中美貿易戰對台灣與巴西貿易關係的影響 - 政大學術集成

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(1)International Master's Program in International Studies National Chengchi University 國立政治大學國際研究英語碩士學位學程. The influence of the Sino-US trade war on the Brazil-Taiwan trade 政治大. 立relationship. ‧ 國. 學. ‧. 中美貿易戰對台灣與巴西貿易關係的 y. sit. io. n. al. er. Nat. 影響 Ch. engchi. i n U. v. Kelly Santana Leite - 宋凱莉 Advisor: Chienwu Hsueh - 薛健吾. July, 2019. DOI:10.6814/NCCU201901077.

(2) TABLE OF CONTENT. Acknowledgement. IV. Abstract. V. Abstract (Chinese). V. List of figures. VI. Abbreviations. VII. Chapter 1: Sino-US trade war 1.1 Introduction 1.2 The Trade war summary. 立. 政治大. 1 1 2. ‧ 國. 學. 1.3 Research question. 9. Nat. n. al. Ch. 2.3 Both will hurt, but who hurts more 2.4 No winners. 12 12. er. io. 2.1 The US will triumph 2.2 China will triumph. 10. sit. Chapter 2: Literature Review. ‧. 1.5 Structure. 10. y. 1.4 Research limitation. engchi U. v ni. 14 15 18. 2.5 The effect of the Sino-US trade war on other countries. 20. 2.6 Theoretical Framework. 20. 2.7 Literature review summary. 22. Chapter 3: An analysis of Sino-USA Taiwan and Sino-US Brazil trade relations. 24. 3.1 Sino-US and Taiwan. 24. 3.2 Sino-US and Brazil. 37. 3.3 Summary. 51. II. DOI:10.6814/NCCU201901077.

(3) Chapter 4: An analysis of Brazil-Taiwan trade relationship. 52. 4.1 Brazil-Taiwan trade history. 52. 4.2 The impact of the Sino-USA trade war on Brazil-Taiwan relationship6Error! Bookmark not defined. 4.3 Summary. 6Error! Bookmark not defined.. Chapter 5: Conclusion. 66. Reference. 68. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. III. DOI:10.6814/NCCU201901077.

(4) Acknowledgement First and foremost, with the eagerness to acquire a master degree I am most grateful for the support of my family, my father and my sister who never ceased to find ways to see me growing, they saw my great desire to grow professionally even though I had to move to the other side of the world and stay away from home for so long, still they supported me to follow my aspiration for change and have been my main source of strength and encouragement, they keep me going. A special professor had a great impact in my life who encouraged me to pursue a master degree in Taiwan, Dr Adriano Pires Almeida spent a year in Taiwan developing his research and had to desire to share with other what he experienced here, he wanted other to have the same. 政治大. opportunity. With the generous heart as he has, he made it possible for me and for so many other students to study in Taiwan.. 立. As an important source of contribution to my studies, I owe my gratitude to Taiwan ICDF. ‧ 國. 學. program that sponsored my aspiration to grow professional and use education as a powerful tool to help my nation to develop. It is through the generosity of Taiwan ICDF that many like me can. ‧. aspire to contribute to a better society for the current and future generation,. sit. y. Nat. My most sincere gratitude to Taiwan ICDF!. io. er. Professor Chienwu Hsueh without a doubt contributed a lot to my academic growth, encouraging me to keep pressing when I encountered difficulties throughout the two semesters we. n. al. i n U. v. spent discussing this research, I am grateful for his patience and knowledge.. Ch. engchi. I can not leave out my gratitude to the ones who welcomed and looked after me as a daughter, a friend, and a student, Dr. Shirley Carvalhêdo Franco (UNB) who helped through so many steps of this research, several meetings and weekends, she worked hard to stablish a good foundation so this research could be a success, as well as her husband the director of the Commercial Office of Brazil in Taipei Mr. Fábio Guimarães Franco who adopted me into their family and provided all sorts of help. Last but not least, the IMPIS and OIC office that never ceased to assist in these two years of Taiwan, they made sure we were well accommodated and having a smooth adaptation to a new culture and environment we encountered which was far different from what we were all used to. Thank you very much! IV. DOI:10.6814/NCCU201901077.

(5) Abstract In the current Sino-US trade war many have been the consequences of this war, which didn’t only affect the two main nations but even if indirectly it has caused a spill over effect on many other nations. However, some might have had a more positive consequence than others in which it improved their trade and this research focused on two main puzzles to be explored. First, whether the Sino-US trade would affect Brazil-Taiwan trade relation and to obtain such information, trade value and traded products were analysed over the period of 2007-2018. Second, to find out if Donald Trump’s strategy to threat China by imposing the economic sanction on China was successful, which happened to be to certain extent as it influenced China’s behaviour but didn’t cause China to accept Trump’s imposition. As a conclusion, the Sino-US trade war had an. 政治大. impact on Brazil-Taiwan trade relationship but it wasn’t intentionally caused by China, but it. 立. happened to Brazil’s exportation to China to rapidly increase and Brazil’s exportation to Taiwan. ‧ 國. 學. suffering a great decrease but there seems not to be any direct purpose for it to happen but just a cause-effect relation which should be explored more deeply in future research.. ‧. Abstract (Chinese). y. Nat. er. io. sit. 在當前中美貿易戰中，許多國家都遭受到波及。除了中美兩國直接受到衝擊，其他國家間接地也受到了不少影響。然而有些國家得到的影響比較正面；自家貿易因而得到. al. n. iv n C 改善，本論文即在探討這兩大問題。首先，中美貿易是否會影響巴西與台灣的貿易關係， hengchi U. 為了找出答案，筆者分析了 2007 年到 2018 年間的貿易值及交易產品間之關係。再者，本論文分析美國總統川普對中國發動的經濟制裁策略是否有效，因為在某種程度上川普的策略影響了中國的行為，但中國並沒有全然被牽著鼻子走。結論是中美貿易戰的確影響了巴西與台灣間的貿易關係，但此結果並非中國有意造成。貿易戰使巴西到中國的出口量快速增加，卻使巴西到台灣的出口量大大減少，然而這兩件事之間似乎沒有人為操作，僅是因果關係的影響，但這個議題還有待後人更深入的研究。. V. DOI:10.6814/NCCU201901077.

(6) LIST OF FIGURES. Figure 3.1 – USA and China Trade (2007-2018). 26. Figure 3.2 – USA Top 10 exports to China (2017). 27. Figure 3.3 – USA Top 10 imports from China (2017). 28. Figure 3.4 – China and Taiwan Trade (2007-2018). 30. Figure 3.5 – China Top 10 exports to Taiwan (2018). 31. Figure 3.6 – China Top 10 imports from Taiwan (2018). 32. Figure 3.7 – US and Taiwan Trade (2007-2018). 34. 治政 Figure 3.9 – US Top 10 imports from Taiwan (2018) 大 Figure 3.10 – Brazil and US立 Trade (2007-2018) Figure 3.8 – US Top 10 Exports to Taiwan (2018). 36 39. ‧ 國. 學. Figure 3.11 – Brazil Top 10 exports to the US (2017). 35. Figure 3.12 – Brazil Top 10 imports from the US (2017). ‧. Figure 3.13 – Brazil Top 10 exports to the US (2018) Figure 3.14 – Brazil Top 10 imports from the US (2018). n. al. i n C Figure 3.19 – Brazil Top 10 exportsh toe China (2018)i U ngch Figure 3.18 – Brazil Top 10 imports from China (2018). 44. y. io. Figure 3.17 – Brazil Top 10 exports to China (2017). 43. 46 47. er. Figure 3.16 – Brazil Top 10 imports from China (2017). 41. sit. Nat. Figure 3.15 – Brazil and China Trade (2007-2018). 40. v. 48 49 50. Figure 4.1 – Total Bilateral trade Brazil - Taiwan. 53. Figure 4.2 – Brazil agricultural export to Taiwan (2005). 55. Figure 4.3 – Brazil agricultural export to Taiwan (2014). 56. Figure 4.4 – Brazil and Taiwan trade (2007-2018). 58. Figure 4.5 – Brazil Top 10 imports from Taiwan (2017). 60. Figure 4.6 – Brazil Top 10 exports to Taiwan (2017). 61. Figure 4.7 – Brazil Top 10 imports from Taiwan (2018). 62. Figure 4.8 – Brazil Top 10 exports to Taiwan (2018). 63. VI. DOI:10.6814/NCCU201901077.

