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New Legislation Would Impose Punitive Duties on Mainland China for IPR Violations

Rep. Steve King (Republican-Iowa) introduced legislation on 14 February directing the president to impose duties on imports from mainland China for violations of U.S. intellectual property rights. The duties would be equivalent to the estimated annual loss of revenue to holders of U.S. IPR as a result of violations of such IPR in the mainland and would be disbursed to U.S. IPR holders on a proportional basis. While this bill does not currently have any co-sponsors in the House, it is an example of the types of measures the Trump administration and certain lawmakers could pursue against Beijing for allegedly engaging in unfair trade or otherwise failing to play by the rules of international trade.

Rep. King claims in a press release that mainland China is responsible for 50 to 80 percent of intellectual property theft on a global basis, with an estimated annual loss of over US$300 billion to the U.S. economy alone. The legislation would require the Office of the U.S. Trade Representative to conduct an annual study to determine such losses and submit that report to Congress within 120 days from the date of enactment of the bill and annually thereafter. Rep. King believes his legislation would allow for better protection of intellectual property and encourage significantly more research, development investment and economic growth.

While the administration has not issued any specific proposals regarding trade with mainland China, the president has vowed to pursue strong enforcement against the mainland including by potentially imposing uni-lateral import duties as high as 45 percent. There are a number of mechanisms already available under U.S. law that would allow President Trump to impose new tariffs on goods from mainland China and other sources, although any punitive tariffs or quotas would likely be challenged at the World Trade Organisation and/or met with retaliatory action. The administration could also use more conventional tactics to step up enforcement on mainland Chinese products, such as by self-initiating antidumping and countervailing duty investigations on specific goods, requiring the U.S. Department of Commerce to treat manipulated exchange rates as export subsidies in CV duty proceedings, and taking full advantage of the additional enforcement tools afforded by the Trade Facilitation and Trade Enforcement Act of 2015.

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