WASHINGTON (March 22, 2018) – In light of a report from the Office of the U.S. Trade Representative accusing China of “unfair and harmful acquisition of U.S. technology,” the R Street Institute encourages President Donald Trump to join with like-minded trading partners, such as Japan and the European Union, to challenge Chinese trade practices at the World Trade Organization.

The USTR investigation, the first performed pursuant to Section 301 of the Trade Act of 1974 since 2013, concluded that China uses foreign ownership restrictions to pressure U.S. companies to transfer technology to Chinese entities and forces licensing of technologies on terms that aren’t market-based. In a fact sheet announcing the report, the White House noted the USTR would use the WTO’s dispute resolution proceedings to challenge China’s technology-licensing practices.

“There is no question that Chinese state-sponsored businesses routinely engage in industrial espionage and steal trade secrets, which harms American companies doing business in China,” R Street Trade Policy Counsel Clark Packard said. “The WTO is the proper forum to address such issues and the administration would be well-served to reach out to allies and trading partners who share our concerns. Multi-lateral action is the most effective path in our rules-based global trading order.”

The White House also announced it would propose additional tariffs of up to 25 percent on Chinese products supported by its technology-licensing rules, including in aerospace, information technology and machinery. The tariffs, which could reach $50 billion, will be submitted for public comment.

“The tariffs proposed by the White House would damage the American economy and fail to address a serious problem, but we are heartened to see that the administration is seeking input from key stakeholders before choosing to levy them,” Packard said. “The relationship between the United States and China is extremely complicated and deserves a thoughtful strategy.”

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