US balancing act on China trade probe

Chinese media says an expected order from US President Donald Trump to investigate supposedly unfair trade practices will "poison" relations between the two countries.

Delay in probe expected with Trump cautious over not alienating Beijing amid N. Korea crisis

WASHINGTON • President Donald Trump is planning to jab, not punch, China for allegedly stealing intellectual property from US businesses, part of an effort to fulfil his hard-edge campaign promises on trade without alienating Beijing during the crisis over North Korea's nuclear weapons programme.

Mr Trump will return to Washington from his working vacation at his Bedminster, New Jersey, golf resort today to sign an executive memo asking the US Trade Representative to determine whether to investigate state-backed theft by China of intellectual property from US technology and defence companies.

The request for an investigation will focus on Beijing's practice of coercing US companies doing business in China to partner with local firms, which requires them to turn over proprietary technological secrets as part of what US officials describe is a coordinated effort to steal intellectual property.

President Trump's trade advisers, speaking to reporters on a conference call early on Saturday, did not say why the adminis- tration decided to add the intermediate step of requesting an investigation, rather than starting one immediately.

This month, people familiar with Mr Trump's deliberations suggested that the administration was prepared to immediately begin an inquiry into Chinese theft under the 1974 Trade Act.

Chinese officials have repeatedly denied that the country has engaged in such theft.

The pause might give both sides a chance to negotiate some kind of a deal before the investigation begins, one US official involved in the policy said.

MEASURED APPROACH WELCOME

If this is the expression of Trumpian economic nationalism, most trade advocates are going to breathe a sigh of relief.

MR SCOTT LINCICOME, an international trade lawyer at White & Case.

If Mr Trump moves ahead with an investigation, China could litigate it with the World Trade Organisation. It is not clear how much time the additional step will add to the process. If approved, the probe is expected to take as long as a year, officials said.

The delay was welcomed by those who have been worried about the President's protectionist tendencies. The Trump administration was expected to move directly into the investigation, so the memorandum reflects the more measured approach the administration also appears to be taking with steel and aluminium.

"If this is the expression of Trumpian economic nationalism, most trade advocates are going to breathe a sigh of relief," said Mr Scott Lincicome, an international trade lawyer at White & Case.

The White House has sent mixed messages on the policy, as Mr Trump's campaign-rally denunciations of China collide with the complexities of a co-dependent geopolitical relationship. The President has publicly linked the issue of trade fairness with his calls on China to pressure North Korea to drop its weapons programme and inflammatory rhetoric. Yet, he and Chinese President Xi Jinping did not discuss this latest action in a phone conversation last week.

"This is a critical action, and long overdue," said Mr Michael Wessel, a member of the US-China Economic and Security Review Commission, a bipartisan group created by Congress in 2000 to monitor trade and security issues between the world's two largest economies.

If the probe finds evidence of wrongdoing, Mr Trump could retaliate against China with tariffs or other punitive measures.

Officials, speaking to reporters on the Saturday conference call, said their intention was not to punish Beijing but to negotiate an agreement that would claw back some of the estimated US$600 billion (S$814 billion) in intellectual property theft that officials estimate is perpetuated by China.

NYTIMES

A version of this article appeared in the print edition of The Straits Times on August 14, 2017, with the headline 'US balancing act on China trade probe'. Print Edition | Subscribe