(7) ABBREVIATIONS. CBP. US Customs and Border Protection. BOFT. Bureau of foreign Trade. EU. European Union. IP. Intellectual Property. MAPA. Ministry of Agriculture, Livestock and Food Supply. MDIC. Ministry of Industry, Foreign Trade and Services (Brazil). MOEA. Ministry of Economic Affairs. OEC. The Observatory of Economic Complexity Foreign Trade Secretariat (Brazil). The Office of the United States Trade Representative. ‧. World Trade Organisation. io. sit. y. Nat. n. al. er. WTO. ‧ 國. USTR. 學. SECEX. 立. 政治大. Ch. engchi. i n U. v. VII. DOI:10.6814/NCCU201901077.

(8) Chapter 1 - Sino-US trade war 1.1 Introduction The United States of America and China have been well-known as the two most powerful economies in the world. At current time both countries are encountered in a declared Trade War and the damage this Sino-US trade war can be unmeasurably damaging to other nations economically and politically speaking. The core issue of this matter lies on a foundational question that concerns the reflection of the two biggest economies conflict on other nations: Can the Sino-American trade war affect the trade relation between Brazil and Taiwan? Even though the trade conflict is not directly involving these two nations, this question prompts its importance in the international scenario since the world is interdependent that the. 政治大 For this research, the purpose is to analyse the impact of Sino-US trade on two specific 立 nations – Brazil and Taiwan. The reason to choose these two nations is due to the fact that spillage of consequences over nations might be unavoidable.. ‧ 國. 學. Brazil is a strong economy and has China as main trade partner both in importation and exportation as only for 2017 according to the Brazilian Ministry of Industry, Foreign Trade and. ‧. Services (MDIC). Brazil exported US$47.49 billion to China but imported US$27.32 billion, having a surplus of US$20.17 billion (MDIC, 2019). However, in the case of the United States. y. Nat. sit. of America (USA) for the same period of time, Brazil exported US$26.87 billion and imported. er. io. US$ 24.85 billion, with a surplus of US$2.03 billion to Brazil (MDIC, 2019). At the same period of time of 2017, Brazil was considered China’s 20 th largest trade partner, Taiwan. n. al. Ch. i n U. v. occupied the 11th position in the rank and the USA came as 1 st main trade partner of China (Workman, 2019).. engchi. Although Taiwan is not either one of the largest trade partners of the US nor Brazil as well as China, it still plays a great role in trade with the other three nations involved in this research. In 2018 Taiwan was ranked as 39th in exportation and 21 st in importation with Brazil. The concern of Taiwan and Brazil in the trade war is that in the last 12 months, Brazil had a deficit of 38.62% less than 2017, which might increase in the following year if the trade war goes ahead (MDIC, 2019). The main objective of proposing this research is to point out that the Sino-American trade war affects not only their commercial relation but also the trade relation between Brazil and Taiwan, and the relation between Brazil-China consequently. The specific goals are to map the history between Brazil and China and the history between Brazil and Taiwan as well as 1. DOI:10.6814/NCCU201901077.

(9) these three nations with the United States of America, the one who started the whole trade phenomena. As the current president of Brazil Jair Bolsonaro visited Taiwan in May 2018 with the interest to strengthen the relationship between Brazil and Taiwan through education and economy, throughout this research there might be a turning-point to bring Taiwan and Brazil closer rather than letting the trade war affect the relationship between the two nations become sour (Bolsonaro, 2018).. 1.2 The trade war summary In the meantime, Donald Trump the president of the US, during his presidential. 政治大 fighting America oldest trading partner – China (BBC, 18 Sep 2018). His first move was to 立 start taxing Chinas’ imports in order to encourage local people to consume the local products,. campaign promised that he would make trade fairer for the USA, and to begin with he started. ‧ 國. 學. therefore boost the American economy and make local products cheaper than imported ones. The USA would start taxing a list of products by 10% first and reach up to 25% of tax on. ‧. products from China, including Beijing. Trumps affirmed he has adopted such policies to stop the "unfair transfers of American technology and intellectual property to China" and protect. y. Nat. sit. jobs in the US (BBC, 18 Sep 2018). China didn’t take it lightly as it will affect its economy. er. io. due to USA being its greatest trade partner and the other way around, at present time China. al. v i n the USA from China. But it doesn’tC mean China is powerless in this battlefield because it can hengchi U still fight back in making American companies struggle to settle in China if the US increases n. might not have the same power to fight the USA back as China buys more from the USA than. its bureaucracy. The Observatory of Economic Complexity (OEC) stated that the USA and Brazil have been the biggest exporters of Soybeans and both nations have China as their main buyer, meaning they all know the dependence on this specific commodity even though that’s not the most exported products of all but a very important one. In the year of 2016 the US and Brazil exported $42.2 billion out of $51,7 billion worldwide worth of soybeans, that is $22.8 billion and $19.4 billion respectively (OEC, 2016). On 10th November 2001, after years of negotiation China is finally accepted in the World Trade Organisation (WTO) as an official member. The WTO’s Director-General, Mike Moore said “China, one of the fastest growing economies in the world, has made tremendous 2. DOI:10.6814/NCCU201901077.

(10) progress in the last decade in reducing poverty thanks to an economic system increasingly open to trade and foreign investment. Now this economy will be subjected to the rules-based system of the WTO, something which is bound to enhance global economic cooperation” (WTO, 2001) justifying China’s acceptance in the organization. After being approved in the organisation, the Chinese Minister of Foreign Trade and Economic Cooperation Shi Guan sheng declared “We need to invite all members to formulate the international trade rules of the new century through equal participation and consultation, so as to enable more developing countries to share the opportunities and interests brought about by the economic globalization and to avoid the further widening of the gap between rich and poor and protect some countries against being marginalized.” (WTO, 2001). Years later Trump gave a speech against China and in defence of such strict policies. 政治大 property to China (BBC, 18 Sep 2018) which China itself agreed to work on transparency and 立. towards China in order to stop “unfair transfers of American technology and intellectual fairness since 2001 by signing the 900 pages of agreement. Ideally, Trump’s plan could be a. ‧ 國. 學. perfect but in reality, business in the USA might be harmed as their product will have extra cost.. ‧. Since China joined the WTO, it has been growing rapidly enough to overtake the US. sit. y. Nat. and become the “largest trading nation” (Johnston, 2015). However, the USA remains as a. io. er. great trading nation together with Hong Kong and Japan are the main trade partner to China. In 2008, when the world faced a financial crisis, it was believed that China wouldn’t be. n. al. Ch. i n U. v. affected as much as the USA and Europe as in the year before it had economically grown by. engchi. 11.4 per cent, however with the dependence of USA and Europe consumption of Chinese goods caused an economic downturn in China, even though China had a trade surplus over these countries as trade partners which caused factories to close down and lots of job losses (Sandgren, 2008). However, at the same time the worldwide financial crisis was happening, China refused to help the west to get back on their feet, regardless China’s surplus of $29.3 billion in trade, they chose not to help the west and decided to focus on their own internal development, as the government encouraged bank to invest and people to loan money from the banks by lowering taxes in order to invest in infrastructure which many believed not to be China’s real desire but boost consumption only. This could have soured their relationship with some countries, especially the US (Sandgren, 2008).. 3. DOI:10.6814/NCCU201901077.

