I was watching a documentary on the trade war and in the documentary a claim is made about the practice of giving market access for technology transfer. They say it was illegal under the WTO, but I have actually heard the opposite claim and heard that the WTO want developed countries to transfer technology to developing countries. So who is right?
The EU certainly thinks so. If I'm reading this right, it's not a totally obvious issue that China signed up to require no technology transfers, but that the way the Chinese laws/regulations predicate approvals on these transfers, contravene to the more general WTO commitments of China to not limit the freedom of contract of enterprises in China. Furthermore China did sign up to not require anything but un-predicated technology transfers. (Now you understand why China insists, in response to complaints, that these transfers are completely voluntary.)
Here's a quote from the EU complaint:
The Regulations for the Implementation of the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures ("JV Regulation") operating separately or together with other listed instruments, notably the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures ("JV Law"), is inconsistent with China's commitments under Paragraph 7.3 of Part I of the Protocol on the Accession of the People's Republic of China ("Accession Protocol") and Paragraph 1.2 of Part I of the Accession Protocol, which incorporates the commitments under Paragraph 49 and Paragraph 203 of the Report of the Working Party on the Accession of the People's Republic of China to the WTO (“Working Party Report”). This is because China conditions the right of a foreign investor to invest in China upon the transfer of certain technology to the joint venture with a Chinese partner. In particular, by imposing requirements on the type of technology to be transferred to the joint venture, China prevents or restricts the possibility for a foreign investor to freely decide or freely agree with the joint venture partner on the type of technology to be transferred to the joint venture. China makes such requirements conditional on obtaining the necessary approvals by the national or sub-national authorities. For example,
[I'm skipping some, because the following seems the most damning:]
Pursuant notably to Articles 7, 11, 26 and 27 of the JV Regulation, details about the technology transferred to the joint venture by the foreign partner are part of the information that must be submitted to the Chinese authorities for examination to obtain approval of the joint venture. In particular, Article 27 provides that the technology contributed by the foreign parties shall be subject to the examination and approval by the competent authorities.
The JV Regulation and notably its Article 4(3), operating solely or together with other listed instruments, precludes the approval of a joint venture by the authorities if the project is not in conformity with the development of China’s national economy.
Pursuant to Paragraph 7.3 of its Accession Protocol, China committed to eliminate and cease to enforce performance requirements made effective through laws, regulations or other measures. Moreover, China committed not to enforce provisions of contracts imposing such requirements. China also committed to ensure that the means of approval by national and sub-national authorities of the right of investment would not be conditioned on performance requirements of any kind, such as local content, offsets, the transfer of technology, export performance or the conduct of research and development in China. Pursuant to Paragraph 203 of its Working Party Report, China committed that the allocation, permission or rights for importation and investment would not be conditional upon performance requirements set by national or sub-national authorities, or subject to secondary conditions covering, for example, the transfer of technology.
Contrary to the aforementioned commitments, the JV Law and the JV Regulation, operating separately or together with other listed instruments, impose performance requirements related to the transfer of certain technologies. Compliance with these requirements is a precondition for obtaining the necessary approvals by the Chinese authorities.
Pursuant to Paragraph 203 of its Working Party Report China committed that, consistently with its obligations under the WTO Agreement and the Protocol, the freedom of contract of enterprises would be respected by China. Furthermore, in Paragraph 49, second sentence, of its Working Party Report China committed that the terms and conditions of technology transfer, production processes or other proprietary knowledge, particularly in the context of an investment, would only require agreement between the parties to the investment. The European Union considers that China interferes in the technology transfer between enterprises contrary to Paragraph 1.2 of Part I of China’s Accession Protocol, which incorporates China’s commitment under the second sentence of Paragraph 49 of the Working Party Report, by subjecting to examination and approval by the Chinese authorities the technology contributed to the joint venture, and the joint venture contracts incorporating such technology. The European Union further considers that through the aforementioned restrictions China violates Paragraph 1.2 of Part I of the Accession Protocol, which incorporates commitments under the second sentence of Paragraph 49 and fifth sentence of Paragraph 203 of the Working Party Report, because these restrictions limit the freedom of contract of enterprises in China.
Basically the two bullets (from the Chinese regulations) set up a system in which the Chinese state can reject any joint venture after reviewing the technology transfer commitments, which must be disclosed in advance by the foreign party. And here's the text of the famous paragraph 49 (which that setup the EU claims it contravenes):
- The representative of China confirmed that China would only impose, apply or enforce laws, regulations or measures relating to the transfer of technology, production processes, or other proprietary knowledge to an individual or enterprise in its territory that were not inconsistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement") and the Agreement on Trade-Related Investment Measures ("TRIMs Agreement"). He confirmed that the terms and conditions of technology transfer, production processes or other proprietary knowledge, particularly in the context of an investment, would only require agreement between the parties to the investment. The Working Party took note of these commitments.
Technology transfer I think means technology have patent monopoly. WTO can't stop any public domain technology, any person can copy and use it.
If true WTO not allow transfer technology with patent monopoly, need wait for patent expire. But other way around this problem convince government revoke patent, or patent owner revoke patent, fail pay renew fee, or convince owner put patent in public domain early.