US launches probe into China's IP practices

It will determine if behaviour is discriminatory or restricts American commerce: Trade official

WASHINGTON • The United States has formally launched a trade investigation into China's intellectual property (IP) practices and alleged forced transfer of American technology, which President Donald Trump had called for last week.

The US will investigate China's policies and practices related to technology transfer, IP and innovation to determine if the behaviour is "unreasonable or discriminatory" or restricts US commerce, US Trade Representative Robert Lighthizer said last Friday.

"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," said Mr Lighthizer in a statement. "After consulting 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 hard for their governments to take action, for fear of losing access to China.

But "Washington will turn a blind eye no longer", Mr Trump insisted last Monday. "We will safeguard the copyrights, patents, trademarks, trade secrets and other intellectual property that are so vital to our security and to our prosperity."

America, he added, will no longer tolerate Beijing's "theft" of US industrial secrets.

Mr Lighthizer is launching the investigation under Section 301 of US trade law, which addresses intellectual property.

The provision gives the president broad authority to impose tariffs on foreign goods, though such unilateral action has rarely been used since the creation of the World Trade Organisation in 1995, according to trade experts.

Beijing last week fired back at Mr Trump's move, warning that "everybody will lose" in the event of a trade war between the world's two largest economies.

The Chinese Ministry of Commerce said in a statement last Tuesday that it "will resort to all proper measures" to defend its rights.

The US is China's second-largest trading partner after the European Union and it had a deficit of almost US$310 billion (S$423 billion) last year.

The IP issue is the latest source of tension between the two countries, which have seen their relations cool since Mr Trump and Chinese President Xi Jinping bonded on a visit to Mr Trump's Mar-a-Lago resort earlier this year.

The investigation threatens to further complicate efforts to contain North Korea's nuclear threat.

AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Sunday Times on August 20, 2017, with the headline 'US launches probe into China's IP practices'. Print Edition | Subscribe