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US Takes Aim at China in WTO, Escalating Stakes of Trade War

The U.S. asked the World Trade Organization to investigate possible violations related to China’s intellectual property policies, a point of contention for President Donald Trump that’s served to justify his ongoing trade war.

The move escalates the conflict between the world’s two largest economies and sets the stage for the Geneva-based trade organization, which itself has been a target of Trump’s ire, to decide if China’s policies are illegal. The U.S. has already imposed tariffs on $250 billion worth of Chinese products and has threatened duties that would more than cover all imports.

The U.S. complaint says that various Chinese regulations violate the terms of the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights, which sets international norms for such policies. The WTO dispute settlement body will consider the U.S. request at its Oct. 29 meeting in Geneva.

China “appears to be breaking WTO rules by denying foreign patent holders, including U.S. companies, basic patent rights to stop a Chinese entity from using the technology after a licensing contract ends,” according to the U.S. complaint. “China also appears to be breaking WTO rules by imposing mandatory adverse contract terms that discriminate against and are less favorable for imported foreign technology.”

WTO rules prohibit its members from providing less favorable treatment to foreign entities than the comparable treatment of domestic entities. A request for the establishment of a WTO dispute panel marks the second step in dispute proceedings.

Under WTO rules China can block the initial request for the establishment of a WTO dispute panel but cannot do so a second time, which means the WTO inquiry could begin as soon as next month.