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China’s new foreign investment law may not be enough for US trade deal



Following the growing frustration of foreign companies about their ability to compete fairly with Chinese companies, the United States and China have become embroiled in commercial tensions last year.

Under US President Donald Trump, the rhetoric on spitting initially focused on the American trade deficit with China. This resulted in the application of customs duties for $ 250 billion of goods imported from China, to which Beijing counterattacked with US $ 110 billion worth of goods. In the last few months the negotiations between the two parties have increasingly focused on issues of property protection and claims of forced technology transfer.

Few details on progress in the talks have been made public. On Friday, Chinese state media claimed that the leaders of both trade delegations made a morning phone call to Beijing and made "substantial progress".

A few hours later, the symbolic meeting of the delegates approved the new foreign investment law. It took about three months from the time the NPC Standing Committee began to solicit comments on its first draft.

"He is coming on the run" Lester Ross, chairman of the policy committee of the American Chamber of Commerce in China, said in a telephone interview with CNBC on Thursday. "It does not grant this adequate time to the public comments of AmCham (and foreign companies). The law is drafted in a fairly general way."

Ross also noted that the project gave China the right to take revenge against a particular country for restricting the Chinese companies there. "The law offers more extensive retaliation," said Ross, who is also a partner in law firm Wilmer Cutler Pickering Hale and Dorr.

This clause essentially reinforces the inequality that foreign and Chinese companies have in accessing each other & # 39; countries. US companies have complained that China has less access than Chinese companies in America have.

But the Chinese government is clearly trying to prove that it has the interests of foreigners in mind. At the last minute, Beijing has even added a new language that provides further protection of trade and business secrets of foreign companies, according to a final draft revised by the US-China Business Council.

"The addition of language imposing criminal penalties for sharing sensitive information information on foreign companies adopts a much stronger deterrent against counterfeiting and theft (of intellectual property) and will offer new avenues for protection of intellectual property, "said Jake Parker, vice president of Chinese operations at the US-China Business Council. a declaration.

He noted that the council is "satisfied" with the new language. He warned that "the application will be the key metric to assess success, but the business community collectively called for years for the Chinese government to impose criminal sanctions for infringement (of intellectual property), we need to recognize this positive progress to this end ".

The law should be implemented on 1

January 2020. It is expected to abolish three existing regulations on joint venture companies, wholly foreign-owned companies and contractual joint ventures, according to an English translation of the project on Chinese law Translate.

In all, for foreign companies already looking at opportunities to profit from the world's second largest economy, the law gives them more incentives to enter China, Ross said: "It is moving in a good direction. Go quite far. "


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