Intellectual Property Dimension of the EU-China Comprehensive Agreement on Investment: The EU Approach Against Non-Market-Mediated International Technology Transfer

To compete economically and geopolitically, a country needs to have access to cutting-edge technology, which is often proprietary, protected by intellectual property rights (IPRs) including patents or trade secrets. Before countries can innovate indigenously, they need to catch up. One can distinguish between market-mediated and non-market-mediated methods of international technology transfer. This chapter explores the EU approach to China’s non-market-mediated international technology transfer. Two USTR 301 Reports and an EU request for consultation with China at the WTO, provided incentives for China to include prohibitions of technology transfer in both the Foreign Investment Law and Administrative License Law. Nevertheless, after the promulgation of these laws, prohibitions against forced technology transfer were included in first the US-China Economic and Trade Agreement (“Phase One”), and then in the EU-China Comprehensive Agreement on Investment (CAI). At different moments in its history, China has relied on non-market-mediated technology transfer. As a truly developing country that was opening up in 1978, this was justified and effective. Anno 2022, just one year short of the World Bank prediction that China will become a high-income country, non-market-mediated international technology transfer might be counterproductive to China’s ability to indigenously innovate.