The U.S. Trade Representative's Office filed a challenge with the World Trade Organization on March 23, charging that China's "unfair technology practices" violate WTO rules and discriminate against imported foreign technology.
In a March 23 news release, the USTR's office said it would pursue a dispute settlement process at the WTO, alleging that China utilizes "discriminatory technology licensing requirements." The move by the trade agency came a day after President Donald Trump signed an order to impose tariffs on $60 billion of Chinese imports.
"China appears to be breaking WTO rules by denying foreign patent holders, including U.S. companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends," the agency said in a news release. "These Chinese policies hurt innovators in the United States and worldwide by interfering with the ability of foreign technology holders to set market-based terms in licensing and other technology-related contracts."
U.S. Trade Representative Robert Lighthizer filed a consultation request with the WTO, which is the first step in the dispute settlement process. Should the U.S. and China not reach a settlement through consultations, the U.S. can then call for a dispute settlement panel at the WTO to take up the case. The consultation is the administration's third such request, which claims that China's fails to ensure patent rights for foreign companies and individuals.
The move was not unexpected. Trump's tariff memorandum on March 22 directed the trade agency to file the WTO case following the agency's monthslong Section 301 investigation that found China forces technology transfers from U.S. companies to Chinese companies among other "unfair" trading practices.
China hit back with its own proposed tariffs on U.S. exports on March 23, but reportedly stated they would be in retaliation for a separate set of tariffs that Trump is imposing on steel and aluminum imports to the U.S. Trump signed orders March 8 to impose a 25% tariff on global steel imports and a 10% tariff on aluminum imports. China's Ministry of Commerce said that it plans to impose a 15% tariff on up to $3 billion of U.S. imports, including 128 products across seven categories in retaliation for the U.S. steel and aluminum tariffs. Those measures, which could be done in two stages, will include U.S. exports of fresh fruit, wine, nut products, seamless steel pipes, pork and aluminum.
There has not been a direct official Chinese government response to the separate dispute over the proposed U.S. tariffs on up to $60 billion of Chinese imports. However, the editor-in-chief of the Chinese state-run Global Times tweeted on March 23 that China's retaliation against the Section 301 investigation will target U.S. products worth tens of billions of dollars.