WT/DS549/1/Rev.1  
G/L/1244/Rev.1  
IP/D/39/Rev.1  
 
8 January  2019 
(19-0085) Page: 1/10 
  Original: English  
 
CHINA - CERTAIN MEAS URES ON THE TRANSFER  OF TECHNOLOGY  
REQUEST FOR CONSULTA TIONS BY THE EUROPEAN UNION  
Revision  
The following communication, dated 20 December 2018 , from the delegation of the European Union  
to the delegation of China , is circulated to the Dispute Settlement Body in accordance with Article  4.4 
of the DSU.  
 
_______________  
 
 
My authorities have instructed me to request consultations with the Government of the People's 
Republic of China ("China"), pursuant to Articles 1 and 4 of the Understan ding on Rules and 
Procedures 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 Agreem ent") (to the extent that Article 64 of the TRIPS 
Agreement corresponds to Article XXII of the GATT 1994 ), with respect to certain Chinese measures 
pertaining to the transfer of foreign technology into China. This request replaces the European 
Union's requ est for consultations with China dated 1 June 2018 and circulated to the WTO Members 
on 6 June 2018, on certain measures on the transfer of technology.1 
Through its domestic legislation, China restricts the access and operation of foreign investment in 
its territory, by conditioning the approval of foreign investments upon performance requirements, 
including requirements related to the transfer of technology and the conduct of research and 
development in China. In addition, China imposes measures that adver sely affect the protection of 
intellectual property rights of foreign companies, which transfer technology into China, including in 
the context of joint ventures with Chinese companies. In this respect, China discriminates against 
foreign companies by impo sing on them conditions, which are less favourable than those applicable 
to the transfer of technology between Chinese companies.  
Investment into China is regulated inter alia through a system of negative lists/catalogues which, 
depending on the sector con cerned, classify investments as "encouraged ", "restricted " or 
"prohibited ". In certain sectors Chinese legislation requires foreign investors to establish joint 
ventures with Chinese companies, and/or imposes caps on the equity that foreign investors can 
hold. Joint ventures between foreign and Chinese companies need to obtain t he necessary approvals 
by the Chinese authorities to be established in China. Chinese legislation also imposes a number of 
sector -specific requirements on companies, including Sino -foreign joint ventures and other types of 
foreign -invested companies, to ob tain certifications, licenses, permits or other types of 
administrative approvals to operate their businesses in China.  
Through its domestic legislation, China conditions the right to invest in China, including the possibility 
to access and operate in the Chinese market by foreign investors, foreign invested companies and 
joint ventures between foreign and Chinese companies, upon performance requirements, including 
in relation to the transfer of technology and the conduct of research and development in Chin a, 
contrary to China's WTO obligations.  
                                                
1 WT/DS549/1, G/L/1244, IP/D/39.  WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  In addition, through its domestic legislation, China imposes a different set of rules on the import of 
technology, including industrial property rights, other intellectual property rights and undisclosed 
information ("intellectual property rights"), than the rules, which are applicable to technology 
transfers occurring between Chinese companies. The Chinese measures at issue discriminate against 
foreign holders of intellectual property rights, and restrict the foreign  right holders' ability to protect 
certain intellectual property rights in China, contrary to China's WTO obligations.  
China imposes restrictions on the rights of foreign intellectual property right holders to freely 
negotiate market -based contractual term s in licensing and other technology -related contracts 
concerning the transfer of technology to China. Notably, China appears to impose mandatory 
contract terms for contracts concerning the import of technology into China that discriminate against 
and are l ess favourable for foreign intellectual property rights holders. In addition to being 
discriminatory, these mandatory contract terms also appear to restrict intellectual property right 
holders who import technology into China in their ability to protect th eir intellectual property rights 
in China.  
