The Trump administration is set to order an investigation into China and alleged intellectual property theft today.
There are concerns that the probe into China could lead to tensions, and sanctions, between the two countries, particularly when Trump has asked China to do more to temper North Korea’s nuclear weapons programme.
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What is the investigation about?
According to Reuters, an administration official told reporters that Trump will ask the US trade representative Robert Lighthizer to determine if an investigation is needed to look into “any of China’s laws, policies, practices or actions that may be unreasonable or discriminatory, and that may be harming American intellectual property, innovation, and technology.”
The administration has said that it believes China operates trade practices and industrial policies that lead to “forced technology transfer and intellectual property theft”.
It believes this is harming the US economy and workers in the country.
A second official said:
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By GlobalData“The action being taken on Monday is a reflection of the president’s firm commitment to addressing this problem in a firm way.”
Trump’s problems with China and trade
Throughout the US presidential campaign last year and his administration, Trump has remained strong against US trade.
In March, the president signed two new executive orders to identify the causes of the US-China trade deficit.
The country has a $347bn trade surplus with the US.
As well, Trump has often accused Beijing of carrying out competitive currency devaluation in order to stimulate exports, which the country’s foreign minister has denied.
What could the investigation lead to?
The investigation could take as a long as a year to finish so it is highly unlikely that Trump is going to be slapping sanctions on China anytime soon. This is beneficial, particularly as the two countries need to work together over preventing Pyongyang from launching any nuclear weapons anytime soon.
The results, however, could lead to Trump invoking Section 301 of the 1974 Trade Act, which would allow him to impose tariffs or other trade restrictions on foreign countries that carry out “unfair trade practices” that harm US industries.
Section 301 orders were often used in the 1980s, such as to impose tariffs against Japanese motorcycles and steel, however, none have been imposed since the World Trade Organisation (WTO) was set up in 1995.
The orders can be imposed without authorisation by the WTO for adjudicating grievances.
The administration official said:
“We’re at the beginning of this process and no firm decisions have been made as to how that is going to work in terms of whether we would pursue WTO action or action outside the WTO.”
