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Trade agency: China forces intellectual property transfer; tariff decision looms

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Trade agency: China forces intellectual property transfer; tariff decision looms

A U.S. trade official reiterated long-standing charges that China forces U.S. companies to share intellectual property, perhaps signaling the Trump administration's official findings justifying the reported imposition of up to $60 billion in tariffs on Chinese imports.

The official, who is with the Office of the U.S. Trade Representative, or USTR, and spoke with reporters on background, declined to answer any questions regarding the scope of tariffs that may be imposed on China, but did say they are a legal option as a result of the Section 301 investigation, which he added is nearing its end.

The official said the administration recognizes the "gravity" of the situation and is considering the possibility of Chinese retaliation for the actions it takes when the investigation is completed.

"This has not been done quickly, and we've certainly given a great deal of thought as to what they might do, how they might react and what their potential reaction could mean for us," the official said.

Axios reported March 21 that President Donald Trump is ready to announce on March 22 up to $50 billion in tariffs on Chinese imports in order to crack down on the alleged intellectual property violations and, in part, to reduce the $375.2 billion goods trade deficit the U.S. has with the trading partner.

That came after U.S. Trade Representative Robert Lighthizer told members of the House Ways and Means Committee earlier on March 21 that Trump will make a decision on Chinese imports in the "very near future," adding that his office will use an "algorithm" to calculate the proper remedy.

Chinese state-run media outlet Global Times reported March 19 that Beijing was ready to hit back against any tariffs with its own $10 billion duty on U.S. soybean exports.

The Section 301 investigation, launched in August 2017, focused on four types of allegations according to the official, including China putting pressure on U.S. entities to enter into joint ventures and then requiring a transfer of their technology to Chinese companies. The other allegations regarded claims that U.S. companies did not have the same ability to license intellectual property in China as a Chinese company would and that China was using state funds in order to purchase intellectual property in the U.S., as well as concerns that China was involved in intruding into U.S. commercial networks for commercial gain.

The trade agency official said the investigation has found evidence to support the four allegations, which backs up a January 19 USTR report to Congress citing Chinese technology transfer requirements for American companies doing business in the country.

"These are all very deeply, deeply concerning to the administration," the official said. "They raise very severe questions about China."

Although the USTR's office has taken the lead on the investigation, the official said it has been a "robust" interagency process that has included departments such as Treasury, Commerce, State, Defense and Agriculture, as well as the National Security Council and National Economic Council.

Trump has the final say on how to respond against China, the official said, adding that the agency has "very strong evidence" that the Asian nation has committed unfair trading practices and has not followed through on its World Trade Organization commitments since joining the organization in 2001.

The tariffs, ranging from $30 billion to $60 billion annually in various media reports leading up the official's comments, have already sparked an outcry and concern from various industries, including consumer electronics, footwear and apparel producers, which could be targets. In a letter to Trump, companies including Walmart Inc. and Target Corp. warned that any tariffs on China would lead to higher prices on consumer products, which are largely made in China and imported to the U.S.