U.S., China envoys clash over ‘forced technology transfer’ at WTO session

Reuters

Chinese and U.S. envoys sparred at the World Trade Organization on Monday over U.S. President Donald Trump’s claims that China steals American ideas, the subject of two lawsuits and a White House plan to slap huge punitive tariffs on Chinese goods.

U.S. Ambassador Dennis Shea said “forced technology transfer” is often an unwritten rule for companies trying to access China’s burgeoning marketplace, especially if they are partnering with a state-owned or state-directed Chinese firm.

China’s licensing and administrative rules force foreign firms to share technology if they want to do business, while government officials can exploit vague investment rules to impose technology transfer requirements, he said.

“This is not the rule of law. In fact, it is China’s laws themselves that enable this coercion,” Shea told the WTO’s dispute settlement body, according to a copy of his remarks.

“Fundamentally, China has made the decision to engage in a systematic, state-directed, and non-market pursuit of other (WTO) members’ cutting-edge technology in service of China’s industrial policy.”

It is a lose-lose proposition for foreign investors, he said, and not just Americans. All countries will see their competitiveness eroded if China’s policies are left unchecked.

China flatly rejected the criticism, which has spawned WTO disputes from both sides and a $50 billion tariff threat from Trump.

“There is no forced technology transfer in China,” Chinese Ambassador Zhang Xiangchen told the meeting, adding that the U.S. argument involved a “presumption of guilt.”

“But the fact is, nothing in these regulatory measures requires technology transfer from foreign companies.”

The U.S. Trade Representative’s office had failed to produce a single piece of evidence, and some of its claims were “pure speculation,” he said, adding that the USTR saw Chinese M&A activity as a Chinese government conspiracy.

Technology transfer was a normal commercial activity that benefited the United States most of all, he said, while Chinese innovation was driven by “the diligence and entrepreneurship of the Chinese people, investment in education and research, and efforts to improve the protection of intellectual property.”

Legal experts say Washington needs WTO backing to implement its tariffs as far as they relate to WTO rules, while China has rejected the tariff plan wholesale and resorted to WTO action to stop it.

Under WTO rules, if disputes are not settled amicably after 60 days, the complainant can ask for a panel of experts to adjudicate, escalating the dispute and triggering a legal case that can take years to settle.

The United States, which launched its complaint on March 23, could have used the dispute meeting Monday to take that step. China could do so at next month’s meeting.

But since the dispute erupted, U.S.-China trade policy has been the subject of high-level bilateral talks.

Last week Trump tweeted cryptically that “our trade deal with China is moving along nicely” but said it probably needs a “different structure.”