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Trump, China, and IP

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My latest two columns at the Diplomat have looked at the IP angle of the Glorious, Easy, Winnable Trade War Against My Friend Xi Jinping. First, on the IP issues more generally:

The Trump administration has decided to apply aggressive tariffs on China, in large part in response to concerns about Chinese intellectual property theft. The tariffs have both an economic and a national security purpose. On the former, Trump hopes that protectionist measures will help close the large trade gap between the United States and China. The tariff also has a coercive purpose; it demonstrates to China, and to the rest of the world, that Trump is willing to throw around American economic power for the purposes of trade statecraft.

On the national security side, the express purpose of the tariff involves retaliation for Chinese intellectual property practices. These practices include espionage directed at U.S. (and European) IP, lax enforcement of IP standards domestically, and also forced technology transfer from U.S. firms operating in China. These concerns involve both economic statecraft (preventing China from obtaining on unfair advantage in particular strategic industries) and defense statecraft (punishing China for the illicit acquisition of U.S. defense technologies).

And then on the security aspects specifically:

DiUX report may have helped enable the Trump administration to pursue harsh trade measures against China. According to Patrick Tucker of Defense One, the report was influential in the Trump administration’s decision to implement trade sanctions against China. The Pentagon fears that the PRC is using improper means to acquire U.S. technology and close the military and economic gaps between China and the United States.

Measures of technology acquisition discussed in the paper included industrial espionage, forced technology transfer in joint ventures, acquisitions of U.S. firms, and venture capital investment. The last has the added incentive of making technology startups unable to work with the U.S. Department of Defense. As the report notes, “export controls are effective at deterring exports of products to undesirable countries and can be used to prevent the loss of advanced technologies but controls were not designed to govern early-stage technologies or investment activity.”

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