On Friday, U.S. Trade Representative Robert Lighthizer formally initiated what some are calling “the first shot in a trade war with China.”
“After consulting with stakeholders and other government agencies, I have determined that these critical issues merit a thorough investigation,” Lighthizer said in a statement posted on the USTR site. “I notified the President that today I am beginning an investigation under Section 301 of the Trade Act of 1974.”
The 301 investigation will “determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.”
Who needs an investigation? Chinese practices are blatantly predatory. Any administration at this time would have had to act.
The only question is the severity of the remedies the White House eventually adopts, perhaps in as few as two months. Those remedies should be severe if they are to be effective.
Last week, an “involved observer,” speaking anonymously to the Washington-insider Nelson Report, said it was “hard to imagine that an investigation won’t result in anything other than a broad indictment of China’s policies.”
Broad indictment it should be. China, often in violation of its trade obligations, has been requiring American companies to joint venture with local enterprises—thereby being force to share valuable technology with the Chinese partners—as a condition to market access.
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Moreover, Beijing is increasingly using national security laws and regulations to take tech. “Central to Chinese cybersecurity law is the ‘secure and controllable’ standard, which, in the name of protecting software and data, forces companies operating in China to disclose critical intellectual property to the government and requires that they store data locally,” write Dennis Blair and Keith Alexander in their New York Times op-ed, aptly titled “China’s Intellectual Property Theft Must Stop.”