The US Trade Representative (USTR) will begin a full-scale investigation into unfair trade practices, including China’s infringements on intellectual property rights, in accordance with an executive order of President Donald Trump.
"After consultations with interested parties and other government agencies, we have concluded that we will launch a thorough investigation into these important issues," said USTR Robert Lighthizer said in a statement on August 18 (local time)
The announcement was made only three days after President Donald Trump signed an executive order based on Article 301 of the US Trade Act on August 14 requesting the USTR to look into unfair practices such as China’s infringements on intellectual property rights and China’s demand for mandatory transfers of US technology. "This is a big step and only a beginning," Trump said, signing the executive order. President Trump warned China of a trade war, saying that he would designate China as a currency manipulator and impose tariffs Chinese imports during the election process last year.
Lighthizer’s decision to officially launch the investigation after collecting opinions from various circles signaled that a trade war began between the US and China on a full scale. The US Trade Law allows the US government to impose sanctions on countries that built trade barriers such as ramping up import tariffs. The US media predicted that the USTR investigation would continue for about one year.
Analysis says that US President Trump’s order to look into China's trade practices is a multi-purpose move to pressure China to pressure North Korea to give up nuclear weapons and missiles, and hold China in check, a G2 member country rising fast economically, militarily and diplomatically.
China strongly resisted the US Trade Representative's investigation into China’s infringements on intellectual property rights. The Global Times, a sisterhood paper of the People’s Daily, a Chinese Communist Party newspaper called Article 301 of the Trade Act “an obsolete protectionist tool that has not been unused since 2001, saying, “President Trump is trying to kill two birds with one stone,” in an editorial titled “Politicization of Trade Ruins China-US Relationship.” The newspaper said that investigating China's infringements on intellectual property rights, the US will correct a trade imbalance and at the same time, intensify pressure on China to cooperate with the US in connection with US policies against North Korea. The newspaper quoted Chad Brown, a trade specialist at the Peterson Institute of International Economics (PIIE), warning the US that China can use the US at the WTO.
"If the Trump administration continues to link North Korea's nuclear weapon and missile development issues with trade, it will make the situation more complicated," the newspaper warned. "If China and the US start a trade war, then North Korea will benefit." With a prospect that North Korea will carry out its sixth nuclear test within several months, it was high time for the US and China to cooperate with each other, the newspaper added.
China's state-run Xinhua News Agency reported on August 19 carried the USTR's investigation into infringements on intellectual property rights as the main news, worrying that the unilateral action by the administration could harm China-US trade relations. China had made efforts for IPR protection in recent years in the administrative and judicial aspects and produced positive results through enhancing international cooperation and exchanges and China hoped that the USTR would act prudently by paying attention to these objective facts, Xinhua said.
"China-US trade relations are the foundation of our bilateral relations and mutual reciprocity. So if the two sides cooperate with each other, it will benefit both sides. Unless, both sides will hurt," said Gao Peng, a spokesman for the Ministry of Commerce of China. The Commerce Ministry also stressed that unilateral trade sanctions will ultimately affect both consumers and businesses and cooperation was the right direction.
The Chinese Commerce Ministry also warned the US that if the US does not respect the multilateral rules and takes unilateral measures, China will never take any chances on the US and use all means available to protect China's legitimate interests.
"Economic relationships between China and the US have become too strong and complicated to disintegrate. If a trade war occurs, both sides will be losers," Chinese Foreign Ministry spokesperson Hua Chunying pointed out.