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Treasury Notes

 Engaging China on Fair Innovation Policies

By: Holly Shulman

At the World Economic Forum’s Annual Meeting of the New Champions in Dalian earlier this month, Chinese Premier Li highlighted the importance of innovation as part of China’s reform moving forward.  Innovation, including providing non-discriminatory treatment for Intellectual Property Rights (IPR), was one of the many key issues that were discussed at the U.S.- China Strategic and Economic Dialogue (S&ED).  

Under the umbrella of the U.S.-China Strategic and Economic Dialogue (S&ED), the United States and China held the fourth round of the U.S.-China Innovation Dialogue (ID) on July 9th, co-chaired by Dr. John P. Holdren, Assistant to the President for Science and Technology and Director of the White House Office of Science & Technology Policy and Minister Wan Gang of China’s Ministry of Science and Technology (MOST).  At the ID, the two nations reaffirmed their 2012 commitment to treat  IPR-owned or developed in foreign countries the same as domestically-owned or developed IPR.  In addition, the two sides committed to study China’s High and New Technology Enterprise-related IP policies, and to China revising them to the extent necessary.  China and the United States also welcomed cooperation in the patent area to support their countries’ efforts to foster innovation.

The ID, which includes government, industry, and academic experts from both the United States and China, was held in Washington, D.C., a day prior to the S&ED – where Dr. Holdren and Minister Wan reported on the progress from the meeting to the S&ED Economic Track and to the Strategic Track Plenary.  U.S. Government representatives at the dialogue included senior officials from the Departments of State, Treasury, Agriculture, Commerce, and Energy; the Office of the U.S. Trade Representative; the Food and Drug Administration; the Trade and Development Agency; and the Patent and Trademark Office, as well as representatives from the President’s Council of Advisors on Science & Technology (PCAST). Participating Chinese officials included high-level representatives from MOST; the National Development and Reform Commission; and the Ministries of Foreign Affairs, Finance, Industry and Information Technology, and Commerce, as well as the State-owned Assets Supervision and Administration Commission of the State Council; the State Intellectual Property Office; and the China Food and Drug Administration. 

The meeting provided an opportunity for the two nations to discuss differences in government innovation policies and companies’ practices and the appropriate role of government in promoting innovation.  Discussion among the participants focused on the importance of robust intellectual property protection and enforcement, and their commitment to ensure that their innovation policies do not treat domestic- and foreign-owned or -developed IPR differently.  China committed to study the IP related policies in a tax incentive program called HNTE (“High and New Technology Enterprises”) and to revise them to the extent necessary.  The United States explained its view that this program requires parties that own their IPR outside China, who tend to be foreign-owned companies, to license it to parties in China on onerous terms, whereas parties that own IPR in China, who tend to be Chinese-owned, are free to license their IPR to anyone.

The discussion at the ID is part of the broader discussion of intellectual property rights-related issues between the United States and China and an important part of the S&ED. The most recent S&ED took place in July, when Treasury held economic discussions with the Chinese delegation that led to significant progress. To learn more about previous S&EDs visit here.

Holly Shulman is the Spokesperson for International Affairs at the U.S. Department of the Treasury. 

Posted in:  International Affairs
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