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U.S., China Provide Additional Detail on Outcomes of Recent Trade Talks

Monday, January 05, 2015
Sandler, Travis & Rosenberg Trade Report

The U.S. has issued a fact sheet providing additional details on the outcomes achieved at the 25th meeting of the U.S.-China Joint Commission on Commerce and Trade held Dec. 16-18 in Chicago.

Agriculture. China announced pending import approvals for three new biotech varieties of U.S. soybeans and corn and committed to an intensified dialogue at the vice-ministerial level on science-based innovation in agriculture, which will discuss needed improvements in China’s regulatory framework for the review and approval of technology used for agriculture.

Technology Localization. The U.S. and China committed to ensure that both treat intellectual property rights owned or developed in other countries the same as domestically owned or developed IPR. Enterprises are free to base technology transfer decisions on business and market

considerations and to independently negotiate and decide whether and under what circumstances to assign or license IPR to affiliated or unaffiliated enterprises. Both sides confirm that the government is entitled to take measures to encourage enterprises to engage in research and development and the creation and protection of IPR.

Medical Devices and Pharmaceuticals. China will accelerate the studying and pushing forward of the reform of the medical device and pharmaceutical regulatory review and approval system and will make great efforts to eliminate the drug application backlog within two to three years. China’s efforts will include adding personnel and funds, streamlining relevant mechanisms and increasing the speed of review.

Applicants who use multi-regional clinical trial data that includes data from China to apply for clinical trial waivers, and whose applications comply with the technical review requirements, can receive clinical trial waivers in China to prevent duplicative testing.

China will implement measures that allow a drug not marketed in foreign countries to conduct clinical trials in China at the same time it is conducting clinical trials in another country. Applicants can submit evidence of marketing approval of a pharmaceutical product in another country (i.e., certificate of pharmaceutical product) when applying for the drug license after completing clinical trials.

For all draft pharmaceutical and medical device rules and regulations where notifications are required under the relevant World Trade Organization rules, a comment period of no less than 60 days will be provided.

In accordance with the Regulations on Supervisory Management of Medical Devices, China will, to facilitate practical regulatory needs, further accelerate the expansion and adjustment of clinical trial product exemption catalogues; expand the scope of medical devices that can be exempted from conducting clinical trials in China; reduce the number of medical device clinical trials; and improve the efficiency of bringing imported medical devices to the Chinese market.     

China and the U.S. agreed to engage in enhanced dialogue with expert and high-level officials of relevant Chinese and U.S. agencies in 2015 to promote efficient pharmaceutical and medical device regulation and market access.

Trade Secrets. Trade secrets submitted to the government in administrative or regulatory proceedings are to be protected from improper disclosure to the public and only disclosed to government officials in connection with their official duties in accordance with law. Each side will further study how to optimize its respective relevant administrative and regulatory procedures within its legal system, where appropriate, including by strengthening confidentiality protection measures, limiting the scope of government personnel having access to trade secrets, limiting the information required from companies to information reasonably necessary for satisfying regulatory purposes, and stipulating that any requirements on government agencies to publicly disclose information appropriately allow for the withholding of trade secrets. Government officials who illegally disclose companies’ trade secrets are to be subject to administrative or legal liability according to law. The U.S. and China agree to exchange information on the scope of protection of trade secrets and confidential business information under their respective legal systems. China is to conduct a legislative study of a revised law on trade secrets. The U.S. acknowledges that draft legislation proposing a federal civil cause of action for trade secret misappropriation has been introduced in Congress.

Geographical Indications. China and the U.S. have reached the following understandings: (a) a term, or its translation or transliteration, is not eligible for protection as a GI in its territory where the term is generic in its territory; (b) the relationship between trademarks and GIs is to be handled in accordance with relevant articles in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights; (c) legal means are available for interested third parties on the above grounds to object to and cancel any registration or recognition granted to a GI; and (d) where a component of a compound GI is generic in its territory, the GI protection is not to extend to that generic component (if a relevant agency does not have a disclaimer practice it may adopt such practice noting that the compound GI registered or recognized is to be protected only in compound form).

