US alone as probe launched into China's IP practices

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The decision of the US to launch a probe into China's IP practices signals the Trump's administration favoring a "go it alone approach" rather than working within accepted international organizations, according to experts.

US Trade Representative Robert Lighthizer on Friday formally initiated an investigation into China's intellectual property practices under Section 301 of the Trade Act of 1974.

It came after President Donald Trump on Monday signed an executive memorandum directing Lighthizer to decide whether to start the investigation.

The Trade Act of 1974's Section 301 allows the US to unilaterally impose tariff or other trade restrictions on foreign trade.

US Trade Representative Robert Lighthizer /CFP Photo

US acts solo

Bai Ming, deputy director of the research institute under the Ministry of Commerce, told the People's Daily that the 301 investigation is initiated and executed by the US alone, and it is strongly unilateral.

The action has not undergone a process within the World Trade Organization (WTO), whose role is dealing with the global rules of trade between nations.

Working within the World Trade Organization (WTO) process has helped different countries resolve trade disputes since it was founded in 1995. However, Section 301 enables the US to take unilateral action outside the WTO.

"Trade disputes usually are solved under the WTO, the initiative by the US this time is using a domestic act to face an international matter," Chen Fengying, a senior researcher on the world economy at the China Institutes of Contemporary International Relations told CGTN.

What is Section 301 of the Trade Act of 1974?

The US goods and services trade deficit with China was 309.6 billion US dollars in 2016, according to the US official data. But according to Bai, China does not enjoy the benefit of the surplus.

Trade surplus and benefit of it are different

"Trade surplus and benefit of it are two different things. The US benefits from the trade surplus between China and the US," said Bai.

President Donald Trump finishes signing a memorandum directing the US Trade Representative to complete a review of trade issues with China at the White House in Washington, US August 14, 2017. /CFP Photo

According to a report issued by China's Commerce Ministry in May, 59 percent of the trade surplus comes from foreign investment enterprises, and 61 percent comes from manufacturing and processing goods. China only benefits from those goods that require manufacturing and processing while the US benefits more from goods from providing designs, components and parts supplies, as well as marketing.

China is currently the US's largest goods trading partner. US top imports from China in 2016 were electrical machinery (129 billion US dollars), machinery (97 billion US dollars) and furniture and bedding (29 billion US dollars).

The US's top export to China in 2016 were miscellaneous grain, seeds, fruit 15 billion US dollars, aircraft (15 billion US dollars), electrical machinery (12 billion US dollars), and machinery (11 billion US dollars), according to the Office of the US Trade Representative.

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