| | | | |  | | By Gavin Bade | | | With help from Doug Palmer and Ari Hawkins
| | | — Biden administration economic officials have been taking meetings with industry groups and allies ahead of an executive order to screen American investments in China — expected before the end of the year. — Trade tensions are threatening to overshadow French President Emmanuel Macron's visit to the White House this week, with Paris and other European capitals still fuming over new U.S. electric vehicle subsidies that favor North American firms. — And supporters of an intellectual property rights waiver for Covid 19-related goods are hopeful that an upcoming meeting between Biden and African leaders can dislodge negotiations. It's Monday, Nov. 28. Welcome to Morning Trade. Send us your trade news: gbade@politico.com , soverly@politico.com , ahawkins@politico.com and dpalmer@politico.com .
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| | | WHITE HOUSE CONSULTS INDUSTRY ON OUTBOUND INVESTMENT: Officials from the Commerce Department, National Security Council and other agencies have taken meetings with industry officials, allies and others over the past two months as they work to finalize new oversight for American firms in China. "The Biden administration continues to discuss with stakeholders, including industry, allies and partners, our ongoing deliberations to develop a carefully tailored approach to outbound investments in sensitive technologies," said an NSC spokesperson, "particularly investments that would not be captured by export controls or other currently available tools, and could enhance the technological capabilities of our competitors in ways that undermine U.S and allied security." The meetings, described as "listening sessions" by one source with knowledge, have been going on since at least October. And what they indicate isn't immediately clear. Other than confirming a wide range of discussions, the White House's statement doesn't tell us anything we didn't already know about the nature of the executive order. That the administration would try to target technologies not already covered by export controls and those beneficial to China's military has been known for months . Meet for what? The White House could be seeking input from allies and firms that do business in China because of disagreements over the final scope of the order, like which industries it should cover. Or the administration could simply be trying to check the box on industry engagement before issuing the order. The officials didn't apparently give up much during the meetings, and the White House did not elaborate further. Something's coming: Either way, the talks show that the White House has been working in earnest over the past few months to shape the new screening mechanism for American investments in China — the first time the federal government will exert such broad power over U.S. industry overseas. In October, the administration confirmed that the order would likely establish new regulatory power over investments , going further than simply requiring companies to disclose their plans to the government. Hill work ongoing: Congress is participating as well, crafting its own version of outbound investment review meant to codify the administration's act into law. But work on that bill isn't likely to be done before the end of the year, despite efforts from outgoing Sen. Pat Toomey (R-Pa.) to short-circuit the process before he retires . That means 2023 is shaping up to be a big year for China economic policy. In addition to the existing outbound investment bill, called the National Critical Capabilities Defense Act, House Republicans are getting ready to take up the issue of capital controls on American financial firms investing in Chinese companies. That could mean much broader oversight than the NCCDA and the Biden administration's executive order, which are expected to cover only a handful of critical sectors and target a narrower set of direct investments in China, like new factories or joint ventures with Chinese firms. "We have an approach that we will present next Congress in clear form on our capital markets and our approach to competition with China," Rep. Patrick McHenry (R-N.C.), who will likely head the House Financial Services Committee next Congress, told POLITICO recently. "There have been great conversations across different committees in this Congress and last about our approach, but we'll engage in a more fulsome way in the next Congress."