The legal instruments through which China imposes and administers these measures, include the 
following, operating separately or collectively:  
• Notice on Issuing the National Medium -and Long –Term Science and Techno logy 
Development Plan Outline  (2006 -2020) (State Counci l, Guo Fa [2005] No. 44, issued  
December 26, 2005);  
• Opinions on Encouraging Technology Importing and Innovation and Promoting Changes in 
Pattern of Trade Growth (MOFCOM, NDRC, MOST, MOF, GAC, SAT, SIPO , SAFE, Shang FU 
Mao Fa [2006] No. 13, issued July 14,  2006) ; 
• State Council Decision on Accelerating and Cultivating the Development of Strategic 
Emerging Industries (State Council, Guo Fa [2010] No. 32, issued October 10, 2010);  
• CCP Central Committee Deci sion on Several Major Issues for Comprehensively Deepening 
Reform, CCP Central Committee, issued November 12, 2013 (Third Plenary Session of the 
18th National Congress of the CCP);  
• Notice of the State Council on Printing and Distributing the "China Manufac turing 2025" , 
(State Council, Guo Fa [2015] No. 28, issued May 8, 2015);  
• The 13th Five-Year Plan for Economic and Social Development of the People 's Republic of 
China (2016 -2020) , translated by Compilation and Translation Bureau, Central Committee 
of the Communist Party of China Beijing, China , available at http://en.ndrc.gov.cn/ ;  
• Auto Industry Development Policy, NDRC Decree No. 8, issued in 2004, revised in 2009;  
• Energy -Saving and New -Energy Automotive Industry Development Plan (2012 -2020) (NEV 
Plan) (State Council, Guo Fa [2012] No. 22, issued June 28, 2012);  
• Notice on printing and issuing Medium and Long Term Development Planning of Vehicle 
Industry, Ministry of Industry and Information Technology, National De velopment and 
Reform Commission and Ministry of Science and Technology, MIITLZ [2017] No. 53, issued 
on April 25, 2017;  
• Catalogue of Industries for Guiding Foreign Investment (2017 Revision) (Order No. 4 NDRC, 
MOFCOM, promulgated on 28 June 2017, effective  on 28 July 2017);  
• Special Management Measures for the Market Entry of Foreign Investment (Negative List) 
(2018 Version) , (Order No. 18, NDRC, MOFCOM, promulgated on 28 June 2018, effective on 
28 July 2018);  
• Law of the People 's Republic of China on Chinese -Foreign Equity Joint Ventures (adopted at 
the Second Session of the Fifth National People 's Congress on July 1, 1979, effective July 8, 
1979, in Order No. 7 of the Chairman of the Standing Committee, amended April 4, 1990, WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  in Executive Order No. 27, furth er amended March 15, 2001, in Executive Order No. 48, and 
September 3, 2016, in Executive Order No. 51, effective on October 1, 2016);  
• Regulations for the Implementation of the Law of the People 's Republic of China on Chinese -
Foreign Equity Joint Ventures (State Council, Guo Fa [1983] No. 148, issued September 20, 
1983, effective September 20, 1983, amended January 15, 1986, in Guo Fa [1986] No. 6, 
further amended December 21, 1987, in Guo Fa [1987] No. 110, July 22, 2001, in Order of 
the State Council No. 311, January 8, 2011, in Order of the State Council No. 588, and 
February 19, 2014, in Order of the State Council No. 648);  
• Seed Law of the People's Republic of China (amended and adopted at the 17th Session of 
the Standing Committee of the 12th National P eople's Congress of the People's Republic of 
China on November 4, 2015, in Order No. 35 of the President of the People's Republic of 
China, promulgated on 11 April 2015, effective on 1 January 2016 ); 
• Measures for the Administration of Crop Seed Production and Operation Licenses , (Order No. 
