

Com­merce Sec­re­tary Wil­bur Ross, who will lead the 29 com­pa­nies that have been ap­proved to travel on the trade mis­sion start­ing on Nov. 8, said they will be look­ing for “im­me­di­ate re­sults” and “tan­gi­ble agree­ments”. But, speak­ing at the Pa­ley In­ter­na­tional Coun­cil Sum­mit in New York on Wed­nes­day, he ac­knowl­edged that mar­ket ac­cess, in­tel­lec­tual prop­erty rights, and tar­iffs are more com­plex and will take a longer time to ne­go­ti­ate.

Some major in­dus­trial com­pa­nies - Gen­eral Elec­tric Co, Honey­well In­ter­na­tional Inc and Boe­ing Co - are among the com­pa­nies on the cur­rent list.

Whether ex­ec­u­tives from all the named com­pa­nies end up at­tend­ing could be sub­ject to agree­ments or deals be­ing ne­go­ti­ated in time for the visit, ac­cord­ing to mul­ti­ple sources whose com­pa­nies are in­volved. One of the few tech com­pa­nies go­ing with Trump is Qual­comm, which earns about half of its global rev­enue in China and faces a se­ries of tricky le­gal is­sues there, in­clud­ing a law­suit with Ap­ple and the Chi­nese gov­ern­ment’s re­view of its pend­ing $38 bil­lion merger with NXP Semi­con­duc­tors. Qual­comm said its CEO, Steve Mol­lenkopf, planned to at­tend.

An in­dus­try source told Reuters tech firms were re­luc­tant to go, given China mar­ket ac­cess is­sues, the un­pre­dictabil­ity of the Trump ad­min­is­tra­tion, and a “Sec­tion 301” US trade in­ves­ti­ga­tion al­leg­ing Chi­nese abuses of in­tel­lec­tual prop­erty.

“(Th­ese) is­sues are ex­tremely sen­si­tive for tech com­pa­nies said an­other source in the US busi­ness com­mu­nity.

“Very few want to stick their heads up and be per­ceived as com­plain­ing di­rectly, and even fewer trust this White House to do any­thing help­ful on their is­sues,” he said. Par­tic­u­larly galling to for­eign tech firms are a slate of new national se­cu­rity and cy­ber se­cu­rity reg­u­la­tions, which man­date com­pa­nies store cru­cial data within China and pass se­cu­rity re­views they ar­gue could put busi­ness se­crets at risk.

Testy re­la­tion­ship

Trump, a real es­tate mag­nate who had never be­fore held pub­lic of­fice, has had a some­times testy re­la­tion­ship with cor­po­rate Amer­ica since tak­ing of­fice in Jan­uary. He dis­banded two high-pro­file busi­ness ad­vi­sory coun­cils in Au­gust after sev­eral chief ex­ec­u­tives quit in protest over his con­tro­ver­sial re­marks on racist vi­o­lence in Char­lottesville.

US in­dus­try sources say it has been years since a major busi­ness del­e­ga­tion has gone to China dur­ing a US pres­i­den­tial visit. Calls for such a del­e­ga­tion dur­ing Trump’s visit orig­i­nated in the China-based US busi­ness com­mu­nity, ac­cord­ing to sev­eral sources, who saw a need to match grow­ing ef­forts by Ger­many, France and Bri­tain to pro­mote their na­tion’s firms in China.

Trump, who has fre­quently cited the sub­stan­tial US trade deficit with China as a rea­son why Wash­ing­ton should take more pro­tec­tion­ist mea­sures, was an easy sell on in­cor­po­rat­ing a group of ex­ec­u­tives into the visit, ac­cord­ing to the sources. None­the­less, some trade an­a­lysts say China has done a good job of tam­ing Trump’s com­bat­ive trade im­pulses. They worry the U.S. ad­min­is­tra­tion will be will­ing to pa­per over mar­ket ac­cess con­cerns dur­ing the visit in its fo­cus on get­ting Bei­jing to take ac­tion against North Korea over its nu­clear and mis­sile pro­grams.

Bei­jing agreed in May to grant lim­ited US ac­cess in fi­nan­cial ser­vices in bi­lat­eral talks aimed at re­duc­ing China’s trade sur­plus with the United States which reached $347 bil­lion last year, but busi­ness groups com­plained it was too lit­tle, too late.