(11) The taxation imposed by the US on Chinese goods was not an overnight decision to punish China. On 8th November 2017, Trump and his administration visited China as a usual official visit, however at that time Trump was not quite content with both China and Russia closeness and with the trade imbalance between China and the US as well as the forced technology transfer, among other issues (Koty, 2017). Implementing taxation on imported good in the US was a way President Trump found to start protecting the country’s economy, which first started in 7th February 2018 when the US placed 30% tariff on all imported solar panel, except the ones imported from Canada of $8.5 billion and 20% tariff on imported washing machine amounting to $1.8 billion. By 22 nd March 2018, the Sino-Us trade relation had heated up as Trump signed a memorandum for the followings:. 政治大 To restrict investment in key technology sectors; and 立. o To file a WTO case against China for their discriminatory licensing practices; o. 學. ‧ 國. o To impose tariffs on Chinese products (such as aerospace, information communication technology and machinery).. ‧. (Koty & Wong, April 12, 2019). The memorandum was just the beginning of a larger conflict that was about to start, as. Nat. sit. y. on the following day 23rd March, the US imposed more tariffs on other products from other. er. io. countries such as all steel from Argentina, Australia, Brazil and South Korea with 25% tariff and 10% tariff on all aluminium imports (except Argentina and Australia). From February,. n. al. Ch. i n U. v. when Trump started taxing every country, except for Canada, to export solar panel and washing. engchi. machine to the US, then the US kept adding more products such as aerospace from China. But it was only in April that China and the US started a very direct trade conflict (Koty & Wong, April 12, 2019). China did not take long to respond to the taxation; by 2 nd April China also imposed tariffs from varying from 15-25% on 128 products worth of $3 billion which included “fruit, wine, seamless steel pipes, pork and recycled aluminium in retaliation to the US’ steel and aluminium” (Koty & Wong, 2019) on 3rd April, The Office of the United States Trade Representative (USTR) released the first list of taxed imported products from China (Hadfield, F.; Gao, Y.; Goetz, E., 2018), 1.334 products worth US$50 billion with 25% of tariff. China took a day (4th April) to get back on USTR list and proposed a new list of 106 products with 25% tariff on goods (soybeans, Automobile and chemicals). From this firing of tariff, both 4. DOI:10.6814/NCCU201901077.

(12) countries tried to negotiate more in May and put the Trade War on hold for some time. On 15th June the initial list of 1,334 products was reduced to 818 with quick action upon it as on 6 th July “the US Customs and Border Protection (CBP) begins collecting a 25 per cent tariff on 818 imported Chinese products valued at US$34 billion – giving effect to the first round of tariffs” (Koty & Wong, 2019) as shown on table 1 below. Towards the end of May 2018, US and China agreed to put the Trade War on hold, however on 15th June 2018 the US revised its first list of 1,334 products to be taxed and reduced it to 818 products, while China on the very next week increased its first list of taxed American imported products from 106 to 545, including agricultural products (Koty & Wong, 2019). The implementation of tariff took place on 6th July as the US first started taxing 25% on the first list of products and China responded immediately without any hesitation, Sino-US. 政治大. Trade War is no more just tariff threats and it has now become official trade war. In a matter. 立. of 23 days Trump increased the 10% to 25% percent of tariff on 600 commodities from China. ‧ 國. 學. and includes 44 Chinese entities as a significant risk to the US national security, this certainly angered China and made negotiations a lot harder. As a result, China took a day to apply a range of tax from 5% to 25% on a total of 5,493 US products and eventually China files a. ‧. complaint against the USA at the WTO alleging tariffs on solar panels causing damage to. sit. y. Nat. China. On 23rd August both nations implemented 25% tariff on various products from each. io. er. other both worth of US$16 billion (Koty & Wong, 2019).. The US was determined to make the Sino-US trade fair, on 10th July another list was. n. al. Ch. i n U. v. published of more than 6,000 commodities from China which would be taxed 10%, equivalent to $200 billion but by 2. nd. engchi. August the list was updated, the equivalent amount in US dollars. remained the same but they increased the tax from 10% to 25% (Hadfield, Holleyman, Marx, & Toubia, 2018). As the USA continued to upgrade the products to be taxed, USTR released the second list of products on 7th August 2018 which included 279 goods to be taxed 25% tariff, that is, $16 billion worth of imports from China that will be subject to this additional tax. Shortly after the 2nd list released, the White House demanded USTR to implement taxes on other products and on 17th September 2018 (Hadfield, Marx, Brew, & Goetz, 2018) was released with the Chinese goods to be taxed 10% worth approximately $200 billion. However, the White House already announced that by 1 st January 2019 this 10% tariff will also rise to 25% “unless the two countries agree on a deal” (BBC, 18 Sep 2018).. 5. DOI:10.6814/NCCU201901077.

(13) China, as a powerful economy, also took an action on retaliating goods imported from the USA with tariffs worth of $60 billion to start with, but China is more caution with the tariff which will start with 5 or 10% only as opposed to 10-25% as the USA is threating China. It is not clear if there is a specific reason for the taxing on each single product, Trump’s administration affirms the new tariff policy to be necessary in order “to protect national security and the intellectual property of US businesses” (Bob, 2018), Trump also shrinks the trade deficit with China and make sure the American business is protected from overflow of Chinese goods in the market which will sum up to 50% of all imported goods from China and its main idea is to make foreign goods expensive enough to force companies to purchase American products (Bob, 2018). In the first week of September 2018, Trump threatened China of new tariffs, followed. 政治大. by a renegotiation the week after which seemed not to have helped much as the US increased. 立. a tariff of 10% to 25% on Chinese goods 5 days after their attempt of renegotiation as China. ‧ 國. 學. also implemented US$60 billion worth of tariff on US goods and China ceased trade talks with the US. Both nations agreed to at least cease fire, stop increasing tariffs as well as not imposing new tariffs until 1 st March 2019, under this agreement in January 2019 US and China engaged. ‧. in a Trade talk to discuss two main issues, trade imbalance and structural issues which includes. sit. y. Nat. the technology transfer as Trump has consistently complained about.. io. er. From 28th to 31st March US and China had a great progress on trade talk, resulting on China suspending tariffs on autos parts from the US but it took just a month for Trump to. n. al. Ch. i n U. v. reinitiate a numerous amount of threats made in August to increase tariffs on Chinese products. engchi. which were previously set as 10% to 25%, making China regret for pausing the tariffs on autos parts as on 10th May all the tariffs became official. Being China the great economic power it is, three days later China responded to the US with a range of increase of tariff from 5% and 10% to 25% over 5.140 US products which should be imposed from 1st June 2019 onwards, Table 1.1 below details each stage.. 6. DOI:10.6814/NCCU201901077.

(14) Table 1.1 – Timeline of Sino-US trade war Date. Country applying taxes. Country being taxed. Tax in %. Imported Product. 7th February 2018 USA. Every country 30 (except Canada). Solar panel. 7th February 2018 USA. Every country 20 (except Canada). Washing machine. 22nd March 2018. China. rd. USA USA. 23rd March 2018. USA. 2nd April 2018. China. 立. Aerospace, ICT and Machinery Steel. 政治大 USA 15-25. 學. 3rd April 2018. Argentina, Australia, Brazil 25 and South Korea Brazil and South 10 Korea. ‧ 國. 23 March 2018. Unspecif ic. Aluminium 128 products. 25. 1.334 products. China. USA. 25. 106 products. China. USA. 178.6. 15th June 2018. USA. China. 25. 16th June 2018. China. io. Sorghum. y. n. al. sit. 17th April 2018. er. 4th April 2018. ‧. China. Nat. USA. Ch. USA. engchi. iv 25 n U. 6th July 2018. USA. China. 25. 6th July 2018. China. USA. 25. 10th July 2018. USA. China. 10. 2nd August 2018. USA. China. 25. 3rd August 2018. China. USA. 5-25. Reduced products from 1.334 to 818. Increased products from 106 to 545. Started implementing 25% tariff on China’s products Started implementing 25% tariff on US products Added 600 commodities to list 3 Increased tariff on 600 commodities (list 3) 5,493 products. 7. DOI:10.6814/NCCU201901077.

