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United States Moves Forward with Tariffs and Requests WTO Consultations in Response to Certain Trade Practices by China

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Trade tensions between the United States and China have escalated under the Trump administration. Some of this tension has resulted from the steel and aluminum tariffs imposed by the United States on most of its trading partners in the spring of 2018. Another major source of conflict relates to President Trump's concerns with China's perceived unfair practices in relation to intellectual property and technology rights. The Trump administration has addressed these concerns both by pursuing unilateral responses and seeking relief through the World Trade Organization (WTO).

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1 These developments are discussed in Jean Galbraith, Contemporary Practice of the United States, 112 AJIL 499 (2018).

2 Presidential Memorandum of Aug. 14, 2017, Addressing China's Laws, Policies, Practices, and Actions Related to Intellectual Property, Innovation, and Technology, 82 Fed. Reg. 39007, 39007 (Aug. 17, 2017).

3 Office of the U.S. Trade Rep. Press Release, USTR Announces Initiation of Section 301 Investigation of China (Aug. 18, 2017), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2017/august/ustr-announces-initiation-section [https://perma.cc/KDE5-NVFB].

4 Office of the U.S. Trade Rep., Findings of the Investigation Into China's Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act of 1974, at 3 (2018) [hereinafter USTR Section 301 Report]; see also infra note 20 and accompanying text (describing Section 301 in more detail).

5 See generally id.

6 Office of the U.S. Trade Rep. Press Release, President Trump Announces Strong Actions to Address China's Unfair Trade (Mar. 22, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/march/president-trump-announces-strong [https://perma.cc/XS8U-A3H5].

7 Presidential Memorandum of March 22, 2018, on the Actions by the United States Related to the Section 301 Investigation of China's Laws, Policies, Practices, or Actions Related to Technology Transfer, Intellectual Property, and Innovation, 83 Fed. Reg. 13099, 13100 (Mar. 27, 2018). In addition, the memorandum instructed the secretary of the Treasury to “propose executive branch action … to address concerns about investment in the United States directed or facilitated by China in industries or technologies deemed important to the United States.” Id.

8 Id.

9 Office of the U.S. Trade Rep. Press Release, Under Section 301 Action, USTR Releases Proposed Tariff List on Chinese Products (Apr. 3, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/april/under-section-301-action-ustr [https://perma.cc/7T78-QWBY].

10 See China Announces Additional Tariffs on $50 Billion of U.S. Goods, Reuters (Apr. 4, 2018), at https://www.reuters.com/article/us-usa-trade-china-tariffs-statement/china-announces-additional-tariffs-on-50-billion-of-u-s-goods-idUSKCN1HB0W6. By this time, China had already announced retaliatory tariffs on U.S. goods in response to the new U.S. tariffs on steel and aluminum. See Galbraith, supra note 1, at 500.

11 White House Press Release, What You Need to Know About President Donald J. Trump's Actions Responding to China's Unfair Trade Practices (Apr. 6, 2018), at https://www.whitehouse.gov/briefings-statements/need-know-president-donald-j-trumps-actions-responding-chinas-unfair-trade-practices [https://perma.cc/678G-JHB3].

12 Keith Bradsher, China Cuts Car Tariffs, in a Small Offering to the U.S. on Trade, N.Y. Times (May 22, 2018), at https://www.nytimes.com/2018/05/22/business/china-cuts-auto-tariffs.html.

13 See, e.g., Ana Swanson & Alan Rappeport, U.S. Suspends Tariffs on China, Stoking Fears of a Loss of Leverage, N.Y. Times (May 20, 2018), at https://www.nytimes.com/2018/05/20/us/politics/mnuchin-kudlow-china-trade.html.

14 Id. For discussion of earlier U.S. negotiating demands and their relationship to international trade law, see Julia Qin, Could the US-China Trade Conflict Be Dealt with within the WTO Framework?, Int'l Econ. L. & Pol'y Blog (May 5, 2018), at http://worldtradelaw.typepad.com/ielpblog/2018/05/could-the-us-china-trade-conflict-be-dealt-with-within-the-wto-framework.html.

15 White House Press Release, Statement on Steps to Protect Domestic Technology and Intellectual Property from China's Discriminatory and Burdensome Trade Practices (May 29, 2018), at https://www.whitehouse.gov/briefings-statements/statement-steps-protect-domestic-technology-intellectual-property-chinas-discriminatory-burdensome-trade-practices [https://perma.cc/RG79-ZBEX] (also announcing a plan to implement, for national security reasons, “specific investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology”). Made in China 2025 is a state-sponsored program aimed at bolstering China's advanced manufacturing capabilities. See Kristen Hopewell, What Is ‘Made in China 2025’—and Why Is It a Threat to Trump's Trade Goals?, Wash. Post (May 3, 2018), at https://www.washingtonpost.com/news/monkey-cage/wp/2018/05/03/what-is-made-in-china-2025-and-why-is-it-a-threat-to-trumps-trade-goals/?utm_term=.0f8bf76f8b14 (reporting on the program's goals and methods of attainment, potential impact on the U.S. market, and the efficacy of the U.S. response).

