The US Investigation into China Has Begun

Only a few days after Trump directed U.S. Trade Representative Robert Lighthizer to examine China’s trade policies and the potential damage they may have against United States intellectual property, he has come back with a definitive ‘yes’ and launched an official investigation.

This move is also notable for not working through the World Trade Organization first to address these complaints, but through domestic legislation, specifically Section 301 of the Trade Act of 1974. China has complained that the United States has decided to take this approach, although it remains consistent with WTO rules.

Problems with China surrounding intellectual property and counterfeits have long been known, accounting for 87% of all counterfeit goods seized at the U.S. border. In 2016 the OECD found the United States as the nation hit hardest by fake goods worldwide, and China as the number one originator for 84.5% of all imported counterfeits in the world, valued at $390 billion.

Merely days after the investigation began, China already appears to be responding to these moves by promising new enforcement measures against trademark registration abuse and theft of trade secrets by the end of September. 

Issues with fraud and counterfeits fall properly in the role of government to defend the rights of its citizens. If consumers are allowed to be defrauded, the entire market system is undermined, ultimately harming inventors, entrepreneurs, and the competitive system.  The United States and China must work towards improving their defense of property rights and upholding the market system. Enforcement of IP protections is a win-win for all countries.