US begins probing China technology transfer despite threats of a trade war

US has rarely used the trade tool since the World Trade Organisation began operations in 1995

The US has launched a probe into China's alleged intellectual property theft, despite concerns over potential harms to Beijing and Washington's trade ties.

"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," US Trade Representative (USTR) Robert Lighthizer said in a statement on Friday.

The move comes after President Donald Trump on Monday signed an executive memorandum directing Lighthizer to consider the possible initiation of the investigation, reports Xinhua news agency.

China has urged the US to objectively evaluate its progress in protection of intellectual property rights (IPR) and resolve the differences through dialogue and consultation.

 

The probe has been launched under the Section 301 of the Trade Act of 1974. It allows the President of the US to unilaterally impose tariffs or other trade restrictions against foreign countries.

But the country has rarely used the trade tool since the World Trade Organisation began operations in 1995.

Jeffrey Schott, a trade expert and senior fellow at the Washington D.C-based Peterson Institute for International Economics (PIIE), told Xinhua that the purpose of the investigation is "to find out what the facts are and to use the process of investigation to expand bilateral consultations with China" so that there is a better understanding of each other's practices.

Schott did not see "any immediate restrictions" being imposed on China by the US as the USTR has to do "a lot more study" on this case.

"Whether there are restrictions or not will depend on how the study proceeds and how the bilateral consultations between the US and China unfold over the next few months," he said.

If the US side fails to respect basic facts and multilateral trade rules, and takes measures that harm bilateral economic and trade relations, "China will definitely not sit by, but take all appropriate measures to resolutely safeguard its legitimate rights and interests", Beijing's Ministry of Commerce has warned.