Inventor Remuneration. The U.S. and China committed to (a) protect the legal rights of inventors in respect of their inventions and creations, in accordance with their respective domestic laws and regulations and in line with their domestic laws, and (b) respect the legitimate rules and regulations developed by employers and legitimate contracts between employers and inventors concerning inventor remuneration and awards.

Sales of IP-Intensive Goods and Services. The U.S. and China reaffirmed their commitment to foster a better environment to facilitate increased sales of legitimate IP-intensive goods and services and will study and exchange information on how to accomplish this objective, including metrics to show the levels of legitimate sales, information on how to analyze the economic impact of IP in each economy, information on effective IP enforcement actions as well as relevant IP-related legal and regulatory reforms, and information on civil damages.

Online Infringement. Building on the foundation of the June 18, 2014, Leading Group’s Work Plan for Fighting Infringement in the Online Environment, China will, in a practical and timely fashion, classify products with significant impacts on public health and safety as priorities and carry out enhanced enforcement actions. Both China and the U.S. are to continue their effective cooperation in cross-border enforcement efforts against counterfeit and pirated goods and

conduct exchanges on the effectiveness of enforcement efforts.

Competition Law. China clarified that in enforcing its Anti-Monopoly Law all business operators will be treated equally. Where AML violations are found, China is to impose enforcement measures that address the harm to competition, not measures designed to promote individual competitors or industries. China’s anti-monopoly enforcement agencies will (1) when undertaking administrative actions, strictly follow statutory limits on their authority, procedures and requirements, as laid out in China’s relevant laws, regulations and rules; and (2) before imposing penalties, notify the parties of the facts, grounds and basis according to which the penalties are to be decided, notify the parties of their rights in accordance with the law, and provide the parties with the right to state their cases and to defend themselves.

All administrative decisions that impose liability on a party under the AML will be provided in writing to the party and include the facts, reasons and evidence on which the decision is based. China will publish the final version of administrative decisions that impose liability on a party under the AML in a timely manner. Administrative decisions made public in accordance with law should not include contents involving what are legally commercial secrets.

China will ensure that, upon request from a party involved, the three AMEAs are to allow Chinese practicing lawyers to attend and participate in meetings with any of them. China will ensure that, upon request from the party involved and after obtaining approval from the AMEA, which will be granted as normal practice, the following persons may attend the meetings with any of the three AMEAs: (1) representatives of foreign law firm representative offices established in China, who are permitted to attend and advise on international law and practice and provide information on the impact of the Chinese legal environment but not to conduct activities that encompass Chinese legal affairs; and (2) foreign legal counsel practicing in other legal jurisdictions, who are permitted to attend and provide information on the subject transaction or conduct and information on the laws or international practices of the legal jurisdiction where they practice.

Government Procurement. China will publish for public comment the draft Interim Administrative Measures for the Government Procurement of Domestic Goods after revising and improving this draft on the basis of thorough consideration of various opinions, including achieving cost savings, decreasing administrative burdens and increasing flexibilities.

Treatment of IPR in Standards Setting. The U.S. has agreed to conduct a dialogue with China to reduce uncertainties regarding protections for companies contributing patented technology during standards-setting processes in China. Companies contributing patented technology during such a process typically agree to license their patents under certain terms, which need to be agreed voluntarily and free of government coercion or involvement.

Fisheries. The U.S. and China agree to work together to combat illegal, unreported or unregulated fishing and as a first step will meet in the first half of 2015 to begin sharing information about methodologies on trade statistics for fish and fish products, including greater specificity in the harmonized system, species of interest, and best practices for tracking product.

Legal Services. China agrees to conduct research and discussion at an appropriate time in 2015 to introduce the status and process of opening the Chinese legal services market and to invite advice and suggestions from the foreign legal community. In the pilot work of exploring ways and mechanisms for strengthening business cooperation between Chinese and foreign, Hong Kong and Macau law firms in the Shanghai Pilot Free Trade Zone, Chinese relevant authorities are in the process of drafting implementation rules.

Legal Exchange. During the U.S.-China Legal Exchange that will take place this month, U.S. government representatives are to inform members of the Chinese business, legal and academic communities in Beijing and Wuhan of recent developments in U.S. law on the topics of regulation of air pollution control and legal aspects of conducting international electronic commerce.

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