Key Republican senator points to Chinese IP theft as holding up trade deal

Key Republican senator points to Chinese IP theft as holding up trade deal
© Greg Nash

Sen. Jim RischJames (Jim) Elroy RischHillicon Valley: FTC rules Cambridge Analytica engaged in 'deceptive practices' | NATO researchers warn social media failing to remove fake accounts | Sanders calls for breaking up Comcast, Verizon Bipartisan senators call on FERC to protect against Huawei threats Senate panel to vote on Turkey sanctions next week MORE (R-Idaho) on Tuesday pointed to worries about Chinese theft of U.S. intellectual property (IP) as the major issue holding up a U.S.-China trade deal, while also highlighting concerns around U.S. and European use of technology from Chinese telecommunications group Huawei.  

“What’s holding up trade right now in my judgement is not so much the numbers and the tariffs that are put on, but China has got to develop a rule of law when it comes to handling intellectual property,” Risch, who serves as the chairman of the Senate Foreign Relations Committee, said during an event at the Center for Strategic and International Studies (CSIS). 

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Risch noted that in order to move forward on a trade deal between the two countries, China must “embrace international norms” in regards to IP and not be a “rogue nation that just takes what it wants.” 

“If they went and tried to take the Mona Lisa out of France, people would be up in arms, but when they come here and take microchip technology, it doesn’t have the same appeal, but it needs to have the same appeal, because modern business, modern industry, modern going forward really relies on technology, so IP is extremely important,” Risch said. 

Chinese theft of IP has been an ongoing issue, and one that bipartisan members of Congress and 2020 Democratic presidential candidates have zeroed in on in recent months. According to the findings of a 2018 investigation by the Office of the U.S. Trade Representative, Chinese intellectual property theft costs the U.S. between $225 billion and $600 billion annually. 

Risch’s comments were made the same day that President TrumpDonald John TrumpTrump says he will 'temporarily hold off' on declaring Mexican drug cartels as terror organization House Judiciary Committee formally receives impeachment report Artist behind gold toilet offered to Trump sells banana duct-taped to a wall for 0,000 MORE announced that the U.S. and China are “close” to sealing a “phase one trade deal.” 

The countries were meant to finalize the phase one trade deal during a summit in Chile this weekend, but the gathering was canceled due to unrest.

“We’re the ones that are deciding whether or not we want to make a deal,” Trump said at the Economic Club of New York. “We’re close. A significant phase one trade deal with China could happen. Could happen soon. But we will only accept a deal if it’s good for the United States and our great companies.”

A key issue in the technology and trade space between China and the U.S. is the use of equipment from Huawei. The Commerce Department added Huawei to its “entity list” in May citing national security concerns, with U.S. companies banned from doing business with groups on the list. 

The agency subsequently issued a temporary license running through Nov. 19 to allow business with Huawei to allow for U.S. companies to adjust to the ban. Trump also said in June that U.S. companies would be allowed to sell products to Huawei in cases that did not involve national security.

There has been bipartisan pushback against the company on Capitol Hill, and efforts by the Trump administration to encourage ally countries in Europe to not allow Huawei to be involved in the rollout of 5G technology. 

Risch strongly opposed doing business with Huawei during his speech on Tuesday, and warned that intelligence sharing operations with other countries in the North Atlantic Treaty Organization (NATO) could be “negatively compromised and impacted” if those countries choose to use Huawei equipment in building their 5G networks. 

“We do not gain by putting economic engagement with China ahead of our political principles and values,” Risch said.