U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman, together with Chinese Vice Premier Wang Yang, co-chaired the 26th U.S.-China Joint Commission on Commerce and Trade (JCCT) in Guangzhou, China, on November 21-23, 2015. They were joined by U.S. Secretary of Agriculture Tom Vilsack to address agricultural issues. Other U.S. participants included U.S. Ambassador to China Max Baucus, U.S. Trade and Development Agency Director Leocadia Zak, and additional representatives from the U.S. Departments of Agriculture, Commerce, Justice, State and Treasury and the Office of the U.S. Trade Representative. Other Chinese participants included China’s Ambassador to the United States Cui Tiankai and representatives from the State Council, the National Development and Reform Commission, the Ministries of Agriculture, Commerce, Energy Protection, Finance, Foreign Affairs, Industry and Information Technology, Justice, Public Security and Science and Technology, the China Civil Aviation Administration, the China Food and Drug Administration, the China Insurance Regulatory Commission, the China Banking Regulatory Commission, the China National Tourism Administration, the General Administration of Customs, the General Administration of Quality Supervision, Inspection and Quarantine, the State Administration for Industry and Commerce, the State Forestry Administration, the National Energy Administration, the Cyberspace Administration of China, the National Copyright Administration, State Intellectual Property Office and the State-owned Assets Supervision and Administration Commission.
The following outcomes were achieved:
AGRICULTURAL BIOTECHNOLOGY
China is the largest export market for U.S. soybeans ($14.7 billion in 2014) and a major export market for U.S. corn and corn products ($1.3 billion in 2014). Agricultural biotechnology is important to U.S. farmers of these products, with acreage for biotechnology varieties of soybeans and corn totaling over 90 percent of all varieties of soybeans and corn in 2014, enabling these farmers to increase yield while reducing their environmental footprint.
China and the United States reaffirm the outcomes reached on agricultural innovation in September 2015 at the state visit of President Xi with President Obama. China and the United States have fully exchanged views about agricultural innovation at the JCCT and the Strategic Agricultural Innovation Dialogue; will jointly promote cooperation on agricultural innovation; and will create a favorable environment for agricultural innovation. Both countries reiterated they would work together to further the approval process based on international standards; and reiterated the importance of adopting a timely, transparent, predictable and science-based approval process.
China and the United States jointly agreed to strengthen policy and information exchange; share the experiences and practices on research and development, supervision and approval; and consider domestic and international stakeholders’ comments when modifying and improving regulations.
COMPETITION
In a set of welcome commitments relating to the Anti-monopoly Law (AML), China embraced key principles including the pro-competitive effects of intellectual property licensing and maintaining coherence in AML rules related to intellectual property rights (IPR), independence in decision making and the protection against disclosure of commercial secrets obtained in AML proceedings.
Taking into account the competitive effect of promoting intellectual property rights, China recognizes the positive and important role intellectual property rights play in promoting innovation and competition. Intellectual property rights play an important role in maintaining a healthy market economy and boosting consumer welfare. In the development of AML-related rules, China will take into account these effects and the potential effect intellectual property licensing has on eliminating or restricting competition. China’s anti-monopoly enforcement agencies are to conduct enforcement according to the Anti-monopoly Law and are to be free from intervention by other agencies.
China clarifies that commercial secrets obtained in the process of Anti-monopoly Law enforcement are protected as required under theAnti-monopoly Law and shall not be disclosed to other agencies or third parties, except with a waiver of confidentiality by the submitting party or under circumstances as defined by law.
Taking into account the pro-competitive effects of intellectual property, China attaches great importance to maintaining coherence in the rules related to IPR in the context of the Anti-monopoly Law. China clarifies that any State Council Anti-monopoly Law Commission guidelines will apply to the three anti-monopoly law enforcement agencies.
The Chinese side clarifies that in the process of formulating guidance related to intellectual property rights in the context of anti-monopoly law, it will solicit comments from relevant parties, including the public, in accordance with law and policy.
EXCESS CAPACITY
China’s exports of steel and aluminum are large and growing, and are the central cause of a glut of supply on the global market. They also are contributing to rapidly falling global prices and severe trade frictions. The United States welcomes China’s willingness to engage in intensified discussions regarding these critical developments.
Steel
The U.S. and Chinese governments and industry representatives agreed to hold discussions in 2016 regarding capacity, production and trade in the steel sector, including updates on progress made with regard to China’s July 2014 U.S.-China Strategic and Economic Dialogue (S&ED) commitment to establish mechanisms that strictly prevent the expansion of crude steelmaking capacity and that are designed to achieve major progress in addressing excess production capacity in the steel sector within five years. The two sides will exchange information on steel capacity developments in each economy through the JCCT’s U.S.-China Steel Dialogue.