5 of 2016 of the Ministry of Agriculture of the People's Republic of China, issued on 15 August 
2016);  
• Administration of the Examination, Approval and Registration of Foreign -invested Crop Seed 
Enterprises Provisions (promulgated by the Ministry of Agriculture, State Planning 
Commission, MOFTEC and State Administration for Industry and Commerce on and effective 
as of 8 September 1997);  
• New Energy Vehicle Production Enterprises and Product Admissions Regulations (including  
Annex 1 on Review Requirements for Access of New Energy Vehicle Manufacturers ), (Decree 
of the Ministry of Industry and Information Technology No. 39 of 6 January 2017, reviewed 
and passed at the 26th Ministerial Meeting of the Ministry of Industry and Inf ormation 
Technology of the People 's Republic of China on October 20, 2016 and adopted on 6 January 
2017, effective 1st of July 2017);  
• Provisions on Administration of Newly Established Pure Electric Passenger Vehicle 
Enterprises, Order No. 27 of the Nationa l Development and Reform Commission and the 
Ministry of Industry and Information Technology, issued and effective on July 10, 2015;  
• Foreign Trade Law of the People 's Republic of China (adopted at the Eighth Session of the 
Standing Committee of the Seventh National People 's Congress on May 12, 1994, effective 
July 1, 1994, in Executive Order No. 22, amended by the Eighth Session of the Standing 
Committee of the Tenth National People 's Congress on April 6, 2004, effective July 1, 2004, 
in Executive Order No. 15, further amended November 7, 2016, in Executive Order No. 57);  
• Regulations of the People 's Republic of China on the Administration of the Import and Export 
of Technologies (Order of the State Council No. 331, issued December 10, 2001, effective 
January  1, 2002, amended January 8, 2011, in Order of the State Council No. 588);  
• Measures for the Administration of Registration of Technology Import and Export Contracts 
of the People's Republic of China, (Order No.3 [2009] of the Ministry of Commerce, 
promulg ated on February 1st, 2009, effective on March 3rd, 2009) (repealing the Measures 
for the Administration of Technology Import and Export Contracts Registration (Decree No. 
17, 2001 of the Ministry of Foreign Trade and Economic Cooperation);  
• Contract Law of  the People 's Republic of China (adopted at the Second Session of the Ninth 
National People 's Congress on March 15, 1999, effective October 1, 1999, in Executive Order 
No. 15);  
• Interpretation of the Supreme People's Court concerning Some Issues on Application of Law 
for the Trial of Cases on Disputes over Technology Contract  (Judicial interpretation 
promulgated by Supreme People's Court on 16 December 2004 and effective as of 1 January 
2005);  WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  • Working Measures for Outbound Transfer of Intellectual Pr operty Rights (For Trial 
Implementation) , (State Council, Guo Ban Fa [2018] No. 19, issued March 18, 2018, 
effective March 29, 2018);  
• Questions and Answers around Regulations on Administration of Technology Import and 
Export of People 's Republic of China , Finance Law Department of the Legislative Affairs Office 
of the State Council, April 2002;  
• Anti-Unfair Competition Law of the People's Republic of China (Order of the President of the 
People's Republic of China No. 77, adopted on November 4, 2017, effective January 1, 
2018);  
• Anti-Monopoly Law  (Order of the President of the People's Republic of China No. 68 adopted 
on August 30, 2007, effective August 1, 2008);  
• Provisions for Administrative Authorities for Industry and Commerce on Prohibiting Abuses 
of Dominant Market Positions (Order No. 54 of the State Administration of Industry and 
Commerce (SAIC), adopted on December 31, 2010, effective February 1, 2011);  
• Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude and Restrain 
Competition (Order No. 74 of the State Administration for Industry and Commerce (SAIC), 
adopted on April 7, 2015, effective August 1, 2015);  
• Catalogue of Technology Restricted or Prohibited from Import  (Order No. 7 [2007] of the 
Ministry of Commerce, promul gated on October 23, 2007, effective on November 22, 2007);  
• Catalogue of Technology Restricted or Prohibited from Export (Order No. 12 [2008] of the 
Ministry of Commerce and Ministry of Science and Technology, promulgated on September 
16, 2008, effective o n November 1st, 2008);  
• Encouraged Catalogue of Technology and Products for Import , issued by NDRC and MOFCOM 
on 9 September 2016;  
• Several Opinions of the Ministry of Commerce and the Ministry of Science and Technology 
on Encouraging Technology Export (Shang Fu Mao Fa [2009] No. 584, issued on July 12, 
2009);  
• Law of the People 's Republic of China on Progress of Science and Technology , (Order of the 
President of the People 's Republic of China, No. 82, amended and adopted at the 31st 
Meeting of the Standin g Committee of the Tenth National People 's Congress of the People 's 
Republic of China on December 29, 2007, effective July 1, 2008);  
• Unpublished measures through which China imposes and administers the above referred 
restrictions;  
• as well as any annexes or  schedules thereto, amendments, supplements, extensions, 
replacement measures, renewal measures, related measures, or implementing measures.  
