Beijing warns Washington as U.S. launches probe of China's IP practices

After US Trade Representative (USTR) Robert Lighthizer formally initiated an investigation into China's intellectual property practices under Section 301 of the Trade Act of 1974, Chinese Ministry of Commerce has warned United States, saying that "Beijing will take all appropriate measures to safeguard its legitimate rights and interests".

"The investigation will seek to determine whether acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict US commerce," the USTR's Office said in a statement.

Chinese Ministry of Commerece has warned that if the US side fails to respect basic facts and multilateral trade rules, and takes measures that harm bilateral economic and trade relations, "China will definitely not sit by, but take all appropriate measures to resolutely safeguard its legitimate rights and interests,"

"The United States should treasure the current sound Sino-US economic and trade ties and cooperation momentum. Any US trade protectionism move will surely damage bilateral ties and the interests of companies from both countries," Global Times quoted China's Ministry of Commerce statement.

Section 301, once heavily used in the 1980s and the early 1990s, allows the U.S. president to unilaterally impose tariffs or other trade restrictions against foreign countries, thus it has the potential to damage U.S.-China ties. But the United States has rarely used the trade tool since the WTO came into being in 1995.

China has urged the United States to objectively evaluate China's progress in protection of intellectual property rights (IPR) and resolve the differences with China through dialogue and consultation.

"The United States should treasure the current sound Sino-US economic and trade ties and cooperation momentum. Any US trade protectionism move will surely damage bilateral ties and the interests of companies from both countries," Global Times quoted China's Ministry of Commerce statement.

The move comes after President Donald Trump on Monday signed an executive memorandum directing Lighthizer to consider the possible initiation of an investigation.

"It became no longer necessary really for the United States that they have to use that law, because now we have an effective dispute settlement system under the WTO," Chad Bown, a senior fellow at the Washington-D.C. based Peterson Institute for International Economics (PIIE)said.

Meanwhile, "the legal timeline of the process under Section 301" doesn't work well with the rules of the WTO, said Bown, who previously worked as a senior economist in the White House Council of Economic Advisers and the World Bank.

Jeffrey Schott, another trade expert and senior fellow at the PIIE, told Xinhua that the purpose of the investigation is "to find out what the facts are and to use the process of investigation to expand bilateral consultations with China" so that there is a better understanding of each country's practices.