Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Tensions between the US and China continue to simmer amid reports that the two sides clashed at the World Trade Organisation (WTO) on Monday. The dispute related to US claims that China forces foreign companies to share intellectual property if they wish to do business in the country. The issue – known as ‘forced technology transfer’ – was on the agenda at a WTO dispute settlement session yesterday.
The US Ambassador to the WTO, Dennis Shea, said that forced technology transfer is an “unwritten rule” for companies wanting to do business in China, especially when they partner with a state-owned or state-directed Chinese company, The South China Morning Post reports.
China rejected the claim, asserting that there are no regulatory measures in place which require a technology transfer from foreign companies. Reuters quotes the Chinese Ambassador to the WTO, Zhang Xiangchen, as saying that the US Trade Representative’s office (USTR) had not produced a single piece of evidence, and its claims were pure speculation.
The dispute over technology transfers has led the US to threaten US $150 billion worth of tariffs, which China is attempting to stop through WTO action. According to legal experts, Washington requires WTO backing to implement the threatened tariffs, as far as they relate to WTO rules.
The US initially launched a complaint with the WTO on the issue on 23 March 2018. If after 60 days the dispute is not resolved, the complainant can request a panel of experts to adjudicate the issue. This then initiates a legal case which can take up to several years to complete, reports the Business Times. The US could have taken this step on Monday, but did not.
Given the high-level bilateral discussions already taking place on the issue, the US is likely to refrain from escalating the dispute at the WTO until the high-level discussions are no longer productive.
The US and China appeared to edge away from a trade war after both sides agreed to delay tariffs. However, fundamental disagreement over key issues remain. Last week President Trump cryptically tweeted that the trade deal with China “is moving along nicely” but will “have to use a different structure” to allow the US to “verify results after completion.”
