|June 2, 2011|
Previously published on June 2011
At the third annual U.S.-China Strategic and Economic Dialogue, the United States made some headway on several Chinese commitments that would give U.S. companies increased market access to the Chinese market. The talks, which took place in early May in Washington, D.C., were established in 2009 by President Obama and Chinese President Hu to provide an ongoing forum for high-level U.S. and Chinese officials to discuss issues of mutual economic and strategic interest.
Although no major U.S. economic policy objectives were reached at the meetings, continued progress was made on behalf of U.S. manufacturers to increase protection of intellectual property rights and to eliminate indigenous innovation preferences in China's government procurement process.
Indigenous Innovation And Government Procurement
U.S. companies most affected by China's indigenous innovation policies typically are in the high-tech and heavy manufacturing and chemical manufacturing sectors, according to a May report on China's intellectual property rights infringement and indigenous innovation policies published by the U.S. International Trade Commission. Building on previous discussions with the Chinese government, Chinese officials agreed that they would eliminate government procurement catalogues of indigenous innovation products. Such catalogues were developed to guide government procurement decisions at the central, provincial, municipal, and local levels to promote the use of indigenous Chinese innovation in public projects. In addition, China agreed to revise its draft regulations to eliminate the preference in government procurement that is enjoyed by products that receive indigenous innovation status.
Intellectual Property Rights
China agreed to review the effectiveness of its high-level, long-term intellectual property rights campaign, the Special Campaign against IPR Infringement and Fake and Shoddy Products, and consider ways in which to build upon it. According to the International Trade Commission's recent report, U.S firms in intellectual property intensive industries suffered losses from intellectual property rights infringement in China in the amount of $48 billion in 2009 alone. The affected industries include, but are not limited to, the high-tech and heavy manufacturing sector, the information and other services sector, consumer goods manufacturing, chemical manufacturing, and transportation manufacturing sectors. China's intellectual property rights infringement is an issue for U.S. manufacturers of all sizes and sectors. Even if the U.S. manufacturer does not export outside of the United States, counterfeit versions of its products could be sold internationally. The high-tech sector has been the hardest hit among the affected sectors. During the talks, China agreed to strengthen its checks to ensure that software used by Chinese government agencies at all levels are properly licensed. Pirated software has been a long-standing problem for the U.S. software industry in China.
With China's presidential and legislative elections coming up in 2012, radical changes in China's policy are unlikely. The scope, speed, and effectiveness of China's implementation of the conservative pledges it has made will be the true measure of success. Many of the measures China has agreed to come without implementation dates and whether these measures can be implemented successfully from the central level down to the local level remains to be seen. The next U.S.-China Strategic and Economic Dialogue will take place in China in 2012.