- US President Donald Trump’s proposed steel tariffs have caused China to warn of trade wars and potential damage to the US economy, but steel tariffs are nothing compared with the coming fight over intellectual property theft.
- Two former senior Defence Department officials said Chinese intellectual property theft cost the US as much as $US600 billion a year, calling it possibly the “greatest transfer of wealth in history.”
- But with Trump angering the international community in pursuing protectionist practices like tariffs, experts question how he will rally sufficient support against intellectual property theft.
President Donald Trump hinted on Wednesday at what experts predict will become the major economic and diplomatic clash between the US and China – and it will make steel and aluminium tariffs look like small potatoes.
After tweeting that he had asked China to come up with plans to reduce the US trade deficit, Trump brought up the separate but even more important issue of intellectual property theft.
“The U.S. is acting swiftly on Intellectual Property theft. We cannot allow this to happen as it has for many years!” Trump tweeted.
Trump asked China to cut the trade deficit by $US1 billion, but two retired senior Department of Defence officials wrote in The New York Times last fall that Chinese intellectual property theft cost the US as much as $US600 billion a year, calling it “the greatest transfer of wealth in history.”
Steel is small potatoes
While China has cautioned against Trump’s announced aluminium and steel tariffs, warning they could spark a trade war that would harm the US above all, the tariffs on metals wouldn’t really hurt Chinese businesses, as China exports just 1.1% of its steel to the US.
During a National Committee on US-China Relations call, Jeffrey Bader, a former US ambassador who has spent decades focused on US-China relations, said “China’s already under something like 150 anti-dumping and countervailing duty rulings affecting much of the steel industry.”
And while the US does make steel, in recent decades the US has created immeasurably more wealth from innovations that hinge on intellectual property being respected.
“This is the PSATs compared to the SATs coming up,” Bader said of Trump’s push for tariffs, adding that confronting Chinese intellectual property theft was “the big game.”
Intellectual property theft is not straightforward to prove, but a recent example includes accusations by the FBI in 2014 that Chinese hackers had stolen sensitive intelligence on 32 military projects, including the new F-35 stealth fighter jet.
But in Bader’s view, the US may have already squandered its shot at the “big game.”
The ‘big game’ is coming, but Trump may have already blown it
“It would be better to try to maintain some semblance of international solidarity with the Japanese and the EU and others,” Bader said. Instead, the US appears ready to go ahead with tariffs and protectionist practices that already have key US allies and partners seeking help from the World Trade Organisation and threatening trade wars.
Most countries would benefit, on the other hand, from stronger protections against Chinese intellectual property theft. But Trump appears to have divided the world by pursuing the tariffs first.
Privately, US industry figures have long reported Chinese nationals photographing competitive technology. US workers operating in China have been known to abandon their phones and electronic devices and take a walk while discussing important business decisions.
A US Trade Representative report accused China of engaging in “trade secret theft, rampant online piracy and counterfeiting, and high levels of physical pirated and counterfeit exports to markets around the globe.”
“Having reversed the sequence” by imposing tariffs first, Bader said, “it’s hard to see how there will be much international support” for the US’s coming campaign against Chinese intellectual property theft.
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