And what's the definition of done (victory)?
of their behavior on the issue, no.
It will be like North Korea. There is a defacto recognition that they are going to keep most of their nuke capacity.
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analogous.
Orange will claim victory even if N Korea remains nuclear armed. He will also claim victory over China if he gets some concessions, even though he doesn’t get substantial change in their behavior.
Maybe a lot of the corporate world also sees things this way.
I do not think Trump has the intelligence and political smarts to pull this off, but I give him some scant credit for trying.
Ideally victory would be some copyright laws actually enforced, and the opening of Chinese markets to American businesses, as well as dropping of tariffs.
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If Trump gets the Chinese to lower some of their tariffs, then he can (and should) declare victory. But it will come at a cost, and that may well outweigh the benefits.
Then again, if the Chinese dig in their heels, or if this goes on for a long time, it might be a disaster.
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Example: China raises taxes to higher levels, then allows companies to lower the taxes down to the original lower rates by transferring IP and technology to China corporations from elsewhere. They provide overwhelming incentives in this way, basically forcing the transfer of ownership of IP from US companies to China companies...which make it totally under control of China. When your subsidiary, to which you transferred patents, is nationalized, what can you do?
Patents have to be transferred, but in order to get the tax benefits, the patents have to cover a technology which you use in China. I can't just transfer a patent to get the tax benefit...I have to show the tax authorities how the patent is used on an actual manufacturing line in China. It is not enough to sell a technology product there; you have to make it there...which trains your competitors, given the speed of movement of labor there.
ANd, that secret mixture the company has?...you can try to do half in the US, and half in China, but at least some of it has to go to China, where you lose control of your trade secrets. Some have suggested to me that if you have good technology, it is safe to say that more than one of your IT guys gets two paychecks, one from you, and one from the PRC.
And, when employees disappear with your trade secrets in the old fashioned way (without government enabled espionage), what do you do? Litigation is always a 3 party process. Your patent being infringed by a China competitor?...sue them, and you will discover that there are 3 parties in the courtroom, not two: you, the infringer, and the PRC government. Even if you have a 100% rock solid case, if that case goes against the long term interests of the PRC, you will lose. A factor is whether it is in the interests of the PRC to allow you to recover damages, or to allow their local company to continue infringing. There are crazy decisions in China courts...decisions that totally disregard IP law. Yes, there have been some prominent wins by Western companies against PRC corporations, but I am convinced that this is on purpose, for the media splash...just to give the West a case or two to talk about so that people can credibly (apparently) argue that things are changing, and the PRC protects the interests of Western companies.
And, by the way, law firms have government agents in their offices...there is no privileged conversation under China law. Have an IP problem? The files of every law firm are open to the PRC government as a routine matter, no warrent or official investigation required...mere nosiness can be used to justify opening up your files. Government agents can literally sit in on internal meetings at the law firm after you leave.
I appreciate the specifics. Most people just throw out that they are stealing IP. That can mean a lot of things. It can mean freely infringing IP rights without much enforcement. That problem is as old as the hills, and is slowly getting better. It can also mean "industrial espionage" (you've got some examples). This is actually stealing the technology, as opposed to merely the economic benefit of the technology. Your specifics are helpful.
Just to recap the first two paragraphs - a Chinese subsidiary of a U.S. company has high tax rates. They can lower it by transferring patents (I assume Chinese patents?). If they have technology and only license it to the subsidiary, they still have the same tax rate. If they have technology and assign it to the subsidiary, then they get a lower tax rate (assuming they show how it is used). I guess I don't understand what triggers the higher tax rate in the first place. If you have no technology (you make lollipops or toothbrushes), do you pay the higher rate anyway because you have no IP to transfer? Also, is the requirement of showing use merely a variant of our "Best Mode" requirement? Isn't the quid pro quo of patents to disclose how the invention is made or used?
As far as the trade secrets, that kind of industrial espionage stuff is no doubt a problem. I just don't see what could be in a trade deal to solve it. Countries can sign anything they want. If they are going to be dishonest, then they will be dishonest.
The court battles are the same. 30 years ago you would not have dreamed of winning a case in China. Now, they are taking baby steps toward a more even playing field. It may be going slowly, but again, I don't know what "official" thing they can promise to do that will change that culture.
