Trucks wait in line as shipping containers stand in a terminal at the Yangshan Deep Water Port in Shanghai, China, on Friday, March 23, 2018. The trade conflict between China and the U.S. escalated, with Beijing announcing its first retaliation against metals levies hours after President Donald Trump outlined fresh tariffs on $50 billion of Chinese imports and pledged there’s more on the way. Photographer: Qilai Shen/Bloomberg

U.S. Presses China to Address IP Concern Amid Tariff Dispute

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(Bloomberg) -- The U.S. issued a new warning to China on its handling of intellectual property as President Donald Trump prepares to dispatch senior advisers to the Asian nation to head off a trade dispute.

The U.S. Trade Representative’s office kept China on its “priority watch list” of countries whose IP practices require monitoring. China has an “urgent need” to fix a range of IP-related concerns, including trade-secret theft, online piracy, and forced technology transfer, USTR said in its annual report on IP protection and enforcement.

Escalating trade tensions between the world’s two biggest economies have rattled markets and sparked fears of a trade war. Trump has proposed tariffs on as much as $150 billion of Chinese imports on the grounds of alleged IP theft, while Beijing has vowed to retaliate on everything from American soybeans to airplanes.

The annual list, which carries no immediate penalties, is supposed draw attention to the need for nations to address everything from copyright infringement to online piracy.

China opposed the U.S. decision to keep its name on the list, the Asian nation’s Commerce Ministry said in a statement Saturday. The U.S. assessment of other countries’ intellectual property practices lacks objectivity, fairness, and has been widely criticized, the ministry said.

China Visit

Trump said this week Treasury Secretary Steven Mnuchin and other senior officials will visit China within days, adding that there’s a “very good chance” the two countries can reach a deal. U.S. Trade Representative Robert Lighthizer and White House economic adviser Larry Kudlow will also be part of the delegation.

Kudlow said he expects serious negotiations on a range of trade irritants, including technology-related issues, and the U.S. will be looking for specific actions from China. Officials in Beijing in recent weeks have been announcing steps to further open up the economy, such as gradually scrapping foreign ownership caps on local vehicle companies.

The administration added Canada and Colombia to the highest priority watch list for IP challenges, and it dropped Thailand from the regular watch list.

Canada Watch

Canada is the only Group of Seven country on the monitoring list. The USTR said the country has failed to resolve “key longstanding deficiencies,” including poor border and law enforcement with respect to counterfeit and pirated goods, weak patent protection and pricing for pharmaceuticals, and inadequate copyright protection.

The move comes as the U.S., Canada and Mexico aim for a tentative deal on a revised North American Free Trade Agreement in the coming days. The new deal will likely include a separate chapter on intellectual property practices.

USTR is required by law to identify countries that don’t adequately protect IP or deny market access to U.S. companies that rely on IP protection. USTR can launch investigations against countries on the priority watch list under section 301 of the Trade Act of 1974. The Trump administration used that section to investigate China.

Trump proposed the tariffs against Chinese products after USTR concluded earlier this year that China engages in widespread violation of U.S. IP rights.

©2018 Bloomberg L.P.

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