| | | | A message from Global Business Alliance: When international companies invest in the U.S., it's a vote of confidence in America's workforce. These companies have invested $5 TRILLION into the U.S. economy – employing 7.9 million Americans and paying an average of $84,800 in compensation annually. These workers produce 24 percent of U.S. goods exports. GBA represents some of the most well-known brands in the world. Learn more about our work and explore how global investment strengthens our economy at globalbusiness.org. | | | BIDEN'S CHARM OFFENSIVE: President Joe Biden's rolling out the red carpet this week for French President Emmanuel Macron, welcoming him with a state dinner on Thursday complete with New Orleans-style entertainment from Jon Batiste. He'll need all the charm he can muster: Macron and the rest of the European Union are fuming at Biden's Inflation Reduction Act , which grants $369 billion worth of subsidies and tax breaks to American electric vehicle and renewable energy firms — but not their EU competitors. Macron has called for the EU to respond with its own measures that would subsidize European firms, sparking concerns of a subsidy war between the two global economic leaders — or worse. His trade minister Olivier Becht upped the stakes last week , saying at a meeting of EU ministers on Friday that the bloc should use "coercive" measures if Washington doesn't change the IRA to include European firms. That brings to mind harsher options, like tariffs or other trade restrictions. The EU wants to be treated the same as Canada and Mexico, which are included in the IRA because the law stipulates that electric vehicles with final assembly in North America are eligible for subsidies. In theory, the Treasury Department could try to finesse a loophole in that language as it implements the bill. But Secretary Janet Yellen appeared to downplay that option last month, saying the law "is what it is" while promising to take allies' concerns into account. That means any changes will likely have to come from Congress, and the prospects for that look dim. Though there are some proposals to widen the law's eligibility, like from Georgia Sen. Raphael Warnock (D), Congressional trade leaders have shown little interest in reopening the IRA, particularly as they rush to hash out year-end deals on government spending, tax extenders and the yearly defense spending bill. TTC in jeopardy: That puts the U.S.-EU relationship on rocky ground ahead of next week's meeting of the Trade and Technology Council, the main convening body for leaders to discuss trans-Atlantic economic issues. Ahead of the trade ministers' meeting on Friday, EU officials reiterated that the issue is at the front of their minds going into the meeting. "A subsidy rally is a very dangerous game," Jozef Síkela told reporters in Brussels . "The winner might then sit on [another] continent — not in Europe, and not on the American one," said Síkela, trade and industry minister of the Czech Republic, which currently holds the presidency of the Council of the EU. A spokesperson made it clear that Síkela was referring to China. The TTC was supposed to address a number of other trade issues, like how to coordinate the U.S. and EU's hundreds of billions of dollars in semiconductor subsidies without sparking a subsidy war similar to the EV issue. And the U.S. is still trying hard to convince the EU — and the Dutch in particular — to follow its lead in blocking the sale of semiconductor manufacturing equipment to China. EU leaders have been clear that their bitterness over the IRA's electric vehicle subsidies are making it more difficult to help Washington on other fronts. We're friends, right? "We need to cooperate when it comes to defense and security issues, because we have the same enemies. And when it comes to trade, we have the same competitors. The EU and the U.S. should be at one on these issues," Irish Trade Minister Leo Varadkar said on Friday. Keep talkin': The U.S. and EU launched a separate task force in November to address the EU issue, and EU Trade Commissioner Valdis Dombrovskis said on Friday that he expects that group to keep talking after the TTC meetings that start Dec. 5.
| | | | POLITICO APP USERS: UPGRADE YOUR APP BY DECEMBER 19! We recently upgraded the POLITICO app with a fresh look and improved features for easier access to POLITICO's scoops and groundbreaking reporting. Starting December 19, users will no longer have access to the previous version of the app. Update your app today to stay on top of essential political news, insights, and analysis from the best journalists in the business. UPDATE iOS APP – UPDATE ANDROID APP . | | | | | WAIVER ADVOCATES PIN HOPE ON U.S.