Wil­liam Zarit, the chair­man of the Amer­i­can Cham­ber of Com­merce in China, told Reuters he didn’t ex­pect Trump to push hard on mar­ket ac­cess is­sues on this trip.

“Un­for­tu­nately, I think the Chi­nese aren’t go­ing to start to re­spond un­til they feel some pain,” Zarit said. “We’re all won­der­ing what that is go­ing to mean.”

Scott Kennedy, at the Cen­ter for Strate­gic and In­ter­na­tional Stud­ies think tank in Wash­ing­ton, said Bei­jing has de­flected com­mer­cial is­sues “us­ing a com­bi­na­tion of lead­er­ship flat­tery, coax­ing up to his (Trump’s) fam­ily, to­ken con­ces­sions, ad­just­ing their level of help on North Korea sanc­tions, and threats of re­tal­i­a­tion should the US take any uni­lat­eral ac­tion”.

Gas ex­ports Agribusi­ness and en­ergy firms dom­i­nate the del­e­ga­tion list. They in­clude Archer Daniels Midland Co (ADM), one of the world’s largest grain com­pa­nies, and chem­i­cals and agribusi­ness gi­ant DowDuPont.

Ten of the com­pa­nies are in­volved in gas or other en­ergy fields, in­clud­ing Che­niere En­ergy Inc, which op­er­ates the only US liq­ue­fied nat­u­ral gas (LNG) ex­port ter­mi­nal, three that are build­ing new projects, and Free­p­oint Com­modi­ties, founded and run by David Messer, who led power util­ity Sem­pra’s vaunted com­modi­ties di­vi­sion.

Their pres­ence un­der­scores the US am­bi­tion to sell more of its ex­cess gas abroad as its shale rev­o­lu­tion con­trib­utes to a global LNG glut.

Oth­ers on the list who con­firmed plans to at­tend in­clude GE, Hous­ton-based LNG com­pany Delfin Mid­stream, So­larRe­serve, Stine Seed Com­pany, biotech firm Drylet, waste­water-pro­cess­ing firm Viro­ment and the US Soy­bean Ex­port Coun­cil.

Bell He­li­copter and crane-maker Terex Corp are also on the del­e­ga­tion list. Honey­well, DowDuPont and ADM did not re­spond im­me­di­ately to a re­quest for com­ment and Free­p­oint, Che­niere, Sem­pra En­ergy, and Texas LNG Brownsville LLC said they had no com­ment.

Boe­ing told Reuters it does not yet have plans to send any­one but that may change. Alaska Gasline De­vel­op­ment Corp said it had no in­for­ma­tion to re­lease.

The US Com­merce Depart­ment, which is lead­ing the del­e­ga­tion, has not yet is­sued its own list. At least one of the com­pa­nies on the list tried to dis­tance it­self from Trump. So­larRe­serve told Reuters in a state­ment that it had been se­lected to par­tic­i­pate in the com­merce depart­ment’s del­e­ga­tion but stressed that “we are not part of the busi­ness del­e­ga­tion trav­el­ling to China with Pres­i­dent Trump.”

Tot­ing ex­ist­ing deals

One US of­fi­cial told Reuters on con­di­tion of anonymity that Trump will tout deals an­nounced dur­ing the trip, but they would have likely hap­pened re­gard­less.

The risk is that com­mer­cial deals “dis­tract from longterm po­lit­i­cal so­lu­tions” to trade is­sues, the of­fi­cial said. Evan Medeiros, for­mer Pres­i­dent Barack Obama’s top Asia ad­viser, made a sim­i­lar point in Wash­ing­ton. Bei­jing would avoid se­ri­ously ad­dress­ing the “un­der­ly­ing sys­temic prob­lems” such as mar­ket ac­cess for high-tech goods and in­tel­lec­tual prop­erty pro­tec­tion dur­ing the visit, he pre­dicted.

“The Chi­nese will be happy to buy a lot of Amer­i­can goods. That’s what they know Trump wants - big ex­port num­bers,” he said, pre­dict­ing that China would an­nounce big busi­ness deals and al­low the pres­i­dent to tout them dur­ing his visit. —Reuters

China world’s third-largest gas buyer


BEI­JING: A woman takes a nap at a bro­ker­age house dis­play­ing stock trad­ing in­dex in Bei­jing yes­ter­day. Asian stock mar­kets were mixed yes­ter­day as in­vestors waited to find out US Pres­i­dent Don­ald Trump’s pick to head the Fed­eral Re­serve.

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