US Govt Initiates Section 301 Investigation of China

The US government has initiated an investigation of China under Section 301 of the Trade Act of 1974. The investigation will seek to determine whether 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 US commerce.

The move follows upon President Donald Trump’s Memorandum of August 14, 2017 instructing the US Trade Representative (USTR) to consider the possible initiation of an investigation. The President’s Memorandum emphasised that “the United States is a world leader in research-and-development-intensive, high-technology goods,” and that “violations of intellectual property rights and other unfair technology transfers potentially threaten United States firms by undermining their ability to compete fairly in the global market.”

The President’s Memorandum further noted that China’s conduct “may inhibit United States exports, deprive United States citizens of fair remuneration for their innovations, divert American jobs to workers in China, contribute to our trade deficit with China, and otherwise undermine American manufacturing, services, and innovation.”

“After consulting with stakeholders and other government agencies, I have determined that these critical issues merit a thorough investigation. I notified the President that I am beginning an investigation under Section 301 of the Trade Act of 1974,” said USTR Robert Lighthizer in a statement.

Section 301 of the Trade Act of 1974, as amended, gives the USTR broad authority to respond to a foreign country’s unfair trade practices. If USTR makes an affirmative determination of actionable conduct, it has the authority to take all appropriate and feasible action to obtain the elimination of the act, policy, or practice, subject to the direction of the President, if any. The statute includes authorisation to take any actions that are within the President’s power with respect to trade in goods or services, or any other area of pertinent relations with the foreign country.