As the White House is about to escalate trade friction in intellectual property, it has opted for a flawed, partisan approach.
In mid-August, President Trump asked US Trade Representative Robert Lighthizer, a veteran Reagan administration trade hawk, to open an investigation into China’s intellectual property (IP) practices.
The first public hearing about Chinese trade conduct is scheduled for October 10 in Washington.
The White House IP Narrative
As Lighthizer initiated the investigation, he seized the notorious Section 301 of the Trade Act of 1974, which in the 1980s was used against the rise of Japan and which Japan and the EU regarded as a violation of the rules of the World Trade Organization (WTO). Instead of free trade, it represents “aggressive unilateralism” and authorises retaliatory tariffs.
Lighthizer draws from the highly partisan US Commission on the Theft of American Intellectual Property, which was mobilised in the early 2010s – amid the rise of China’s indigenous innovation and foreign investment.
Relying on contested estimates, the Commission believes that IP theft amounts to $225-600 billion annually in counterfeit goods, pirated software, and theft of trade secrets. As a result, it advocates more aggressive policy enforcement “to protect American IP”.
Essentially, the US IP narrative claims that Chinese government forces US companies to relinquish its IP to China. The narrative is consistent with Trump’s “America First” stance and it has been quoted, referenced and echoed uncritically by media.
Nevertheless, it is deeply flawed.
About the Author
Dan Steinbock is the Founder of Difference Group and has served as Research Director of International Business at the India China and America Institute (US) and a Visiting Fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see http://www.differencegroup.net