The U.S. International Trade Commission in December released the first of two reports on the economic effects of Chinese infringement on the bottom line of U.S. firms. Not surprisingly, illegal knockoffs are one source undermining the profitablility of U.S. products and technologies. However, there is also a threat stemming from “indigenous innovation policies” instituted by the Chinese government, which promote commerce in Chinese products and technologies, at the expense of U.S. exports and direct investment into China.
The ITC report provides an analytical outline of the effects of infringement in China on U.S. jobs and the overall economy. Significant structural and institutional (including legal) obstacles to I.P. enforcement are examined, as well as isolated pockets of improvement in the enforcement regimes of certain major Chinese cities. The report finds that Chinese government implementation of policies favoring domestic industry has placed a stranglehold on opportunities for emerging and established U.S. firms seeking to do business in China -- in all areas from competition and government procurement to tax regulations.
Although the Commission technically engages in fact-finding without any recommendation as to policy, the message espoused by the ITC is clear, and will no doubt be used in some capacity to leverage future U.S. economic policy and negotiations with the PRC. A copy of the ITC’s report, entitled China: Intellectual Property Infringement, Indigenous Innovation Policies, and Frameworks for Measuring the Effects on the U.S. Economy, can be found here.