In particular, the European Union considers that:  
(1) The Regulations for the Implementation of the Law of the People 's Republic of China on 
Chinese -Foreign Equity Joint Ventures  ("JV Regulation") operating separately or together with 
other listed instruments, notably the Law of the People 's Republic of China on Chinese -Foreign 
Equity Joint Ventures  ("JV Law"), is inconsis tent with China's commitments under Paragraph 
7.3 of Part I of the Protocol on the Accession of the People's Republic of China2 ("Accession 
Protocol") and Paragraph 1.2 of Part I of the Accession Protocol, which incorporates the 
commitments under Paragraph 49 and Paragraph 203 of the Report of the Working Party on 
the Accession of the People's Republic of China to the WTO3 ("Worki ng Party Report "). This is 
                                                
2 WT/L/432.  
3 WT/ACC/CHN/49.  WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  because China conditions the right of a foreign investor to invest in China upon the transfer 
of certain technology to the joint venture with a Chinese partner. In particular, by imposing 
requirements on the type of technology to  be transferred to the joint venture, China prevents 
or restricts the possibility for a foreign investor to freely decide or freely agree with the joint 
venture partner on the type of technology to be transferred to the joint venture. China makes 
such requ irements conditional on obtaining the necessary approvals by the national or sub -
national authorities. For example,   
• Article 5 of the JV Law  requires that the technology and equipment contributed by a 
foreign partner to a joint venture be advanced and sui table to the needs of China. 
Moreover, Article 5 of the JV Law  requires the foreign partner to the joint venture to 
pay compensation if losses occur due to the intentional supply of outdated technology 
or equipment;  
• Article 41 of the JV Regulation  provide s that the technology acquired by the joint venture 
must be appropriate and advanced  and enable the joint venture 's products to display 
conspicuous social and economic results domestically or be competitive on the 
international market ; 
• Pursuant notably to Articles 7, 11, 26 and 27 of the JV Regulation , details about the 
technology transferred to the joint venture by the foreign partner are part of the 
information that must be submitted to the Chinese authorities for examination to obtain  
approval of the joint venture. In particular, Article 27 provides that the technology 
contributed by the foreign parties shall be subject to the examination and approval by 
the competent authorities.  
• The JV Regulation  and notably its Article 4(3), operati ng solely or together with other 
listed instruments, precludes the approval of a joint venture by the authorities if the 
project is not in conformity with the development of China 's national economy.  
Pursuant to Paragraph 7.3 of its Accession Protocol,  China committed to eliminate and cease 
to enforce performance requirements made effective through laws, regulations or other 
measures. Moreover, China committed not to enforce provisions of contracts imposing such 
requirements. China also committed to ensure  that the means of approval by national and 
sub-national authorities of the right of investment would not be conditioned on performance 
requirements of any kind, such as local content, offsets, the transfer of technology, export 
performance or the conduct of research and development in China. Pursuant to Paragraph 203 
of its Working Party Report , China committed that the allocation, permission or rights for 
importation and investment would not be conditional upon performance requirements set by 
national or sub -national authorities, or subject to secondary conditions covering, for example, 
the tra nsfer of technology.  
Contrary to the afore mentioned commitments, the JV Law  and the JV Regulation,  operating 
separately or together with other listed instruments, impose performance requirements 
related to the transfer of certain technologies. Compliance  with these requirements is a 
precondition for obtaining the necessary approvals by the Chinese authorities.  
Pursuant to Paragraph 203 of its Working Party Report  China committed that, consistently 
with its obligations under the WTO Agreement and the Prot ocol, the freedom of contract of 
enterprises would be respected by China. Furthermore, in Paragraph 49, second sentence, of 
its Working Party Report  China committed that the terms and conditions of technology 
transfer, production processes or other proprie tary knowledge, particularly in the context of 
an investment, would only require agreement between the parties to the investment.  
The European Union considers that China interferes in the technology transfer between 
enterprises contrary to Paragraph 1.2 of  Part I of China 's Accession Protocol, which 
incorporates China 's commitment under the second sentence of Paragraph 49 of the Working 
Party Report, by subjecting to examination and approval by the Chinese authorities the 
technology contributed to the joint  venture, and the joint venture contracts incorporating such 
technology. The European Union further considers that through the afore mentioned 
restrictions China violates Paragraph 1.2 of Part I of the Accession Protocol, which incorporates WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  commitments und er the second sentence of Paragraph 49 and fifth sentence of Paragraph 203 
of the Working Party Report, because these restrictions limit the freedom of contract of 
enterprises in China.  
