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22nd U.S.-China Joint Commission on Commerce and Trade Fact Sheet

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November 21, 2011

U.S. Commerce Secretary John Bryson and U.S. Trade Representative Ron Kirk, together with Chinese Vice Premier Wang Qishan, co-chaired the 22nd Joint Commission on Commerce and Trade (JCCT) in Chengdu, China on November 20-21, 2011.  U.S. Secretary of Agriculture Tom Vilsack also took part in the discussions to address agricultural concerns.  Other participants included U.S. Ambassador to China Gary Locke, U.S. Trade and Development Agency Director Leocadia Zak, and representatives from the State and Treasury Departments.  Senior Chinese officials from 23 ministries and agencies also attended.

The following outcomes were achieved.  Industry facts and figures appear in italics.

TECHNOLOGY AND INNOVATION POLICIES

Open and non-discriminatory innovation policies will help boost U.S. advanced technology exports to China, which have grown steadily since China joined the World Trade Organization, and reached $29.6 billion in 2010.  These exports to China have outpaced U.S. advanced technology exports globally, reflecting the growing prominence of China’s market.

New Energy Vehicles (NEVs)

China plans to manufacture one million New Energy Vehicles annually by 2015 and five million annually by 2020.

  • China confirmed that it does not and will not maintain measures that mandate the transfer of technology.  China clarified that “mastery of core technology” does not require technology transfer for NEVs. 
  • The Chinese government confirmed that the establishment of brands is a corporate decision and that the Chinese government does not and will not impose any requirements for foreign-invested companies to establish domestic brands in China. 
  • China confirmed that foreign-invested enterprises are eligible on an equal basis for subsidies or other preferential policies for NEVs with Chinese enterprises, and that these subsidies and preference programs will be implemented in a manner consistent with WTO rules.  In addition, China affirmed that as it develops possible future NEV support programs, the views of all stakeholders will be considered, including the comments and opinions of the United States.

Indigenous Innovation

  • China announced that the State Council has issued a measure requiring governments of provinces, municipalities and autonomous regions to eliminate by December 1, 2011 any catalogues or other measures linking innovation policies to government procurement preferences.

 Intellectual Property Rights and Non-discrimination

  • Building on the innovation principles agreed to in the 2011 APEC Leaders’ Declaration, China and the United States agree to use the JCCT Intellectual Property Rights Working Group to study investment, tax and other regulatory measures outside of government procurement, with the first phase of study in 2012 covering investment and tax, and the second phase in 2013 covering key measures in other areas, to determine whether the receipt of government benefits is linked to where intellectual property is owned or developed, or to the licensing of technology by foreign investors to host country entities.  The two sides will actively discuss removal of these barriers that distort trade and investment.

INTELLECTUAL PROPERTY RIGHTS

Intellectual Property Rights Enforcement Leadership Structure

  • China has established a State Council-level leadership structure, headed by Vice Premier Wang Qishan, to lead and coordinate intellectual property rights (IPR) enforcement across China.  Through the establishment of this mechanism, China will enhance its ability to crack down on IPR infringement by making permanent the leadership structure under the recent Special IPR Campaign.

Software Legalization

In 2009, the commercial value of unlicensed software marketed in China exceeded $7.5 billion. 

  • China, under the leadership of Vice Premier and Member of the State Council, Wang Qishan, will continue to take measures to ensure that governments at all levels use only legitimate software, ensuring that all the types of software used by government agencies are licensed. China has requested government agencies at all levels to bring software into state asset management systems, and will increase resources devoted to conducting audits and inspections, and will publish the auditing results as required by China’s law to ensure that all types of software used by government agencies are being accurately accounted for. To promote efficiency and accuracy in these audits and inspections, government agencies will further improve management of their software assets, including by the use of technical means.
  • By the middle of 2012, Vice Premier and Member of the State Council Wang Qishan committed that the provincial legalization program for all the 31 provincial entities will be completed, and by 2013, the software legalization program for the municipal and county level governments will also be completed.
  • In addition, China will further promote the use of licensed software in enterprises and conduct enterprise software management pilot projects and publish progress reports about these projects.
  • China and the United States will strengthen engagement on the implementation of software legalization in both government and enterprises.

 STRATEGIC, NEWLY EMERGING INDUSTRIES

China plans to invest $1.5 trillion in these sectors in the next five years.