(15) 23rd August 2018. USA. China. 25. Implemented tariff on 279 products. 23rd August 2018. China. USA. 25. Implemented tariff on 333 products. 10th May 2019. USA. China. 25. 5, 745 approx. – Official list 3. 13th May 2019. China. USA. 5-25. 5,140 products. Note: Data from China Briefing (https://www.china-briefing.com/news/the-us-china-trade-war-a-timeline/) retrieved in May 2019.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 8. DOI:10.6814/NCCU201901077.

(16) This Sino-US trade war matter is far from being finished but in order to advance this research and develop a literature review, a follow up of online articles, academic papers and a mapping of Brazil-Taiwan history through access to official documentation published by both Brazil and Taiwan commercial offices and governmental institutions, as these are the main nations suffering the spillage of the trade war being explored in this research, there will also be a debate towards whether the US or China shall win this battle, furthermore there might not be a matter of winners but mutual benefits and losses for many other nations. Trade databases among the 4 nations will be covered by a detailed analysis of the most traded products as trade volume, goods and industrial structures of Brazil and Taiwan before and after this current Trade war initiated. There is a lot of literature to analyse the Sino-US trade war and most of them points out. 政治大 China and the USA. However, most of the literature focuses on analysing which of the two 立 that other countries will also be affected by the war but it might not be as much and directly as. sides will be the winner of the Sino-US trade war, few scholars use empirical to answer this. ‧ 國. 學. puzzle. In the next chapter, I will explore analysing this current trade war from different perspectives and using the sanction theory to explain the efficiency of its implementation.. ‧. Nat. sit. y. 1.3 Research question. al. er. io. The goal of this research is of two folds, one is to analyse the debate about which side. v. n. may benefit more and the other is to investigate whether it affects the trade relationship between Taiwan and Brazil.. Ch. engchi. i n U. This following literature review points out two main puzzles which requires further empirical researches to be concluded and the goal of this thesis is to empirically answer these questions: 1 – Which side of the Sino-US trade war should have salient advantage based on theories? Which sanction theory better matched the situation? 2 – What’s the influence on other countries taking Brazil-Taiwan as an example? Trade diversion plays a great role in the shifting of target market in the Sino-US trade war, as trade diversion stands for the “A shift in international trade caused by one nation giving trade preferences to another, resulting in a decline in trade with a third country.” (The Global Economy, 2019). Also, Tejvan Pettinger defined it is as “Trade diversion occurs when tariff 9. DOI:10.6814/NCCU201901077.

(17) agreements cause imports to shift from low-cost countries to higher cost countries. Trade diversion is considered undesirable because it concentrates production in countries with a higher opportunity cost and lower comparative advantage.” (Pettinger, 2017). For instance, when the U.K. used to import lamb from New Zealand before joining the European Union (EU) but afterwards with the common external tariff of EU it became cheaper to import lamb from EU countries when the trade of lamb from New Zealand was diverted to France (The Global Economy, 2019). If looking for an efficient, low-cost production and high volume of trade, countries tend to shift their target market as might have been the case of Brazil when Brazilian farmers realised the potential market gap in the Chinese soy beans demand if the US stopped providing soy beans to China. Brazil probably diverted its soy beans supply from countries such as Taiwan to China, as the trade advantages looked greater for these two countries to the. 政治大. contrary as to what happened to Brazil-Taiwan with the decrease of trade in volume and value.. 立. 1.4 Research limitation. ‧ 國. 學. Within this research there is also a limitation that due to f the trade flow from China to US and vice-verse, many products are produced by Taiwanese, Brazil, Southeast Asian or other countries’ firms therefore limiting clear data to estimate the impact on the trade between either. ‧. Brazil and Taiwan or Brazil and China. Another limitation encountered is the fact this is an. sit. y. Nat. ongoing event, this current trade war can not be measured if sanctions, values, taxed products keep changing, once this Sino-US trade ceases it will be an appropriate time to fully measure. io. 1.5 Structure. al. n. until June.. er. the consequences of it, the goal is to analyse only the situations in the year of 2018 and 2019. Ch. engchi. i n U. v. On Chapter 2 there will be a literature review analysing 4 points of view on who will be the winner of this current Trade war if any at all. Scholar and experts on this matter have been discussing whether US will be the winner, other scholars have strong beliefs China will come out as the winner, yet two other group of scholars support the idea of both hurting with the probability of one hurting more than the other as well as no winner at all. On Chapter 3 the focus is to analyse the trade relation between Taiwan and the SinoUSA trade war as well as Brazil and the Sino-US trade war, with figures of trade value from the 4 nations involved in this research, the analyse should enlighten some more precise conclusion to this project.. 10. DOI:10.6814/NCCU201901077.

(18) On Chapter 4 will be dedicated to draw a conclusion based on the empirical research of Sino-US trade war, how these two nations actions affected the worldly trade dynamic as they started conflicting and indirectly affecting so many other nations which highly depend on both, some more than others but nevertheless countless nations had some spillage effect of this trade war. Chapter 5 includes the conclusion of the findings from this research as well as policy suggestions and future researches suggestions which can be a follow up of this ongoing work.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 11. DOI:10.6814/NCCU201901077.

(19) Chapter 2 Literature Review This chapter focuses on the matter of discussing different point of views towards the triumphant of the Sino-US trade war initiated by President Trump in the beginning of 2018 due to the unbalanced trade between China and the US, favouring China. Some scholars truly believe the US is more powerful therefore it shall triumph in this trade war, other scholar disagree US will come out as a winner as China has more power of purchase than the US, furthermore yet there might not be a winner in this conflict. The debates below will be divided in four arguments, the first section supports the US’ triumph, the second section details the reason behind why China has the potential to triumph over the US, the third section argues that both nations will be hurt but one should hurt more. 政治大. than the other, however on the fourth section argues that none of the two countries neither any other will be the winner as globalised as the world is now, different countries will benefit from. 立. the trade war as well as be economically affected by it.. ‧ 國. 學. 2.1 The US will triumph. ‧. This battle has prevailed over a year already without a sight of ceasing and yet experts. sit. y. Nat. believe President Trump is on the right path to victory over Chinese trade system. The future outcome of this trade war is unpredictable, the political structure difference between the two. io. al. n. (Whallen, 2019).. er. nations is highly relevant but their trade imbalance is what stands in middle of the conflict. Ch. engchi. i n U. v. It is believed that USA will win this trade war, for instance Gary Shilling the president of A. Gary Shilling & Co. and an economist thinks that the USA has a greater chance to win the war. The first reason is that the buyer has greater power over the seller, therefore China as a seller and the US as a buyer, the US is more likely to control China and China won’t have another option to sell its products and it has more intellectual property (Chin, Frank, & Silvertein, 2018). The second reason is due to the fact that China has a very slight chance of winning the battle against Trump’s trade sanctions even though it possesses a large amount of US’ treasury, holding on to it could cause a debt crisis to the public and borrowers in China, thus China cannot win a trade war in it is in deep debt and the US quickly takes lead and win trade over a broken nation as they expert China to be (Whallen, 2019). 12. DOI:10.6814/NCCU201901077.

