WTO

Mr. Naoyuki Haraoka's picture

Pondering National Security Concerns as a Basis for Trade and Investment Barriers

In March, United States (US) President Donald Trump decided to raise tariffs on steel by 25 percent and on aluminum by 10 percent for national security reasons. This raised concerns about possible retaliation by US trading partners that might lead to a damaging cycle of trade actions that shrank world trade and spurred a global depression. US national security economic-related worries pertain not only to trade but also to foreign direct investment (FDI), especially high-tech FDI, because an increasing number of civilian technologies can be adapted for military use.

MNCs in the News-2018-03-30

China responds to United States (US) World Trade Organization (WTO) complaint that its technology licensing practices are not WTO compliant. Washington considers new mechanisms for reviewing and limiting Chinese foreign direct investment (FDI) into the US technology sector. The Head of Australia’s Foreign Investment Review Board welcomes Chinese FDI as the country moves to improve its ability to minimize any related security threats. Takeda considering takeover of Irish drugmaker Shire as Japanese government seeks to tackle rising healthcare costs for its aging population. Softbank Vision Fund and Saudi Arabia to boost solar production in the Arab country. Tirebank intends to acquire Korean company Kumho Tire from Korea Development Bank because of frictions between Kumho’s workers union and Chinese buyer Doublestar. Renegotiation of South Korea-US Free Trade Agreement causes Hyundai to move production of its new pick-up truck model from Korea to the US. Pertamina reports it secured a contract with the Iranian government to take an 80 percent stake in Mansouri oil field. Jakarta put forth simplified tax holiday scheme in bid to boost investment in the country. Thailand approves USD $7.22 billion high-speed rail project to link three airports. Japanese electric vehicle producers flocking to Thailand in the wake of government promotion packages. Joint venture between Malaysia’s Yinson Holdings and PetroVietnam ordered to stop operations in Vietnamese offshore oil field due to Chinese pressure. InvestKL on track to bring in 100 multinational corporations by 2020. Hanoi announces list of sectors that would be prioritized to receive Japanese high-technology and investment. New Franco-Vietnamese investment deals signed as Vietnam’s Communist Party General Secretary visits France.

MNCs in the News-2017-09-29

China’s National Development and Reform Commission (NDRC) notes possibility China may expand its negative list approach nationwide as early as 2018. State-owned Assets Supervision and Administration Commission (SASAC) representatives encourage foreign investors to partake in China’s mixed-ownership reform of state-owned enterprises (SOEs). At the World Trade Organization (WTO), the United States (US) asks China to hold off implementing its cybersecurity law. US Committee on Foreign Investment in the United States opposition torpedoes Chinese bid to take a 10 percent stake in Dutch mapping company. Kobe Steel Ltd and US Steel Corp. to launch US joint venture to produce steel needed to build cars that meet their respective governments’ tightening emissions standards. Sumitomo has invested in Taiwanese electric scooter maker Gogoro to tap Gogoro’s advanced electronic battery technologies which are in increasing demand due to rising environmental standards. Unilever acquires Carver Korea as Korean makeup brand weakens due to declining sales in China resulting from THAAD tensions. Despite suffering from China’s THAAD related sanctions, Hyundai opens big data center in China to tap Chinese government’s promotion of connected cars. Indonesia's Transportation Ministry opens 12 infrastructure projects worth a total of USD $3 billion to foreign investors. Indonesia’s Indika Energy raises stake in large local coal producer after forced Freeport-McMorRan divesture and new Indonesian government policies drive Korea’s Samtan to reduce its stake in the country. Vietnam’s Ministry of Finance says equitisation progress of state-owned enterprises so far disappointing. World Bank and Vietnam’s Ministry of Industry and Trade collaborate to implement solar projects pilot auction program.

MNCs in the News-2017-09-22

China’s National Development and Reform Commission (NDRC) promises measures to create a better environment for foreign direct investment (FDI). China courts foreign investment in its energy sector to advance its reform initiatives. European Union (EU) Chamber of Commerce in China releases position paper detailing many areas of concern among its members about China’s policies towards inward FDI (IFDI). Chinese expresses concern about possible implications of proposed EU wide investment screening scheme. Toshiba selects consortium to take over its politically contentious USD $21 billion semiconductor business. Prime Minister May visits Japan as Japanese firms become more hesitant about continued investment in Britain due to Brexit’s slow and uncertain progress. Economic and security concerns prompt Korea’s Industry Ministry to review investment plans by South Korean semiconductor and display companies seeking expansion in China. State-owned Korea Electric Corp. represents South Korea in a bid to build Saudi Arabia’s first nuclear energy plant. Indonesia’s demand for steel is expected to rise substantially within the decade, triggering calls to improve investment conditions for steel producers. Foreign investment in Indonesian startups reaches USD $3 billion so far this year with Chinese FDI patterns shaped by government initiatives. New Thai Digital Park proposed, opening new potential vistas for foreign investors. Sumitomo Corporation starts construction third industrial park in Vietnam with Vietnam’s Deputy Prime Minister calling for best possible conditions for investors. With central government support, Hanwha Techwin to open first of three Vietnamese aircraft engine parts factories early next year.

