US Close To Decision On China Trade Sanctions: Media

By Vince Morkri

     BEIJING (MNI) - The United States is prepared to invoke a little-used

provision of a 1974 trade law to end what it sees as unfair Chinese trade

practices, the Wall Street Journal and other U.S. media outlets reported

Wednesday. 

     By invoking the provision, the Trump administration would "force Beijing to

crack down on intellectual-property theft and ease requirements that American

companies share advanced technologies to gain entry to the Chinese market," the

Wall Street Journal report said.

     Such a tack would allow the U.S. government to impose sanctions in Chinese

exporters or restrict technology transfers to Chinese companies or U.S.-China

joint ventures, the report said.

     The measures would be a way of countering the huge China trade surplus with

the United States, which was $347 billion in 2016. China reported earlier this

month that its June trade surplus with the United States was $25.4 billion,up

from $22.0 billion in May and the highest monthly surplus since October 2015.

     U.S. President Donald Trump had reached an agreement with Chinese President

Xi Jinping at their summit meeting in Mar-a-Lago, Florida, in April on a 100-day

plan to improve trade relations between the two countries. That plan was later

extended to an entire year, but the two sides ran into a roadblock at their

Comprehensive Economic Dialogue earlier this month in Washington D.C., when they

failed to reach agreement on the steps needed to reduce China's surplus.

     Reuters reported that the U.S. would use Section 301 of the Trade Act of

1974 to unilaterally impose tariffs on China. Section 301 allows the president

to make the move to protect U.S. industries from "unfair trade practices" of

foreign countries. The act has rarely been used since the World Trade

Organization came into being in 1995. But U.S. Commerce Secretary Wilbur Ross

has said the WTO is too slow in responding to U.S. complains about other

countries' trade practices. 

     Ross said in a Wall Street Journal opinion piece on Tuesday that the Trump

administration would "use every available tool to counter the protectionism of

those who pledge allegiance to free trade while violating its core principles."

     Ross also claimed that China was subsidizing its export industries and had

"formidable tariff and non-tariff trade barriers against imports."

     "China is not a market economy," Ross wrote. "The Chinese government

creates national champions and takes other actions that significantly distort

markets. Responding to such actions with trade remedies is not protectionist."

     The Reuters report quoted an unidentified senior Trump administration

official as saying a decision on the matter by Trump could come as early as this

week. 

     Trump's patience with China on trade and other matters has apparently worn

thin. He blasted Beijing this week for not doing enough to rein in North Korea

after it tested another intercontinental ballistic missile, which military

analysts said could have the capability to strike anywhere in the United States.

"Our foolish past leaders have allowed them to make hundreds of billions of

dollars a year in trade, yet ... they do nothing for us with North Korea, just

talk," Trump said of China in a Twitter message. 

     Chinese Vice Commerce Minister Qian Keming on Monday decoupled the ongoing

nuclear crisis on the Korean Peninsula from U.S.-China trade ties. "The

peninsula nuclear issue is not relevant to bilateral trade issues. We cannot mix

these two issues together," Qian said at a press conference on China's foreign

trade at the State Council Information Office.

     "China is ready to work with the U.S. to promote more balanced growth of

our bilateral trade relations," Qian added.

     But Qian also made a pointed reference to "protectionist" countries that

are increasingly trying to shut the door to foreign trade and relations. "Some

of these countries are citing widening income gaps and using it to look inward,"

Qian said, without naming the United States or any other country. "Such a shift

in policy will have a long-term effect on global trade."

     U.S. Secretary of State Rex Tillerson on Tuesday tried to shift the tone of

the Trump administration, saying in Washington at a press conference that the

U.S. did not "blame" China for the Korean Peninsula nuclear conundrum.

     But, Tillerson said, "we do believe China has a unique and special

relationship," with North Korea. "We continue to call upon them to use that

influence with North Korea to create the conditions where we can have a

productive dialogue."

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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