The U.S.-China trade and economic relationship has expanded significantly over the past decades but recently reached a critical juncture. The U.S. concerns have grown sharply in recent years over a number of specific practices endemic to China’s economic model and the national security risks China presents. After years of U.S. complaints against China for obtaining American intellectual property (“IP”) and trade secrets through coercion and outright theft, the relationship between the countries culminated with the Office of the United States Trade Representative (“USTR”) releasing a 2018 Section 301 Report in March 2018.
The Trump administration directed the USTR to investigate China’s policies on IPR protection and forced technology requirements to determine if American IP rights, innovations, or technology developments were significantly at risk. The report highlighted a critical point in a dispute over China’s practices on IP and identified that China has provided trade distorting domestic support and unfair trade practices well in excess of its commitments under WTO rules. As identified in the USTR Section 301 report, China’s alleged theft of American IP and its related forced technology transfer to hand over technology to gain access to its market and other Chinese unfair trade practices threaten the long-term competitiveness of U.S. industry. Thus, the Trump administration began imposing duties on imports from China based on the aforementioned report, which considerably impacted the Chinese IP landscape.
Although China has publicly denied the U.S.’s claims regarding IP theft and the forced transfer of technology and has claimed to have establish special IP courts, China continues to pursue policies that restrict the ability of foreign companies to protect, enforce, and fully benefit from their IP right in China. Under direction from President Trump, the USTR were directed to levy increased 25% tariffs on nearly all remaining imports from China, since trade negotiations between both countries broke down last May.
Despite the recent escalation of tensions in the US-China trade negotiations, the world’s largest economies remain committed to continue discussions and have pledged to meet in October 2019 to settle their ongoing trade war. There seems to be room for compromise on several issues, such as protection of IP rights, as the two side have already made progress on IP protection before the talks broke down in May. One of the biggest objectives of the U.S. is to prevent China to use coercion to steal or unfairly obtain American IP and trade secrets but also to allow U.S. companies to advance in many high-technology industries and to fight the declining competitiveness of the U.S. products in the global economy market.