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Trade

US weighing ‘many billions’ of dollars in sanctions on Chinese items via accelerated probe

Trump administration could release results of investigation into China’s intellectual property practices early, triggering punitive action, analyst said

PUBLISHED : Tuesday, 23 January, 2018, 6:19am
UPDATED : Tuesday, 23 January, 2018, 9:22am

The administration of US President Donald Trump is considering releasing the results of its investigation into China’s alleged theft of intellectual property ahead of schedule, a move that could speed up the probe and set sanctions against Chinese products worth “many billions” of US dollars into motion, a trade analyst said.

Derek Scissors, a trade expert at the American Enterprise Institute in Washington, told the South China Morning Post that an announcement of the initial findings of the probe under Section 301 of the US Trade Act could come “a few days” before Trump delivers his first official State of the Union address to Congress on January 30.

The bulk of the sanctions coming out of the investigation could primarily target China’s telecom and semiconductor sectors, Scissors said.

“This is a political decision [to make] and the date [of the first announcement] could change,” he said.

The expected announcement could be just the first of several to be made in the weeks and months ahead, he said.

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The White House dismissed the idea that an imminent release of the investigation’s results could be coming early. A spokesman for the president’s National Security Council said in an email on the condition of anonymity that “we have nothing to announce at this time”.

“The president has reiterated that the United States will use all available trade remedies to create a level playing field for United States workers and businesses,” the spokesman added.

The US Trade Representative Office did not immediately responded to the Post’s request for comment.

Scissors’ observations come as the Trump administration signals that it could release the results early. It had a year to finish the “Section 301” investigation after initiating it about five months ago.

Last Wednesday, Trump told Reuters the US could soon impose a potential big “fine” in connection with China’s intellectual property theft. 

“We have a very big intellectual property potential fine going, which is going to come out soon,” Trump was quoted. He did not specify what he meant by a “fine”.

Trump and his economic adviser, Gary Cohn, said Beijing had forced American companies to transfer their intellectual property to China as a requirement for doing business there. 

“We’re talking about big damages,” the president said. “We’re talking about numbers that you haven’t even thought about.” 

In his first national security strategy document, Trump accused “competitors such as China” of “stealing” US intellectual property valued at “hundreds of billions of dollars”.

A week ago, Trump’s chief trade negotiator, Robert Lighthizer, briefed the president on China’s economy and pending trade enforcement actions, White House spokeswoman Lindsay Walters said in a statement. She did not provide details.

In early December, two anonymous sources told Politico that the US Trade Representative’s Office had completed a draft report of the China intellectual property probe and were sharing it with an inter-agency committee overseeing the investigation. 

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After the announcement, the White House would have three options: lodge a lawsuit against China to settle the dispute at the World Trade Organisation, start negotiating a solution with the Chinese government, or proceed with unilateral sanctions against China.

Scissors said there is no chance the US would go to the WTO for help settling the dispute. The Trump administration also has shown little interest in negotiating with China on trade. That would leave the third approach – taking unilateral action – as the preferred option.