Could Looming Virtual Private Network Rule Changes In China Further Stimulate “Reshoring” Of American Manufacturing?
Starting March 31, 2018, China will only allow companies to use Virtual Private Networks (VPNs) from a limited number of VPN providers approved by the government. China’s stated reason for the shift in policy is to prohibit the use of VPNs—which allow secure communications, data transmissions, and web browsing—as workarounds of Chinese censorship.
This development also creates potentially significant implications for U.S. manufacturers maintaining or considering operations in China. First, U.S. businesses must begin planning for the March 31 deadline now to ensure no disruption of operations. For example, Apple has removed hundreds of VPN apps from its Chinese app store and agreed to allow the state-owned Guizhou on the Cloud Big Data to operate its iCloud in China. Second, U.S. companies must weigh the potential additional business risks of remaining in or entering the Chinese market on the one hand, and determining whether to “reshore” operations in the United States in order to avoid the potential risks associated trade secrets, business plans, and intellectual property being accessible to Chinese government surveillance on the other hand.
India As “Alternative Investment Hub” To China?
On January 11, 2018, U.S. Ambassador to India Kenneth I. Juster gave a speech entitled U.S.-India Relations: Building A Durable Partnership For The 21st Century. Ambassador Juster’s remarks included a statement that “‘America First’ and ‘Make in India’ are not incompatible”, and that increased “economic interactions and volume of trade” between the United States and India will “lead to collaboration on emerging technologies and create jobs in both countries.” Ambassador Juster stated that this era of shared economic opportunity for the United States and India is occurring against the backdrop of “increasing difficulties [in] conducting business in the largest market in the region—China.”
President Trump’s State Of The Union Address
President Trump’s first State of the Union speech clocked in at more than one hour and twenty minutes. President Trump conveyed his Administration’s approach to international trade in a brief segment. He stated that:
America has also finally turned the page on decades of unfair trade deals that sacrificed our prosperity and shipped away our companies, our jobs, and our Nation’s wealth.
The era of economic surrender is over.
From now on, we expect trading relationships to be fair and reciprocal.
We will work to fix bad trade deals and negotiate new ones.
And we will protect American workers and American intellectual property, through strong enforcement of our trade rules.
A White House press release supplemented the President’s remarks on international trade and discussed several highlights from President Trump’s first year in office. President Trump also remarked that “it is also time to rebuild our crumbling infrastructure” and invited Congress to pass legislation containing “at least $1.5 trillion for the new infrastructure investment we need.” Increasing the use “Buy American” requirements for goods, products, or materials that are produced in the United States in Federal spending programs and infrastructure projects has been a focus of the Trump Administration, as reported previously.