  • China assured the United States that it will provide a fair and level playing field for all companies, including U.S. companies, in China’s strategic, newly emerging industries, including high-end equipment manufacturing, energy-saving and environmentally-friendly technologies, biotechnologies, new generation information technologies, alternative energy, advanced materials and new energy vehicles.

MEDICAL DEVICES

China is the world’s third largest market for medical equipment and is expected to become the second largest market in the next few years.  Based on the estimates, total market size was over $12 billion in 2009 and is expected to be $18 billion by 2010.  

Down Classification

  • China’s State Food and Drug Administration (SFDA) has carefully researched and studied lowering the risk classification of certain x-ray and in-vitro diagnostic (IVD) equipment, including consulting with industry stakeholders, so that the classification will more appropriately reflect medical device risk and match international norms.  As a result, SFDA will issue by June 2012 a complete list of x-ray equipment to be placed in a lower category and endeavors to release a draft IVD equipment catalogue for public comment by June 2012.

Safety Standards

  • The United States and China recognize that timely transition from the 2nd edition to the 3rd edition of IEC 60601-1 safety standards for medical devices is important and is an area where they can benefit from closer cooperation and exchange.  China’s SFDA is conducting in-depth research and drafting of 3rd edition transition procedures, which will be part of SFDA’s 2012 work plan.  The United States and China will participate in an information exchange program to take place in 2012.

PHARMACEUTICALS

Regulatory Data Protection

  • To build upon the successful bilateral discussions at the June 2011 JCCT Roundtable on Regulatory Data Protection, China and the United States agree to conduct more in-depth research and exchanges on how China can establish and implement effective regulatory data protection through the revision of relevant legislative instruments.  Having established in 2011 that effective regulatory data protection plays a positive role in fostering innovation, future joint activities will explore regulatory data protection’s role in the development of the overall pharmaceutical industry and ensuring patients’ timely access to innovative medicines.

Counterfeit Drugs

  • China announced the establishment and funding of the Complaint Center for Counterfeit Drugs which includes, among other things, a consumer hotline, website, and a data analysis unit.  SFDA is collaborating closely with China’s Ministry of Industry and Information Technology and Ministry of Public Security to monitor and crack down on websites involved in the sale and distribution of counterfeit medicines.  The U.S. government and the U.S. pharmaceutical industry will share with SFDA instances of counterfeit drugs in China when such information is available.

SMART GRID TECHNOLOGIES

State Grid Corporation of China plans to invest $100 billion in a smart grid by 2030.

  • China stated that the Standardization Administration of China and the National Energy Administration follow the principles of openness and transparency in the development of national and industry standards.  China confirmed that foreign entities are welcome to participate in China’s smart grid standards technical committees. 
  • China welcomed continued bilateral cooperation with the United States on smart grid standards, including under the Energy Cooperation Program framework. 

STANDARDS AND CONFORMITY ASSESSMENT

20 percent of all U.S. exports to China will benefit from time and cost savings through improvements to the China Compulsory Certification mark process.

  • In response to a U.S. request to permit participation of non-Chinese entities in the China Compulsory Certification (CCC) scheme, China agreed to conduct technical exchanges with the United States concerning the CCC mark.
  • China stated that it welcomes competent foreign participation in its CCC technical experts group.

TELECOMMUNICATIONS GOODS

For a given piece of telecommunications equipment, it can cost between U.S. $30,000-35,000 to test for all three licenses required in the China market. 

  • Building on the 2010 JCCT commitment to develop a one-stop shopping mechanism for telecommunications network access license and radio type approval, China agreed to publish these procedures by the end of 2011. 

TELECOMMUNICATION SERVICES

Private-sector experts predict value-added telecommunications services will continue to grow rapidly in China, with Internet subscribers projected to increase from 457 million in 2010 to 609 million in 2015, and broadband subscribers to increase from 126 million in 2010 to 462 million in 2015. 

  • China intends to publish in draft and allow public comment on the revision to its value-added telecommunications services catalogue.

TRAVEL AND TOURISM

Every $100,000 spent by international travelers to the United States supports one American job.  Since the initiation of travel under the Memorandum of Understanding in June 2008, the United States has received a total export value of $13 billion from Chinese travelers.  Spending by Chinese visitors is expected to grow 232 percent to $16.6 billion by 2016, moving up from the seventh largest source of tourism for the U.S. market in 2010 to the third in 2016.

