Tag Archives: markets

Foreign Business Inside the PRC

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The Qualcomm’s acquisition of NXP Semiconductors is supposedly in jeopardy as the People’s Republic of China threatens approval of the acquisition in its prosecution of its long-term trade fight with the US.

But wait—Qualcomm is an American company, and NXP is a Dutch company.  Why does the PRC even have a say in this?

[The PRC] is the last of nine markets where Qualcomm and NXP need approval from competition authorities….

There’s a perfectly straightforward way around this.  The two could stop doing business in the PRC, which is not a business-friendly nation, anyway, what with the nation’s demands that foreign companies give up their technology to domestic “partners” and that they install backdoors into their core softwares so the PRC government can go in and poke around at whim.

Certainly, there would be large initial costs from walking away from such a large market, and there would be market share reduction in the middle term from ceding that market to competitors.  But what would be the costs, really?  Less anticompetitive restrictions on the combined company’s operations, less government sanctioned—even demanded—theft of proprietary and intellectual property, saddling the PRC albatross to those competitors anxious to fill the “gap.”

And real gains from quitting the PRC market: more efficiencies from better focus on the other eight markets, and a better ability to keep and expand the combined company’s technological edge over its competitors by not having to give up that edge to the PRC.

Auto Tariffs Revisited

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EU Trade Commissioner Cecilia Malmström says the EU will respond to any increase in US tariffs on imported autos and auto parts with its own tariffs on autos and parts imported from the US.

And,

The EU cannot offer a bilateral deal only on autos, Ms. Malmström said, to address Mr Trumps complaints about the 28-member bloc’s 10% car tariffs—which are quadruple the US rate.

Never mind that applying its own auto and auto parts tariffs to imports from the US is precisely such a bilateral action.

In the meantime, Malmström, along with the rest of EU governance, continue to studiously ignore an offer already on the table: no tariffs at all on auto and auto parts imports.

Auto Tariffs

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Auto makers, parts suppliers, and dealers are joining forces to push back against the Trump administration’s proposal to apply tariffs of up to 25% on vehicles and components imported into the US….

The auto industry is aiming at the wrong target.  The German auto industry and the US have already agreed in principle to a regime of no auto tariffs at all.  It’s the German government that’s waffling and the EU that’s ignoring the matter altogether.

These domestic execs need to be asking the German government and the EU why they’re so disinterested instead of whining about domestic matters.

An Example of Irrationality

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Here’s Donald Trump decrying Germany’s willingness make itself dependent on Russian energy supplies by pushing for Nordstream 2, which will mean that Germany will get 60% of its natural gas from Russia, to go with the 40% of its oil imports that already are from Russia.  Aside from becoming so dependent on an enemy for its energy, Germany will be paying Russia billions of euros for the privilege.

I have to say, I think it’s very sad when Germany makes a massive oil and gas deal with Russia, where you’re supposed to be guarding against Russia, and Germany goes out and pays billions and billions of dollars a year to Russia.

The Progressive-Democrats went hysterical over Trump’s remark.  Here’s House Minority Leader Nancy Pelosi (D, CA) and Senate Minority Leader Chuck Schumer (D, NY) in a joint statement:

President Trump’s brazen insults and denigration of one of America’s most steadfast allies, Germany, is an embarrassment.  His behavior this morning is another profoundly disturbing signal that the President is more loyal to President Putin than to our NATO allies.

Because not wanting billions of euros to go to Russia in return for dependency on Russian good offices is somehow being loyal to Putin.

Sure.

Not Far Wrong

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In an interview with the British newspaper The Sun, President Donald Trump said that Prime Minister Theresa May’s Brexit “blueprint” for Brexit would likely kill any opportunity for special trade deals with the US.  A critical part of that blueprint would have Great Britain

stick[ing] to a common ­rulebook with Brussels on goods and agricultural produce in a bid to keep customs borders open with the EU.

The EU’s trade rulebook, not just on goods and ag products, but covering all trade, explicitly blocks nations from entering into unilateral trade deals with non-EU nations.  Trade deals with non-EU nations can only be EU trade deals.  Sticking to the EU’s trade rulebook, then, would make it impossible for Great Britain to enter into its own deals with other nations—including with the US.

If they do a deal like that, we would be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal.

If they do that, then their trade deal with the US will probably not be made.

Trump isn’t far wrong on that.

At a joint news conference the day after the Sun interview, though, May said that

the leaders had agreed to pursue an “ambitious” trade deal between the two nations that “works for both countries right across the economies.”

That would seem encouraging for Great Britain, implying as it does that May’s blueprint doesn’t, or will be modified to not, include a commitment to the EU’s trade rulebook.