The US-China Business Council (USCSBC) represents 200 American companies engaged in business across all industries and sectors in China, employing millions of American across the United States. Protecting intellectual property and market-based decisions on technology transfer are to priorities of USCBC's membership. We appreciate the Office of the US Trade Representative's focus on these important issues to reach the ultimate goal of eliminating policies that harm US companies. The requirement to transfer technology as a condition to gain market access in China is an acute concern of American companies in key sectors, who often must make difficult choices about managing the tradeoff of technology sharing and access to the world's second largest economy. The protection of intellectual property rights, a broad term that encompasses patents, trade secrets, trademarks, and copyrights, is also critically important. Addressing these issues with effective measures will positively contribute to building a stronger and more durable commercial relationship between the United States and China.
As we look to address the issues, we should keep the overall bilateral commercial relationship in perspective: while there are numerous challenges that companies face, US trade and investments with China supports roughly 2.6 million American jobs, across many industries. China is expected to continue to be one of the world's fastest, if not the fastest, growing major economies, fueling more market opportunities for US businesses. According to research by Oxford Economics, US exports to China are expected to rise to more than $520 billion by 2030. Given those important benefits, the United States should seek to preserve the gains we have made for American companies in China while addressing the problems that remain.
USTR's August 24, 2017 Federal Register notice cited four specific areas in which Chinese policies may result in US and other foreign technology and IP being transferred unwillingly to China. USCBC's submission includes recommendations of how problems identified in each area could be effectively addressed.
While section 301 provides a variety of options that the United States may use when it finds that trading partners' policies are unreasonable or discriminatory, the ultimate goal of the US statue - and the goal of US companies who face discrimination - is the elimination of those policies. Eliminating those policies would allow greater access to what is currently at least a $400 billion market for the US economy, but should be much more. Rather than simply seeking to impose penalties or restrict trade, which could have the effect of inhibiting commercial cooperation that benefits US companies and US citizens, the preferred approach should be to develop and achieve enduring solutions -- changes to Chinese policies and practices that resolve the issues. Any related trade actions taken by the United States should be compliant with US international trading obligations, able to withstand a challenge at the World Trade Organizations, and address the concerns of American companies about the protection of their intellectual property and technology. Such an approach should prioritize bilateral or multilateral agreements with enforcement option tailored to deal with specific concerns, to ensure that progress made in these areas can be effectively locked in. If existing agreements do not cover all of the United States' concerns, new agreements should be negotiated to do so.
Read the full letter here.