  • China and the United States agreed to expand the Memorandum of Understanding opening the market for the sale of packaged leisure travel from China to the United States to three additional provinces – Henan, Jiangxi and Guizhou – for a total of 27.

COOPERATIVE ACTIVITIES

Intellectual Property Rights Working Group

Online Counterfeiting

  • The U.S. and China agree to enhance efforts to combat online sales of counterfeit products with a U.S.-China government/industry program in spring 2012 to identify new approaches to combating the sale of infringing hard goods on online markets.

Online and Library Copyright Protection

  • The United States and China will hold government/industry roundtables in China to discuss online copyright protection and enforcement, including library copyright protection in 2012.

Broadcast Tariff Rates

  • China’s broadcast and television associations and relevant U.S. counterparts will enhance their communications and exchanges concerning broadcast tariff rates.  This exchange will be held with the support of the U.S. and Chinese governments. 

Bad Faith Trademark Filings

  • The United States and China agree to continue and enhance their work to address the issue of bad faith trademark registrations, with continued engagement between Chinese, U.S. and other international counterparts to come up with solutions to reduce bad faith filings and improve and streamline the opposition/cancellation process with respect to such filings. 

Patent Quality

  • The United States and China agree to deepen their dialogue on issues related to patent quality and examination times for invention, utility model, and design patents to address specific issues of concern for U.S. and Chinese companies.

Commercial Law Working Group

China and the United States agreed to reinvigorate the Commercial Law Working Group to promote trade and commerce by addressing commercial law issues.  The working group will meet in the United States in the spring of 2012 to focus on enhancing our mutual understanding of the two sides’ administrative licensing procedures.  During the first meeting in 2012, each side will deliver a detailed introduction on its relevant central/federal laws governing administrative licensing, and will discuss how to bring in the Chinese and the U.S. business communities and other relevant governmental departments in further dialogue.

The U.S. Department of Commerce and the Ministry of Commerce successfully led the 2011 U.S.-China Legal Exchange, the 16th such exchange under the JCCT. During this Legal Exchange, representatives from the Government of China informed members of the U.S. business, legal, and academic communities in San Francisco, Denver, and Atlanta of recent improvements in China’s commercial rule of law.  To promote greater U.S.-China trade by increasing mutual understanding of the rules governing commerce, the Chinese representatives described developments in China’s antitrust merger review and tort and product liability legal regimes.  Both sides agreed to convene the 2012 Legal Exchange in China, and to work together promptly to agree on the topics of the exchange and the cities in China where it will take place. 

Cloud Computing

The United States and China agreed to hold a Cloud Computing Seminar in the first half of 2012 to exchange best practices in approaches to cloud computing.

Motorcycles

The U.S. Department of Commerce and China’s Ministry of Commerce announced a forum will be held on motorcycle use and regulation. 

Specialty Automotive Products

The U.S. auto specialty equipment industry was worth an estimated $29 billion in 2010.

The U.S. Department of Commerce and China’s Ministry of Commerce agree to discuss specialty auto products including safety, environmental and other regulation in the United States and China, as well as to hold discussions on the current state of the industry and its market potential. 

APEC Life Sciences Innovation Forum

China and the United States worked cooperatively, in a leadership role, to advance the communication on drug detection technologies at the APEC Life Sciences Innovation Forum Drug Safety and Detection Technology Workshop held in Beijing in September 2011.

Express Delivery

Estimates of China’s express delivery market totaled $5 billion for 2010, a 17 percent increase from 2009, according to publically available reports.

China and the United States agree to hold the Sixth U.S.-China Symposium on Postal Reform and Express Delivery Services in 2012 in the United States.  

Remanufacturing

The United States is a world leader in remanufactured goods.  Remanufacturing in the United States accounts for 90 percent of the market for certain replacement auto parts and is responsible for creating roughly 680,000 jobs.  

The United States and China held a successful U.S.-China Remanufacturing Dialogue in October 2011.  The United States and China will continue to discuss remanufacturing in the industry sectors that it occurs in globally, with participation from all relevant agencies and ministries, industry stakeholders, and academic experts from both countries. 

Agricultural Cooperation

The U.S. Department of Agriculture and China’s Ministry of Agriculture and General Administration of Quality Supervision, Inspection and Quarantine are finalizing the framework of a five year strategic plan focused on food security, food safety and sustainable agriculture to build a stronger foundation for critical cooperation in agriculture.