(20) As for the third reason to see the US triumph is the fact that China’s fragile economic growth, it has no power to threat the US nor win a trade war without enough tools to keep the country’s economy growing steadily Shilling refers to post-Cold War time when Japan and Europe were allowed to export to the US so their economy could grow, he thinks the same happened to China and China only grew because it was allowed to export to Europe and North America (Chin, Frank, & Silvertein, 2018). He considers that China is playing the old game by thinking it can just export to the US without any barrier and supervision. He strongly believes that this trade war might cause a serious global recession, china will eventually give in to the US’ pressure and the US will definitely win the trade war, “I mean, people say nobody wins trade wars. Yeah, in the short-run you don't, but in the long-. 治政大own half of our treasuries. I think it and what do we do? We give them paper. That's why they 立 that is being reversed and in the long-run, the US will be better off.” Gary Shilling in an run, if it's a matter of changing what has been the world exporting to the US and the US buying. ‧ 國. 學. interview to Sara Silverstein of Business insider (Chin et al, 2018).. For instance, the biggest effected may be caused to investors such as Apple, Caterpillar. ‧. and Boeing as they lead the exports to China amounting to 7.2% of all American export, rather than economic system as a whole and it might be an opportunity for the US to extend to the. y. Nat. sit. Asian market and not only China (Whallen, 2019) .. al. er. io. China has gotten away with its protectionism for over the years for being a fuel to the. n. world economy, its approach to trade has become out of control and even though it has been. Ch. i n U. v. diagnosed a little too late as the imbalance between the major world economic power became. engchi. bigger in the last years, Daniel Lacalle believes the US has already won this trade war as China need the US surplus to keep feed the country’s economic growth. He also agrees that China is drown in debt and a nation in debt cannot purchase and to overcome its debt, China has to export more to its most important exporter which happens to be the US. Furthermore, he believes China’s reserve is far from being a significant amount to save the country’s debt and it cannot maintain its growth at all, let alone recover from an economic crisis (Whallen, 2019). There might also be a chance for the US to lose too, but the chances are slim in comparison to China, the consumption and job will decrease, technological products might suffer the price increase the most for now but China has to rapidly take an action on working on transparency, property and intellectual rights, or the loss will be even greater (Whallen, 2019).. 13. DOI:10.6814/NCCU201901077.

(21) 2.2 China will triumph China’s main concern now is to avoid more complicated dispute being so China has already agreed to protect Intellectual Property (IP) and some imported goods from the US and also forbid forced transfer, according to Professor Keyu Jin who is specialised in the Chinese economy. Although China is more willing to cooperate, it has not submitted to US’ requisitions completely but thus far China will agree to 40% of US’s demand, keep negotiating another 40% and the 20% left out is unnegotiable and the US cannot determine how neither by which means China’s development is meant to be done (Parker, 2019). The trade war had an unexpected outcome on Chinese citizens as to before Chinese people used to rate the West highly as an inspiring framework in studies, work and knowledge, however now with the hostility the US created also generated nationalism in China which won’t. 政治大 encouraged China as a whole to protect its own domestic economy and technology (Parker, 立 please the US, essentially the aggressive trade demand from the US strengthened and. 2019).. ‧ 國. 學. However, on the other side of the discussion whether should the US or China’s approach prevail, Trump’s administration is confident this trade war is won by the US already. ‧. if they just keep pushing China to its limits; But some says China will be the one celebrating a. y. Nat. battle that it didn’t even start and there are three reasons the US can’t win this battle because:. sit. 1. The United States’ economic leverage is not strong enough;. er. io. 2. The national interests in much of the rest of the world are not aligned with such. al. n. v i n Ch And the U.S. is at a comparative in terms of resources. e n gdisadvantage chi U (Oktay, Nov. 2018) an arrangement;. 3.. China has become an extremely strong economy in the world, its level of dependency on the US is considerably low as the total share of US export in China’s GDP is merely 2.5%, meaning the impact on China’s economy and trade will be minimum and China can manage to take the risk to run its trade without the US as a main trade partner. China is quick on rearranging its economy and to adjust to new regulations, as in order to keep low valued products China, it moves its labour force and production to neighbouring countries, therefore China keeps its own way of production but in another land (Oktay, 2018). There are at least three different viewpoints acknowledging Chinas as the one which will mostly prevail in this current trade war, China has a potential to overpower the taxation imposed by the US and there are enough evidence for some scholars to support this argument. 14. DOI:10.6814/NCCU201901077.

(22) Firstly, China is running ahead of the US in the trade war as the US can’t gather other countries to go along with Trump’s administration against China, as most countries from the developing to the most developed countries have great trade ties with China with products from cars to groceries and the market is expected to be greater in the future as China increases its production and opens its market (Oktay, 2018). Secondly, even if some of countries agree to stay on Trump’ side and go against China with the US; it doesn’t guarantee any economic success to countries involved much less a win over this battle. It might be a risk to have the world economy run by China but run by the US with the “America first” principle might not be a great solution to this war either (Oktay, 2018). And lastly, the US does not have all the resources to survive without China neither to fight against it, China has its own savings to keep investing domestically if external factors. 治政大and affects the USA. China has can keep the country on its feet if any external matter changes 立 a far greater chance of winning this trade war, it doesn’t mean the trade war is already won but collapse and tend to affect China, but the US doesn’t have an economic strategy like China that. ‧ 國. 學. China is prepared for it.. As result of good restructuring strategy that China has to run the country’s economy. ‧. with the US by migrating its labour force to neighbouring countries, with its trade surplus over the US, even if other nations join the US in this battle with the “America first” principle will. y. Nat. sit. voluntarily give up on its own national economic interest in order to save the US, neither is the. al. n. than they think, therefore this trade war belongs to China.. Ch. engchi. 2.3 Both will hurt, but who hurts more. er. io. US prepared to survive economically without China, America is too dependent on China more. i n U. v. However, there is a third debate that says the ongoing trade war won’t have either the US or China as the winner, as the indicators one uses to define the winner of this war will change the perspective of winner in it, and there are a few reasons. First of all, as this trade war is rather recent there isn’ta enough economic data neither there has been a great impact on both nations or spill over effect on other nations, for a solid decision on who wins it, there must be more time and economic impact on one of them at least. China did have a decline on the market in 2018, which was a result of strict regulations and weak economy but it picked up towards the end of the year despite the trade war and the $200 billion tariff China was submitted to (Chen, 2018).. 15. DOI:10.6814/NCCU201901077.

(23) Secondly, both economies will suffer economically or even politically if this trade war continues and spreads, nor China neither the US is willing to give in and negotiate as both want to have the advantage, this can’t be a win-win scenario, but if not carefully managed, this trade war will take the whole world into it and cause a greater harm than it is expected so far, and the fact that the US isn’t winning the trade war right now doesn’t necessarily mean China is winning it (Chen, 2018). Also, this trade war will severely hit both countries but for China, the pain will be much greater if it continues as China’s dependence on US’ trade and technology, but the main consequence China might face is the billions of dollar it will lose if the US stop importing Chinese good, which according to Huang is totalled US$500 Billion, also China will have to restructure its manufacturing hub which might increase its products cost, China is one of the. 政治大 even if some other nations try to fill in the trade gap left by the US, yet there will be a time 立 largest nation in the world and the US its largest trade partner in products and commodities,. China will have to return to the US trade partnership and probably the other way around too. ‧ 國. 學. (Huang, 2018).. It has been a delicate task to take side of who will win this war as Trump’s objectives. ‧. look confusing with all this taxation, it looks more a personal goal to reduce trade deficit but. y. Nat. also stop the “Made in China 2025” project, force China to open its market, stop China from. io. sit. stealing intellectual property, change the capitalism system but most importantly, stop China’s. n. al. er. rise. With some many goals in mind, the US cannot tackle every single objective and win the. i n U. v. trade war altogether; this is far too great for a single nation to tackle and wins it, despite its. Ch. engchi. economic power as the US has (Chen, 2018).. As a third point, Trump’s administration should be reminded of its high dependence on China which is higher than the other way around, The US is very confident over the tariffs imposed on China will be effective, therefore resulting in China bowing down to the US. In Professor Winter Nie’s perspective, Trump needs to understand the current China is already well developed, with access to Western technology and the manufacturing techniques it looked for in the 1980’s, thus China is an economy that the US cannot ignore its economic and political power, if Chinese consumers stop buying the American products such as Iphones or the government stop buying airplanes for the next 20 years, the US market will lose about US$1 trillion (Nie, 2018).. 16. DOI:10.6814/NCCU201901077.