Aluminum
The United States and China agreed to intensify their discussions regarding overcapacity in the aluminum sector in 2016.
FISHERIES, TIMBER AND WILDLIFE
China and the United States are among the largest consumers and traders of wildlife, fish and timber and associated products. The two countries share the objective of combatting wildlife trafficking, illegal, unreported or unregulated (IUU) fishing, and illegal logging and associated trade, recognizing their combined efforts and commitments will have significant benefits for the protection of the environment and its natural resources on a global scale. The United States and China are already taking action domestically and with international trade partners; including recent commitments to enact near-complete bans on the import, export and domestic commercial trade of ivory; and agree enhanced cooperation and information exchange in these areas is crucial to help support legal trade in these products and strengthen our collective ability to address illicit practices.
Information Exchange on Fisheries, Timber and Wildlife
The United States and China agree to build on previous JCCT (2014) and S&ED commitments by enhancing information exchange and cooperation, under existing and appropriate agreements and mechanisms, in the areas of IUU fishing, wildlife trafficking, and illegal logging and associated trade. Recognizing these issues are global in nature, the two countries also agreed to exchange information and cooperate with other trading partners in the region, as appropriate.
Cooperation on Fisheries
The United States and China, through the JCCT, S&ED, bilateral fishing exchanges and related bilateral mechanisms and multilateral fora, will expand dialogue and cooperation in the effort to combat IUU fishing. In order to implement the 25th JCCT outcomes, the two sides will discuss cooperation in fisheries trade statistics and the exchange of relevant information and data. The two sides agree to hold a discussion in 2016 to continue information sharing and collaboration in support of efforts to combat IUU fishing practices.
On the Fight Against Illegal Logging
The United States and China firmly oppose illegal logging and associated trade and seek to implement a cooperative strategy to address these issues. The two sides agree to continue the fight against illegal logging and associated trade through exchange of information and experiences in the Bilateral Forum on Combatting Illegal Logging and Associated Trade, the S&ED, and other existing bilateral discussions and regional trade fora in 2016.
On the Fight Against Wildlife Trafficking
The United States and China attach great importance to combating the global challenge of illegal trade in wildlife and wildlife products. The two sides agreed to continue to use the S&ED and other existing mechanisms and fora to communicate and cooperate in support of combating wildlife trafficking.
FOOD SAFETY
The United States and China understand the importance of protecting human health while facilitating and expanding trade by utilizing a variety of means to address and seek to resolve food safety issues.
The food safety issue is one of the key issues of global concern. China and the United States recognize the importance of addressing and resolving food safety issues to protect public health and facilitate trade. Chinese and U.S. food safety agencies can, through existing food safety cooperation mechanisms, including through the JCCT, further enhance food safety cooperation. China and the United States will, on a scientific basis, engage and cooperate on food safety issues to exchange risk communication and regulatory experiences. The United States and China reaffirm the importance of participation in the development of international food safety standards, and enhancing transparency in developing and implementing food safety regulations, including releasing draft regulations for solicitation of public comments, and taking into consideration public comments in final food safety regulations. China and the United States will enhance implementation of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), including through efforts to reinforce the use of scientific risk analysis in the development and implementation of food safety measures, strengthen consumer protection, and enhance public confidence in the food supply chain. China and the United States will participate actively in related actvities of international organizations in the food safety field, and through exchanges of best practices together, with the goal of improving capability to prevent and respond to food safety incidents.
GOVERNMENT SUPPORT
Integrated Circuit (IC) Industry Development Plans
In 2014, U.S. producers of semiconductors, or integrated circuits, supplied more than one-half of the $336 billion global market. China represents the largest single end-market for U.S. semiconductors, and semiconductors were one of China’s top imports in 2014, with U.S.-manufactured semiconductors representing 60 percent of China’s total semiconductor imports. If China were not to implement its IC development plans transparently and using market principles, it could have deleterious effects for the entire global semiconductor innovation eco-system that is evolving on a foundation of deep global inter-industry, intra-industry and cross-industry collaboration across many complex and unique stages of the semiconductor supply chain.
China confirms that the Semiconductor Industry Development Plan policies are equally applicable to and available for foreign-invested enterprises. For legally binding policies and measures for promoting the semiconductor industry development, China will publish them for public comment according to the procedures and time limits of relevant Chinese laws, and to enhance policy transparency. China commits that the National Semiconductor Investment Fund will be managed by professional fund companies in a manner consistent with market-based concepts and free from government intervention into normal operational activities. The United States and China share a commitment to a strong, growing global semiconductor industry that operates under fair, open and transparent legal and regulatory environments.
