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China Manipulating America’s Legal System for Unfair Trade Advantage

The U.S.-China Economic and Security Commission, a watchdog, complained last year that Chinese companies in the United States hid behind a "legal firewall" by claiming that Chinese secrecy and banking laws exempted them from U.S. complaints.

The U.S.-China Economic and Security Commission, a watchdog, complained last year that Chinese companies in the United States hid behind a “legal firewall” by claiming that Chinese secrecy and banking laws exempted them from U.S. complaints.

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WASHINGTON – U.S. corporations have found it can be tough to do business in China. Now, as more Chinese firms invest in the United States, they’re finding it can be hard to contend with Chinese companies on American turf, too.

Chinese companies can hide behind complex corporate structures. They can keep assets back home. And they can use connections to Beijing to assert immunity from America’s legal system.

Consider one Texas corporation that thought it had scored a victory.

Five months ago, an arbitration panel awarded Tang Energy Group at least $69 million after a contract to build wind farms collapsed and left Tang fighting for survival.

The celebration didn’t last long.

Chinese officials countered that the commission is a government agency with immunity from U.S. courts.

Chinese officials countered that the commission is a government agency with immunity from U.S. courts.

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The corporation the panel ruled against – (Aviation Industry Corporation of China (AVIC), a conglomerate owned by China’s government – challenged the award.

Aviation Industry Corporation of China (AVIC) argued that the arbitration panel was stacked against it and that it wasn’t directly involved in the wind project, though its subsidiaries were.

AVIC had another argument, too: As an arm of China’s government, it said, it isn’t subject to the authority of American arbitration panels – or courts.

Such disputes are destined to grow as Chinese companies invest more in the United States and sign more contracts on U.S. shores. China’s investment in the United States reached a record $15.7 billion in 2015, the Rhodium Group consultancy reports.

“Chinese companies are flush with cash,” says AVIC’s lawyer, Cedric Chao of DLA Piper in San Francisco.

Disputes with Chinese companies are complicated by China’s blurry lines between public and private. Many Chinese companies with the clout to export and invest overseas are owned by the state or enjoy powerful ties.

The Chinese government backed two companies that were accused of rigging the price of Vitamin C in the U.S. market. The Chinese Commerce Ministry said the companies were following Chinese law when they set prices. The companies lost in 2013, but the case is on appeal.

There’s some hope that the task of fighting Chinese companies in U.S. courts will ease as they deepen their investment in the United States and their assets become easier to seize.

And as they increasingly expand internationally, they will need to manage their reputation and won’t want to be known for eluding courts and skipping out on legal bills, says Dan Harris with the law firm Harris Moure in Seattle.

But for now at least, Harris says the Chinese can’t always fathom how U.S. courts operate, aren’t used to judges who are mostly immune to bribes and don’t understand the consequences of defying court orders.

Several state-owned companies have invoked the 1976 Foreign Sovereign Immunities Act. The act says foreign government agencies can claim immunity unless they’re directly involved in commerce – a status that’s subject to dispute.

“Being sovereign,” says Anthony Balloon, a lawyer who specializes in international business, “means you don’t have to say you’re sorry.”

Consider the toxic drywall case.

Chinese-made drywall, installed after hurricanes struck the Southern United States in the mid-2000s, caused damage ranging from foul smells to corroded pipes. Thousands of homeowners sued a Chinese commission that oversees state-owned companies that made the drywall.

Chinese officials countered that the commission is a government agency with immunity from U.S. courts.

In March, another defendant in the drywall case, China National Building Materials Group, convinced U.S. District Judge Eldon Fallon it was immune because it, too, belongs to China’s government.

AVIC, tangled in the dispute with Tang, has also claimed sovereign immunity in a case brought by Global Technology, a Michigan company that’s U.S. sales rep for an AVIC subsidiary. Global Technology says it was wrongly left out of a deal in which AVIC acquired an American auto supplier.

