US Launched Trade Investigation into China’s IP Practices
Friday, the United States formally launched a trade investigation into China’s IP (intellectual property) practices and forced transfer of American technology, which President Donald Trump called for this week.
“On Monday, President Trump instructed me to look into Chinese laws, policies, and practices which may be harming American intellectual property rights, innovation, or technology development,” US Trade Representative Robert Lighthizer said in a statement.
“After consulting with stakeholders and other government agencies, I have determined that these critical issues merit a thorough investigation.”
Foreign companies have long complained about Beijing’s failure to protect know-how and patents, and in some cases forcing firms to share information with domestic partners as the price for doing business in the massive Chinese market.
But they also have been timid about pressing too hard for their governments to take action, for fear of losing access to China.
But “Washington will turn a blind eye no longer,” President Trump insisted Monday.
“We will safeguard the copyrights, patents, trademarks, trade secrets and other intellectual property that is so vital to our security and to our prosperity,” he said.
America, he added, will no longer tolerate Beijing’s “theft” of US industrial secrets.
Lighthizer is launching the investigation under Section 301 of US trade law, which addresses intellectual property.
Beijing fired back, warning that “everybody will lose” in the event of a trade war between the world’s 2 largest economies.
The United States is China’s 2nd-largest trading partner after the European Union, and had a deficit of nearly $310-B last year.
Meanwhile, “the legal timeline of the process under Section 301” doesn’t work well with the rules of the WTO, said Bown, who previously worked as a senior economist in the White House Council of Economic Advisers and the World Bank(WB).
Senior Trump Administration officials said last week that the United States would 1st consult with China if Mr. Lighthizer decided to go ahead with an investigation, and the investigation process could take as long as a year.
Jeffrey Schott, another trade expert and senior fellow at the PIIE, said that the purpose of the investigation is “to find out what the facts are and to use the process of investigation to expand bilateral consultations with China” so that there is a better understanding of each country’s practices.
Mr. Schott did not see “any immediate restrictions” being imposed on China by the United States as the USTR has to do “a lot more study” on this case.
“Whether there are restrictions or not will depend on how the study proceeds and how the bilateral consultations between the United States and China unfold over the next few months,” he said.
If the US side fails to respect basic facts and multilateral trade rules, and takes measures that harm bilateral economic and trade relations, “China will definitely not sit by, but take all appropriate measures to resolutely safeguard its legitimate rights and interests,” warned China’s Ministry of Commerce.
Have a terrific weekend.