Trade Policy Compliance
The United States welcomes China’s willingness to conduct a careful examination of U.S. concerns regarding the WTO consistency of measures benefiting a wide range of manufacturers and agricultural producers in China.
China noted that the United States provided comments to the Ministry of Commerce (MOFCOM) concerning the WTO consistency of certain matters relating to International Well Known Brands and farm machinery. China confirms that MOFCOM will deal with these matters in accordance with the Circular on Strengthening Trade Policy Compliance and the Measures for the Implementation of Trade Policy Compliance.
INTELLECTUAL PROPERTY RIGHTS
Standards and Intellectual Property
Voluntary, consensus-based technological standards promote innovation, competition and consumer welfare and have helped spur investment and advances in a wide range of industries.
The United States and China affirm the beneficial role of standards in promoting innovation, efficiency, and public health and safety, and the need to strike an appropriate balance of interests of multiple stakeholders.
The United States and China commit that licensing commitments for patents in voluntary standards are made voluntarily and without government involvement in negotiations over such commitments, except as otherwise provided by legally binding measures.
The United States confirms that Chinese firms participate in the setting of voluntary consensus standards in the United States on a non-discriminatory basis, consistent with the rules and procedures of the relevant standards organizations. China welcomes U.S.-invested firms in China to participate in the development of national recommendatory and social organization standards in China on a non-discriminatory basis.
With a view to enhance mutual understanding and trust, the United States and China agree to hold dialogues over issues under this topic.
Trade Secrets
Trade secret theft threatens to diminish U.S. competitiveness around the globe, putting American jobs at risk. Trade secrets are essential to businesses, large and small, and often are a company’s most valuable asset. China announced steps to strengthen protection of trade secrets in China by providing U.S. companies with better legal tools to defend their trade secrets from misappropriation.
The United States and China are committed to providing a strong trade secrets protection regime that promotes innovation and encourages fair competition. China clarifies it is in the process of amending the Anti-Unfair Competition Law; intends to issue model or guiding court cases; and intends to clarify rules on preliminary injunctions, evidence preservation orders and damages. The United States confirms that draft legislation proposed to establish a federal civil cause of action for trade secrets misappropriation has been introduced in relevant committees. Both sides confirm that IP-related investigations, including on trade secrets, are conducted in a prudent and cautious manner. The United States and China agree to jointly share experiences and practices in the areas of protecting trade secrets from disclosure during investigations and in court proceedings, and identify practices that companies may undertake to protect trade secrets from misappropriation in accordance with respective laws.
Geographical Indications (GIs)
China’s commitments on GIs will help to ensure that China’s growing market remains open to exports of U.S.-originated products.
The United States and China will continue our dialogue on GIs. Both sides reaffirmed the importance of the 2014 JCCT commitment on GIs and confirmed that this commitment applies to all GIs, including those protected pursuant to international agreements. China will publish in draft form for public comment, and expects to do so by the end of 2016, procedures that provide the opportunity for a third party to cancel already-granted GIs.
Sports Broadcasts
Sporting events, live concerts and other broadcasts of live events are an integral part of American culture and entertainment media. They represent the collective creativity of thousands of Americans. China’s unique position as the host country of the 2022 Winter Olympics and China’s interest in promoting the development of Chinese sporting leagues provide incentives to protect these broadcasts under copyright provisions.
The United States and China agree to protect original recordings of the images, or sound and images, of live events, including sports broadcasts, against acts of unauthorized exploitation, including the unauthorized retransmission of such broadcasts over computer networks, in accordance with their respective laws and regulations. The United States and China agree to discuss copyright protection for sports broadcasts and further cooperate on this issue in the JCCT IPR Working Group and other appropriate bilateral fora.
Enhanced Enforcement Against Media Boxes and Unauthorized Content Providers
The digital media revolution is transforming the way that U.S. and Chinese viewers watch television, film and other cultural content. Unfortunately, entities and individuals seeking to take advantage of the ease by which digital media is copied, distributed and made available have created a chain of infringing activity from servers hosting infringing content to media boxes sold directly to consumers that allow the download and streaming of pirated programming from around the world.
Noting the challenges posed by new technologies to the protection of copyright, China and the United States will continue discussions and share respective experiences and practices on combating the unauthorized online distribution of audiovisual content made possible by media boxes. China clarifies it is to enhance enforcement against such media boxes and the providers of unauthorized content in accordance with its laws and regulations.
