AUDIE CORNISH, HOST:
By some estimates, U.S. companies lose as much as $300 billion a year to China because of the theft of intellectual property. Today President Trump formally asked the U.S. trade representative to look into the problem, and NPR's Jim Zarroli reports that investigation could eventually lead to trade sanctions against China.
JIM ZARROLI, BYLINE: President Trump said intellectual property theft costs the United States millions of jobs each year. That includes the forced transfer of valuable technology from U.S. companies as a condition of access to China's markets. Trump said, for too long, wealth has been drained from our country while Washington turned a blind eye.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: We will safeguard the copyrights, patents, trademarks, trade secrets and other intellectual property that is so vital to our security and to our prosperity.
ZARROLI: The steps announced by the White House today are very preliminary. U.S. trade representative Robert Lighthizer will essentially look into the issue, and depending on what he finds, the administration could initiate what's called a Section 301 investigation, a rarely used mechanism from the 1974 Trade Act. That would eventually allow the U.S. government to impose tariffs on China, and it could do so unilaterally without having to go through the World Trade Organization. Matt Gold is a former deputy assistant U.S. trade representative.
MATT GOLD: It saves time. The WTO case - it would take a few years for us to bring it to a WTO panel, get a decision. Then it will get appealed to the WTO appellate body. Then we get another decision.
ZARROLI: The president's move was applauded by technology groups who have long complained about IP theft. The Information Technology and Innovation Foundation issued a statement saying, for too long, China has flouted the spirit, if not always the letter, of its commitments under the WTO and other agreements.
Democratic Senator Sherrod Brown of Ohio said launching the investigation sends a strong signal to China that it will be held accountable if it doesn't work with the U.S. to level the playing field. But he said the Trump administration needs to go further to address the dumping of products such as steel.
SHERROD BROWN: We need to follow through with meaningful action. And that means the president needs to get serious about trade enforcement, especially on steel.
ZARROLI: But there are risks to what the White House is embarking on. Trade disputes are typically arbitrated by the WTO, and acting unilaterally could backfire. Caroline Freund, senior fellow at the Peterson Institute for International Economics, says U.S. companies that try to do business with China could get hurt in several ways.
CAROLINE FREUND: One, China is likely to retaliate with tariffs of their own on U.S. goods, and then U.S. companies will be further hurt in China. It won't lead to anything positive.
ZARROLI: But Freund also points out that for all of Trump's rhetoric on the campaign trail, the White House has so far been slow to take action against unfair trade practices. Trump backed off of labeling China a currency manipulator, for instance, and a long-promised report on steel dumping has been delayed.
FREUND: The administration embarks on something. They think it's going to be simple. Let's just impose tariffs on steel. But then it turns out to be a lot more complicated because of the way the economy is so intertwined.
ZARROLI: It's one thing to talk about steel tariffs, for example, Freund says, but imposing them hurts other U.S. manufacturers such as automakers and appliance companies. President Trump has asked for an investigation into intellectual property theft, but any action to stop it still seems a long way off. Jim Zarroli, NPR News, New York.
(SOUNDBITE OF SAN FERMIN SONG, "BRIDE")
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.