Finally a President who can stand up to China’s suspicious trade policies.
In a significant development with long term inpact, U.S. President Donald Trump has authorized an inquiry into China’s alleged theft of intellectual property, in what has been described as a first step towards mitigating the trade imbalance between the two nations.
With China being its largest trading partner, the investigation is likely to cast a shadow on that relationship.
The move comes midst Trump pushing Beijing to talk less and do more over Pyongyang.
Robert Lighthizer, the U.S. Trade Representative will now have upto a year to decide whether the U.S. will launch a formal investigation over China’s trade policies on intellectual property.
U.S. Industry lobby groups have backed the move saying, China’s trade policies harm U.S. businesses and jobs.
Officials in the Trump administration have estimated that theft of intellectual property by China could be as high as $600 billion.
According to experts on China trade policy, the long lead time of a year, could allow Beijing some face saving measure as it allows it some time to discuss some of the issues raised by Washington without being seen to caving into pressure.
“I’m sure they will formally reject this if an investigation is launched and there is an implication this is going to require negotiation to resolve it,” said Matthew Goodman, a senior adviser for Asian economics at the Washington-based Center for Strategic and International Studies.
Jonathan Fenby, an analyst at the TS Lombard consultancy, said China was not interested in a short-term trade fix with the United States and will resist “attempts to tie it down.”
China’s policy of coercing foreign companies to hand over technologies to their Chinese joint venture partners along with its failure to crack down on intellectual property theft have been sore outstanding issues for several U.S. administrations.
The main trade group for U.S. tech companies, which include tech giants such as Google, Microsoft and Apple said it hoped China would take the administration’s announcement seriously.
“Both the United States and China should use the coming months to address the issues causing friction in the bilateral trade relationship before Presidents Trump and Xi have their anticipated meeting ahead of the November APEC leaders meeting,” said ITI President Dean Garfield in a statement.
The U.S. Chamber of Commerce, the largest business lobbying group, backed the tech lobby group saying China needs to end forcing technology companies to hand over tech to their joint venture partners and protect foreign intellectual property rights as well.
Clearly caught with its hand in the cookie jar, China Daily, a chinese state-run paper said the investigation will “poison” relations.
Trump is expected to expected to wield Section 301 of the 1974 Trade Act which allows him to unilaterally impose tariffs or other trade restrictions to protect U.S. industries from “unfair trade practices” indulged by foreign countries.