[A2k] FT: US tries to enlist EU and Japan in China tech fight

Thiru Balasubramaniam thiru at keionline.org
Thu Sep 21 03:44:36 PDT 2017


Trade disputes

US tries to enlist EU and Japan in China tech fight

Washington steps up moves to tackle Beijing over intellectual property

8 HOURS AGO by Shawn Donnan in Washington

The Trump administration is seeking to convince the EU and Japan to join
its efforts to tackle China over Beijing’s intellectual property regime as
it tries to address one of the top concerns of foreign businesses operating
in China.

The move follows Washington’s launch in the summer of an investigation into
Chinese IP theft and forced technology transfer rules that some fear could
lead to US tariffs and a trade war between the world’s two largest
economies. It also marks the administration’s first major attempt to
co-operate with traditional trade allies in taking on China.

However, European and Japanese officials are wary and point to what they
see as the risk in co-operating with a bellicose and mercurial US president
who has vowed to pursue an “America First” foreign and trade policy.

Their reluctance follows battles over the administration’s now-stalled push
to impose tariffs on imports of steel and aluminium that would have hit
allies such as Germany, Japan and South Korea hard. It also highlights how
Donald Trump’s presidency has rewritten US relationships, making it harder
for Washington to assemble the sort of diplomatic coalitions that
presidents have traditionally used to tackle issues of mutual economic

According to senior officials familiar with the discussions, the US began
approaching European Commission officials and EU member states as well as
officials in Japan over the summer. The first approaches came just before
Mr Trump signed an executive memorandum ordering US trade representative
Robert Lighthizer to launch an investigation into China’s IP practice.

The “Section 301” investigation is controversial because it would give Mr
Trump powers to impose unilateral tariffs and take other measures against
China that could spark a trade war. The probe is expected to take up to a
year, although some administration officials are pushing for it to be
completed by the end of this year.

According to one person briefed on the talks, US trade officials suggested
during a visit to Tokyo last month that Japan could take its own unilateral
measures. However, Japanese officials pointed out there were no statutes on
their books to allow this.

European and Japanese officials have told US counterparts that they would
not join any action that would result in the US flouting World Trade
Organisation rules, something that some nationalist members of the
administration are keen to see.

“I don’t think we would be ready to support the US if at the end of the
investigation they decide to go unilateral,” said one senior EU official.

The EU and Japan have, however, indicated that they might be willing to
work with the US if Mr Trump’s China fight results in one or more cases
being brought against Beijing at the WTO.

Through a spokeswoman, Mr Lighthizer declined to confirm the approaches to
the EU and Japan.

The WTO and its predecessor, the General Agreement on Tariffs and Trade,
were not designed to successfully manage mercantilism on this scale

Companies from Europe, Japan and the US have increasingly complained about
Chinese IP theft, hacking and industrial espionage in recent years. They
have also raised growing concerns about rules that force them to take
Chinese joint venture partners and transfer sensitive technologies in order
to do business in China.

During a rare public appearance in Washington this week Mr Lighthizer, a
longtime China hawk, also sent mixed signals on whether the administration
would be willing to take its fight to the WTO.

He said the US did not want to “prejudge” the outcome of the IP probe or
what actions it might take. “If we turn up WTO violations, we’ll bring them
to the WTO,” said Mr Lighthizer. “We’re not precluded from doing that, by
any means.”

But he also separately argued that the WTO was not equipped to deal with
China, calling Beijing’s economic model state-backed “mercantilism” and “a
threat to the world trading system that is unprecedented”.

“The WTO and its predecessor, the General Agreement on Tariffs and Trade,
were not designed to successfully manage mercantilism on this scale,” he
added. “We must find other ways to defend our companies, workers, farmers,
and indeed our economic system.”

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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