In the meantime, the United States is seeking an investment treaty with China. Researchers at the Peterson Institute for International Economics has suggested that negotiators require China’s state-owned companies to accept the jurisdiction of foreign countries.

In some ways, the very fact that Chinese companies are fighting in U.S. courts represents progress. In the past, many didn’t even recognize the American legal process.

The U.S.-China Economic and Security Commission, a watchdog, complained last year that Chinese companies in the United States hid behind a “legal firewall” by claiming that Chinese secrecy and banking laws exempted them from U.S. complaints.

And when American plaintiffs took their cases to China, they got nowhere.

“We call it retreating to Fortress China,” says Balloon, a partner in Atlanta with the firm Alston & Bird.

Some plaintiffs and judges are deploying other tactics against the Chinese companies. Judge Fallon, presiding over the drywall case, found the Chinese company Taishan Gypsum in contempt of court in 2014 for refusing to appear and defend itself. Faced with being barred from business in the United States, Taishan Gypsum returned to court.

In Dallas, Tang is still awaiting its award from AVIC.

A corporate colossus, AVIC has 500,000 employees and 140 subsidiaries in businesses from aircraft manufacturing to financial services.

“We follow the rule of law,” says Tang CEO Patrick Jenevein. “They follow playground rules when the teacher is not around.”

The Tang-AVIC relationship had begun promisingly. In 1997, the two agreed to build a gas-fired power plant near China’s Great Wall. Later, Tang and two AVIC subsidiaries started producing wind turbine blades in China. In 2008, they agreed to form a company to develop wind projects.

Then the partnership soured.

Tang suggested that AVIC consider a partnership with Cirrus Aircraft, a Minnesota aircraft maker that wanted to enter the wind-turbine business. AVIC considered it – and then acquired Cirrus on its own, leaving Tang out of the deal.

AVIC also bypassed Tang when it invested in wind projects in the United States. And it developed its own projects from Australia to South Africa.

Tang argued that the AVIC projects violated their agreement to develop wind projects exclusively together. The arbitration panel agreed in December. It found that AVIC and its subsidiaries operate as a single entity and that AVIC used its subsidiaries to commit “fraud or injustice.”

AVIC has appealed to a federal court. Among other things, it argues that it “was beyond the jurisdiction of the panel and now this court as an undisputed 100% state-owned enterprise.”

“We’ve seen in the last three to five years Chinese companies becoming more sophisticated in the way they deal with the West,” Balloon says.

According to Donald Trump, America fully opened its markets to China but China has not reciprocated. Its Great Wall of Protectionism uses unlawful tariff and non-tariff barriers to keep American companies out of China and to tilt the playing field in their favor.

President Obama’s Treasury Department has repeatedly refused to brand China a currency manipulator – a move that would force China to stop these unfair practices or face tough countervailing duties that level the playing field.

Economists estimate the Chinese yuan is undervalued by anywhere from 15% to 40%. This grossly undervalued yuan gives Chinese exporters a huge advantage while imposing the equivalent of a heavy tariff on U.S. exports to China. Such currency manipulation, in concert with China’s other unfair practices, has resulted in chronic U.S. trade deficits, a severe weakening of the U.S. manufacturing base and the loss of tens of millions of American jobs.


AP writer Janet McConnaughey in New Orleans contributed to this report.

By Paul Wiseman follow him on Twitter at https://twitter.com/PaulWisemanAP

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Marine Le Pen’s National Rally Wins the First Round in France 2024 Election

Marine Le Pen's far-right National Rally (RN) party scored historic gains in France

Exit polls in France showed that Marine Le Pen’s right-wing National Rally (RN) party made huge gains to win the first round of election on Sunday. However, the final outcome will depend on how people trade votes in the days before next week’s run-off.

Exit polls from Ipsos, Ifop, OpinionWay, and Elabe showed that the RN got about 34% of the vote. This was a big loss for President Emmanuel Macron, who called the early election after his party lost badly in the European Parliament elections earlier this month.

