Trump ready to press China harder on intellectual property

Bloomberg

WASHINGTON — President Donald Trump is stepping up pressure on China over what the U.S. perceives to be the theft of intellectual property, opening a new front of trade friction.

Trump will sign an executive memorandum Monday directing U.S. Trade Representative Robert Lighthizer to consider investigating China over its IP policies, especially the practice of forcing U.S. companies operating in China to transfer technological know-how, administration officials said Saturday.

If China is found to be flouting the rules on U.S. intellectual property, the administration has a range of options, including imposing import tariffs, said the administration officials. If Lighthizer moves forward, the investigation could take as long as a year.

The intellectual issue complicates the already fraught U.S.-China relationship, which soured further last month when officials from both nations couldn’t agree on a joint statement over economic issues after high-level talks in Washington.

Still, Trump’s actions stop short of what some analysts had been expecting him to do on intellectual property. Rather than launching straight into a probe, the trade representative will merely consider whether to launch an investigation under Section 301 of the 1974 Trade Act.

Section 301 allows the president to impose tariffs on foreign products in response to unfair or discriminatory restrictions on American commerce. The provision has fallen into disuse since the mid-1990s after the creation of the World Trade Organization.

The U.S. could file a trade complaint on IP with the WTO or take action outside the WTO process, one administration official said.

In a report to lawmakers released in July, the trade representative accused China of engaging in “widespread infringing activity, including trade secret theft, rampant online piracy and counterfeiting, and high levels of physical pirated and counterfeit exports to markets around the globe.”

Earlier this year, an independent commission on U.S. intellectual property estimated that the annual cost to the U.S. economy in counterfeit goods, pirated software, and theft of trade secrets from all sources exceeds $225 billion and could be as high as $600 billion. China is the world’s principal IP infringer, the commission said.