(24) And lastly as the fourth point, China now has a great purchase power which Trump might not be acknowledging its potential to cause an economic crisis in the US trade is interrupted due to high tariffs imposed by both nations and the US might suffer the consequences of its own sanction (Mullen, 2018). Both economy powers are pushing each other to see which can endure the trade tariff for the longest; Nevertheless, they are aware this trade war can affect other economies as well through businesses and investment. Scott Kennedy, the director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies affirmed that Trump’s administration believes the trade war will also strengthen his political credibility domestically, therefore weaken China but he also thinks this enthusiasm will cool off soon and both nations will come to negotiation soon (Mullen, 2018). 政治大. The two main nations involved in this trade war might not realise the effect of their. 立. conflict over their population, current American companies in China are rather concerned about. ‧ 國. 學. the impact their companies might suffer with the trade war goes on.. The chairman of the American Chamber of Commerce in China stated that the. ‧. "Increased tensions in the US-China economic relationship will negatively impact ... operations in China," William Zarit (Mullen, 2018). "We urge the two governments to come back to the. Nat. sit. y. negotiation table with the aim of having productive discussions based on achieving results --. io. Zarit.. er. focused on fairness and reciprocal treatment -- instead of escalating the current situation.” said. al. n. v i n C htrillion of good inU2017, which is a 5.6% decrease if China has imported US$1.841 e n g cmonths h i of 2018, China has already imported compared to 2013, however only in the first three $497.3 billion in goods and it is estimated to reach $1.989 trillion by the end of the year (Workman, 2018). China’s importation is mainly from Asian countries 55.9%, leaving only 44.1% for the rest of the world to export to China which only 6.2% includes Latin America (Excluding Mexico). Soy beans is the 6th most imported products by China, totalling $39.6 billion with an increase of 16.6% (Workman., 2018). There are two points of view to predict who will hurt more, if from a infrastructure perspective China is highly vulnerable and likely to suffer the most consequences if the trade war goes on, as its hub will have to be restructured and find a new market to export its products once the US closes its market to Chinese good, nevertheless the conflict is not fully won for 17. DOI:10.6814/NCCU201901077.

(25) the US. China doesn’t depend on the US importation as much as it is thought, 55% of China’s importation comes from Asia nations with the other 45% from all over the world, undoubtedly the US plays a great role in the Chinese trade but China won’t collapse with it(Workman, 2018).. 2.4 No winners This Sino-US trade will affect not only these countries trade, but also companies and the final consumers. Companies will be forced to buy local goods which are more expensive than the Chinese, therefore the final consumers will have to pay extra for the extra expenses companies will have, and this is something that Trump might not realise that there might be a. 治政 not necessarily affect other great economies such as Brazil大 and US trade relation directly, so 立 as Brazil and the US as Brazil and China have different far there are no signs of any effect. negative effect when he tries to fight China trade wise. However, this Sino-US trade war might. ‧ 國. 學. products being traded, what is likely to happen and according to the data from MDIC, the USA will have to export its products somewhere else, and Brazil seems to be the chosen one as US. ‧. importation increased in Brazil in the last 11 months (MDIC, 2019).. A quick analyse regarding Brazil and China in the trade war is that the Brazilian farmers. y. Nat. sit. will have a great benefit, specially the soybeans farmers as China places high tariffs on. er. io. soybeans from the US, Brazil has the opportunity to step up and fill the gap that will be left by. al. v i n time being if the trade war continues,CBrazil will be the only soybeans supplier to China (Elmer, hengchi U 2008). n. the US of soybeans importation in China. The trade war might not last a long term, but for the. However, Gustavo Oliveira, an assistant professor of global studies at the University of California, suggested that even though Brazilian farmers have already invested in producing more soybeans due to China’s demand, China will have to buy from the US sometime soon. Oliveira believes the trade war will cause a great pain to farmers worldwide, using Brazil as an example that farmers are used to deal with weather and market unpredictability but 25% of unpredictability of the two biggest economies will be very frustrating to everyone (Elmer, 2008). Considering the effect of the trade war might be not bilateral but multilateral, as the Foreign Minister Joseph Wu (吳釗燮) stated Taiwan’s strong will to strengthen trade relation with the US and urged the US to consider Free Trade Agreement, the 18. DOI:10.6814/NCCU201901077.

(26) hypothetical effect that this trade Taiwan-US agreement might bring to the relation Brazil-Taiwan is that Brazil will lose even more market, that is Brazil will export even less to Taiwan, as the US products prevails in the Taiwanese market and Brazil main relation to Taiwan is commercial, therefore trade, more than political ( Teng, 2018). The trade war created by the US and China will get other countries down with them. It is not a dispute between two nations where only them suffer the consequences but as international trade creates an interdependence of nations, if the two largest economies fight and one collapses, others will collapse too as she suggested that Beijing, South Korean, Taiwan and even Singapore may be affected. As a family company of speakers in Singapore run by Joyce Seow has its factory in China which supplies most of its goods to the US as their products will also be taxed with the 25% tariff, Singapore is a rich nation with the busiest port in the world,. 政治大 because although some of its products are produced in their countries, they are usually finalised 立 some other countries in south East Asian as Malaysia and Indonesia will also be affected. in China, therefore considered a Chinese product and submitted to the tariffs imposed by the. ‧ 國. 學. US (Vaswani, 2018).. Keyu Jin believes it is hard to tell who might have its economy and trade threatened the. ‧. most so far, there is not enough data to draw a solid conclusion, however since the trade war. sit. y. Nat. was initiated, China had a great reduction of soy beans and agricultural products importation as well as aircraft related material (Parker, 2019). As globalised as the world is today, there. io. n. al. er. cannot be a loser or winner in this war, both nations get hurt as well as other nations trading. i n U. v. with China and the USA and it can cause a significant change to the dynamic of the. Ch. engchi. international market. Nevertheless, China is not intimidated by US’ demand and longs to solve the conflict the soonest so the country can proceed its independent economic development despite the long-term tension that might prevail between the two super powers (Parker, 2019). The probability of no winner in this conflict is rather high as there might be other trade partner to both China and the US which will benefit as well as have some unfavourable outcome in their trading market, for instance there is Brazil benefiting from exporting more soy beans to Chinas but also Singapore which might have a decrease of their exportation as some products go through China and is sold the in the international market as a Chinese good rather than Singaporean, but there will be a little of loss and win for each nation involved in this battle.. 19. DOI:10.6814/NCCU201901077.

(27) 2.5 The effect of the Sino-US trade war on other countries There are some researches done on the effect of Sino-US trade war as period of studies and data available with significant results are yet at premature stage to determine which countries have been affected the most and how, such information must take a few more years to be concluded. My contribution to this topic is to add up to the literature based on empirical research how other countries are affected by a two nations trade conflict. There is a lot to be researched and discovered in relation to spill over effect of the Sino-US trade war. 2.6 Theoretical Framework This research will focus on how bilateral trade relationship of Brazil and Taiwan could be affected through the Sino-American trade war which does not only affect these two nations but as a spill over effect, it might affect many nations as well as Brazil-Taiwan trade relation.. 政治大. Can the Sino-US trade war have a significant effect on Brazil-Taiwan relationship? How can. 立. it also affect the relation between Brazil and China too? This trade war could facilitate a more. ‧ 國. 學. profitable trade relation of Brazil-China but on the contrary Brazil-Taiwan relation is likely to weaken due to the lack of market Brazil might have in Taiwan, however the gap in the Chinese market left by the American suppliers, can be seen as an opportunity for Brazil’s exportation. ‧. to increase, most importantly is to find out the effects of this Trade war and map Brazil-Taiwan. sit. y. Nat. history.. io. er. This is an evaluative research aimed to evaluate the effect of trade war on other States, as for instance Brazil and Taiwan relationship. The methodology in this research will be both. n. al. Ch. i n U. v. qualitative and quantitative. To start with collect information and analyse the trade war. engchi. phenomena through online news agencies about the case, as well as academic articles and books whenever possible and available because the phenomena is too recent to have books written about it. A quantitative methodology will be applied as I collect data from various database banks for each country trade statistics record. The variables will be indexes such as values and goods as dependent variables (DV) and the Sino-US trade war as independent variable (IV) to support my analysis to find out whether Sino-US trade war will affect other nations, their industrial structure and in special Brazil-Taiwan relations. In the quantitative approach used, Sino-US Trade War will be counted as a treatment and whether the trade relationship between Brazil and Taiwan had any alteration in significant numbers of trade in volume and products, and with that the sanctions effectiveness theory as whether applying a sanction on goods over a given country guarantees positive, negative or no results at all. 20. DOI:10.6814/NCCU201901077.

