Alaska Gov. Bill Walker is convinced President Donald Trump’s trade war with China is just a negotiating ploy, and every thing will work out fine in the end, an aide said Thursday.
Press Secretary Austin Baird compared Trump’s behavior now to his threatening to “totally destroy North Korea” in the months preceding his historic summit meeting with North Korean dictator Kim Jong Un in Singapore in June.
The 49th state has a lot at stake in the China trade tussle what with the state’s independent governor eyeing China as the liquified natural gas (LNG) buyer who might make his dream of a construction of an 800-mile gas pipeline from the North Slope to Cook Inlet finally come true.
And the states’ fishing industry is now largely beholden to processing in China.
“….About a half of our salmon has been exported to China,” Sen. Lisa Murkowski, R-Alaska told U.S. Trade Representative Robert E. Lighthizer at a Senate hearing last month. “And it’s not just the salmon. With cod, 54 percent of our cod [exports] last year went to China. So this is very, very significant to us.”
China threatened a 25 percent tariff on imports of Alaska fish, but that appeared self defeating. The Chinese turn a profit of about $1.5 billion per year on the processing of Alaska seafood.
Trump, however, has proposed a 10 percent import on fish exported from China back to the U.S. That could affect salmon caught in Alaska, headed and gutted here, shipped across the Pacific to be fileted and deboned by cheap Chinese labor – sometimes reportedly slave labor, and then shipped back to the U.S. for sale.
Chinese processing of Alaska seafood has been an issue for sometime, though it has largely flown below the radar.
“…It weighs hard on Alaskan seafood processors and their employees,” Nikolai Nikitenko wrote at Global Seafoods in 2016. “For the last two decades, the Alaskan seafood industry has been struggling to stay afloat in the global market due to China’s involvement. Many fishermen for one end up selling to exporters since they can afford a higher price for their raw material, leaving local Alaskan workers out of a job. This practice also weighs heavily on Alaskan producers who then struggle to sell their clean and additive free product to grocery stores, since many retailers prefer the cheaper products from China to gain a competitive edge on the market for themselves, and also get a higher profit margin. The issues also do not stay within the boundaries of economics and profits; they also stretch out towards consumer health and safety.”
Nikitenko went on to suggest that maybe “Trump is right when he says that China’s control of our markets is a danger to our society.
“When seafood gets to China, the rulebook for food processing changes dramatically, Nikitenko said. “Chinese processors have the ability and freedom to use certain practices that are outright banned in the United States. Chinese seafood processors often will soak the seafood they receive in additives, one of which is Sodium Tri-Polyphosphate (STPP). The purpose of STPP is to soak up water into the cellular structure of the fish. This practice can lead to very deceptive sales, even if the fish is thawed. With over-glazing a fillet’s true weight can be seen when it is thawed, but with a STPP soak, the evidence only shows when you cook it. Seafood that has been soaked will often seem more affordable per pound, but when you remove the water weight added to it, you are quite often left with a more expensive product and less fish than you originally thought. Being cheated out of some fish or money is the least of your worries with STPP, as it can have affects on the consumer’s health?”
Consumer health, however, is not the first concern of Alaska commercial fishermen and seafood processors trying to survive in a competitive market now dominated by farmed salmon. They need to sell fish to stay in business, and Walker has promised help.
Walker announced in June that he was headed East to “meet in Washington with leaders from both governments who have been at the table leading the efforts to avoid an unnecessary trade war. I will continue to work directly with both sides to make sure Alaska’s interests are protected.”
The Governor’s Office headlined the trip with this – “Governor Walker continues to work with US, Chinese leaders to advance Alaska’s trade interests” – and quoted Walker hammering away at what has become a common theme, reducing the U.S. balance of payments.
“Alaska has abundant resources, from natural gas and seafood to beer and baby food,” the governor was said to have said. “These resources enable our state to dramatically reduce the trade deficit between the United States and China, if we can finalize agreements to increase exports of our products. Trade negotiations between leaders from both countries are ongoing. I am confident that we will, in the end, embrace the opportunity for mutual economic growth that we can achieve by working together.”
The governor’s office went silent in the weeks that followed and efforts to find out what happened in those meetings at first went unanswered. But Baird on Thursday said Walker met with the U.S. secretaries of Labor and the Treasury and came away convinced Trump has the situation under control.
Federal officials offered support for the Alaska LNG project and said work was continuing on trade talks, all of which left Walker “optimistic,” according to Baird.
Optimism about Alaska LNG is not exactly easy in the current economic climate. CNBC reported earlier this month that the Chinese threat of tariffs on LNG has injected a lot of uncertainty into gas markets.
“…The threat comes at a time when industry watchers say some (planed new) terminals are already at risk of being shelved because there’s too little capital available to finance so many projects,” wrote Tom DiChristopher, who quoted Raymond James company energy analyst Pavel Molchanov offering this warning:
“Even ignoring the politics with China, there are too many of these early stage projects. The vast majority of them will never get built, no matter what happens with China, because the scale of the demand is disconnected from the excessive, absurd number of early-stage players that want to build a LNG plant.”
Sixteen LNG terminals are now under review in the U.S. with two more being studied in Canada. Most have lower development costs than the hoped-for Alaska project.
Were the stretched markets for the capital required to build a $35 billion or greater Alaska gasline project not enough of a worry, the Walker administration was this week hit by the news the Chinese have been trying to spy on Alaska.
Recorded Future, a company that tracks online espionage, Thursday reported that “reconnaissance activity against Alaskan organizations increased following the governor of Alaska’s trade delegation trip to China in late May. Organizations targeted by the reconnaissance activity were in industries at the heart of the trade discussions, such as oil and gas.”
The company’s report highlighted “Opportunity Alaska,” saying Tsinghua University, part of the Chinese Education and Research Network Center (CERNET), started probing Alaska websites in March and that activity spiked in June.
“The spike in scanning activity at the conclusion of (China-Alaska) trade discussions…indicates that the activity was likely an attempt to gain insight into the Alaskan perspective on the trip and strategic advantage in the post-visit negotiations,” the website reported.
“There was a further surge in interest between June 20 and June 24 against the State of Alaska and Alaska Department of Natural Resources networks. This was possibly in response to Gov. Walker announcing on June 19 that he intended to visit Washington, D.C. to meet U.S. and Chinese officials to raise his concerns on the growing trade dispute between the two nations.”
Walker’s office largely dismissed the report as meaningless. It offered a statement saying this:
“In this day and age, it is critical for any business or government to take cyber security seriously, whether conducting business online, close to home, or overseas. The State of Alaska, like most state governments, routinely has anonymous activity on the perimeter of our networks that amounts to someone checking if the door is locked.
“That is the sort of activity referenced in a recent blog post from Recorded Future. It is not unique, nor would we draw conclusions about its timing or source. There is no way to tell if the activity is related to the recent trade mission to China, and a review by the Office of Information Technology has found no evidence that state networks were hacked in this instance.”