The National Rally (RN) easily won more votes than its opponents on the left and center, including Macron’s Together group, whose bloc was predicted to get 20.5% to 23% of the vote. Exit polls showed that the New Popular Front (NFP), a hastily put together left-wing alliance, would get about 29% of the vote.

The results of the exit polls matched what people said in polls before the election, which made Le Pen’s fans very happy. But they didn’t say for sure if the anti-immigrant, anti-EU National Rally (RN) will be able to “cohabit” with the pro-EU Macron in a government after the runoff election next Sunday.

Voters in France Angry at Macron

Many French people have looked down on the National Rally (RN) for a long time, but now it is closer to power than it has ever been. A party known for racism and antisemitism has tried to clean up its image, and it has worked. Voters are angry at Macron, the high cost of living, and rising concerns about immigration.

Fans of Marine Le Pen waved French flags and sang the Marseillaise in the northern French district of Henin-Beaumont. The crowd cheered as Le Pen said, “The French have shown they are ready to turn the page on a power that is disrespectful and destructive.”

The National Rally’s chances of taking power next week will rest on what political deals its opponents make in the next few days. Right-wing and left-wing parties used to work together to keep the National Rally (RN) out of power, but the “republican front,” which refers to this group, is less stable than ever.

If no candidate gets 50% of the vote in the first round, the top two candidates and anyone else with 12.5% of the registered voters immediately move on to the second round. The district goes to the person who gets the most votes in the runoff.

France is likely to have a record number of three-way runoffs because so many people voted on Sunday. Experts say that these are much better for the National Rally (RN) than two-way games. Almost right away on Sunday night, the horse trade began.

Macron asked people to support candidates who are “clearly republican and democratic.” Based on what he has said recently, this would rule out candidates from the National Rally (RN) and the hard-left France Unbowed (LFI) party. Leaders on the far left and the center left both asked their third-placed candidates to drop out.

Minority government

Jean-Luc Melenchon, leader of France Unbowed, said, “Our rule is simple and clear: not a single more vote for the National Rally.” But the center-right Republicans party, which split before the vote when some of its members joined the RN, didn’t say anything.

The president of the RN party, Jordan Bardella, who is 28 years old, said he was ready to be prime minister if his party gets a majority of seats. He has said he won’t try to make a minority government, and neither Macron nor the communist NFP will work with him.

“I will be a “cohabitation” Prime Minister, respectful of the constitution and of the office of President of the Republic, but uncompromising about the policies we will implement,” he said.

A few thousand anti-RN protesters met in Paris’s Republique square on Sunday night for a rally of the leftist alliance. The mood was gloomy.

Niya Khaldi, a 33-year-old teacher, said that the RN’s good results made her feel “disgust, sadness, and fear.”

“This is not how I normally act,” she said. “I think I came to reassure myself, to not feel alone.”

Election Runoff

The result on Sunday didn’t have much of an effect on the market. In early Asia-Pacific trade, the euro gained about 0.23%. Fiona Cincotta, a senior markets expert at City Index in London, said she was glad the outcome “didn’t come as a surprise.”

“Le Pen had a slightly smaller margin than some of the polls had pointed to, which may have helped the euro a little bit higher on the open,” she noted. “Now everyone is waiting for July 7 to see if the second round supports a clear majority or not. So it does feel like we’re on the edge of something.”

Some pollsters thought the RN would win the most seats in the National Assembly, but Elabe was the only one who thought the party would win all 289 seats in the run-off. Seat projections made after the first round of voting are often very wrong, and this race is no exception.

On Sunday night, Reuters reported there were no final results for the whole country yet, but they were due in the next few hours. In France, exit polls have usually been very accurate.

Voter turnout was high compared to previous parliamentary elections. This shows how passionate people are about politics after Macron made the shocking and politically risky decision to call a vote in parliament.

