TENSIONS RATTLE APEC: Agriculture Secretary Tom Vilsack will face a test of his diplomatic skills when he hosts Chinese and Hong Kong officials at the Asia-Pacific Economic Cooperation Food Security Ministerial Meeting Thursday. Top agriculture officials from the 21 APEC member economies will gather in Seattle less than a week after the latest flare-up of tensions in the U.S.-China relationship. China reacted furiously Friday to a Washington Post report that the Biden administration plans to bar Hong Kong Chief Executive John Lee from attending the APEC leaders summit in San Francisco in November. “China strongly disapproves of and firmly opposes this and has made serious démarches to the U.S.,” Chinese Foreign Ministry spokesperson Mao Ning said. “We ask the U.S. to correct the wrong move immediately.” The Trump administration imposed sanctions on Lee and 10 other Hong Kong and Chinese officials in 2020 in response to a new national security law imposed by Beijing that further eroded the special administrative region’s political autonomy. It “blatantly violates APEC rules and gravely contravenes the U.S. commitment as the host” for the Biden administration to cite those sanctions as the reason for not allowing Lee to attend the meeting, Mao said. White House officials stopped short of confirming the report, which also said Russian President Vladimir Putin would not be allowed to attend. "We're going to make sure that attendance is in keeping with the U.S. laws and regulations,” National Security Council spokesperson John Kirby said. “And we continue to work with all our partners who are coming together for APEC to make sure that everybody is appropriately represented.” Food security talks: Thursday’s Food Security meeting provides APEC ag ministers the opportunity to discuss Russia’s refusal to renew a U.N.-brokered deal allowing Ukraine to ship grain out of its blockaded Black Sea ports. However, officials are expected to mainly focus on issues related to the 2030 Food Security Roadmap previously approved by the group. Looking like a longshot: Western officials had hoped that Beijing, a strong ally of Moscow, could help persuade the Kremlin to rejoin the deal since China has been the top destination of grain shipments under the agreement. HOW BEIJING FUELS MOSCOW: China is providing Russia with crucial support for its war against Ukraine by helping Moscow evade sanctions, and is likely supplying the Kremlin with critical technology, according to an assessment released by the Office of the Director of National Intelligence The “Support Provided by the People’s Republic of China to Russia,” which was mandated by Congress and released Thursday, said Beijing is “pursuing a variety of economic support mechanisms for Russia that mitigate both the impact of Western sanctions and export controls.” China fires back: Beijing’s foreign ministry railed against the report at a press conference on Friday and said China opposes “unilateral sanctions and long-arm jurisdiction that have no basis in international law or mandate from the Security Council.” China’s trading relationship with Russia “shall be free from disruption or coercion by any third party,” Mao added. The report underscores the difficulty the Biden administration has found when trying to rein in third-party intermediaries used to circumvent restrictions. Russian companies continue to ship energy commodities across the globe despite Western sanctions, while the Kremlin imports Western technology via sanction-free countries. The Biden administration has designated more than 200 entities in connection with evading the sanctions across Europe, Asia and Africa. Critical tech: Beijing has facilitated the flow of “hundreds of millions of dollars” worth of U.S.-made or branded semiconductors into Russia and is “probably supplying Moscow with key technology and dual-use equipment used in Ukraine,” according to the report. What to watch: “I hope this report makes clear to Beijing that the United States, and the world, will know if they take further actions to enable Putin’s brutal invasion,” said Rep. Jim Himes (D-Conn.), a ranking member on the House Permanent Select Committee on Intelligence. By the numbers: Russian imports from the PRC increased 13 percent in 2022, and exports to the PRC increased by 43 percent. Total trade between Beijing and Moscow hit a record high of $190 billion in 2022, a 30 percent increase from 2021. MOLINA SEES PROGRESS IN WTO TALKS: WTO members have resolved 80 percent of the issues in talks on reforming the group’s dispute settlement system, but still have more work to do to get a deal, Guatemala’s deputy permanent representative to the WTO said Friday. Members are also near agreement on another 10 percent of the issues, but are still far apart on the remaining 10 percent, Marco Molina said during a meeting of the WTO’s Dispute Settlement Body, according to a Geneva-based trade official who recounted the comments. Molina did not detail which issues are the most “highly sensitive,” but it’s a fair guess they have to do with the future of the Appellate Body, which the U.S. essentially killed during the Trump administration by blocking the appointment of new judges. Informal process: A group of WTO members asked Molina this year to organize an informal process aimed at restoring a fully functioning dispute settlement system. Many members want to reach an agreement by the WTO’s 13th Ministerial Conference at the end of February in the United Arab Emirates. But the formal deadline set by the group at their 12th Ministerial Conference last year simply says “by 2024.” Next steps: Molina said he will resume talks with delegates after the August break in the hope of identifying potential solutions to the most difficult issues in September. The Guatemalan diplomat also said he plans to convene meetings right after the summer break for delegates to start drafting the text of an agreement in what is expected to be a very intense process. To reach a deal by MC13, any outcome of an informal process should first be considered by the WTO’s Dispute Settlement Body or some other committee. Molina estimated that gives members only 3 to 4 months to conclude the informal process. "We are in the final stretch and there is still a lot of work to do," Molina said, according to the Geneva official. EYES ON THE INDO-PACIFIC: Biden is slated to host Japanese Prime Minister Kishida Fumio and South Korean President Yoon Suk Yeol on Aug. 18 at Camp David, as part of the administration’s effort to bring key Asian allies closer to Washington. “The three leaders will discuss expanding trilateral cooperation across the Indo-Pacific and beyond – including to address the continued threat posed by the DPRK and to strengthen ties with ASEAN and the Pacific Islands,” the White House said in a statement on Friday. The summit is a chance to reaffirm the “iron-clad alliances between the United States and Japan, United States and the Republic of Korea, and the blossoming of the relationship between Japan and the ROK under the extraordinary leadership of both President Yoon and Prime Minister Kishida,” said John Kirby, per CNN. BIDENOMICS ON TAP: The president signed an executive order on Friday directing federal agencies to support research and development aimed at boosting incentives to manufacture inventions. The order would cut red tape related to the R&D process, encourage the expansion of domestic production and tighten the waiver process. ALL EYES ON CHIPS EXPORTS: The Republican chair of the House Select Committee on China, Mike Gallagher (Wis.), and Democratic ranking member Raja Krishnamoorthi (Ill.) wrote a letter to Commerce Secretary Gina Raimondo calling on her to strengthen a sweeping set of export control rules implemented in October. The move tees up a clash with industry and comes as the Biden administration considers new restrictions on exports of AI chips to Beijing, per the Wall Street Journal.
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