(28) In order to visualize the results of the findings, there will a few plots to demonstrate the statistics of trade between Brazil, The United States of America, China and Taiwan, all the numbers will be based in American dollars and also the 10 most products trade between dyads comparing the imports and exports of each dyad in the period from 2007 to 2017, with a special attention to soybeans as it might be the main product that the US should stop supplying to China and should Brazil fill the gap. In this trade dispute, President Trump is relying on the sanctions effectiveness to contribute to succeed the pressure he is putting on China. Threats might play a role on imposing economic sanctions but it doesn’t guarantee the expected results, it might influence the opponent and even change their behaviour but also if applied smartly, the sanctions will reach the expected results (Bapat, Heinrich, Kobayashi, & Morgan, 2013).. 政治大 applied against their allies are more likely to be efficient, Drury (1998) and Krustev & Morgan 立 Some scholars as Drezner (1999) and Allen (2005,2008) have argued that sanctions. (2011) take it into no consideration since there isn’t any empirical findings to support such. ‧ 國. 學. argument, meanwhile Nooruddin (2002) and Early (2011) have agreed on the theory that sanctions have less effectiveness when applied against allies. A successful sanction. ‧. effectiveness will depend on the variables considered in the process which might highly. sit. y. Nat. influence the results (Bapat et al, 2013, p.80).. In some other cases, scholars suggest that sanctions are efficient when they threat the. io. n. al. er. target and force them to change their behaviour before the actual sanctions are imposed so the. i n U. v. target would take an action by changing their policies in order to avoid the sanctions to occur (Bapat et al, 2013, p. 84).. Ch. engchi. For a better understanding of sanction, it must involve a sender and a target State as well as a demand by the sender towards the target State in order to change the behaviour and/or their policy which is likely to be causing some implications to the sender State. And sanctions could be applied in different ways such as travel or importation bans, tariffs, export controls, aid cuts and soforth (Bapat et al, 2013, p.85). The findings reveal that the sender is more likely to achieve the sanction effectiveness when the threat is done through an International Orgationation and if the economic sanction is effectively imposed, however these results are not to be taken so strictly (Bapat et al, 2013, p.89). The analisys of sanctions threats show that there are three main reasons why threats are more likley to be efficient, firstly if the threat is issued via the supervison of an International. 21. DOI:10.6814/NCCU201901077.

(29) organtion, secondly if the target cost is excessively high and thirdly if the dispute matters are highly revelant (Bapat et al, 2013, p.90). The final analysis suggest some components that are more likely to determine the success of sanctions are “when carrots are offered by the senders; when the senders are democratic; when the targets are not democratic; when sanctions do not include export restrictions; when issues are less salient; when multiple issues are involved; and when the target highly depends on the trade with the sender” (Bapat et al, 2013, p.94). Also, it indicates that threats are less likely to be successful than imposed sanctions unless there are further threats or matters involved, in additonal to the findings it is also clear that much of the agreements and actions were taken during the threat stage rather than waiting for the sanctions to be impoved, threats can be very efficient at times and considered just as important as the imposition of sanctions (Bapat et al, 2013, p.95).. 立. 政治大. One of the purposes of this research is to identify which argument is more accurate. ‧ 國. 學. whether China or the USA will win the trade war. Furthermore, there might be a chance that none of them being the winner, owning to the fact that other nations will get involved and maybe benefited from this dispute as China and the US just look for other market to do trade. ‧. with.. sit. y. Nat. er. io. 2.7 Literature review conclusion. al. n. v i n C or the other will win variables to evaluate whether one side h e n g c h i U current Sino-US trade war. Some According to the literature review there are different opinions based on different. experts and scholars defend the US as a winner, others find more evidences to support the. argument to place Chinas as the winner of the war, however there are still two more arguments emphasizing than neither China nor the US will be the winner of all, they will both be hurt though one might hurt more than the other but nevertheless both nations will have some impacts as well as no winners or losers but a spill over effect of losing and winning consequences of the trade war. Chapter 3 aims to empirically answer the first question by pointing out who has more advantages by looking at the changes of the trade flow as well as the goods from China and the US.. 22. DOI:10.6814/NCCU201901077.

(30) Chapter 4 also has the focus to use empirical research to answer the second question by looking at the figure of trade between two important trade partners, taking Brazil and Taiwan as an example.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 23. DOI:10.6814/NCCU201901077.

(31) Chapter 3 – An analysis Sino-US Taiwan and Sino-US Brazil trade relations This section will be focusing on analysing the relations on each dyad negotiation, trade history, most traded products in the years of 2017 and 2018 as well as the outcomes of their interaction. There will be line graphs to analyse the trade value and also pie graphs to expose the most traded products of each dyad and it will be divided in two parts. Firstly, the analysis will focus on the US, China and Taiwan relations regarding their latest values and how the trade war might have affected the relation of the three nations. And secondly, the relation between the US, China and Brazil as to analyse whether has had any considerable impact on its trade market due to the Sino-US trade war. This chapter is divided in two main sections, the first one explores the relation of Sino-. 政治大. US and Taiwan and the second section explores the Sino-US and Brazil aiming to evaluate whether Brazil-Taiwan relationship has had any impact due to the trade war.. 立. ‧ 國. 學. 3.1 Sino-US and Taiwan. ‧. The USA as the largest economy in the world has already traded trillions of dollars altogether with China alone, their bilateral trade resulted in more than $500 billion in 2017 as. Nat. sit. y. the USA imported Chinese goods and the US only exported its good to China at the value of. io. al. er. $129.8 billion, a trade surplus for China, as shown on Figure 3.1 (p.26) (OEC, 2018).. n. In their bilateral trade, the USA exports to China include “oil seed, fruits, grains, seed,. Ch. i n U. v. etc. ($14.9 billion); unspecified commodities ($14.9 billion); and vehicles other than railway. engchi. and tramway ($13.3 billion)” and the other way around as China exported to the USA were “electrical and electronic equipment ($127.1 billion); machinery, nuclear reactors, boilers, etc. ($105.3 billion); and furniture, lighting, signs, prefabricated buildings ($25.5 billion)” (Johnston, 2015), an important factor in their trade is that with the devaluation of Yuan, the USA tends to buy a lot from China as its products becomes cheaper to the USA (OEC, 2016). In 2017 computers are number one product imported to the US from China and Soy beans the number one exported product from the US to China, in figure 3.2 (p.27) you can find the top 10 products exported from the US to China and figure 3.3 (p.28) the top 10 imported products to the US from China. As for 2018 after the Trade War started, the outcome of it was the contrary of what Trump expected it to be, China had an even greater profit over US’ trade. 24. DOI:10.6814/NCCU201901077.

(32) once again, which in 2017 China’s surplus was of US$376 billion and in 2018 it overpassed the year before amount totalling US$420 (Figure 3.1, p.26). Whether it is the USA or China the strongest in the global trade, a slowdown of one or the other nation will affect not only both China and USA, but also the other two main China’s main partner Hong Kong and Japan, moreover it will affect many other nations as a cause and effect cycle.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 25. DOI:10.6814/NCCU201901077.

(33) 立. 政治大. Figure 3.1 – USA and China Trade (2007-2018). ‧ 國. 學. Source: Data from The Observatory of Economy, 2019, https://atlas.media.mit.edu/en/ retrieved in May 2019. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 26. DOI:10.6814/NCCU201901077.

(34) 立. 政治大. ‧ 國. 學 ‧. Figure 3.2 – USA Top 10 exports to China (2017). n. al. er. io. sit. y. Nat. Source: Data from The Observatory of Economy, 2019, https://atlas.media.mit.edu/en/ retrieved in May 2019. Ch. engchi. i n U. v. 27. DOI:10.6814/NCCU201901077.

