Under President Trump’s leadership, the United States is working towards a more fair and reciprocal trade relationship with China. After years of unsuccessful U.S.-China dialogues, the United States is taking action to confront China over its state-led, market-distorting policies and practices, forced technology transfers, intellectual property practices, and cyber intrusions of U.S. commercial networks.
The goal is to mitigate Chinese mercantilist practices, change China’s behavior, and create a level playing field that will give all Americans a better chance to succeed.
- SECTION 301 INVESTIGATION
- Under Section 301 of the Trade Act of 1974, USTR initiated an investigation to determine whether China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and burden or restrict U.S. commerce.
- USTR held a public hearing on October 10, 2017, consulted with private sector advisory committees, held two rounds of public comment periods, and received approximately 70 written submissions from trade associations, U.S. companies and workers, academics, think tanks, and law firms.
- Following a thorough analysis of available evidence, USTR, with the assistance of the interagency Section 301 Committee, determined that numerous acts, policies, and practices of the government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and burden or restrict U.S. commerce. Specifically, USTR found that:
- China uses joint venture requirements, foreign investment restrictions, and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
- China deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations.
- China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer.
- China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially-valuable business information.
- An interagency team of subject matter experts and economists estimated, based on a three-year annual average, U.S. damages of $50 billion annually from China’s unfair acts, policies, and practices.
- Based on the investigation findings and interagency consultations, USTR developed recommendations for responsive action to China’s unfair trade practices.
- SECTION 301 RESPONSES
- Under Section 301 of the Trade Act of 1974, USTR has broad authority for a range of possible responsive actions to meet the goal of eliminating or otherwise resolving these unfair practices, such as the imposition of duties or other restrictions on goods or services.
- USTR has determined that appropriate actions for addressing China’s unreasonable or discriminatory acts, policies, and practices should include the following:
- 25 Percent Ad Valorem Duties: In accordance with the President’s direction, USTR has determined to impose an additional 25 percent tariff on approximately $50 billion of products from China that are strategically important to, and benefit from, the “Made in China 2025” program and other Chinese industrial policies.
- WTO Case: USTR is pursuing dispute settlement at the World Trade Organization (WTO) to address China’s discriminatory licensing practices. The United States hopes to work with other like-minded countries in pursuing this case.
- Based in part on evidence uncovered in the Section 301 investigation, the President directed the Department of Treasury to address concerns about Chinese investments in certain technology-intensive sectors. USTR is working closely with the Treasury Department and other agencies on this issue.
- These actions will best position the United States to defend U.S. innovation from unfair trade practices and to achieve greater fairness and reciprocity in the United States’ trade relationship with China.