China IP and the New Trade Agenda

Tradeagenndawordcloud

Last week, the Trump administration announced its Trade Policy Agenda, to criticism and support.  As the above word cloud suggests, the focus is on US interests, US sovereignty and the US relationship with the WTO, although China (highlighted in yellow above) is certainly also called out.

The policy singles out IP and China in the following ways:

  1. It makes a key objective of the administration’s trade agenda “ensuring that U.S. owners of intellectual property (IP) have a full and fair opportunity to use and profit from their IP.”  The focus on use of IP, a theme of this blog, is welcome.
  2. It continues to focus on “theft of intellectual property” including “unfair competitive behavior by state-owned enterprises…”. Theft of IP has been a theme of the Trump campaign and of an early administration executive order.
  3. It points to China as a cause for much of the US economy’s malaise, noting that “while the current global trading system has been great for China, since the turn of the century it has not generated the same results for the United States.” The report also notes that “a review of what has happened since 2000 – the last full year before China joined the WTO – shows a period of slowed GDP growth, weak employment growth, and sharp net loss of manufacturing employment in the United States. Many factors contribute to this, notably the financial crisis of 2008-2009 and the broad impact of automation.  But the trade data are striking. “
  4. The four priorities of the new trade agenda are US-focused. These include: “ (1) defend U.S. national sovereignty over trade policy; (2) strictly enforce U.S. trade laws; (3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property rights; and (4) negotiate new and better trade deals with countries in key markets around the world.”

The theme of IP theft is also found in the revised report of the Commission on the Theft of Intellectual Property (Feb. 27, 2017) coauthored by the former Director of National Intelligence, Dennis Blair and former Ambassador to China, Jon Huntsman, Jr.  The report notes that “there exists broad bipartisan support for addressing IP theft and safeguarding the competitive advantages of U.S. firms, entrepreneurs, and workers. “  The report further reiterates several prior recommendations, noting that “China, whose industrial output now exceeds that of the United States, remains the world’s principal IP infringer. China is deeply committed to industrial policies that include maximizing the acquisition of foreign technology and information, policies that have contributed to greater IP theft. IP theft by thousands of Chinese actors continues to be rampant, and the United States constantly buys its own and other states’ inventions from Chinese infringers. “

Note that this blog was cited and this author participated in meetings involving the original 2013 report.

2 thoughts on “China IP and the New Trade Agenda

  1. Complaints about Chinese IP theft make a pretty thin beef, as my detective friend used to say. 90% of China’s IP is open source or indigenous, 9% purchased (including $11.4 billion for HSR IP) and 1% filched. Probably the best IP record of any developed country anywhere, ever.

  2. chinaipr2 says:

    Thanks for your comments Godfree. It think it is very hard to calculate the sources of technology, including IP-protected technology in any country for the full range of goods and services in produces. In terms of freedom of contract for licensing, China ranks pretty low on some of the scales (the US Chamber just did a report, and the Global Innovation Index ranked China fairly low too). China is the world’s leading manufacturer of high tech goods yet it only accounts for about five percent of global licensing receipts by the US. This is an inexact comparison, but it does suggest a shortfall in licensing revenues for US companies. Of course, open source is hardly an environment free of licensing restrictions. The fact that open source is generally free of charge, doesn’t mean its free of obligations. Many companies complain in a variety of open source fields that China doesn’t contribute back to the OS community any improvements it makes – and in fact, the obligation not to contribute back is codified in China’s Technology Import/Export Regulations, which mandate that the Chinese licensee owns any improvements in licensed technology from foreigners – without reference to whether the technology is paid for or not. I believe that China’s principle OS contribution to date has been in the development of the human genome project. Obviously, IP is not only about high tech and in certain sectors OS may not be the principal means of creating new innovations. Moreover, China is also a major collaborator with the US as a major partner on many joint inventions and scientific publications. I find it hard to think of any technology as purely indigenous – China has benefited enormously from globalized commodity markets, and I believe it is also benefitting form the free flow of technology to its borders, and hopefully will continue to collaborate and contribute back – we all need that collaborative approach. Thanks again for contributing. Mark

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s