[Ip-health] FT: US threatens new trade curbs on China over IP abuse

Thiru Balasubramaniam thiru at keionline.org
Thu Mar 22 04:58:58 PDT 2018


US threatens new trade curbs on China over IP abuse

White House draws up hit list of tariffs, investment curbs and tougher visa

The White House is expected to announce a plan to apply new tariffs on
imports from China worth at least $30bn © EPA

Shawn Donnan in Washington 5 HOURS AGO 46
The Trump administration plans to use new targeted tariffs to apply
“maximum pressure” on China to stop it stealing the intellectual property
of American business, according to the top US trade official.

Robert Lighthizer, US trade representative, also offered an olive branch to
the EU and other allies, indicating they would not face immediate US
tariffs on steel and aluminium imports while they were negotiating possible
exemptions. Washington is keen to enlist Europe, Japan and other trading
partners in its fight against alleged Chinese trade abuses.

The White House said Mr Trump would sign a memorandum targeting “China’s
economic aggression” around lunchtime in Washington on Thursday.

According to people familiar with its deliberations, the White House is
expected to announce a plan to apply tariffs on imports from China worth at
least $30bn, although US officials said the proposals remained in flux. The
plan is also likely to involve a process for consultations with US business
that may delay their implementation.

The Trump administration is also likely flag up new restrictions on Chinese
investment in the US and tighter visa requirements for Chinese nationals,
although the immediate actions are likely to take the form of an order to
draft regulations rather than final actions.

I don’t think it is as simple as saying: ‘There is this very simple
end-game here and it will all be over.’ There’s a very difficult set of

Mr Lighthizer told members of Congress on Wednesday that the administration
expected to hit certain Chinese technology products in sectors where
Beijing has forced US companies to transfer intellectual property in order
to do business in China. It also wants to target sectors in which the
Chinese government is subsidising overseas acquisitions by its companies of
strategic technologies.

“We think that it is perhaps the most important thing that will have been
done in a long time in terms of rebalancing trade with China,” he said,
pointing to America’s $375bn trade deficit with Beijing.

But he said Washington was mindful of the potential impact on US
households. His staff had used an “algorithm” to formulate penalties that
would “put maximum pressure on China and minimum pressure on American

China fired back on Thursday, saying it was it was “unrealistic and
unreasonable to require complete equality in trade”, that the US itself was
to blame for the yawning deficit, and that Beijing would “resolutely defend
its rights and interests” on trade.

“China is the largest export market for US aircraft and soybeans, and the
second largest export market for automobiles and cotton,” said Hua
Chunying, foreign ministry spokesperson. “How many soybeans does China have
to buy to match a Boeing? Or, if you will, how many C919 [Chinese civil
airliners] does the US have to purchase in order to balance the number of
Boeing aircraft the US has sold to China?”

However, in discussions behind closed doors, senior policymakers in Beijing
on Thursday told a group of foreign dignitaries that China “will not
overreact” to the US measures.

The prospect of tariffs on imports from China has drawn widespread
criticism from the US business community and others worried about the
prospect of Chinese retaliation leading to a trade war between the world’s
two largest economies.

“Nobody wins from a trade war. We certainly don’t want a trade war,” Mr
Lighthizer said. But he added: “We have to do something . . . The reality
is that if you are on a course that is unsustainable you have to do
something to change.”

Business groups remain sceptical of the Trump administration’s plans,
though many acknowledge that it is trying to tackle legitimate concerns.

“It’s unclear right now what the strategy is for using tariffs in this
case,” said Erin Ennis, senior vice-president for the US-China Business
Council. “Companies want to see the problems that are identified in the
case addressed . . . It’s just not clear how tariffs get you to fix that

A senior US trade official told reporters that the expected actions against
China followed years of unsuccessful attempts by previous administrations
to extract concessions from Beijing and almost a year of President Donald
Trump and his aides trying to do the same.

“For nine months, 10 months we have tried dialogue with China,” the
official said, pointing to Mr Trump’s trip to China in November and other
attempts last year to extract concessions from the Chinese leadership. “I
don’t’ think the administration has ever turned its back on having these

But the official also conceded that the Trump administration was taking
action against China without having a defined set of goals for China to
meet. “I don’t think it is as simple as saying: ‘There is this very simple
end-game here and it will all be over.’ There’s a very difficult set of

That lack of a clear goal is one of the reasons Republicans in Congress
remain deeply sceptical about the merits of tariffs.

Opening Wednesday’s hearing with Mr Lighthizer, Kevin Brady, the Republican
chairman of the House Ways and Means Committee, said he was concerned that
US trade policy was at a dangerous crossroads. The administration needed to
choose between isolationism and global leadership, he said.

China’s oversupply of steel and aluminium had “put many Americans out of
work” and “its blatant theft of our companies’ technology and intellectual
property can’t be tolerated”, Mr Brady said. But he warned against
“indiscriminate tariffs”.

“We must not punish American families and workers for China’s
misbehaviour,” he said. “It’s not about backing down — it’s about hitting
the target, which is China and its bad practices, not our allies and other
US sectors.”

Additional reporting by Gabriel Wildau in Shanghai and Charles Clover in

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

More information about the Ip-health mailing list