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Abu Dhabi, UAEFriday 21 September 2018

Trump inquiry may spur sanctions on China

US to determine whether any Chinese laws, policies or practices discriminate against or harm American innovators and tech firms

Trump is target China over intellectual property. Jim Watson / AFP
Trump is target China over intellectual property. Jim Watson / AFP

The US president Donald Trump will sign a memorandum Monday that could lead to sanctions against China over its intellectual property practices, administration officials said.

Mr Trump will direct the US trade representative Robert Lighthizer to determine whether any Chinese laws, policies or practices discriminate against or harm American innovators and technology companies, the officials said.

If so, Mr Lighthizer would have "broad powers" to seek remedial action.

The officials, who spoke on condition of anonymity, bluntly accused China of "stealing our intellectual property" - long a concern of western companies seeking a share of the enormous Chinese market.

The new measure comes amid high tensions between Washington and Beijing. Mr Trump has accused China of failing to rein in the nuclear ambitions of its ally North Korea, even as he makes ever sharper threats against Pyongyang.

The officials said that matter, and the trade issue, are not linked.

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The process Mr Lighthizer will initiate, under Article 302b of the US Commercial Code, could take as long as a year to yield its findings.

The latest step follows the opening by the Trump administration of several other investigations into Chinese commercial practices, notably in the steel sector.

On Tuesday, Washington announced preliminary sanctions against imports of Chinese aluminum foil.

The US officials said "Chinese commercial policy has a major goal, the acquisition and the absorption of the intellectual property of the United States and other countries around the world."

"Most Americans are fully aware that China is stealing our intellectual property," they added. "What they may not know is that China is also forcing and coercing American companies that operate in China to turn over their technologies."

US officials will particularly examine the role of joint ventures, the mixed foreign-and-Chinese companies whose establishment is required for any outside business wishing to sell its products in China.

"China also funds and facilitates the acquisition of US firms that possess advanced technologies," the officials said.

"If Americans continue to have their best technologies and intellectual property stolen or forcibly transferred off-shore, the United States will find it difficult to maintain its current technology leadership position," they added.

US and European companies have long complained of Chinese rules that force them to turn over their industrial secrets if they wish to do business in China.

Apple, which has a turnover of more than US$30 billion a year in China, is currently subject to several measures taken by Beijing that hinder its activities in the country.

The manufacturer of the iPhone was forced in late July to remove certain apps that would have allowed users to circumvent extensive online restrictions imposed by the Chinese government.

Among the other big names in US technology, Facebook and Google are currently sidelined in China. Although they are largely missing out on the giant consumer market, they also fear their technologies being stolen.

Car makers as well as aeronautical giants Boeing and Airbus have been able to enter China via joint ventures, even as the Chinese seek to penetrate global markets.

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