Mathieu Gallard, research head at Ipsos France, said that at 1500 GMT, nearly 60% of voters had turned out, up from 39.42% two years earlier. This was the highest comparable turnout since the 1986 legislative vote. It wasn’t clear when the official number of people who voted would be changed.

 

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Pakistan Seeks US Support for Counter-Terrorism Operation Azm-e-Istehkam

Pakistan

(CTN News) – Pakistan’s Ambassador to the United States, Masood Khan, has urged Washington to provide Pakistan with sophisticated small arms and communication equipment to ensure the success of Operation Azm-e-Istehkam, a newly approved counter-terrorism initiative in the country.

The federal government recently approved the reinvigorated national counter-terrorism drive, which comprises three components: doctrinal, societal, and operational.

Ambassador Khan noted that work on the first two phases has already begun, with the third phase set to be implemented soon.

Addressing US policymakers, scholars, and corporate leaders at the Wilson Center in Washington, Khan emphasized the importance of strong security links, enhanced intelligence cooperation, and the resumption of sales of advanced military platforms between Pakistan and the US.

He argued that this is crucial for regional security and countering the rising tide of terrorism, which also threatens the interests of the US and its allies.

“Pakistan has launched Azm-i-Istehkam […] to oppose and dismantle terrorist networks. For that, we need sophisticated small arms and communication equipment,” said Ambassador Khan.

Pakistan–United States relations

The ambassador observed that the prospects of Pakistan-United States relations were bright, stating that the two countries “share values, our security and economic interests are interwoven, and it is the aspiration of our two peoples that strengthens our ties.”

He invited US investors and businesses to explore Pakistan’s potential in terms of demographic dividend, technological advancements, and market opportunities.

Khan also suggested that the US should consider Pakistan as a partner in its diplomatic efforts in Kabul and collaborate on counterterrorism and the rights of women and girls in Afghanistan.

He stressed that the bilateral relationship should be based on ground realities and not be hindered by a few issues.

“We should not base our engagement on the incongruity of expectations.

Our ties should be anchored in ground realities, even as we aim for stronger security and economic partnerships. Secondly, one or two issues should not hold the entire relationship hostage,” said the ambassador.

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China Urges Taiwanese to Visit Mainland ‘Without Worry’ Despite Execution Threat

China Urges Taiwanese to Visit Mainland Without Worry Despite Threats

China has reassured Taiwanese citizens that they can visit the mainland “without the slightest worry”, despite Taiwan raising its travel alert to the second-highest level in response to Beijing’s new judicial guidelines targeting supporters of Taiwanese independence.

Last week, China published guidelines that could impose the death penalty for “particularly serious” cases involving “diehard” advocates of Taiwanese independence.

In response, Taiwan’s government urged the public to avoid “unnecessary travel” to mainland China and Hong Kong, and raised its travel warning to the “orange” level.

However, Zhu Fenglian, a spokeswoman for a Chinese body overseeing Taiwan affairs, stated that the new directives are “aimed solely at the very small number of supporters of ‘Taiwan independence’, who are engaged in malicious acts and utterances”.

She emphasized that “the vast majority of Taiwan compatriots involved in cross-strait exchanges and cooperation do not need to have the slightest worry when they come to or leave mainland China”.

“They can arrive in high spirits and leave fully satisfied with their stay,” Zhu added.

What’s Behind The China-Taiwan Tensions?

The tensions stem from the longstanding dispute over Taiwan’s status. Mainland China claims Taiwan as part of its territory and has refused to rule out using force to bring the democratic island under its control, while Taiwan sees itself as a sovereign state.

Beijing has not conducted top-level communications with Taipei since 2016, when the Democratic Progressive Party’s Tsai Ing-wen became Taiwan’s leader. China has since branded her successor, President Lai Ching-te, a “dangerous separatist”.

“The DPP authorities have fabricated excuses to deceive the people on the island and incite confrontation and opposition,” Zhu said in her statement.
Despite the political tensions, many Taiwanese continue to travel to mainland China for work, study, or business.

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