Online Enforcement
As one of the fastest growing e-commerce markets in the world, China presents valuable opportunities to reach hundreds of millions of Chinese consumers, who have a growing interest in and ability to purchase U.S.-branded goods online. However, it also presents challenges in ensuring that the millions of transactions taking place every day involve safe, reliable and legitimate goods. Preventing the online sale of pirated and counterfeit goods is a high priority for both the United States and China.
In order to address the civil, administrative and criminal enforcement challenges caused by the rapid development of e-commerce, as part of the JCCT IPR Working Group, China and the United States will enhance engagement and exchanges between U.S. and Chinese government IPR policy and enforcement officials, IP right holders, business representatives and online sales-platform operators, among other relevant stakeholders. This engagement will cover current and anticipated challenges in protecting and enforcing IPR online by sharing respective practices, discussing possible improvements in each country’s systems, facilitating information exchange and training between our two countries, and increasing cooperation on cross-border enforcement. The goal of this effort is to enhance existing legal and cooperative regimes among businesses, rights holders and governments in civil, administrative and criminal online IPR enforcement. Appropriate criminal matters will be referred, if necessary, to law enforcement agencies through the Joint Liaison Group (JLG) IP Criminal Enforcement Working Group or domestic law enforcement officials.
PHARMACEUTICALS AND MEDICAL DEVICES
According to industry data, the U.S. pharmaceuticals industry directly employs more than 810,000 workers, supports a total of 3.4 million jobs in the United States, and provides annual compensation to its workers at approximately twice the average for all U.S. workers. China is the second largest market for pharmaceuticals in the world, with the size of its market being estimated at $83 billion in 2013. Exports of U.S. medical devices to China reached over $3 billion in 2014. According to industry data, the U.S. medical device industry includes over 7,000 companies, most with less than 100 employees, and supports 1.9 million U.S. jobs overall. Cutting red tape in China’s medical device approval process, as China has committed to do below, will allow better patient outcomes in, and more exports to, China, the industry’s largest growth market.
Pharmaceuticals and Medical Devices Registration and Approval
The United States and China affirm:
That China publishes annual reports on drugs and medical devices evaluation that include their performance efforts.
That in 2014 and 2015, China issued clinical trial exemption catalogues for Class II and Class III medical devices and the Medical Device Clinical Trial Evaluation Guidelines, and will conduct relevant training. In 2016, China will complete the drafting of the second batch of medical device clinical trial exemption catalogues in order to further expand the scope of the exemption catalogues.
That China is currently refining mechanisms to communicate with registration applicants. For innovative medical devices, the China Food and Drug Administration (CFDA) will appoint dedicated personnel in the evaluation and approval process to provide guidance and promptly communicate with the applicant upon request. For other types of medical device registration applications, relevant departments of the CFDA will conduct weekly group consultations for applicants.
That the State Council Opinions on Reforming the Review and Approval Systems for Drugs and Medical Devices (State Council 2015 No. 44) is the guideline for reforming China’s drug and medical device review and approval systems. China agrees that the CFDA will provide no less than a 30-day public comment period for implementing departmental rules and regulations, and will also abide by its technical barriers to trade (TBT) commitments.
Medical Devices Localization
In accordance with China’s medical device regulatory legal framework, China agrees that in the area of market access, it will give imported medical devices the same treatment as those manufactured or developed domestically.
TECHNICAL REGULATIONS
Cosmetics Regulatory Dialogue
China is the 10th largest export market for U.S. personal care and cosmetics products, with exports totaling $297 million in 2014 and growing at an average of 12 percent over the past five years. Beauty, make-up and skin care products are the largest category of these exports representing 52 percent of the total, followed by personal toiletry items such as shaving cream at 12 percent. China’s recent actions to reduce tariffs on various consumer goods, including skin care products, from 5 percent to 2 percent, starting in June 2015, will further facilitate U.S. exports. Overall, the cosmetics sector is an important contributor to the U.S. economy, providing 48,513 manufacturing jobs in 2013.
To deepen mutual understanding in cosmetics regulation and promote consumer protection, China and the United States agree to engage and to cooperate under the current JCCT Trade and Investment Working Group framework. The competent cosmetics regulatory authorities of the two countries agree to consider, through joint seminars and other formats, holding a cosmetics regulatory dialogue to discuss international best practices in cosmetics regulation. To this end, China and the United States agree to hold, in the first half of 2016, a dialogue in Beijing with participation from the competent U.S. and Chinese regulatory authorities as well as other government officials and stakeholders from the two countries to exchange views on various issues including cosmetics regulations, rules, and regulatory practices.
