Trump orders China IP probe as business groups urge caution
By Lesley Wroughton and Jeff Mason
WASHINGTON, Aug 14 (Reuters) - U.S. President Donald Trump on Monday authorized an inquiry into whether to investigate China's alleged theft of American intellectual property, declaring it "a very big move" while the country's largest business lobby group urged the two countries to resolve differences.
Trump broke from his 17-day vacation in New Jersey to return to Washington and sign a memorandum that instructs U.S. Trade Representative Robert Lighthizer to look into whether to investigate China's trade policies on intellectual property, which the White House says are harming U.S. businesses and jobs.
The inquiry, which U.S. administration officials say will take up to a year to complete, is likely to escalate tensions with Beijing at a time when Washington has asked for its help on North Korea.
"Ambassador Lighthizer, you are empowered to consider all available options at your disposal," Trump told reporters, flanked by Lighthizer and members of his economic team, including U.S. Treasury Secretary Steven Mnuchin. "It's a very big move," he added.
Analysts said the action was aimed at pressuring Beijing into a negotiated settlement to revise its practices.
China's policy of forcing foreign companies to turn over technology to Chinese joint venture partners and failure to crack down on intellectual property theft have been longstanding problems for several U.S. administrations.
The U.S. Chamber of Commerce, the largest business lobbying group in Washington, said U.S. companies must get equal access to the Chinese market, but said the two countries should be able to work out the issues.
"If the U.S.-China relationship is to deliver mutually beneficial growth, U.S. firms must enjoy the same broad, secure access to the Chinese market that Chinese firms already enjoy to the United States," Myron Brilliant, the chamber's executive vice president and head of international affairs, said in a statement.
"Equally important, China must end forced technology transfer and protect foreign-owned intellectual property rights within China," he said, "We urge the two governments to work together to resolve these concerns."
In a statement later, Lighthizer said the investigation would be a top priority for his office.
Although Trump constantly criticized China's trade practices on the campaign trail, his administration has not taken direct action against Beijing. It declined to name China a currency manipulator and has delayed broader national security probes into imports of foreign steel and aluminum that could indirectly affect China.
In an editorial on Monday, the state-run newspaper China Daily said the investigation will "poison" relations and warned the Trump administration not to make a rash decision it could regret.
The investigation could take up to a year, according to administration officials, opening the door to a settlement before a possible investigation is launched.
Matthew Goodman, a senior adviser for Asian economics at the Washington-based Center for Strategic and International Studies, said Beijing would likely resist negotiating under the threat of trade sanctions but could be amenable to a backdoor deal.
"I'm sure they will formally reject this if an investigation is launched and there is an implication this is going to require negotiation to resolve it," Goodman said. "But will they quietly be willing to talk about some of the underlying concerns?"
Jonathan Fenby, an analyst at the TS Lombard consultancy, said China was not interested in a short-term trade fix with the United States and will resist "attempts to tie it down."
Trump had been expected to seek a so-called Section 301 investigation earlier this month, but an announcement was postponed as the White House pressured for China's cooperation on North Korea.
Section 301 of the Trade Act of 1974, a popular trade tool in the 1980s that has been rarely used in the past decade, allows the president to unilaterally impose tariffs or other trade restrictions to protect U.S. industries from "unfair trade practices" of foreign countries. (Additional reporting by Ginger Gibson and David Lawder; Editing by Leslie Adler)