The United States launched a challenge at the World Trade Organization against China over intellectual property breaches, a statement said.
“The United States is taking action at the World Trade Organization (WTO) to address China’s unfair technology practices that run counter to WTO rules,” the statement from the US Trade Representative’s office said.
US President Donald Trump on Thursday hit China with tariffs on up to USD 60 billion of imports to retaliate against the “theft” of American intellectual property, ratcheting up trade tensions between the world’s two largest economies.
Trump also announced he was directing the USTR to pursue dispute settlement in the WTO to confront China over its policies that result in unfair treatment for US companies and innovators trying to do business in China.
“China appears to be breaking WTO rules by denying foreign patent holders, including US companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends,” said the USTR in its statement.
It said China also appears to be breaking WTO rules by imposing contract terms that discriminate against and are less favourable for imported foreign technology.
“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,” said the USTR.
China warned the United States on Friday that it was “not afraid of a trade war” as it threatened tariffs on $3 billion worth of US goods in retaliation over the US measures.
The World Trade Organization is not only a forum for nations to negotiate trade deals, but it is also acts as a court to resolve trade disputes.
However Trump’s protectionist administration has levelled hostile rhetoric towards the WTO, and has nearly crippled its dispute resolution mechanism be blocking appointment of new judges.