WT/DS549/2  
 
11 June 2018  
(18-3599) Page: 1/2 
  Original: English  
 
CHINA - CERTAIN MEASURES ON THE TRANSFER OF TECH NOLOGY  
REQUEST TO JOIN CONS ULTATIONS  
Communication from Japan  
The following communication, dated 8 June 2018 , from the delegation of Japan  to the delegation 
of China , and the delegation of the European Union , is circulated to the Dispute Settlement Body in 
accordance with Article  4.11 of the DSU.  
 
_______________  
 
 
I wish to refer to the consultations requested by the European Union pursuant to Article 1 and 
Article 4 of the Understanding on Rules and Procedu res Governing the Settlement of Disputes  
("DSU"), Article XXII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") and 
Article 64 of the Agreement on Trade -Related Aspects of Intellectual Property Rights  
("TRIPS  Agreement") in the communication circulated to WTO Members on 6 June 2018, titled 
"China - Certain Measures on the Transfer of Technology " (WT/DS549/1, G/L/1244, IP/D/39 ). 
My authorities have instructed me to notify the consulting Members and the Dispute Settlement 
Body of t he desire of Japan to join in these consultations, pursuant to paragraph 11 of Article  4 of 
the DSU.  
The subject matter of the consultations requested by the European Union relates to Chinese 
measures pertaining to the transfer of foreign technology into C hina. Japan has a substantial trade 
interest in the consultations the European Union  requested for several reasons.  
First, China 's laws, regulations and other measures relating to technology transfers, which are 
identified in the request for consultations by the European Union, are legal instruments with 
respect to which Japan has held and expressed its concerns for several years. For example, Japan 
has expressly raised its concerns with these Chinese licensing regulations on patents and know -
how in its ann ual publication entitled "Report on Compliance by Major Trading Partners with Trade 
Agreements -WTO, EPA/FTA and IIA -."1 As the latest report states that "a number of restrictive 
clauses and mandatory warranties contained in the Administrative Ordinance (i .e. "TIER") are 
subject to concern from the point of view of Article 3 of the TRIPS Agreement (national treatment) 
in relation to Article 28(2) of the same Agreement with respect to the right of patent owners to 
conclude licensing contracts. "2, Japan has c ontinuing concern about the legal instruments 
identified in the request for consultations by the European Union, which have a commercial impact 
on Japanese companies that transfer technologies to Chinese partners.  
Second, Japan has been one of the major ex porters of technology to China. In recent years, the 
technology provided by Japanese companies to Chinese companies accounted for about 20% of 
the technology imported into China (in terms of number of contracts).3 Thus Japan is one of the 
largest stakehold ers in technology transfer to China.  
                                                
1 See, for example, the latest 2017 report, page 56 -70,  which is available at: 
http://www.meti.go.jp/english/report/data/2017WTO/gct17_1coe.html  
2 ibid, page 61  
3 China statistical yearbook on science and technology  WT/DS549/2  
 
- 2 - 
 
  Third, Japan is also one of the major foreign countries whose nationals possess patent rights in 
China. For example, in 2015, Japanese nationals filed approximately 40,000 applications for patent 
rights4 and approximate ly 36,000 patents were granted.5 As such, these patent rights possessed 
by Japanese nationals in China are subject to China 's technology transfer laws, regulations and 
other measures.  
Specifically, the Japanese companies which transfer technologies to Chin ese companies by 
contracts are directly affected by the Regulations of the People 's Republic of China on the 
Administration of the Import and Export of Technologies , one of the measures identified by the 
European Union, because this measure mandates such c ontractual terms in technology transfer 
agreements between foreign and Chinese partners that are disadvantageous to foreign partners, 
including Japanese companies. With respect to the regulations of China relating to joint ventures, 
the Regulations for the  Implementation of the Law of the People 's Republic of China on Chinese -
Foreign Equity Joint Ventures , for example, denies foreign patent holders the ability to enforce 
their intellectual property rights against Chinese joint -venture parties after their te chnology 
transfer contract expires. Thus, Japanese companies that have stakes in a joint -venture company 
with Chinese shareholders are directly affected, particularly when they have their technologies 
transferred to the joint -venture company.  
For these rea sons, Japan has a substantial trade interest in the consultations requested by the 
European Union, and wish to join in the consultation.  
 
__________  
                                                
4 SIPO statistics, Table 3 Distribution of Inventions Received from Major Countries and Regions 2015, 
which is available at: http://english.sipo.gov.cn/statistics/2015s/12/1061552.htm  
5 SIPO statistics, Table 6 Distribution of Grants for Inventions Received from  Major Countries and 
Regions 2015, which is available at: http://english.sipo.gov.cn/statistics/2015s/12/1061548.htm