MNCs in the News-2017-05-19

Almost five dozen global business groups send letter to top Chinese officials asking China to postpone the implementation of its cybersecurity law. Foreign pharmaceutical companies seek new ways to get high off China’s pharmaceutical policy reforms. Several American senators scream that Ant Financial’s takeover of MoneyGram is a national security threat. Joint strategic and security concerns over China’s Belt and Road initiative drive Japan and India to engage in new economic partnership. China’s economic retaliation against South Korea following South Korea’s adoption of THAAD missile system decreases after the installation of a new Korean government. Daewoo E&C and Hanwha E&C partner with Saudi Arabian government to develop new Saudi Arabian city. Wanda Group Chairman meets with Malaysia’s Prime Minister and considers investment exceeding USD $10 billion in Bandar Malaysia development. Malaysia’s troubled carmaker Proton seeks to sell up to 51 percent stake to foreign investor. Survey shows that despite government encouragement to go overseas smaller Singapore businesses emphasize local investments. Vietnam’s President welcomes Chinese hi-tech investment as Hanoi pursues a green economy and economic growth. Transfer pricing continues to be a serious problem with foreign investment in Vietnam.

MNCs in the News-2017-03-24

The Information Technology & Innovation Foundation (United States) has called for global action in the face of China’s Made in China 2025 plan. Chinese Ministry of Industry and Information Technology (MIIT) official defends his country’s “Made in China 2025” plan. China’s Food and Drug Administration issues draft policy that would allow foreign drugs to be tested and approved much more quickly in China. During a visit to China, Apple CEO Tim Cook announces Apple will open new R&D centers in Shanghai and Suzhou. Microsoft touts the development of a China-specific Windows 10 operating system that is “secure and controllable.” Chinese government agencies are working on a policy that would specify those sectors where outward foreign direct investment (FDI) was encouraged and those where it was restricted. Tokyo says it does not plan to support troubled Toshiba and that it will share information with Washington about Toshiba and its bankrupt US nuclear division. Japanese and Russian officials meet to discuss ways to jointly develop the islands off Hokkaido they both claim. South Korea asks the World Trade Organization to review Chinese sanctions against Korean companies relating to its deployment of THAAD. South Korea’s SK Engineering & Constructions partners with Turkey’s UNIT International to win multi-billion dollar power plant construction project in Iran. Energy firms urge Indonesian government to enhance its policies in the upstream and downstream oil and gas sectors.

MNCs in the News-2017-03-10

European Chamber of Commerce in Beijing highlights China’s 2025 Plan as possibly violating China’s World Trade Organization (WTO) commitments. China’s re-imposition of capital controls becomes a hot issue at China’s 2017 National People Congress meeting. Facing seemingly severe constraints on their ability to access/use yuan, Chinese corporate executives are complaining about the impact of such limits on their ability to do deals. In the face of possible increased American trade barriers, Great Wall Motor Co. ponders building its first factory in the United States (U.S.). Wanfeng Auto Holding Group looks to the U.S. for deals to jump potential tariff and other barriers in the U.S. Toyota Motor Corp. may wait until economic fallout of Brexit becomes clearer until it decides whether or not to produce the next generation Auris in the United Kingdom (U.K.). Honda announces plans to invest $150 million in transmission facilities in Georgia and Ohio in the US. Chinese sanctions against South Korea because of the latter’s deployment of the Terminal High Altitude Area Defense system hit Korean companies inside and outside China. Korea’s Trade Minister meets with US Commerce Secretary Wilbur Ross to seek ways to boost investment and other forms of cooperation. Indonesia explores new levels of investment cooperation with Japan. Indonesia welcomes small amount of investment from Saudi Arabia flowing from visit of Saudi king, but does not receive large amounts expected.

MNCs in the News-2017-02-17

American business community becomes more favorable towards “reciprocity” policy towards China. Hejun Vanguard Group files complaint against sale of McDonald’s China and Hong Kong assets. Chinese firms’ pursuit of investment in critical sectors leads Germany, France, and Italy to ask European Union (EU) to give it more powers to investigate and block investments. The United States (US) Federal Trade Commission asks Syngenta for more information regarding its proposed acquisition by China’s ChemChina. In the face of potential restrictions on Chinese firm investments in non-core businesses, Dalian Wanda eyes European bank deals. Japanese companies face investigation by South Korea’s transport ministry which has begun to investigate more firms in the wake of the Volkswagen emission manipulation scandal. Toshiba will remove itself from work on the UK’s new Moorside nuclear plant. South Korea’s Korea Electric Power Corp. (KEPCO) has started its first wind power plant in Jordan. Korean outward foreign direct investment (FDI) grows significantly in 2016 with a large increase in money flowing to the US. Indonesian loosening of ban on raw mineral ore exports has many implications. Indonesian regional elections have big implications for Indonesia’s inward FDI (FDI)

Dr. Hwy-Chang Moon's picture

Made in Home Country, Host Country, or the World? The need to Revamp Globalization Indices

South Korea is very concerned about its economy because the exports of its major conglomerates like Samsung Electronics and Hyundai Motors have declined. Although their domestic production and exports are decreasing, they are producing more in foreign countries and increasing their exports from these host countries.

Dr. Amitendu Palit's picture

Europe Resists China’s Economic Inroads

Political resistance is hardening to China’s commercial presence in Europe. Two recent events make this evident. The latest of these is a review by the European Union (EU) Commission of the proposed merger between France’s EGF and China General Nuclear Power (CGN), a state-owned enterprise (SOE).

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