Washington Insider-- Friday

Asia's Exporters Heal Slowly From COVID

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

CR Signing To Set Farm Program Payments In Motion

Approval of the continuing resolution (CR) to keep the government funded through December 11 and provide for $20 billion in Commodity Credit Corporation (CCC) borrowing authority means that the Farm Service Agency (FSA) will start the process of making a series of “regular” farm program-related payments to farmers.

FSA will start processing payments for Transition Incentives Program (TIP), Emergency Forestry CRP (EFCRP) and for some Conservation Reserve Program (CRP) contracts October 2, for Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) payments on October 6, other CRP payments October 9 and for ARC Individual Option Contracts on October 26.

UK Beef Shipment En Route To US

A shipment of meat from Northern Ireland is on its way to the U.S., decades after a mad cow disease scare prompted the U.S. to block all imports of UK beef.

The shipment, the first since 1996, comes amid negotiations toward a bilateral trade deal. An audit by USDA's Food Safety and Inspection Service in March led to the U.S. lifting the ban on beef imports from all of the UK—England, Wales, Scotland and Northern Ireland.

The Trump administration wants Britain to remove a ban on imports of American beef produced with artificial growth hormones.


Washington Insider: Asia's Exporters Heal Slowly From COVID

Asia's manufacturing engines just turned in another month of fitful progress, as September's purchasing managers indexes look a bit brighter, with a few exceptions.

Bloomberg is reporting this week that that India's factory gauge surged further into expansion, while still making up for a record-low reading in April and with more challenges ahead given a worsening COVID-19 outbreak. Japan's PMI rose to the highest level since February but continues to contract.

Vietnam improved to its best level in more than a year and Thailand and the Philippines each edged higher. Indonesia brought the biggest bad news, with its gauge slumping as Jakarta reintroduced restrictions to curb the spread of coronavirus cases.

Bloomberg also says that the PMI reports for several “bellwethers for the global rebound in trade – South Korea and Taiwan – won't be available until later in October, and that China's Caixin PMI is now set for release Oct. 8, due to holidays.”

A few of the PMIs followed more hopeful signs for the regional recovery, a separate report Thursday showed South Korean exports gaining for the first time since the pandemic hit. Also, Wednesday's figures from China indicate “further momentum in economic activity.”

For Vietnam, the manufacturing jump was overshadowed by a string of other data and developments in the Southeast Asian nation over the past 24 hours. For example, the U.S. is readying a probe into Vietnam's currency practices, Bloomberg says, thickening the long-term plot of sticky U.S.-Vietnam relations on the sidelines of the U.S.-China trade war.

Bloomberg also says that on Wednesday Vietnam reported an acceleration in third-quarter growth – although the rate was “slower than expected.”

Nevertheless, Bloomberg concludes that “the warning more broadly from Wall Street economists heading into the final quarter of the year is that the best is already over for recovery” of this region. They suggest now that, “what started off as a sprint is turning into a slog.”

In a side note Wednesday, Bloomberg noted a report that suggested that China's tech companies will face a tougher time globally in the future as digital decoupling accelerates and countries with shared values join forces to promote their technology standards and ethics, according to a report from the Hinrich Foundation.

Moves by the U.S. against companies such as TikTok, WeChat, Huawei Technologies Co. and Semiconductor Manufacturing International Corp. are only the beginning of a deeper shift that will also see the European Union and international organizations rethink how they engage with Chinese technology, said the Asia-based foundation set up by U.S. entrepreneur Merle Hinrich.

Australia, Japan and the UK have already followed the U.S. in banning Huawei from 5G networks. India has prohibited more than 100 Chinese apps including the video-sharing platform TikTok.

In addition, in August, the U.S. launched a so-called Clean Network initiative that aims to oust Chinese technology from wireless and digital networks on the grounds that it poses national security threats. The following month, China released its Global Initiative on Data Security that ostensibly calls for global standards for data security—an effort that could also be construed as an attempt to deter others from signing up for Washington's program.

“These actions have created an existential crisis for Chinese companies, which have come under fire as they are increasingly viewed as de facto proxies of the Chinese Communist Party,” said Alex Capri, a Singapore-based research fellow who authored the report. “In the broader context of a U.S.-China technology cold war, Chinese companies' linkage to Beijing has relegated them to the status of malign actors.”

Chinese actions such as the clamping down on freedoms in Xinjiang, Tibet and Hong Kong – where Beijing abruptly imposed a new national security law in June – are also stoking concern about reliance on the country's technology internationally. China has repeatedly called such matters its own internal affairs and warned against foreign interference. EU leaders are expected to call for a rebalancing of their economic relations with China at a summit Thursday in Brussels.

The report said that, “regardless of whether Republican incumbent Donald Trump or Democratic nominee Joe Biden is in the Oval Office, Washington will accelerate efforts to block Chinese tech firms from expanding into overseas markets.” This will make technology a cornerstone of global diplomacy, which could lead to the creation of new institutions and rule frameworks for governing technology and data, the report added.

The linkage of technology to fundamental ideological values is a key factor leading countries to reconsider their stance, according to the report. “There's been this sort of 'wake up moment' that's produced this incredible backlash from the West in particular,” Capri said in an interview. “We're starting to see a closing of the ranks from liberal democracies around the world, which is not a good thing for China's system of techno-authoritarianism and, by extension, Chinese technology companies in general.”

So, we will see. Clearly, the pushback against rapid Chinese expansion in many markets is intensifying, but China's markets are tempting, as well. So far, efforts to negotiate deals on both the supply and demand side seem to have fallen in sharp political disfavor—a development that possibly will be difficult to maintain in the face of market realities. These are developments which should be watched closely by producers as the season progresses, Washington Insider believes.

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