Trump to request possible probe of China trade practices – South China Morning Post

US President Donald Trump plans to set in motion an investigation into intellectual property violations by China, a measure aimed at addressing complaints that the economic relationship between the world’s two largest economies is stacked in Beijing’s favour.

Trump will sign an executive memorandum on Monday directing US Trade Representative Robert Lighthizer to investigate Chinese laws, policies, practises or actions that might be “unreasonable or discriminatory” to American technology and intellectual property, US senior administration officials told reporters in a teleconference from Washington. 

The investigation will focus on a number of issues related to China’s “forceful transfer of technology” and “intellectual property theft” towards foreign companies doing business in China, senior officials claimed on Saturday in a press teleconference, it’s “premature” to decide the investigation’s deadline, determination and enforcements. 

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US senior officials added that the investigation could take as much as a year, and either lead to negotiating an agreement with China, US unilateral trade remedy actions or entering into dispute settlement process in the World Trade Organization. 

The timing of the investigation is sensitive, given a steep escalation in military tensions between the US and North Korea, a traditional ally and trading partner with China.

Pyongyang and Washington have traded military threats since last Thursday when Trump warned North Korean leader Kim Jong-un that further threats by him would be “met with fire and fury”.

Pyongyang responded Trump by announcing a intermediate-range missile strike plan near US Pacific island territory Guam.

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In a phone call earlier this weekend, Trump and his Chinese counterpart Xi Jinping “agreed North Korea must stop its provocative and escalatory behaviour”, according to a White House statement released after the phone call. 

In the teleconference with reporters, administration officials said the North Korean issue and the trade investigation are “totally unrelated”.

“I don’t believe we are heading towards a period of great conflict. This is simply business between two countries,” said a US senior administration official in the teleconference. The US and China had not reached an agreement to solve their longtime trade disputes during their Comprehensive Economic Dialogue in Washington in mid-July. Afterwards, speculation of a trade war between the two world’s largest economies continued to spread. 

A US senior official explained that USTR will seek counsel with the appropriate advisors, and sought to play down the potential that such an investigation would damage relations with Beijing.

“If the investigation is instituted, we will consult with China, we will give interested parities opportunities to comment. There would likely be a hearing. And these investigations can take as much as year before we reach a conclusion,” the official said.

Pressure from some US government bodies and business associations has been building for years, and has largely been a bipartisan issue in Washington.

The US Federal Trade Commission warned Congress about China’s IP protection practices last year, after determining that efforts to advise Beijing to avoid opaque procedures with respect to its antitrust regulations had largely failed.

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“China’s agencies are pursuing non-competition objectives through competition enforcement to promote either certain industries or particular Chinese competitors,” the FTC said in a prepared statement to a subcommittee of the US House of Representatives in June 2016.

“We recognise that the pursuit of competition enforcement without procedural safeguards or based on opaque, non-competition standards undermines the legitimacy of antitrust enforcement around the world. Many of the concerns about IP-related antitrust enforcement have been focused on China,” the FTC statement said.

Under the terms of China’s entry into the World Trade Organisation in 2001, the country was allowed to limit foreign ownership of companies in key industries including telecommunications and auto manufacturing. These limitations forced many foreign companies into joint ventures with Chinese entities, many of them state-owned, effectively a form of technology transfer.

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US government negotiators agreed to these allowances because Chinese companies weren’t competitive internationally at the time. US companies and government officials largely approved of these terms to gain access to Chinese markets.

The growth of companies like Huawei, now a global manufacturer of telecommunications networking equipment and a competitor to US companies like Qualcomm and Cisco, underscores how the 2001 scenario has changed.

Trump to request possible probe of China trade practices – South China Morning Post

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