The International Trade Commission has begun two days of hearings today, announced in a news release, “EFFECT OF INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS IN CHINA ON U.S. ECONOMY AND JOBS TO BE INVESTIGATED BY U.S. INTERNATIONAL TRADE COMMISSION.”

The AP previews the hearings in an article, “China bid to spur innovation raises trade tensions.” Writing about China’s new procurement proposals called “indigenous innovation,” AP reports:

U.S. companies argue that the rules are intended to force them to partner with Chinese companies and turn over technology and intellectual property to them. Doing so would qualify them to sell to Chinese government agencies.

But Pat Mears, director of international commercial affairs at the National Association of Manufacturers, said that given China’s poor record in protecting patents, copyrights and other intellectual property, most U.S. companies prefer to keep their most vital technologies — “the crown jewels” — outside China.

“This is another effort at forced technology transfer,” she said.

The NAM’s Shaun Donnelly is testifying today before the ITC.

I’m gearing up to be one of the sixteen people, on three panels, speaking before the U.S. International Trade Commission (ITC) on China and Intellectual Property Rights (IPR) and Indigenous Innovation issues.  I plan to cover the following points tomorrow during tomorrow’s hearing:

• IPR is a huge priority issue for American manufacturers across the board; it is not a niche issue affecting only a few sectors or a few large companies.  American manufacturers, both small and large, depend on patents, trademarks, copyrights, and strong enforcement to protect our innovations, to bolster American global competitiveness, and to create good jobs here at home. 
• China is ground zero for IPR counterfeiting and piracy — 80 percent of IPR seizures by DHS agents in Fiscal Year 09 were from China.
• Such behavior on IPR, by China or anyone else, is unacceptable.  It is particularly unacceptable from an emerging global economic power such as China which has been a major beneficiary from the open rules-based global trading system.
• Similarly, China’s new “Indigenous Innovation” policy is also a concern for U.S. manufacturers.  Promoting innovation in China or anywhere else is not an excuse to discriminate against American goods or technologies.

Shaun Donnelly is Senior Director, International Business Policy, for the NAM.

The NAM applauds today’s announcement that the U.S. Trade Representative (USTR) is seeking to improve how trade policy can bolster the export opportunities of small and medium-sized enterprises (SMEs). As SMEs account for one-third of all U.S. exports, this is a very important step on the part of USTR. The NAM represents thousands of SME exporters and looks forward to working with USTR, Commerce, and other agencies on this very welcome initiative.

SMEs already benefit greatly from U.S. trade policy. For example, SMEs account for 95 percent of all U.S. exporters to NAFTA, and ship an average per company of $630,000 a year to that market – pretty important sales to smaller companies. And SMEs account for 44 percent of U.S. exports to the nations of CAFTA — averaging $440,000 per company.

However, while SMEs benefit strongly from Free Trade Agreements and multilateral tariff-cutting negotiations, some aspects of trade policy bear more heavily on SMEs than large exporters. For example, complex and confusing rules of origin (where a product is produced) and labeling requirements are extremely difficult to comply with for small firms. Different foreign product standards and costly testing and certification requirements can pose insurmountable obstacles for some smaller firms. Focusing new trade policy initiatives on these obstacles in addition to continued market opening could really boost smaller company exports.

USTR’s request that the International Trade Commission examine export obstacles and opportunities is a great next step. Expanded policy attention to the particular export challenges faced by SMEs can pay big dividends, particularly if coupled with expanded export promotion services to get the job done. The NAM thinks that doubling smaller company exports would be a great goal, adding over $300 billion to U.S. exports, and lots of high-paying jobs.