TECHNOLOGY POLICY
China has been developing policies that could restrict the use of foreign information and communication technology (ICT) products in a wide range of commercial sectors. The measures either proposed or currently under review by Chinese authorities include ICT rules for the banking and insurance sectors, a draft counterterrorism law, a draft cybersecurity law and restrictions on U.S.-China data flows. The policies set forth in these measures could cause long-term damage to U.S. businesses trying to sell ICT products into China, a market estimated to be worth about $465 billion this year. They also could add significant costs to foreign ICT companies operating in China and could prevent them from supplying the China market with the most technologically advanced and reliable products. China made several important commitments in this area.
Pro-competitive and Non-discriminatory ICT Security Policy
The two sides commit that information and communication technology information security measures generally applicable to the commercial sector are not to unnecessarily limit or prevent commercial sales opportunities for foreign suppliers of ICT products, services, or technologies and will not impose nationality-based conditions and restrictions on the purchase, sale and use of ICT by commercial enterprises unnecessarily.
Transparency and Clarity of Chinese ICT Security Policy
China confirms that a revised draft of “the banking sector’s guidelines for promotion of the use of safe and controllable information technology (2014-2015)” will be released for a 30-day public comment period and implemented after revision. Prior to this, China suspended the implementation of these “guidelines” via Notice 57, April 13, 2015. China is currently soliciting policy revision advice from concerned parties. Banks in China and the United States, in compliance with laws and regulations, are free to purchase and use the ICT products of their choosing, regardless of the country of origin of such products.
For the “Insurance system informatization regulatory requirements (draft)” China has provided more than a 30-day public comment period. China will notify the WTO TBT Committee of the “Insurance system informatization regulatory requirements (draft),” and China will formulate this measure in an open and transparent manner.
The Chinese side in March 2000 issued clarifications that encryption products and equipment containing encryption technology included in the scope of “Regulations on Commercial Cryptography Administration” are only limited to software and hardware that, at their core, are dedicated to encryption and decryption operations.
China confirms that it is willing to strengthen exchange and dialogue with the United States on the Multi-level Protection Scheme (MLPS) information security testing requirements.
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COOPERATIVE DIALOGUES AND EXCHANGES
Administrative Law Dialogue
The United States and China held a productive joint exchange on administrative law issues in Beijing in April 2015. The two sides will continue their joint exchange on administrative law issues in Washington, D.C., in Spring 2016 to discuss administrative law topics of interest to our business communities.
Legal Exchange
The 19th China-United States Legal Exchange was held in Beijing and Wuhan in January 2015. In a dynamic and fruitful discussion, legal experts from both sides addressed two topics of key concern to both sides: regulation of air pollution and protection of commercial data. China and the United States look forward to convening the 20th Legal Exchange in the United States.
Searchable Database for Intellectual Property (IP) Cases
The United States welcomes that the Supreme People’s Court has established a database for searching intellectual property-related court decisions. In order to increase the understanding of each other’s legal systems, the United States and China agree to dialogue and to share experiences on their respective databases containing IP cases.
Bad Faith Trademark Filings
Given the importance of addressing bad faith trademark filings, both sides agree to continue to prioritize the issue of bad faith trademark filings, and to strengthen communication and exchange on this issue through existing channels.
Copyright Legislation
The United States and China are to continue exchanges on the development of their respective copyright laws. China clarifies that itsCopyright Law is in the process of amendment and useful principles and interpretative guidance from the Supreme People Court’s 2012Judicial Interpretation on Internet Intermediary Liability will be considered in the law, if appropriate and feasible.
Exchange on Intellectual Property Rights Legislation
Recognizing the success and experience of recent exchanges on IP legislation through the JCCT IPR Working Group, programs under the Cooperation Framework Agreement and other fora, as well as the desire of the United States and China to further understand recent developments in this area, the United States and China agree to exchange views on their legislative developments in IP and innovation including on pending reforms in copyright law, patent law, trade secret law (anti-unfair competition law), science and technology achievement law, etc., with relevant legislative bodies.
Protection of New Plant Varieties
The United States and China agree to hold exchanges on the protection of new plant varieties through bilateral meetings and other means to be determined.
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COLLABORATIVE EVENTS
The 2015 JCCT featured a day of collaborative events that facilitated private sector engagement with public and private sector officials from both the United States and China. These events focused on important topics including: enhancing corporate governance and transparency; strengthening bilateral cooperation at the state, provincial and local levels; developing mutually beneficial healthcare initiatives; creating partnerships for safe and reliable food chains; and collaborating on issues related to urbanization and smart city development.