(2) The New Energy Vehicle Production Enterprises and Product Admissions Regulations  ("NEV 
Regulation "), operating separately or together with other listed instruments, are inconsistent 
with China 's commitments under Paragraph 7.3 of Part I of China 's Accession Protocol  and 
Paragraph 1.2 of Part I of the Accession Protocol, whi ch incorporates the commitments under 
Paragraph 49 and Paragraph 203 of its Working Party Report. This is because, through the 
NEV Regulation, operating separately or together with other listed instruments, China imposes 
performance requirements on foreign  auto manufacturers as conditions for foreign investors 
to access and operate in the New Energy Vehicle (NEV) market in China; notably, the 
mandatory requirements to understand and master relevant technologies, and to possess 
specific tools, equipment, sof tware, facilities, production capacity and other capabilities. China 
also imposes a set of general requirements to access and operate in the NEV market that 
include, among others, the localisation of relevant production, operations and research and 
develop ment activities in China. Through  the approval processes established under Chinese 
law and carried out by the relevant Chinese authorities, China interferes in the technology 
transfer between enterprises  and conditions foreign investment on performance req uirements. 
For example,  
• Under Item I(2), first paragraph, of Annex 1 of the NEV Regulation , enterprises applying 
for access to the NEV market in China  are required to understand and master 
technologies pertinent to the development and manufacturing of NEV s; 
• Under Item I(2), point (5) of Annex 1 of the NEV Regulation , enterprises applying for 
access to the plug -in hybrid electric vehicle (PHEV) market are required to also 
understand and master technologies of the control systems for engine 
and electromechan ical coupling devices;  
• Under Item I(2), point (5) of Annex 1 of the NEV Regulation , enterprises applying for 
access of the fuel cell electric vehicle (FCEV) market are required to understand and 
master technologies related  to fuel cell system control and h ydrogen storage system 
control;  
• Under Item I(5) of Annex I of the NEV Regulation, enterprises applying for access to 
the NEV market in China  are required to possess necessary tools, software and 
equipment for the development of vehicles and related systems , and to have certain 
development capabilities.  
• Under Item II(9) of Annex I of the NEV Regulation, enterprises applying for access to 
the NEV market in China  are required to have certain production capacity, including 
specific production tools, equipment a nd machinery.  
• Under Item I(1), first paragraph of Annex I of the NEV Regulation , enterprises applying 
for access to the NEV market in China  are generally required  to set up a design and 
development institution exclusively for product design and manufactu ring process 
development in China;  
• Under Item I(3), first paragraph of Annex I of the NEV Regulation , enterprises applying 
for access to the NEV market in China  are generally required to establish and maintain 
on the Chinese territory specific software and  hardware, manuals and other design 
documentation;  
• Under Item I(4) points (1) to (3) of Annex I of the NEV Regulation , enterprises applying 
for access to the NEV market in China  are generally required to establish product 
information databases in China tha t include a number of specific data and information, 
such as performance data, drawings, technical and design specifications;  
The European Union considers that China violates its commitments under Paragraph 7.3 of 
Part I of the Accession Protocol and Parag raph 1.2 of Part I of the Accession Protocol, which WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  incorporates the commitments under Paragraph 203 of the Working Party Report, which 
require China not to condition approval by Chinese authorities of the right of investment on 
performance requirements of  any kind, such as the transfer of technology or the conduct of 
research and development in China. This is so, because the requirements established under 
the NEV Regulation , condition access to the NEV market in China, on the transfer of 
technology, software, tools and equipment to the joint ventures in China, and to localise 
production capabilities in China. Through the NEV Regulation, China also establishes a set of 
genera l requirements for approval, which include the establishment of design and 
development facilities in China, and the conduct of research and development activities in 
China.  
(3) The Administration of the Examination, Approval and Registration of Foreign -invest ed Crop 
Seed Enterprises Provisions ("Seed FIE Approval Provisions "), operating separately or together 
with other listed instruments, is inconsistent with China 's commitments under Paragraph 7.3 
of Part I of China 's Accession Protocol  and Paragraph 1.2 of Part I of the Accession Protocol, 
which incorporates the commitments under Paragraph 203 of its Working Party Report. This 
is because this law imposes requirements which relate to the transfer of technology, genetic 
material and biotechnology to China as c onditions for the approval of foreign -invested crop 
seed enterprises. For example,  
• Article 4(1) requires that the foreign party to a foreign -invested crop seed enterprise 
shall be an enterprise that possesses a high level of scientific seed breeding, and seed 
production technology and enterprise management. The same requirement does not 
apply to the Chinese party of the foreign -invested crop seed enterprise.  