(35) 立. 政治大. ‧ 國. 學. Figure 3.3 – USA Top 10 imports from China (2017). ‧. Source: Data from The Observatory of Economy, 2019, https://atlas.media.mit.edu/en/ retrieved in May 2019. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 28. DOI:10.6814/NCCU201901077.

(36) In between the Sino-US Trade war Taiwan was involved due to the USA targeting its potential market, as the conflict between China and the US becomes more intense Trump still has other markets to use as an escape to keep the US’ exportation flowing and the closeness between US and Taiwan might not please China. Although Taiwan and China have a rather heated political friction between themselves for many years, Taiwan started investing in China in 1970 in order to build a trade relation, which is today known as Cross-Strait relation. According to Council on Foreign Relations, the bilateral trade of China and Taiwan are significantly important, as China is Taiwan’s main trade partner with 30% of its trade directed to China with the majority of Taiwanese businesses investment in China since 1988. The Bureau of foreign Trade (BOFT) affirmed that Taiwan has reached US$155 billion exported to. 治政大imported to the island from the BOFT in Taiwan reported the dominance of products 立 mainland China as shown on Figure 3.5 (p.31), which I shall detail further in the development China and US$43 billion import from China as shown on Figure 3.4 (p.30).. ‧ 國. 學. of this research, and the variety of exported Taiwanese products to China as on Figure 3.6 (p.32) showing both nations’ 10 most traded goods.. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 29. DOI:10.6814/NCCU201901077.

(37) 立. 政治大. ‧ 國. 學. Figure 3.4 – China and Taiwan Trade (2007-2018). ###. ‧. Source: Data from Bureau of Trade (Taiwan), 2018, https://cus93.trade.gov.tw/FSCE030F/FSCE030F retrieved. n. al. er. io. sit. y. Nat. in May 2019. Ch. engchi. i n U. v. 30. DOI:10.6814/NCCU201901077.

(38) 立. 政治大. ‧ 國. 學. Figure 3.5 - China Top 10 exports to Taiwan (2018). ‧. Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 31. DOI:10.6814/NCCU201901077.

(39) 立. 政治大. ‧ 國. 學. Figure 3.6 - China Top 10 imports from Taiwan (2018). ‧. Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 32. DOI:10.6814/NCCU201901077.

(40) Taiwan and China have kept their trade as smooth as before the Sino-US trade war as Figure 3.4 clearly shows that trade value keeps increasing between them and the variety of the 10 most traded products certifies that so far, China-US conflict hasn’t soured the trade relation between China and Taiwan, at least for now. Also, Taiwan has impressively worked its way into the global market and played a great role in the international trade regardless its size and political friction with China, the biggest trade player in Asia. Yet Taiwan managed to develop a prosperous trade relation with another great powerful economy, the United States of America which according Da-Nien Liu Taiwan was ranked the 14th nations in exporting products accounting 2.3% of the world trade, “In 1990, the United States was Taiwan’s largest export market and its second-largest source of imports.” (Liu, 2016).. 政治大 very successful over the last 20 years at least, which is not what the reports from BOFT has 立 shown, the Taiwanese institution has reported a steady trade relation between the two nations,. However, Liu reported that the trade relation between Taiwan and the US hasn’t been. ‧ 國. 學. referring to Figure 3.7 (p.34) to compare the trade relation of US and Taiwan from 2007 and 2018, which in 2017 the USA exported US$30 billion to Taiwan and imported US$36.9 billion. ‧. followed by an increase in 2018. The following figures 3.8 (p.35) and 3.9 (p.36) represent the 10 most traded products between both nations.. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 33. DOI:10.6814/NCCU201901077.

(41) 立. 政治大. ‧ 國. 學. Figure 3.7 – US and Taiwan Trade (2007-2018). ‧. Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 34. DOI:10.6814/NCCU201901077.

(42) 立. 政治大. Figure 3.8 - USA Top 10 exports to Taiwan (2018). ‧ 國. 學. Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 35. DOI:10.6814/NCCU201901077.

(43) 立. 政治大. ‧ 國. 學. Figure 3.9 - USA Top 10 imports from Taiwan (2018) Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 36. DOI:10.6814/NCCU201901077.

(44) Taiwan has stood steady for the running process of the trade war between China and the US, if the US had the plan to approach Taiwan as a strategy to provoke China either politically or economically, these figures reveal that Sino-US Trade war hasn’t affected trade in values between the US and Taiwan as yet. The most traded products haven’t changed much, expect for the order of priority of them but the importation and exportation between Taiwan and the US has increased over the year, including 2018 which could have had a greater increase but the number aren’t too impressive. Taiwan and China have managed to keep their trade relation healthy and growing for the past years too and it has not been affected by the conflict. However, the results for China and the US aren’t as expected by the US government, with the taxation implemented by Trump, it was expected to control China’s surplus over the. 政治大. US by decreasing China’s export to the US and increasing the US’s export to China for a fairer. 立. trade relation that Trump has been fighting for, as China’s trade surplus increased in 2018 it. ‧ 國. 學. has shown that the tariffs threats and tariffs implementations haven’t had a positive effect to the US but a positive effective to China based on Figure 3.1 (p.30) as China exported more and the US export less than expected.. ‧ y. Nat. io. sit. 3.2 Sino-US and Brazil. n. al. er. Brazil and the US had a stable trade balance, Brazil exported US$26.8 Billion and. i n U. v. imported US$24.8 billion in 2017, the only year Brazil had a trade surplus over the US in the. Ch. engchi. 10 last years. Brazil and China, however had a different trade relation where Brazil exported US$47,8 billion but only imported US$27, 3 billion (MDIC, 2019). In the meantime, China and Taiwan had a big gap in their trade relation as China imports US$155.9 billion but only exports US$43 billion (MOEA, 2018), but the USA has a pretty well balanced trade with Taiwan as the US exports US$30.2 billion and imports US$36.9 billion, not a perfect ratio as the US wants a surplus but it is a better situation than China (MOEA, 2018). The only country that seems not to be doing so well with a bilateral trade is Brazil with Taiwan, as in 2017 exported only US$1.8 billion and imported US$2 billion (MDIC, 2019), with constant decline of trade for the last 10 years. Brazil and the USA have a considerably more stable trade relation over the last 7 years as so both countries signed an agreement to deepen trade cooperation even though the US has. 37. DOI:10.6814/NCCU201901077.

(45) US$7.8 billion surplus over Brazil. Brazil is the “12th largest goods trading partner with US$ 66.7 billion in total […] in 2016” but became the 10th largest exporter in 2017 (USTR, 2017). A comparison of import and export between and the US are shown on figure 3.10 (p.39), which most of the time the US has a trade surplus over Brazil. The US main exports to Brazil in 2017 were Mineral fuels, Aircrafts, machinery, electrical machinery and vehicles. In the agricultural sector, the US exported prepared food, wheat, cotton, dairy products and feed. Brazil exported US$26.8 billion to the US, the main products exported were also fuels, aircrafts, iron & steel and machinery, as agricultural products unroasted coffee is the main one, followed by fruit, vegetables, red meats, tobacco and essential oils (USTR, 2017). On figures 3.11 (p.40) and 3.12 (p.41) are the 10 products most traded between Brazil and the US, which crude petroleum is the main product the US is interested in but for the main. 政治大. 10 products exported to Brazil from the US, fuel oil is the main products as the US imports the. 立. crude material, refines it and exports it back to Brazil.. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 38. DOI:10.6814/NCCU201901077.

(46) 立. 政治大. Figure 3.10 – Brazil and the US Trade (2007-2018). ‧ 國. 學. Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in May 2019. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 39. DOI:10.6814/NCCU201901077.

(47) 立. 政治大. ‧ 國. 學. Figure 3.11 – Brazil Top 10 exports to the US (2017) Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in May 2019. ‧. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 40. DOI:10.6814/NCCU201901077.

(48) 立. 政治大. ‧. ‧ 國. 學. Figure 3.12 – Brazil Top 10 imports from the US (2017). Source: Data from MDIC, 2019, http://www.mdic.gov.br/ retrieved in May 2019. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 41. DOI:10.6814/NCCU201901077.