According to a former trade official of White House, if Beijing deals strictly with intellectual property (IP) thefts, it would not only speed up the United States economy, but it would also boost investment in China. Taking some initiatives to protect trade secrets of foreign business operating in the second-largest economy of the world was also the part of the Phase One trade deal that the President of the United States Donald Trump signed with the Chinese President Xi Jinping on Wednesday.
Clete Willems, a partner at law organization Akin Gump, tells CNBC that according to him a most significant part of this trade deal was what the United States was able to attain on IP. Theft of trade secrets has been a long-term concern for the business of the U.S. as well as business across the globe. Willems was the former deputy director of the National Economic Council and served as the top negotiator for the U.S. at many-sided conferences like the G-20 and G-7.
China will impose big penalties on companies and Individuals accused of IP Theft
He clarified that the trade deal’s provisions to protect IP would make a difference for several companies doing business in China. They are going to face criminal consequences. They are going to face due process for the legal proceedings. Williams said that they are going to impose those penalties greater than they did in the past. There are provisions about counterfeit goods and pharmaceutical patents in the trade agreement.
The agreement of Wednesday takes steps to eradicate many practices by Beijing that annoyed the White House and Congress members from two parties, including IP theft and forced tech transfer from the United States companies in exchange for Chinese market access. It calls for Beijing to submit an Action Plan to strengthen IP protection within thirty days of the pact taking effect. The offer would include steps that Beijing will put to implement its responsibilities and the date by which each step will go into effect.
China Agrees to Purchase $200B of US exports
Under the Phase One trade deal signed on January 15, China will acquire an extra $200 billion in United States goods over the next two years.
Source: Trade Agreement between the United States and China
Part of the agreement also details at around $200 billion increase in China’s purchases of United States goods during two years along with commitment from China to allow firms to operate without any pressure to deliver their tech – that, together with the trade secrets protection supplies, are probably to have consequences for the United States technology sector, where companies want market access in China but also wary over how the officials of the government can access private information stored there.
Willems said that if you put it all together, it might be a massive boost for the United States economy. That really permits those people in China that want to transform their system and make it more market-oriented. Finally, better IP protection means more investment in China. Still, a few experts expressed their concerns about how the United States would certify China keeps up with its assurances.
Willems said the promise of more reduction in United States tariffs in the 2nd phase of the trade deal would likely be a motivation for China to implement this deal authentically. According to Willems, another option for the U.S should influence allies to work with the United States to enforce the deal in a multidimensional system to make it more maintainable and avoid Beijing from relapsing from its commitments.