ITIF Welcomes Firm Stand Against Chinese Innovation Mercantilism

August 2, 2017

WASHINGTON—August 2, 2017—The Information Technology and Innovation Foundation (ITIF), America’s top-ranked science- and tech-policy think tank, today released the following statement from Stephen J. Ezell, ITIF vice president for global innovation policy, regarding the Trump administration’s plans to initiate an investigation into Chinese trade practices that harm the rights of U.S. enterprises that rely on intellectual property (IP) and advanced technologies:

China has the dubious distinction of being the world’s leading innovation mercantilist. Among other trade violations, it has long coerced companies into handing over their proprietary technologies and intellectual property as the price of doing business in China. This must stop. We applaud the administration for taking a firm stand. Opening a Section 301 investigation can be a good start. It doesn’t have to be the first shot in a trade war; it can be a first step in ensuring we maintain a fair and open global trading system.

Policies such as forced IP and tech transfer are flagrant violations of the market-access commitments China made in joining the World Trade Organization. Yet as ITIF has thoroughly documented, China unabashedly imposes such innovation mercantilist policies across a wide range of strategically important industries—from automobiles and high-speed rail to information and communications technologies, to the life sciences.

Open and unfettered trade between the United States and China remains in the best interests of both U.S. and Chinese enterprises, and it is the foundation of a healthily functioning global economy. The aim of the administration’s 301 investigation should be to deter China’s innovation mercantilist practices and demonstrate seriousness of purpose in upholding the rules. The United States and other like-minded nations must insist that China wholeheartedly comply with the core principles of rules-governed, market-based trade that is conducted in accordance with the concepts of non-discrimination and transparency. That is the system China signed up to join. A U.S.-Chinese trade war is in no one’s interest, but it is well past time that Washington send a clear message that Beijing needs to faithfully uphold its full slate of WTO commitments.

For more ITIF analysis of issues related to China’s innovation mercantilism, see: