On Friday 1 June, the European Union launched a case at the World Trade Organisation (WTO) against forced transfers of technology to China, saying that the Chinese legislation undermines the intellectual property rights of European companies.
The European Commission says that European companies that operate in China are forced to grant ownership or usage rights of their technology to domestic Chinese entities and are deprived of the ability to freely negotiate market-based terms in technology transfer agreements. The Commission deems that these practices run counter to the basic rights that companies should enjoy under WTO rules and disciplines, in particular under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).
The EU case targets specific provisions under the Chinese regulation on the import and export of technologies (the TIER regulation) and the regulation on Chinese-foreign equity joint ventures (the JV Regulation) that discriminate against non-Chinese companies and treat them worse than domestic ones.
For the Commission, these provisions violate WTO obligations to treat foreign companies on an equal footing with domestic ones, and to protect intellectual property like patents and undisclosed business information.
"Technological innovation and know-how is the bedrock of our knowledge-based economy. It's what keeps our companies competitive in the global market and supports hundreds of thousands of jobs across Europe. We cannot let any country force our companies to surrender this hard-earned knowledge at its border", European Trade Commissioner Cecilia Malmström stated.
If there is no satisfactory solution at the end of the WTO consultations with China within 60 days, the EU will be able to request that the WTO sets up a panel to rule on the matter.
The Commission says that while the EU's complaint is similar to the one brought to the WTO by the US on 23 March (DS542), the EU also identifies further potential violations of WTO rules. (Original version in French by Emmanuel Hagry)