The last problem appears to be one that is addressable and specifically codifiable. I was not aware of government agents being in law firms, but I suppose it doesn't surprise me. This seems like a specific problem that can be addressed.
China patents (and China utility models count for 1/6 of a patent).
Licensing doesn't help. It used to be that you could transfer granted patents. You can still do that, but it is now discounted if the patent is transferred instead of being filed in the name of the local company in the first place. Anyone who wishes to play the game in China needs to file in the name of a local entity. (Don't do a joint venture over there...but that is another issue.) In other words, it is usually best to assign the rights to the application before it is filed. As far as I can tell, the PRC tax authorities treat that as if the patent were invented in China. (By the way, the China tax authorities change the rules almost yearly, so what I say now may be obsolete in the next go-round.
"If you have no technology (you make lollipops or toothbrushes), do you pay the higher rate anyway because you have no IP to transfer?" Yes, but you can always file 6 utility models (which are not examined for novelty) on each product line you have. Lollipops and toothbrushes can be patented as well!
"Also, is the requirement of showing use merely a variant of our "Best Mode" requirement? Isn't the quid pro quo of patents to disclose how the invention is made or used?" No. They don't care about best mode. They care that their people have high tech jobs. They don't want a company to transfer a patent merely to enforce that patent against another company, thereby shutting down jobs in China. They want the patent to be practiced...their primary focus is jobs. So, you get the tax benefit if you are employing people with the patented concept.
I agree that much of the problem is difficult to address directly as part of a trade deal. However, I think even partial concessions would progress, and could be called a victory.
In my opinion, this is a golden opportunity for countries like Vietnam. Trump could really drive change in China if he and Shinzo Abe flew to Vietnam (and maybe a few others) and announced a major 3-way trade deal. China would have to worry about that...and they might grant some major concessions. Vietnam has a lot of potential, I think. But, as we've seen with India, it is always hard to predict when potential will become actual. The one thing China has that India does not, is a reliable power grid. Vietnam and other countries like them would do well to invest heavily in their infrastructure...I'm talking major investment. Companies are looking for an alternative to China, but the options are limited, as China has cheap labor and good infrastructure.
India will have a difficult time becoming China because it lacks an authoritarian government that has the luxury of making 30 year plans.
Vietnam? it's barely been more than 30 years since their country was devastated. It could well blossom.
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of it.
NAFTA 2 isn’t bad. It just isn’t that big a change and won’t have a huge impact. Far cry from what Orange was promising.
employer china had reverse engineered technology and then put it on the black market. the problem is the chinese government would not stop it. they pay little attention to world court decisions and billions of dollars of IP have been stolen for their benefit.
It is foolish for a US company to negotiate for US law and US jurisdiction in an agreement with a China corporation. Once they get the desired decision in the US, and try to enforce it in China, they will find out that they have to re-litigate the entire issue in China, because the local court will ignore foreign courts. And, at that point, they will wish they did not negotiate for US law and jurisdiction. The translations, the certifications in triplicate from the China embassy of US documents...total nightmare. The bottom line is that you will have to litigate in a China Court no matter what, so it is probably better to do it with a Chinese language agreement under China law.
Instead, they reverse engineer and copy. We need to pressure them to be more open in every respect. It is both of our interests.
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Societies that are run by obsessive compulsive central state bureaucrats are practically devoid of creativity. Mao's China was one of the most backward and non-creative countries in the world.
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Of course the Chinese create things, but they also specialize in copying US technology because we still create and commercialize faster than they do (to generalize).
To further generalize, most creation in the electronics industry is done by companies in the US, Japan, Germany, Scandinavian countries, S.Korea and perhaps even Taiwan. Of course, China is learning fast. But, copying western technologies is still rampant there. They are much better at copying than we are because many companies there make all their money off of copies...they are very efficient at it.
The two things the current administration seems focused on are trade deficits and China’s theft of intellectual property.
Balance of payments will never be close to equal. For as far as the eye can see into the future, China will be able to provide cheap goods to US consumers and the US will never be able to match that with the value of goods and services we provide to them. That is simply an economic fact of life and all the playing around with tariffs won’t change that.
