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Issue #589

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US urges EU to join forces on China IP rights

By: | at 08:00 PM | International Trade  

The United States urged European states to join forces with Washington in pressuring China to change its policies on intellectual property rights and foreign investment.

U.S. Under Secretary of State for Economic Affairs Robert Hormats said U.S. and European Union leaders should make clear to Beijing jointly at the highest level that they will retaliate if China continues to engage in such unfair trade practices.

“China is the biggest violator of intellectual property rights,” Hormats told a Paris think-tank.

“It is not protectionism, when global rules are violated, to respond to those violations in kind,” he told the French Institute for International Relations.

He cited China’s practice of making public procurement from foreign companies conditional on those firms transferring their technology to Chinese companies before they are allowed to sell to government entities.

Another tactic was to make foreign companies seeking to do business in China submit their technology to testing for Chinese technical standards, only to see copy-cat products produced by Chinese firms appear on the market six months later.

“Our core interest, and I believe the French core interests are that people who invest in technologies in our countries are entitled to the benefits of that investment,” Hormats said.

He did not specify what retaliatory action Western countries should take but said it was imperative that the United States and Europe took a firm stance together at the top levels of government.

“I think we have got to be much tougher on this issue and use what laws and practices we have,” he said. “It’s not ganging up on China.”

Beijing says it is working to strengthen intellectual property enforcement and has promised to sign a World Trade Organisation protocol on this but some of what Western companies call technology theft is in fact indigenous innovation.

Hormats acknowledged that China was developing its own technology and patents, and copying was not the main driver of its export growth, forecasting that China would be exporting indigenous cars and medium-range aircraft to world markets very soon. (Reuters)