DEAL: China says enforcing North Korea coal ban seriously, no violation. [archive]

Following repeated North Korean missile tests that drew international criticism, China in February banned all imports of coal from its reclusive neighbor, cutting off its most important export product.

Reuters reported on April 11 that several North Korean cargo ships, most fully laden, were heading home after China’s customs department issued an official order, on April 7, telling trading companies to return their North Korean coal cargoes.

But on Friday, the website reported several North Korean ships in and around Tangshan port, in northern China.

Chinese Foreign Ministry spokesman Lu Kang, asked about the ships and whether China was allowing North Korean coal back in, said China was “seriously enforcing” the provisions in its announcement banning North Korean coal imports for the remainder of the year, which were in line with U.N. resolutions.

“If the ships are still at sea or outside a port, there will always be some mariners who need to be looked after for humanitarian reasons,” Lu said.

“There is no such thing as any violating of this announcement or China violating its obligations to enforce U.N. Security Council resolutions.” . . .

None of the vessels showed recent changes to their draft, a measure of how deep in the water they are floating which rises or falls depending on their load.

Also: Trump administration hails US-China trade deal: Beijing pledges access for rating agencies, credit card companies and American beef. [archive]

The 10-point package revealed on Friday was billed as an “early harvest” from the 100-day plan to reset the trade relationship that Chinese leader Xi Jinping and Donald Trump agreed to pursue when they met in April.

According to a US announcement, the two sides had also agreed to discuss extending that initial 100-day period into a one-year plan.

It is the latest sign that the US president is adopting a less confrontational approach with Beijing. During last year’s election campaign, he threatened to impose punitive tariffs on Chinese goods and label China a currency manipulator.

The threats were always a bargaining chip, going back to Romney’s campaign [archive] (when donor Trump probably forced the issue). See the campaign document, “Reforming The U.S.-China Trade Relationship To Make America Great Again”: [archive]

At its heart, this plan is a negotiating strategy to bring fairness to our trade with China. The results will be huge for American businesses and workers. Jobs and factories will stop moving offshore and instead stay here at home. The economy will boom. The steps outlined in this plan will make that a reality. . . .

The Trump Plan Will Achieve The Following Goals:

1. Bring China to the bargaining table by immediately declaring it a currency manipulator . . .

The U.S. Treasury’s designation of China as a currency manipulator will force China to the negotiating table and open the door to a fair – and far better – trading relationship.

In a primary-season interview on foreign policy, [archive] Trump talked about using economic negotiations as leverage to force China to deal with North Korea:

He called on China to overthrow North Korea’s oppressive regime – but said he would force the hand of Beijing if it did not comply with his demands.

‘China has control – absolute control – over North Korea. They don’t say it, but they do, Trump said.

‘And they should make that problem disappear. China is sucking us dry. They’re taking our money. They’re taking our jobs. They’re doing so much. We have rebuilt China with what they’ve taken out.

‘We have power over China, China should do that. I would force China to do it economically,’ he added.

Video here.

Trump recently reiterated his point about negotiating [archive] with respect to both trade policy and foreign policy:

[Trump:] . . . They talk about why haven’t you called him a currency manipulator? Now think of this. I say, “Jinping. Please help us, let’s make a deal. Help us with North Korea, and by the way we’re announcing tomorrow that you’re a currency manipulator, OK?” They never say that, you know the fake media, they never put them together, they always say, he didn’t call him a currency [manipulator], number one. Number two, they’re actually not a currency [manipulator]. You know, since I’ve been talking about currency manipulation with respect to them and other countries, they stopped.

Mr Mnuchin: Right, as soon as the president got elected they went the other way.

Trump made a similar remark in an interview [archive] with John Dickerson on Face the Nation:

TRUMP: No, they were doing it before. I mean, there was no question. I mean, they were absolute currency manipulators before. But somebody said, “Oh, you didn’t call him a currency manipulator.” Now, you and I are just talking about how he’s working — I believe that President Xi is working to try and resolve a very big problem, for China also.

And that’s North Korea. Can you imagine if I say, “Hey, by the way, how are you doing with North Korea? Also, we’re going to announce that you’re a currency manipulator tomorrow.” So the mainstream media never talks about that. They never say that. And that’s, you know, unfortunate.

There’s talk about whether China had been manipulating its currency against U.S. interests at all during the election cycle. The consensus seems to be that it would be hard to demonstrate. Thus Glenn Kessler writes [archive] at the Washington Post, “So it would be no surprise that Trump would have to give up on this pledge, since it would be rather difficult for the Treasury Department to argue that China met the legal requirements for currency manipulation. (In any case, all the label means is that the treasury secretary would begin negotiations to try to deal with the situation.)” Yes, that was the point the entire time. Thanks for the scoop, Glenn.

An AP article by Paul Wiseman suggests [archive] that going head-to-head with China over the issue would have led to trouble:

Gary Hufbauer, an expert on trade law at the Peterson Institute for International Economics, notes that as president, Trump could nonetheless escalate any dispute over the currency on his own. Over the years, Congress has ceded the president broad authority to impose trade sanctions. Trump has threatened to slap a 45 percent tax, or tariff, on Chinese imports to punish it for unfair trade practices, including alleged currency manipulation.

[David Dollar, senior fellow at the Brookings Institution and a former official at the World Bank and U.S. Treasury Department,] said China likely would bring a case to the World Trade Organization “against any protectionist measures that are a violation of U.S. commitments to the WTO,” which oversees the rules of global commerce and rules on trade disputes.

Some trade analysts wonder if Trump is using the tariff threat as a negotiating tool to win concessions from China.

Whatever the U.S. motive, China has a consistent record of retaliating against trade sanctions. When the Obama administration slapped tariffs on Chinese tire imports in 2009, for instance, China lashed back by imposing a tax on U.S. chicken parts.

China’s Global Times newspaper, published by the ruling Communist Party’s People’s Daily, has already speculated that “China will take a tit-for-tat approach” if Trump’s tariffs are enacted. The paper suggested that Beijing might limit sales of Apple iPhones and Boeing jetliners in China.

“The Chinese are predictable and reliable,” [Amanda DeBusk, chair of the international trade department at the law firm of Hughes Hubbard & Reed and a former Commerce Department official,] said. “If they get punched, they punch back.”

China probably knew the entire time that the battle would be rough for Trump. But did they care to go through the trouble themselves? That was the bargaining chip — either go along with some policies pushed by Trump, or get caught in a trade war that would be a headache for all involved.