Trump administration preparing broad trade case against China, says US official

US President Donald Trump is flanked by White House Senior Advisor Ivanka Trump as he addresses an event with small businesses, on Aug 1, 2017.
US President Donald Trump is flanked by White House Senior Advisor Ivanka Trump as he addresses an event with small businesses, on Aug 1, 2017. PHOTO: REUTERS

WASHINGTON (REUTERS) - United States President Donald Trump is close to a decision on how to respond to what he considers China's unfair trade practices, a senior Trump administration official said on Tuesday (Aug 1).

Mr Trump is considering encouraging US Trade Representative Robert Lighthizer to initiate an investigation of Chinese trade practices under the 1974 Trade Act's section 301, the official said. An announcement could come as early as this week, the official said, speaking on condition of anonymity.

Section 301 of the Trade Act of 1974 allows the President to unilaterally impose tariffs or other trade restrictions to protect US industries from "unfair trade practices" of foreign countries, such as trade agreement violations, or"discriminatory" actions that burden US commerce.

The US has a long list of grievances about China on trade, including accusations of steel dumping and theft of US intellectual property.

China has said that trade between China and the US benefits both sides and that Beijing is willing to work with Washington to improve their trade relationship.

Mr Trump has long been a critic of Chinese trade practices but his interest in penalising Beijing has risen because of his concern at what he perceives to be Chinese inaction on reining in increasingly belligerent North Korea.

The US has pressed China to exert more economic and diplomatic pressure on North Korea to help rein in its nuclear and missile programmes. Beijing has repeatedly said its influence on North Korea is limited and that it is doing all it can.

A senior Chinese official said on Monday that there was no link between North Korea's nuclear program and China-US trade.

Ms Susan Thornton, acting assistant secretary of state for East Asia, told a congressional hearing on Tuesday that new US sanctions aimed at curbing North Korea's weapons programmes, including measures aimed at Chinese financial institutions, could be expected "fairly soon".

Section 301 was used extensively in the 1980s to combat Japanese imports of motorcycles, steel and other products - an era during which Mr Lighthizer served as deputy US trade representative.

The statute has been little used since the World Trade Organisation (WTO) was launched in 1995.

The WTO provides a forum for resolving trade disputes, but Mr Lighthizer and Commerce Secretary Wilbur Ross have complained that it is extremely slow, often taking years to reach a conclusion, and that the Geneva-based organisation has an inherent anti-US bias.

"The Trump administration believes in free and fair trade and will use every available tool to counter the protectionism of those who pledge allegiance to free trade while violating its core principles," Mr Ross said in a Wall Street Journal opinion piece on Tuesday.

He tried to refute arguments that the Trump administration was taking a protectionist stance, saying that both China and Europe were more protectionist because they subsidised export industries and had "formidable tariff and non-tariff trade barriers against imports".

"China is not a market economy. The Chinese government creates national champions and takes other actions that significantly distort markets," Mr Ross wrote. "Responding to such actions with trade remedies is not protectionist."