US launches trade case against China over licensing practices

The United States on Friday officially launched a trade complaint at the World Trade Organization (WTO) over China’s allegedly discriminatory technology licensing practices.

The U.S. trade representative (USTR) filed a request for consultations with China at the WTO to address Beijing over what the Trump administration argues are a slew of unfair technology practices.

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The U.S. complaint said that China “appears to be breaking WTO rules by denying foreign patent holders, including U.S. companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends.”

China also appears to be breaking WTO rules by imposing conditions that don’t allow U.S. firms the ability to protect their intellectual property.

On Thursday, President Trump announced plans for new tariffs on up to $60 billion in Chinese imports to curb what he described as its efforts to steal intellectual property from U.S. companies trying to do business there. 

The president signed a memorandum directing the USTR and the Treasury Department to launch a broad range of trade actions against China.

During an event at the White House, the president called China a “friend” but demanded the world’s second-largest economy change their trade practices that hurt the United States.

The memorandum signed by Trump is a result of an investigation spurred by Section 301 of the Trade Act of 1974. Launched in August, the probe found that China’s theft of U.S. intellectual property is costing the U.S. economy billions of dollars, allowing the president to act under that law.

“These Chinese policies hurt innovators in the United States and worldwide by interfering with the ability of foreign technology holders to set market-based terms in licensing and other technology-related contracts,” USTR said in a statement. 

Consultations are the first step in the WTO dispute settlement process.

If the United States and China can’t reach a solution then the United States may request the establishment of a WTO dispute settlement panel to review the matter.

Beijing has already said it is considering raising tariffs on $3 billion worth of U.S. exports ranging from steel to pork after U.S. steel and aluminum tariffs went into effect on Friday.