16 David J. Lynch & Emily Rauhala, With Tariffs, Trump Starts Unraveling a Quarter-Century of U.S.-China Economic Ties, Wash. Post (June 15, 2018), at https://www.washingtonpost.com/business/economy/trump-imposes-import-taxes-on-chinese-goods-and-warns-of-additional-tariffs/2018/06/15/da909ecc-7092-11e8-bf86-a2351b5ece99_story.html?utm_term=.b2bf1057ca82.

17 H.R. Doc. No. 103-316, at 1034–35 (1994); see also United States – Sections 301–310 of the Trade Act of 1974, Panel Report of Dec. 22, 1999, WT/DS152/R, at VII.1545 (concluding that this is a “lawful and effective” curtailment of USTR's authority).

18 H.R. Doc. No. 103-316, supra note 17, at 656 (applying this language generally to the statement of administrative action).

19 Pub. L. 103-465, at § 101(a)(2), 108 Stat. 4809, 4814 (1994); see also id., § 102(d), 108 Stat. at 4819 (describing this statement of administrative action as “an authoritative expression” of interpretation).

20 USTR Section 301 Report, supra note 4, at 3 (describing this language as coming from the “most relevant” statutory source of authority). This language tracks Section 301(b), which does not reference international trade law and provides USTR with discretionary authority to respond to unfair trade practices, as compared to Section 301(a), which requires USTR to respond to violations of international trade law. See 19 U.S.C. § 2411(a) & (b). In describing Section 301, USTR did not mention the statement of administrative action. See USTR Section 301 Report, supra note 4, at 3–4. For a more thorough discussion of the legal framework surrounding Section 301 investigations and the relevant implications for this current dispute, see Caitlain Devereaux Lewis, Tricks of the Trade: Section 301 Investigation of Chinese Intellectual Property Practices Concludes (Part I), Cong. Res. Serv. (Mar. 29, 2018); Caitlain Devereaux Lewis, Tricks of the Trade: Section 301 Investigation of Chinese Intellectual Property Practices Concludes (Part II), Cong. Res. Serv. (Mar. 29, 2018).

21 Office of the U.S. Trade Rep. Press Release, Following President Trump's Section 301 Decisions, USTR Launches New WTO Challenge Against China (Mar. 23, 2018), at https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/march/following-president-trump%E2%80%99s-section [https://perma.cc/58AC-32WZ].

22 Request for Consultations by the United States, China – Certain Measures Concerning the Protection of Intellectual Property Rights, at 1, WTO Doc. IP/D/38; WT/DS542/1 (Mar. 23, 2018) (citing Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)). Japan and the EU are two of several parties who have requested to join the consultations.

23 Request for Consultations by China, United States – Tariff Measures on Certain Goods From China, at 2, WTO Doc. G/L/1219;WT/DS543/1 (Apr. 4, 2018) [hereinafter Request for Consultations by China]; cf. US “Section 301” Action Against China's Intellectual Property Regime Questioned at WTO Goods Council, World Trade Org. (Mar. 26, 2018), at https://www.wto.org/english/news_e/news18_e/good_28mar18_e.htm (summarizing concerns raised by China with regard to the tariffs at a meeting of the Goods Council).

24 Request for Consultations by China, supra note 23.

25 Communication from the United States, United States–Tariff Measures on Certain Goods from China, WTO Doc. WT/DS543/2 (Apr. 13, 2018). For China's further response, see Communication from China, United States – Tariff Measures on Certain Goods from China, WTO Doc. WT/DS543/3 (Apr. 27, 2018).

26 Maul Mozur & Ana Swanson, Chinese Tech Company Blocked from Buying American Components, N.Y. Times (Apr. 16, 2018), at https://www.nytimes.com/2018/04/16/technology/chinese-tech-company-blocked-from-buying-american-components.html.

27 Order Activating Suspended Denial Order Relating to Zhongxing Telecommunications Equipment Corporation and Zte Kangxu, 83 Fed. Reg. 17644, 17647 (Apr. 23, 2018).

28 Id. at 17646.

29 Id. at 17645.

30 Raymon Zhong, Chinese Tech Giant on Brink of Collapse in New U.S. Cold War, N.Y. Times (May 9, 2018), at https://www.nytimes.com/2018/05/09/technology/zte-china-us-trade-war.html.

31 Donald J. Trump (@realDonaldTrump), Twitter (May 13, 2018, 11:01 AM), at https://twitter.com/realDonaldTrump/status/995680316458262533; see also Ana Swanson, Trump Administration Plans to Revive ZTE, Prompting Backlash, N.Y. Times (May 25, 2018), at https://www.nytimes.com/2018/05/25/us/politics/trump-trade-zte.html (reporting that the Commerce Department had reached a deal with ZTE that would lift the ban in exchange for the payment of a fine and internal restructuring). As of late June, members of Congress had begun efforts to block such a deal through legislative action. See Sarah Ferris & John Bresnahan, Senate GOP Fires Another Warning Shot at Trump over Chinese Telecom Giant, Politico (June 25, 2018), at https://www.politico.com/story/2018/06/25/trump-zte-senate-chinese-telecom-671845 (describing some of these efforts, including a provision passed by the Senate as part of a broader appropriations bill).

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