On April 3, 2018, The Wicks Group (TWG) Partner and Vice President Roncevert Almond appeared on China Global Television Network (CGTN) to discuss the Trump administration’s release of Chinese products under consideration for the proposed 25 percent tariffs following a formal investigation into China’s alleged unfair trade practices related to the forced transfer of U.S. technology and intellectual property.
During the interview, showing live in Beijing, Washington, and across the world, Mr. Almond warned about the impact on global trade and U.S.-China relations:
“With this type of tit-for-tat and potential trade war, we don't know what the outcome will be and right now it could be fire extinguishers but pretty soon it could be Boeing aircraft which would be a significant hit for one of the biggest manufacturers in the United States and in a technology that the United States leads the world in.”
These words proved prophetic as China responded on the following day, on April 4, 2018, with proposed tariffs targeting U.S. aircraft in addition to other exports like soybeans, automobiles, and chemicals. Mr. Almond observed regarding the potential economic impact: “We just don't know the outcome, but we know that we're starting down a road and it can lead to a bad result.”
The latest trade tensions originated in August 2017, when President Donald Trump instructed the U.S. Trade Representative Robert Lighthizer to initiate an investigation under Section 301 of the Trade Act of 1974 (Trade Act) (19 U.S.C. 2411). President Trump specifically requested the USTR to determine under Section 301 whether China’s law, policies, practices, or actions may be unreasonable or discriminatory and may be harming American intellectual property rights, innovation and technology development. The USTR’s investigation began on August 18, 2017, and involved a public hearing on October 10, 2017, and the receipt of approximately 70 written submissions.
Following conclusion of the Section 301 investigation, on March 22, 2018, President Trump announced his plan to impose tariffs on approximately $50 billion worth of Chinese imports and take other actions in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises. According to the investigation report, these policies bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans, such as “Made in China 2025.”
Subsequently, on April 3, 2018, the USTR published the proposed list of targeted Chinese imports, which covers approximately 1,300 separate tariff lines. As described by the Trump administration, the total value of imports subject to the tariff increase is commensurate with an economic analysis of the harm caused by China’s unreasonable technology transfer policies to the U.S. economy, as covered by USTR’s Section 301 investigation.
This type of “Section 301” action is rather unique under U.S. trade laws. The Peterson Institute for International Economics reports that since the enactment of the 1974 law, the U.S. government has conducted 122 investigations under Section 301 with the last formal investigation taking place in 2001. As Mr. Almond expressed to CGTN, prior administrations have acted within the “WTO framework” and the relying on Section 301 represented a “unique approach” by the Trump administration, similar to its reliance on rarely-used national security authority under Section 232(b) of the Trade Expansion Act of 1962 (19 U.S.C. 1862(b) to impose steel and aluminum tariffs. Mr. Almond discussed this issue in U.S.-China trade during a prior interview with CGTN.
In this most recent case, the proposed tariffs on Chinese imports are subject to a period of notice-and-comment, including a hearing on May 15, 2018, followed by the opportunity for post-hearing rebuttal comments. After completion of this process, USTR will issue a final determination on the products subject to the additional duties.
The Wicks Group has broad experience providing legal, regulatory and technical assistance services to commercial entities and government authorities throughout the world. This experience includes advising on issues of compliance with U.S. and international legal standards related to trade. For more information about TWG’s legal and consulting services, please contact Roncevert Almond at firstname.lastname@example.org.