New Report Claims China Has Not Altered Practices Targeted by Section 301 Tariffs

Sandler, Travis & Rosenberg Trade Report

Monday, November 26, 2018

The Office of the U.S. Trade Representative claims in a Nov. 20 report that the Chinese government has not fundamentally altered the unfair, unreasonable, and market-distorting practices that have led to the imposition of additional duties on some $250 billion worth of U.S. imports from China and instead appears to have taken “further unreasonable actions” in recent months.

(Click here for more detailed information on affected products and other aspects of the Section 301 process. Click here to register for ST&R’s Nov. 29 webinar on the latest on this and other current trade issues.)

The report updates information on USTR’s Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. It discusses, among other things, how China ostensibly continues its policy and practice of conducting and supporting cyber-enabled theft and intrusions into the commercial networks of U.S. companies and those of other countries, as well as other means by which China attempts to illegally obtain information. USTR asserts that this conduct provides the Chinese government with unauthorized access to IP, including trade secrets, or confidential business information, as well as technical data, negotiating positions, and sensitive and proprietary internal business communications.

The report also describes how, despite the relaxation of some foreign ownership restrictions and certain other incremental changes in 2018, the Chinese government has persisted in using foreign investment restrictions to require or pressure the transfer of technology from U.S. companies to Chinese entities. USTR notes that numerous foreign companies and other trading partners share U.S. concerns regarding China’s technology transfer regime.

Also under scrutiny in the report are what USTR describes as China’s discriminatory licensing restrictions. In addition, the report indicates that despite an apparent aggregate decline in Chinese outbound investment in the U.S. this year the Chinese government continues to direct and unfairly facilitate the systematic investment in, and acquisition of, U.S. companies and assets by Chinese entities in an effort to obtain cutting-edge technologies and IP and generate large-scale technology transfer in industries deemed important by state industrial plans.