 
• Article 4(2) requires that the foreign -invested crop seed enterprise be capable of 
introducing or adopting superior varieties (germplasm resources), advanced seed 
technology and equipment from abroad.  
In addition, the Measures for the Administration of Crop Seed Production and Operation 
Licenses ("Seed Measures "), operating separately or together with other listed instruments, 
are inconsistent with China 's commitments under Paragraph 7.3 of Part I of China 's Accession 
Protocol  and Paragraph 1.2 of Part I of the Accession Protocol, which incorporates the 
commitments under Paragraph 203 of its Working Par ty Report. These Measures require 
foreign -invested enterprises applying for seed production and business licenses to meet 
specific targets in the investment in scientific research, thus conditioning the approval for the 
granting of the necessary licenses o n the conduct of research and development in China. For 
example,  
• Article 9(4) establishes specific research and development investment targets as 
percentages of the company 's income or in absolute financial terms, as conditions to 
meet in order for a comp any to obtain the necessary licenses for seed production;  
• Article 12 requires that companies applying for a seed production license submit detailed 
documentation including descriptions of the company 's research and development 
activities.  
The European Unio n considers that China violates its commitments under Paragraph 7.3 of 
Part I of the Accession Protocol and Paragraph 1.2 of Part I of the Accession Protocol, which 
incorporates the commitments under Paragraph 203 of the Working Party Report, which 
require  China not to condition approval by Chinese authorities of the right of investment on 
performance requirements of any kind, such as the transfer of technology or the conduct of 
research and development in China. This is so, because the requirements establi shed under 
the Seed FIE Approval Provisions and the Seed Measures condition access to the seed market 
in China, on the transfer of technology, biotechnology, valuable genetic material and valuable 
equipment to the joint ventures in China, as well as on the  conduct of research and 
development activities in China.  
(4) The Regulations for the Implementation of the Law of the People 's Republic of China on 
Chinese -Foreign Equity Joint Ventures  ("JV Regulation"), operating separately or together with 
other listed in struments, are inconsistent with Article 28.1(a) and (b), Article 28.2, Article 33, WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  Article 39.1, 39.2 and with China 's commitment to provide national treatment under 
Article  3(1) of the TRIPS Agreement (each Article either solely or in conjunction with th e 
others). Furthermore, they are inconsistent with China 's commitment under Paragraph 1.2 of 
Part I of China 's Accession Protocol, which incorporates the commitments of Paragraph 49 and 
Paragraph 203 of the Working Party Report. This is because China impos es restrictions on the 
rights of foreign intellectual property right holders, notably, on their right to freely negotiate 
and agree on market -based contractual terms in licensing and other technology -related 
contracts concerning the import of technology to  China. For example:  
• Point (3) of the second paragraph to Article 43 of the JV Regulation provides that the 
duration of a technology transfer agreement is generally no longer than 10 years;  
• Point (4) of the second paragraph to Article 43 of the JV Regulati on provides that the 
technology importing party retains the right to use the transferred technology 
continuously, after the expiration of the technology transfer agreement;  
• The first paragraph of Article 43 of the JV Regulation provides a general examinati on 
and approval requirement for any technology transfers agreements entered into by a 
joint venture.  
With respect to foreign patent holders, China violates Article 33 of the TRIPS Agreement, 
according to which the term of patent protection should be at le ast 20 years. In addition, it 
violates Article 28.1(a) and (b) of the TRIPS Agreement, because it unduly limits the exclusive 
rights of foreign patent holders. Furthermore, China limits the rights of foreign patent holders 
to assign or transfer by successi on patents and to conclude licensing contracts, contrary to its 
obligations under Article 28.2 of the TRIPS Agreement.  Because of these restrictions, China 
also fails to ensure effective protection for foreign intellectual property rights holders of 
undisc losed information contrary to its obligations under Article 39.1 and 39.2 of the TRIPS 
Agreement.   
