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IPR, Medical Devices, Food Safety, High Tech Among Topics at U.S.-China Meeting

Tuesday, November 29, 2016
Sandler, Travis & Rosenberg Trade Report

IPR, Medical Devices, Food Safety, High Tech Among Topics at U.S.-China Meeting

The 27th session of the U.S.-China Joint Commission on Commerce and Trade held in Washington, D.C., last week saw discussion of a wide range of bilateral trade issues. Commerce Secretary Penny Pritzker and U.S. Trade Representative Mike Froman both said the JCCT was productive, though Agriculture Secretary Tom Vilsack noted that the agricultural outcomes “did not go as far as the United States had hoped.” All three officials added that there are still a number of challenges in bilateral economic relations, including disagreements on the appropriate role of the state in the economy, China’s pursuit of policies that require data localization, and trade secret theft in the Chinese market.

Medical Devices and Pharmaceuticals. China committed to strengthen oversight of government procurement of medical devices to ensure foreign brands and foreign-manufactured products are treated in a transparent, fair, and equitable manner and to not link procurement to policies promoting domestically produced medical devices. China also affirmed that drug registration review and approval will not be linked to pricing commitments and will not require specific pricing information.

During the drafting of its unique device identification number regulations and implementing plans China will fully consider the U.S. proposal to rely on international standards and harmonize with globally accredited UDI issuing agencies. It will also offer a phased-in and risk-based implementation approach, with an initial implementation period for phase I to be no less than two years from the issuance of the final rule and an exemption for all devices manufactured or labeled prior to the rule’s effective date.

IPR Protection and Enforcement. China confirmed that it is strengthening its trade secrets protections, including through planned amendments to the Anti-Unfair Competition Law and related judicial practice. China also plans to bolster other elements of its trade secrets regime, including with respect to the availability of evidence preservation orders and damages based on market value, consistent with other developments in intellectual property law in China as well as the issuance of a judicial interpretation on preliminary injunctions and other matters.  Both sides confirmed that in those cases in which a judicial or administrative enforcement authority requests the submission of confidential information in conjunction with a trade secret enforcement matter such requests will be narrowly tailored to avoid putting sensitive business information at risk and will be subject to appropriate protective orders to control additional disclosure and ensure that information is not further misappropriated. 

China is actively conducting research on the Technology Import and Export Administration Regulations to address U.S. concerns and better address newly emerging areas of technology transfer. To that end China will convene a joint seminar with the U.S. in the first quarter of 2017.

Both sides will explore the use of big data and other new information technologies to enhance the capability for combating infringement and counterfeiting online.

In the coming year the two sides are to conduct numerous substantive exchanges and programs on important IPR issues, including a technology licensing program co-sponsored by the Ministry of Commerce, a program to exchange information on China’s legal protections for product and service designs and U.S. trade dress protections, programs on criminal enforcement of trade secrets and counterfeit pharmaceuticals, and a joint conference to share experiences on recent trends in technologies, business models, and international legal developments and to discuss possible ways that criminal law, legislation, and enforcement on IPR may be effectively utilized and adapted to address current and emerging IPR challenges.

Excess Capacity. The U.S. and China agreed to jointly promote the expeditious establishment of the Global Forum on Steel Excess Capacity and to hold an informal JCCT steel dialogue in 2017. They also agreed to exchange information on excess capacity in soda ash and electrolytic aluminum.

Innovation. China said its “secure and controllable” policies generally applicable to the commercial sector are not to unnecessarily limit or prevent commercial sales opportunities for foreign suppliers of information and communication technology products, services, or technologies and will not unnecessarily impose nationality-based conditions and restrictions on the purchase, sale, and use of ICT by commercial enterprises. China also confirmed that it will notify relevant technical regulations to the WTO Technical Barriers to Trade Committee.

Semiconductors. China confirmed that its government has not asked its semiconductor investment funds to require compulsory technology or IPR transfer as a condition for participation in the funds’ investment projects. However, the U.S. remains concerned that state-driven and –financed investment will create market distortions in China and around the world.

Food Safety. The two sides conducted technical discussions on their respective certificate requirements for imported foods and agreed to further cooperation and discussions regarding import requirements related to food safety.

Trade Statistics. At a Nov. 8-9 meeting of the Statistics Working Group the two sides confirmed the new method for further reducing the statistical discrepancies of bilateral goods trade, analyzed the causes for the statistical discrepancies of China’s foreign direct investment in

the U.S., and discussed the further analysis of statistical discrepancies of trade in services. They also agreed to launch research on statistical discrepancies of U.S. FDI in China. A 2017 work plan will be drafted by the end of this year and research reports on statistical discrepancies of goods trade and China’s FDI in the U.S. will be submitted to the next JCCT meeting.

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