WikiLeaks disclosures will intensify US anti-leak push

Significance Microsoft said WikiLeaks had been in contact with them about vulnerabilities disclosed when WikiLeaks published files on March 7, the first in a series called ‘Vault 7’. This leak has been rebuked by US national security officials, but further revelations could be forthcoming. Impacts Customers may be reluctant to buy products that have previously been associated with CIA spy tools and listening devices. The revelations will damage an already strained relationship between the US government and technology firms. Privacy concerns will hinder internet regulation liberalisation between the United States and other countries, particularly in the EU.

Subject US-China trade policy ahead. Significance Starting on August 1, the United States and China have this month imposed more import tariffs on each other’s products following the collapse of the Shanghai round of US-China trade talks. The quick reaction by both indicates that neither sees much prospect of reaching a deal. To protect domestic activity and maintain momentum for further talks, both could apply a lower tariff to products they cannot buy from elsewhere. For example, rare earths, which the United States depends on China for, remain exempt from tariffs. Impacts Worries about the overreliance on consumer spending and uncertainty over investment ahead suggest that the US downturn could accelerate. Despite suffering slower growth and employment worries, China will not simply agree a deal on the US administration’s terms. Chinese negotiators understand the US-China trade dynamics better than the US administration and will use this to their advantage. The US administration can impose 25% tariffs on its global imports of cars and parts, citing national security; this would hit the EU hard.


Subject The US intelligence community in a year after purported reforms. Significance On December 29, an agreement between the United States, Japan and South Korea to share intelligence on North Korea went into effect. This ended a year in which the US intelligence community was the subject of broad domestic public scrutiny in the light of continued fallout from former National Security Agency (NSA) contractor Edward Snowden's leaks to a Senate report on the CIA's use of torture. The White House's support for reforms has been watched by tech and telecoms businesses that have lost considerable revenue from reputational damage as a result of the growing awareness of requirements on them of US intelligence activities. Impacts The Obama administration will rely on the US intelligence community as its main counterterrorist instrument. A Republican Congress will be less likely to support intelligence reforms, though only marginally so. There is no indication that the balance of power on intelligence issues between the executive and legislative branches has shifted.


Subject Asylum-seekers and Canada. Significance After an uptick in asylum claims in recent months, including via the United States, asylum policy is likely to feature more heavily in Canadian state and federal politics. Impacts New migrant flows to Canada will likely be triggered as the US government reduces its grants of Temporary Protected Status. Quebec’s government will face off against the Ottawa federal government over responsibility for new migrant arrivals. Ottawa and Washington will likely eventually update the Safe Third Country Agreement, but this could require bargaining. Canada may invest more in border policing and associated technologies.


Subject Bloomberg report on Chinese supply chain attack. Significance Amazon and Supermicro on October 24 joined Apple in calling on Bloomberg Businessweek to retract its October 4 story about an alleged Chinese supply chain attack on 30 US companies, including Apple and Amazon. Based on evidence provided by 17 anonymous sources from the affected companies and the US government, the story alleged that Chinese agents planted malicious chips in server motherboards manufactured by Supermicro, a major hardware supplier in the United States and globally. Thus far, no one has been able to corroborate Bloomberg's claim, and Bloomberg has provided no further verification itself. Impacts Bloomberg will face pressure to review its reporting standards if it fails to deliver credible evidence for the story. The controversy could end in costly libel suits against Bloomberg if it fails to retract or verify its report. There are no global norms on cyber or supply chain attacks; no agreement is forthcoming.


Subject Prospects for government intervention in the airline industry. Significance The leading Gulf airlines -- Emirates, Qatar and Etihad -- have risen rapidly over the last decade to become major players in the world air transport business. This has been at the expense of long-haul carriers in the United States, Europe and Asia-Pacific. US and European airlines are demanding action that could threaten liberalisation of the international airline industry. Impacts Neither the US government nor EU authorities are likely to unravel the network of international air transport agreements. Yet both Democratic and Republican politicians will be sensitive to demands from core constituencies. Further airline industry liberalisation and growth of Gulf based airlines may therefore be delayed.


Subject The prospects for finalising TTIP. Significance While the EU as a whole -- the European Commission, most member states and a majority of members of the European Parliament (EP) -- appears to remain committed to a wide-ranging agreement with the United States, there are growing indications that public opposition may render the proposed Transatlantic Trade and Investment Partnership (TTIP) agreement politically unviable. Impacts TTIP is estimated to raise the EU's GDP by 0.5%. European governments may decide that such a modest growth boost is not worth the political problems generated by the negotiations. If implemented, its terms could serve as a blueprint for future trade agreements between the EU and other countries. The deal's prospects will be diminished by the US election cycle's appeals to protectionist sentiment.


Subject EU-US ties. Significance Attracting the ire of US President Donald Trump, the US goods trade deficit with the EU has widened since 2009. While Trump blames the imbalance on the EU charging higher tariffs on its US imports than the United States charges on its EU imports, the deficit is instead driven by US demand. Most US-EU trade is between foreign affiliates and the declaration between Trump and European Commission President Jean-Claude Juncker in late July reaffirmed the close economic ties between the two blocs. Impacts The prospects for US exports of LNG to the EU will be higher if Chinese retaliatory restrictions remain in place. The US farm lobby will push for agriculture to be covered in the trade negotiations. The negotiations are unlikely to lead to a return to a comprehensive Transatlantic Trade and Investment Partnership-type deal. Renegotiating US-EU goods trade tariffs will necessarily involve other chapters including services or foreign investment. Escalating trade tariffs would damage the EU but would damage the United States more owing to the size of US-EU cross-border investments.


Significance The hearing was part of the United States Trade Representative (USTR) Robert Lighthizer’s investigation of China under Section 301 of the Trade Act of 1974, initiated in August. The US delegation to the WTO submitted in September a request for China to delay implementation of its Cybersecurity Law, citing its anticipated impact on cross-border technology transfers. Both of these developments reflect increasing technology trade tensions between the world’s two largest economies. Impacts US allies are likely to face pressure from Washington over procurement of Chinese ICT in government facilities. The US government is likely to use power over contracts, regulation and informal pressure to shape tech companies’ behaviour. Espionage fears will drive harsher US and European scrutiny of Chinese investment in their domestic tech sectors.


Significance As Barack Obama eyes the January 2017 presidential transition, Washington's decades-long goal of a stable global nuclear order appears to be under threat from multiple quarters. Obama was mulling a US nuclear posture shift in August, whereby he would declare that the United States would only launch its nuclear deterrent in response to a nuclear strike by an adversary, ruling out a nuclear response to a conventional attack on US or allied forces. Impacts Deviation by Washington from support of disarmament and existing legal instruments could strain ties with some US allies. Trump's unorthodox positions on nuclear policy will promote defections by national security Republicans to Clinton's camp. A candidate's campaign trail rhetoric is likely to influence the credibility of the US nuclear deterrent once in office.


Significance Trump’s controversial Middle East policy decisions have met bipartisan criticism in the US Senate, but in the House of Representatives -- where the influence of the party grassroots is more keenly felt -- Republican congressmen have staunchly backed the president. There are growing partisan differences towards other countries, a notable shift from previous decades when party was not a clear indicator for preference. This may have a major impact on Washington’s future relationship with the Middle East. Impacts Foreign lobbying efforts in Washington will increasingly be targeted on a partisan basis. Russian foreign policy, not beholden to the vagaries of democracy, may become more influential in the Middle East. The EU could seek to play a stronger, independent regional role to replace the United States.


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