Last week, China amended a draft of a proposed foreign-investment law in an effort to address global concern over forced technology transfers. The new law, which bans officials from divulging corporate secrets, was approved by the Chinese legislature on Friday. The amendments were made shortly before the law was put to a vote and are seen as a concession to the U.S. as part of the ongoing trade negotiations.
Chinese forced technology transfers are one of three main unfair trade practices enumerated in the Section 301 Report that formed the basis for “301 tariffs” aimed at Chinese imports.
While the amendments to the foreign investment law appear to be a step in the right direction, it remains unclear what their impact will be given that Chinese law already banned the sharing of trade secrets. The new law is set to go into effect next January.
On Tuesday, before the U.S. Senate Finance Committee, U.S. Trade Representative Lighthizer expressed hope that U.S. and Chinese negotiators are in the final stages of trade negotiations. It remains to be seen what kinds of enforcement provisions will be incorporated into any U.S.-China agreement concerning forced technology transfers.