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US to announce trade action against China

Under Section 301 of the US Trade Act 1974, the United States can “impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices”.

world Updated: Aug 13, 2017 16:15 IST
Yashwant Raj
China's President Xi Jinping and US President Donald Trump attend the G20 summit in Hamburg, Germany, on July 7.
China's President Xi Jinping and US President Donald Trump attend the G20 summit in Hamburg, Germany, on July 7.(AFP File)

The United States will launch a trade action next week that could lead to a full-fledged investigation into China’s “unreasonable or discriminatory” intellectual property laws, policies and practices that harmful to America, with the possibility of punitive follow-up measures including sanctions.

President Donald Trump will sign an executive memorandum on Monday directing the US trade representative to “determine” whether to investigate any of China’s laws, policies, practices, or actions may be unreasonable or discriminatory and may be harming American intellectual property, innovation and technology”, a senior administration official told reporters on Saturday.

Should the trade representative make the determination that an investigation was in order, it will have “broad powers to use all applicable measures including but not limited to Section 301,” the official said. Under Section 301 of the US Trade Act 1974, the US commerce department website said, the United States can “impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices”.

The US could take its case to the World Trade Organization, or settle it outside. The official said a decision had not been taken in that regard and offered no timelines.

Asked if this could lead to a period of “greater conflict” with China, which could retaliate triggering a trade war, the official said he doesn’t “believe” it would. “This is just business”. 

And the administration strenuously pushed back against any suggestion it was related to spiraling tensions with North Korea, and the perceived failure of China, its chief protector, to rein it in. The two issues were unrelated — “trade is trade, national security is national security”, the official said.

A trade sanctions against China had long been in the making, consistent with Trump’s election promises of cutting America’s ballooning trade deficit with China and punish the Asian nation for unfair trade practices such as artificially keeping its currency depressed to boost exports.

But here was a perception that it had been delayed because Trump was hoping China would do more on North Korea, and he had even suggested as much.

It was also said to have been put off to obtain China’s support for the US-sponsored UN Security Council resolution slapping new sanctions on North Korea, which passed unanimously, subsequently.

The United States estimates theft of intellectual property costs the American economy $600 billion a year, and says China was a major contributor, employing unfair trade practices and industrial policies such as “forced technology transfer”.

“All too often,” the official said, “American companies are forced to enter into joint ventures with Chinese companies if they want to do business in China. This is not fair.”

In addition, the official added, “as part of these joint ventures, they have to turn over their intellectual and other proprietary information — again, this is simply not fair”.