-AFRICA SUMMIT: Supporters of an intellectual property rights waiver for Covid-19 diagnostics and therapeutics hope a Dec. 13-15 summit meeting between President Joe Biden and African leaders could help break a stalemate on the issue at the World Trade Organization. "I think it is likely that African leaders will raise the issue with President Biden," Peter Maybarduk, access to medicines director for Public Citizen, told Morning Trade. "And I think it's appropriate for the president to respond with a solution that facilitates access and doesn't create any barriers to Covid therapeutics." WTO members agreed at their 12th Ministerial Conference in June to provide a limited waiver for Covid vaccines — and to decide in six months, or by Dec. 17, whether to extend a similar waiver for diagnostics and therapeutics. With that deadline looming, there is no indication that WTO members will reach an agreement anytime soon. However, U.S. support for a waiver could change the dynamic in Geneva, just as it did when the Biden administration announced support for a vaccine waiver in May 2021. Medicines Patent Pool: Maybarduk said he has heard that one reason the Biden administration has been reluctant to endorse a waiver for therapeutics and diagnostics is because they believe it could jeopardize voluntary licensing agreements for Paxlovid and other treatments that Pfizer and other pharmaceutical companies have reached, including with the Medicines Patent Pool, a UN-backed public health organization. Maybarduk, who serves on the MPP board but emphasized he was only speaking on behalf of Public Citizen, urged the administration not to give that possibility too much weight. "I haven't heard or have any reason to think that it's actually an issue," Maybarduk said. "I mean, if it's an issue, or if it were to become an issue, it's only because pharma is saying like, 'We're gonna take our ball and go home.' It would be pharma trying to bully others." Pfizer's response : Pfizer spokeswoman Sharon Castillo said there's no evidence that IP protection has prevented access to Covid therapeutics and that other factors like low demand, low levels of testing and insufficient country readiness are bigger impediments. She also argued the partnerships that drug companies have negotiated are a better option for expanding access to the medicines than further weakening the WTO's Agreement on Trade-Related Aspects of Intellectual Property with an expanded waiver. "Unlike the proposal to weaken TRIPS, the voluntary license agreement that Pfizer signed with MPP includes a host of provisions to enable the rapid development and distribution of quality-assured generic versions of Pfizer's oral treatment to further expand long-term global supply and access," Castillo said in an email. In the case of Paxlovid, every low- and middle-income country in the world, except China, can now potentially access either the oral treatment or a generic version of it through agreements reached with the MPP, UNICEF and the Global Fund, an international health care partnership between governments and the private sector, she added. PrHMA's response: Megan Van Etten, a spokesperson for Pharmaceutical Research and Manufacturers of America, said it was "great to hear" — at least indirectly — "the administration is finally acknowledging the more than 140 licensing agreements for Covid-19 treatments already underway in more than 30 countries — many through the Medicines Patent Pool." USTR says still consulting: "The global impacts of the pandemic require countries and economies to work together to facilitate an equitable recovery," USTR spokesperson Adam Hodge said. "USTR continues to listen to a broad range of stakeholders and consult with WTO Members and Congress on the discussions regarding the Ministerial Decision on the TRIPS Agreement."
| | | | A message from Global Business Alliance:   | | | | | | — Chinese telecoms giant Huawei is pushing out its pedigreed Western lobbyists , retrenching its European operations and putting its ambitions for global leadership on ice, reports POLITICO's Laurens Cerulus and Sarah Wheaton reports. — The U.S. on Friday banned the import and sale of new telecommunication equipment from Huawei, ZTE and three other Chinese companies, POLITICO's Giorgio Leali reports. — Canada is stepping up its diplomatic pressure on China in a new Indo-Pacific strategy document, POLITICO reports. — Ukrainian President Volodymyr Zelenskyy on Saturday received top Western officials as he officially launched a new food initiative to subsidize grain exports to Africa, POLITICO's Giorgio Leali reports. — A European Commission proposal to set a cap on the price of imported natural gas was supposed to calm demands for action to rein in high prices — instead, it's set off a political crisis, reports POLITICO's Victor Jack and Barbara Moens. — German Economy Minister Robert Habeck voiced skepticism that the EU could still reach an agreement with the U.S. over a contentious industrial subsidy package, POLITICO's Hans von der Burchard report. — An effort to end plastic pollution by 2040 is dividing the United States and the European Union, writes Leonie Cater and Jordan Wolman for POLITICO Pro.
| | | | A message from Global Business Alliance: The Global Business Alliance (GBA) represents some of the most well-known brands in the world and is the premier advocacy resource for international companies operating in the United States.
When international companies invest in the U.S., it's a vote of confidence in America's workforce.
To date, these U.S. employers have invested $5 TRILLION into operations across our country – employing 7.9 million American workers and offering salary and benefits that are 10 percent higher than the national average.
But that is not all: American workers at international companies produce 24 percent of all U.S. goods exports, shipping $347 billion in goods to customers around the world.
Learn more about our work and explore how global investment strengthens our economy at globalbusiness.org. | | | THAT'S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: dpalmer@politico.com , ahawkins@politico.com , gbade@politico.com and soverly@politico.com . Follow us @POLITICOPro and @Morning_Trade . | | | | Follow us on Twitter | | | | Follow us | | | | |
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