2018/2019 Edition of the Global Regulatory Update

Global Regulatory Update  | Corporates Edition 75 10) Trade Issues in APAC U.S.-China Trade Tensions U.S./China Trade tensions continue to escalate. Visits to Beijing led by U.S. Treasury Mnuchin and U.S. Commerce Secretary Ross and visits to Beijing by China’s Vice Premier Liu He did not lead to agreement on how to go forward. The U.S. signalled it would apply tariffs and investment restrictions. On 27 June 2018 the U.S. announced it would pursue investment restrictions via an update to Committee on Foreign Investment in the U.S. (CFIUS) processes rather than via the International Economic Emergency Powers Act (IEEPA) targeting only China. The administration may seek to utilize IEEPA down the track. On 6 July 2018, the U.S. implemented tariffs on China (USD 34bn on 1300 commodities) with some flow on effects for supply chains particularly in APAC. A second tranche of U.S. tariffs could be applied in August after consultation ($16bn on 284 commodities). On 6 July 2018, China implemented some tariffs on the U.S. in response to U.S. action (USD 34bn on 545 commodities). China may apply additional duties in August if the U.S. takes additional action (USD 16bn on 114 commodities). On 10 July 2018, the U.S. said it will begin a 2-month review on the application of an additional 200bn in tariffs at the rate of 10% rather than the 25% used in the earlier announcements. China would likely retaliate against the U.S. with additional measures if the U.S. does follow through and take action. Markets and currencies were negatively impacted. China and the U.S. have signalled that they may be willing to come back to the negotiating table, at least at the officials’ level which might result in a delay of some if not all of the outstanding measures announced by both sides. U.S. action on autos and auto parts may impact China in addition to other major car producers such as Germany, Japan and Korea. Lack of resolution on the case of U.S. sanctions against one of China’s leading technology companies, ZTE, might also result in further retaliatory action against U.S. firms, particularly in the technology sector. China may also take action against U.S. firms in China on market access or regulation in addition to the application of tariffs to exports, given the limited amount of exports from the U.S. to China. RCEP The 23rd round of the Regional Comprehensive Economic Partnership (RCEP) negotiations will take place the week of 23 July 2018 in Bangkok. RCEP is a proposed comprehensive regional economic integration agreement amongst the 10 members of