US-China trade talks fall short on make-or-break IP issues

Bloomberg

Ever since negotiators from the US and China sat down in Beijing after a Christmas meltdown in global markets, President Donald Trump has sought to calm investors and claim his trade talks are making great strides. But that glosses over a more uncomfortable reality.
According to people close to the discussions, the two sides have so far made little progress on the issue any deal Trump strikes with China may ultimately be judged on: ending what the US has dubbed as decades of state-coordinated Chinese theft of American intellectual property.
That stands in contrast to movement on other fronts that has lifted stocks in recent sessions, including a Bloomberg report that China offered a path to reducing its trade surplus to zero by 2024. European stocks and US equity futures dipped, while Asian markets posted modest gains.
The next round of talks is scheduled for January 30-31, when Chinese leader Xi Jinping’s top economic emissary Liu He will visit Washington.
China’s alleged IP theft and its related practice of forcing foreign companies to hand over technology to gain access to its market formed a large part of the agenda for the three days of early-January talks.
Yet the discussions amounted more to an airing of grievances than constructive negotiations, according to participants and others briefed on the talks.
Deputy US Trade Representative Jeffrey Gerrish spent much of the time citing a US report used to justify the tariffs imposed on some $250 billion in Chinese goods.
Chinese officials responded by repeating longstanding denials of any wrongdoing and asked the US for proof.
The lack of progress in discussions on structural issues such as IP was confirmed by Robert Lighthizer, the US trade representative, in a meeting with lawmakers last week, according to congressional aides. His office declined to comment.
China’s Ministry of Commerce and the National Intellectual Property Administration didn’t respond to faxes seeking comment. While it’s unclear if the US made any new demands on IP during the latest round of talks, last year it called on China to eliminate specific policies and practices linked to technology transfer, cease government-sponsored cyber theft, strengthen IP enforcement and end government support for industries targeted in the Made in China 2025 plan.
China has publicly denied the US’s claims regarding IP theft and the forced transfer of technology. It insists that it has lived up to the commitments it made when it joined the World
Trade Organization in 2001, including by establishing special IP courts. The IP stalemate gets to the heart of Trump’s trade wars and questions over his ability to turn the leverage he’s created with tariffs into meaningful Chinese policy changes. It also points to the potential political fallout.
“Any trade deal worth making will clearly address China’s rampant IP theft and forced technology transfers, both for the good of the American economy and American workers, as well our national security,’’ said Senator Marco Rubio, a leading Republican proponent of taking a tough line on China.
Trump and his aides have themselves portrayed the protection of US IP as an existential one for the American economy. His administration has also begun a federal investigation into Huawei Technologies for allegedly stealing technology secrets from US companies.