The White House: Update Concerning China”s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property and Innovation

On August 14, 2017, the President instructed the U.S. Trade Representative to determine under Section 301 of the Trade Act of 1974¹ whether to investigate China’s laws, policies, practices, or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development.² On August 18, 2017, the Office of the U.S. Trade Representative (USTR) initiated a Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.³ On the date of initiation, USTR requested consultations with the Government of China concerning the issues under investigation.⁴ Instead of accepting the request, China’s Ministry of Commerce expressed “strong dissatisfaction” with the United States and decried the investigation as “irresponsible” and “not objective.”⁵

On March 22, 2018, USTR issued the Findings of the Investigation into China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation under Section 301 of the Trade Act of 1974 (the “Section 301 Report”).⁶ Based on this report, USTR determined the following Chinese actions are unreasonable or discriminatory and burden or restrict U.S. commerce:

1. China uses foreign ownership restrictions, such as joint venture (JV) requirements and foreign equity limitations, and various administrative review and licensing processes, to require or pressure technology transfer from U.S. companies.
2. China’s regime of technology regulations forces U.S. companies seeking to licensetechnologies to Chinese entities to do so on non-market based terms that favor Chinese recipients.
3. China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate the transfer of technology to Chinese companies.
4. China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies to access their sensitive commercial information and trade secrets.⁷

Download the full report here.