Trump to take executive action into China's trade practices

Violet Tucker
August 14, 2017

The Trump administration announced Saturday that it is planning to launch an investigation into Chinese intellectual-property violations that could result in severe trade penalties, an escalation that presents both opportunities and risks at a time when the United States needs China's help to contain the North Korean nuclear threat.

US senior administration officials have said Trump will sign an administrative memorandum on Monday ordering the Office of the United States Trade Representative to start a Section 301 investigation into China's trade practices, including alleged intellectual property theft. "An important question going forward will be whether US companies and trade associations who have highlighted the problem will actually come forward and assist our government in the investigation or whether they will hide the facts, fearful that our government won't follow through, that the Chinese will retaliate against their interests or that they'll have to admit what's happened to their critical assets".

Trump has escalated his harsh criticism of North Korea for days, tweeting Friday that the US had military options "locked and loaded".

Trump's order will initiate a two-stage process for confronting China over a variety of "laws, policies, practices or actions" that require American companies to transfer valuable technology or other proprietary information to get permission to do business in China.

As the crisis has unfolded, Trump has alternated praised China for its help and chided it for not ratcheting up the pressure on its Asian neighbor.

"At present, relevant parties should exercise restraint and avoid words and actions that would escalate tensions on the Korean Peninsula", Xi said, according to the statement provided by China's government. Xi, in his phone conversation with Trump, urged calm.

U.S. Senate Democratic leader Chuck Schumer took issue with that assessment. Xi "stressed that China and the US share the same interests on the denuclearization and peace on the Korean Peninsula".

An administration official, however, insisted diplomacy over North Korea and the potential trade probe were "totally unrelated", saying the trade action was not a pressure tactic. "Trade is trade. National security is national security".

Next week the United States is scheduled to embark on its first round of renegotiations of the North American Free Trade Agreement.

"If Americans continue to have their best technologies and intellectual property stolen or forcibly transferred off-shore, the United States will find it hard to maintain its current technology leadership position", they added.

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The Trump administration is already investigating Chinese commercial practices on several fronts, notably whether steel and aluminum imports were jeopardizing national security.

Michael Wessel, a commissioner on the U.S. -China Economic and Security Review Commission, a watchdog group established by Congress.

Trump's trade action reflects his frustration that the USA and China were not able to make more progress on US intellectual property concerns as part of the so-called 100-day plan to improve trade between the two countries - a period that ended earlier this summer - as well as during high-level talks last month in Washington, the administration official said. Though they are largely missing out on the giant consumer market, they also fear their technologies being stolen.

Trump made addressing the US trade deficit with China a centerpiece of his campaign a year ago, and has suggested raising tariffs on goods from China.

The officials said that matter, and the trade issue, are not linked.

Chinese commercial policy aimed to acquire and absorb the intellectual property of the United States and other countries around the world, according to the officials.

At the end of March, Trump asked the Commerce Department to prepare a report on the causes of the trade deficit, country by country and product by product, in 90 days.

Should Lighthizer decide to launch such an investigation, "he will have at his discretion broad powers to use all applicable measures, including, but not limited to, Section 301 of the Trade Act of 1974, which provides a basis for addressing technology transfer practices that may be harming the USA economy, exports and American jobs", an administration official said.

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 for worldwide trade and investment in the White House Council of Economic Advisers and the World Bank. Instead, he is leading the administration in dusting off a variety of powerful and unilateral measures under USA trade law, many of which the United States stopped using after the creation of the WTO, which has its own mechanisms to settle trade disputes. -China trading relationship. But analysts have cautioned that Trump faces a huge challenge in his desire to significantly reduce the US trade deficit with China, which a year ago stood at more than $300 billion.

Other reports by Guamnewswatch

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