As expected, U.S. President Donald Trump signed a presidential memorandum on Monday authorizing an investigation into China's alleged “theft” of American intellectual property. According to the memo, U.S. Trade Representative Robert Lighthizer is being tasked with determining whether or not to investigate any potential trade practices by China “that force U.S. companies operating in China to turn over intellectual property,” per Reuters.
"Ambassador Lighthizer, you are empowered to consider all available options at your disposal," Trump said before he signed the memo, according to Reuters. "This is just the beginning," Trump added. Under the Trade Act of 1974's Section 301, the president may unilaterally impose tariffs or other trade restrictions to protect U.S. industries. It is unclear whether the investigation will, in fact, result in trade sanctions against China, which Beijing would almost certainly challenge before the World Trade Organization.
The order comes on the heels of escalating tensions between Washington and Beijing, as Trump has pressed China to cut steel production to ease global oversupply and rein in North Korea's missile program. In terms of IP infringement, both Republican and Democrats have urged Trump to take action, and the European Union, Japan, Germany and Canada have all expressed concern over China's failure to act on its rampant intellectual property infringement.
While a spokesman for China's Ministry of Commerce told reporters in Beijing earlier this month that China puts a strong emphasis on intellectual property rights and that all WTO members should respect the rules of the organization, China has repeatedly come under fire for its unwillingness to respect U.S. IP. China was, of course, singled out on the Office of the United States Trade Representative’s 2017 “Special 301” Report in May.
A first for the Trump administration, the report detailed how intellectual property is being protected – or better yet, not protected – on a worldwide basis. China – a routine "Priority Watch List" country – was highlighted in the report due to both “longstanding and new IP concerns [that] strongly merit attention.”
As set forth in the report, “China is home to widespread infringing activity, including trade secret theft, rampant online piracy and counterfeiting, and high levels of physical pirated and counterfeit exports to markets around the globe. China imposes requirements that U.S. firms develop their IP in China or transfer their IP to Chinese entities as a condition to accessing the Chinese market.”