US Section 301, China, and technology transfer: Law and its limitations revisited (again)

US Section 301, China, and technology transfer: Law and its limitations revisited (again)

International Center for Trade and Sustainable Development (ICTSD), Opinion, May 23, 2018

ARTICLE HIGHLIGHTS

• Disputes between the United States and China regarding transfer of technology and intellectual property are of long-standing nature.
• The more economically significant elements of China's practices addressed by US complaints are not well-addressed by WTO rules. Threatened US retaliatory tariffs would violate WTO norms. Still, Robert Hudec’s approach to justified trade disobedience is relevant.
• US criticism of China's industrial policy may reflect a fundamental difference in national governance models. Though different, it is not clear why China's model of engaging in detailed industrial policy planning directed towards progressive goals should be viewed as misguided.
• It seems reasonable to rebalance concessions that China secured when negotiating entry to the WTO because circumstances have changed in consequence of China's remarkable economic success.
• There remains space for political and economic diplomacy near and outside the boundaries of the WTO framework. However, care should be taken that bilateralism does not become the "new normal" as trade fragmentation and power politics have proven problematic in the past.