Ambassador Branstad: Protecting and Enforcing Intellectual Property Rights Requires More than Just Words

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Ambassador Branstad: During my first trip to China in 1984 as Governor of Iowa, I took an old steam locomotive from Beijing to Shijiazhuang in Hebei Province to run a sister-state program that I had signed with the Governor of Hebei in 1983.  I then met a Hebei County level Party Secretary named Xi Jinping when he led a delegation to Iowa the next year.  In the years since, I’ve seen firsthand the role technology has played in driving China’s economic transformation.

On April 26 every year we observe World Intellectual Property Day and acknowledge the contributions of authors, artists, designers and inventors who have fueled the innovation and creativity that have helped define modern life and underpinned economic growth around the world.

Since returning to China in 2017 as U.S. Ambassador, I’ve had the opportunity to reunite with my old friend, now the President of China, and discuss the opportunities and challenges presented by China’s economic transformation over the past 40 years.

In my conversations with him, President Xi has said he appreciates the importance of innovation and understands that China’s economic future depends on strong intellectual property protection and enforcement.

So I was encouraged to hear his April 10 remarks at the Bo’ao Forum for Asia, in which he committed to improving China’s IP protection and enforcement.  The United States stands ready to work with him to implement this vision.

The first step to fixing a problem is acknowledging that it exists.

Despite progress, widespread counterfeiting remains a serious problem in China; some 72 percent of counterfeit goods circulating in the EU, Japan and the United States originated in China.

Theft of trade secrets continues to hurt many U.S. companies in China.  In January Chinese company Sinovel was convicted of stealing technology from an American company, AMSC, causing it to lose 70 percent of its workforce and more than $800 million in sales.

Meanwhile in China, many foreign companies aren’t allowed to compete on a level playing field.  They face discriminatory licensing terms and are compelled to enter joint ventures and share their IP with Chinese partners as a condition of doing business

That’s why President Trump asked U.S. Trade Representative Robert Lighthizer to conduct a thorough, transparent investigation of China’s policies and practices related to technology transfer, intellectual property, and innovation, under Section 301 of the U.S. Trade Act of 1974.

The resulting report, published on March 22, provides 215 pages of evidence showing that not only are China’s IPR protection and enforcement insufficient, but its discriminatory practices are an integral part of a national industrial policy that impedes free and fair trade.

It doesn’t have to be this way.  Chinese firms can be innovative and globally competitive when their IP is protected, even without Beijing unfairly tilting the playing field to their advantage.

I frequently hear from U.S. CEOs that they want to continue to operate in China’s market but are concerned that their IP will be stolen or they will be forced to transfer their technology as a condition of doing business.

I hear the same complaints from other Ambassadors here in Beijing.

That is why several countries have announced that they are joining U.S. request for the consultations at the WTO to address China’s discriminatory technology-licensing policies for intellectual property.

The fact is that China’s treatment of IP is not a problem the United States caused, nor is it a problem only for the United States.

President Xi’s remarks at Bo’ao indicate that he realizes this.

Now is the time for the Chinese leadership to follow through on his commitments and take immediate, concrete steps to level the playing field and improve IP protections for all companies, foreign and domestic.

On this World IP Day, if I want to visit Shijiazhuang I can now buy train tickets using my smartphone, or travel in an electric car.

Imagine what China could do in the next 40 years if it makes even greater strides to strengthen the protection and enforcement of intellectual property rights.