On August 14, the President directed the U.S. Trade Representative (USTR) to study China’s policies of forcing U.S. companies to transfer technology and intellectual property to Chinese enterprises. China uses a number of laws, policies, and practices that require U.S. companies to give up their technology as a prerequisite for either selling or investing in the Chinese market. This affects a wide range of U.S. companies, from manufacturers to service providers to content creators.
USTR’s next step is to examine whether China should be investigated for unreasonable or discriminatory policies that may harm American intellectual property rights, innovation, or technical development. If so, USTR would then be able to initiate an investigation of the issue under Section 301 of the Tariff Act of 1974. An affirmative determination under Section 301 could result in USTR taking a number of actions from consulting with China regarding withdrawal of the harmful practices to imposing duties and other restrictions on Chinese goods and services. Although the President’s memorandum to USTR focuses on technology transfer requirements, it is also worded broadly enough to cover other actions by China that harm U.S. innovation or technology, such as allowing intellectual property theft and restricting digital trade.
USTR will consult with other government agencies and advisory committees to determine what action, if any, is appropriate. There may also be a formal hearing and comment process for companies and other stakeholders to provide their views. Reports suggest that this process could take up to a year, while any subsequent Section 301 investigation would have to be completed within a year.