Neither the US nor the rest of the world have been able to devise any way to stop China’s intellectual property theft up to this point and there is no reason to think we will be able to do that in the future.
I don't think returning to what we had before is victory. (Not saying it was bad, it just made the war meaningless).
I don't think anything where we have higher tariffs on imported goods is a victory.
I do think the outcome can very possibly avoid those two things. I picture a modest reduction in some tariffs for goods exported to China over what they were in 2016, and our tariffs returning to what they were.
However, no Trump supporter can seem to point to what they are looking for. Just vague statements about fairness and intellectual property. Let's face. Trump probably doesn't know either. This way, if there is progress on any front at all he can claim victory.
My hope is that protectionism and trade war is not his goal, but rather a means to an end...a negotiating tactic towards a better end for the US, whatever that end is. We threaten war to assure peace...that type of thing. I don't know if these new strategies will work. But, I don't think the status quo was the answer. I'm willing to give Trump's plan a shot, but his efforts in this regard are not the basis of my support for him.
I think he may have run on a hint of protectionism to gain support, but I think in practice he's been all about trying to get China to lower its tariffs.
Weimar Germany, and pre revolutionary France weren’t working well. In recent times on a smaller scale you could point to Iraq, Libya, Iran under the Shah, and Mubarrack’s Egypt. What came with the change in each case though was infinitely worse.
I grant you that Trump's policies may accelerate the rate at which we go there, but his policies have the chance to help, which the GOP and Dem policies do not.
I've said it before many times:
- The Dems want to drive towards the cliff at 80 mph.
- The GOP want to drive towards the cliff at 60mph.
- Trump wants to turn the wheel so fast we may crash...but we may not.
The third option sounds best to me, even if he is an ass.
You are willing to toss that away rather than mend it, for isolationist, nationalistic populism?
Like we haven’t seen what that leads to before.
That’s not turning the wheel. It’s hitting the accelerator to 120.
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Standing up to Russia...I'll throw that one in for your benefit.
Unfortunately, he is saddled with a Republicrat Congress that wants to slow him down while still running up the debt.
Repealing regulation is a standard R message. You think that’s going to stop the coming slowdown? Correcting trade imbalances always helps that doesn’t it? See post 1929 tariff policy.
Standing up to Russia I will take as a poor attempt at humor.
You would replace the post war order for that weak sauce? Sad.
The R's always accept growth in government, and move on. The same with being fiscally conservative...they talk the talk, but they don't walk the walk. That is too bad, but that is the status quo that I hoped Trump would be able to change. I think he's made progress on regulations, but definitely not on spending.
Regarding his trade policy...it is interesting that you say "at what cost." You look at an opening gambit of a negotiation as if it is the final goal, and you cry, "At what cost!?" If the opening gambit were the goal, then I might be as worried as you are, but I don't think it is, so I'm not. I could be wrong of course. But, if he want's X, he needs to demand 3X and negotiate downward, even if people like you will scream "3X?!!! That's outrageous!!" and then "He only got X when he tried for 3X. What a failure!"
My Russia comment was an attempt at humor, since I know you too well. Trump has fought the Russians in Syria, and provided arms to Ukraine, sanctioned Russia, put troops in Poland, bolstered air defense of the Baltic states, and his tough love operates to make a stronger and more independent NATO which is definitely against Russia's interest. He could definitely do more (although he has already been more anti-Russia than Obama), but it is a balancing act.
The benefit is negligible. Most of the industries that it affects are no longer competitive without government props.
The tax cut was a short term sugar boost which is fine, but if not accompanied by spending restraint will also be counterproductive in the long run.
What we really need to do is retrain our workforce. Germany has done some of that already. Repetitive idiot, labor intensive work isn’t the future.
He may push the nation over the cliff if he gets another term. Regulation reform by fiat which can also be undone by fiat is sure worth that risk.
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and I think this has plagued many trade agreements is that US had put the “spread”’of capitalism and democracy above our best interests. in and of itself, trade deficits are not a big deal...until
it gives another country great influence on our financial and labor markets. China has reached that point, as did japan 20-30 years ago. beyond free and fair trade, the US should limit agreements that do not contain our set of rules and regulations. other countries always will win, as ross perot pointed out, when they don’t have to worry about labor laws, pollution and other workplace regulations.