Memo could lead to trade feud

China Daily (Hong Kong) - - TOP NEWS - By CHEN WEIHUA in Wash­ing­ton and JING SHUIYU and ZHONG NAN in Bei­jing

US Pres­i­dent Don­ald Trump is ex­pected to sign a mem­o­ran­dum on Mon­day to an­nounce whether the United States will take the next step to­ward in­ves­ti­gat­ing China’s poli­cies and prac­tices on in­tel­lec­tual prop­erty, a move that would likely cause more ten­sions in bi­lat­eral trade.

White House of­fi­cials, speak­ing on Satur­day on back­ground, said Trump is ex­pected to di­rect US Trade Rep­re­sen­ta­tive Robert Lighthizer to de­ter­mine whether to in­ves­ti­gate any of China’s laws, poli­cies, prac­tices or ac­tions that may be un­rea­son­able or dis­crim­i­na­tory or that may harm US in­tel­lec­tual prop­erty and in­no­va­tion tech­nol­ogy.

Chi­nese of­fi­cials have long in­sisted that the coun­try has been tak­ing steps to bet­ter pro­tect in­tel­lec­tual prop­erty rights as part of a larger ef­fort to cre­ate a more in­no­va­tive econ­omy.

Chad Bown, a se­nior fel­low at the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics, a non­par­ti­san think tank based in Wash­ing­ton, de­scribed the pos­si­ble ac­tion by the Trump ad­min­is­tra­tion as dust­ing off an out­dated US trade law that al­lows the US pres­i­dent to uni­lat­er­ally im­pose tar­iffs on an­other coun­try.

Sec­tion 301 of the US Trade Act of 1974 was used most by the Rea­gan ad­min­is­tra­tion, when Lighthizer served as deputy trade rep­re­sen­ta­tive.

Bown noted in his ar­ti­cle posted on Peter­son’s web­site that US trad­ing part­ners have be­come in­creas­ingly un­happy with such an “ag­gres­sively uni­lat­eral” ap­proach, with the govern­ment act­ing as po­lice, prose­cu­tor, judge and jury.

“The fall­out from Trump’s rogue use of yet an­other out­dated US trade law would be con­sid­er­able,” he wrote.

Mei Xinyu, a re­searcher at the In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion In­sti­tute of China’s Min­istry of Com­merce, said that the uni­lat­eral move by the US “might trig­ger a trade war”, while ar­gu­ing that Sec­tion 301 has lim­ited ef­fect.

In the two decades be­tween 1989 and 2009, the trade rep­re­sen­ta­tive launched many in­ves­ti­ga­tions into Chi­nese com­pa­nies, he wrote in an op-ed for China Daily. “De­spite that, the Chi­nese econ­omy has de­vel­oped ro­bustly.”

“The use of Sec­tion 301 by the US will not have much im­pact on China’s progress to­ward stronger eco­nomic de­vel­op­ment and a bet­ter fu­ture,” Mei said.

If the US in­sti­tutes an in­ves­ti­ga­tion, it would con­sult with China and seek in­ter­ested par­ties who wish to com­ment. It would likely to be a hear­ing, and these in­ves­ti­ga­tions can take as much as a year be­fore the US reaches a con­clu­sion, ac­cord­ing to a se­nior ad­min­is­tra­tion of­fi­cial.

The of­fi­cial said the ex­ec­u­tive mem­o­ran­dum Trump is ex­pected to sign is dif­fer­ent from an ex­ec­u­tive or­der. The mem­o­ran­dum it­self does not or­der a Sec­tion 301 in­ves­ti­ga­tion. In­side Rather, it au­tho­rizes the trade rep­re­sen­ta­tive to de­cide.

The of­fi­cial also in­di­cated that no firm de­ci­sion has been made as to whether the US will pur­sue a case in­volv­ing the World Trade Or­ga­ni­za­tion.

Wayne Mor­ri­son, a spe­cial­ist in Asian trade and fi­nance with the Con­gres­sional Re­search Ser­vice, said that if the US did not use the WTO dis­pute set­tle­ment process, and then im­posed sanc­tions against China, it could gen­er­ate con­cerns that the US was un­der­min­ing the very process it fought to cre­ate when the WTO was es­tab­lished.

“China could also chal­lenge the US use of uni­lat­eral sanc­tions in the WTO or might re­spond with its own sanc­tions against the United States, which could threaten to cause a trade war,” he said.

Zhao Ping, di­rec­tor of the in­ter­na­tional trade re­search depart­ment at the China Coun­cil for the Pro­mo­tion of In­ter­na­tional Trade Academy, said China, as a ma­jor ex­porter to the US, also has large amounts of im­ports from the US. If the Trump ad­min­is­tra­tion was to ap­ply se­ri­ous sanc­tions, it might set po­ten­tial bar­ri­ers for US prod­ucts to en­ter the Chi­nese mar­ket.

Sino-US re­la­tions are of strate­gic sig­nif­i­cance, she said. “In ad­di­tion to trade, the US govern­ment also needs China’s help in a va­ri­ety of ways, such as global gov­er­nance, re­gional se­cu­rity and anti-ter­ror­ism.”

The use of Sec­tion 301 by the US will not have much im­pact on China’s progress to­ward stronger eco­nomic de­vel­op­ment and a bet­ter fu­ture.”

re­searcher at the In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion In­sti­tute of China’s Min­istry of Com­merce

Wei Jian­guo, vice-pres­i­dent of the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes, said ris­ing fric­tions are nor­mal, but this doesn’t mean there will be an in­ten­sive trade war, as the two coun­tries and their eco­nomic and trade re­la­tions have be­come more in­ter­de­pen­dent.

The Trump ad­min­is­tra­tion has been ad­dress­ing China-re­lated trade is­sues in a dif­fer­ent ap­proach. If Sino-US trade ties were pro­foundly al­tered or dam­aged, it would pos­si­bly end an era of spread­ing global pros­per­ity, ac­cord­ing to Wei.

US con­sumers and man­u­fac­tur­ers should be aware that China has pro­vided them with cheaper and in­creas­ingly higher qual­ity prod­ucts and an in­creas­ing mag­ni­tude of for­eign de­mand, but the coun­try also lends much of its sur­plus sav­ing to the US, Wei said.

Con­tact the writ­ers at chen­wei­hua@chi­nadai­lyusa.com

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