Domestic intellectual property right holders are not subject to such restrictions; China thus 
affords less favourable treatment to foreign intellectual property rights holders as compared 
to Chinese intellectual property rights holders, contrary to Article  3(1) of the TRIPS 
Agreement.  
Because the restrictions at issue are contrary to China 's obligations under the TRIPS 
Agreement, China also violates Paragraph 1.2 of Part I of the Accession Protocol, which 
incorporates China 's commitments under the first se ntence of Paragraph 49 of China 's Working 
Party Report on Accession.  
The European Union considers that China interferes in the technology transfer between 
enterprises contrary to Paragraph 1.2 of Part I of China 's Accession Protocol, which 
incorporates Chi na's commitment under the second sentence of Paragraph 49 of the Working 
Party Report, by subjecting to examination and approval by the Chinese authorities any 
technology transfers agreements entered into by a joint venture.  
The European Union further considers that through the afore mentioned restrictions China 
violates Paragraph 1.2 of Part I of the Accession Protocol, which incorporates commitments 
under the fifth sentence of Paragraph 203 of the Working Party Report, becau se the 
restrictions set out in the JV Regulation as regards the terms and conditions of technology 
transfer limit the freedom of contract of enterprises in China.  
(5) The Regulations of the People 's Republic of China on the Administration of the Import and 
Export of Technologies ("TIER"), operating separately or together with other listed 
instruments, are inconsistent with Article 28.1(a) and (b), Article 28.2, Article 39.1 and 39.2 
and with China 's commitment to provide national treatment under Article 3(1) o f the TRIPS 
Agreement (each Article either solely or in conjunction with the others). Furthermore, they 
are inconsistent with China 's commitment under Paragraph 1.2 of Part I of the Accession 
Protocol, which incorporates, the commitments of Paragraph 49 an d Paragraph 203 of the 
Working Party Report. This is because China imposes restrictions on the rights of foreign 
intellectual property right holders, notably, on their right to freely negotiate and agree on WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  market -based contractual terms in licensing and o ther technology -related contracts 
concerning the import of technology to China. For example:  
• Article 24 TIER requires that licensors of imported technology indemnify licensees for 
all liabilities for infringement resulting from the use of the transferred t echnology;  
• Article 27 TIER requires that any improvements to imported technology belong to the 
party making the improvement;  
• Article 29 TIER restricts the terms of import technology contracts by prohibiting certain 
clauses in import technology transfer con tracts. In particular, Article 29(3) TIER 
provides that a technology import contract cannot contain clauses restricting the 
transferee from improving the technology supplied by the supplying party, or restricting 
the receiving party from using the improved  technology;  
Foreign transferors of technology are subject to certain administrative burdens pursuant to 
Articles 10 through 21 TIER. Notably, importers of technologies that are restricted from 
imports are required to obtain a technology import license fro m the competent Chinese 
authorities. Moreover, copies of all contracts must be provided to the Chinese authorities and 
all contracts for the import of freely importable technologies must be notified to and registered 
by the Chinese authorities. These admin istrative requirements apply again, if a contract is 
subsequently amended or terminated;  
China unduly limits the exclusive rights of foreign patent holders contrary to Article 28.1(a) 
and (b) of the TRIPS Agreement. China also limits the rights of foreign patent holders to assign 
or transfer by succession patents and to conclude licensing contracts, contrary to its obligation 
under Article 28.2 of the TRIPS Agreement. Because of these restrictions, China also fails to 
ensure an effective protection for fore ign intellectual property rights holders of undisclosed 
information contrary to its obligations under Article 39.1 and 39.2 of the TRIPS Agreement.  
Domestic  intellectual property right holders are not subject to these restrictions in the context 
of domest ic technology transactions. As a result, through the measures at issue China accords 
less favourable treatment to foreign intellectual property right holders compared to Chinese 
intellectual property right holders, contrary to Article 3(1) of the TRIPS Agr eement.  
Pursuant to the first sentence of Paragraph 49 of China 's Working Party Report on Accession, 
China committed to only impose, apply or enforce laws, regulations or measures relating to 
the transfer of technology, production processes, or other prop rietary knowledge to an 
individual or enterprise in its territory that were not inconsistent with the WTO Agreement on 
Trade -Related Aspects of Intellectual Property Rights ("TRIPS Agreement"). Through the 
measures at issue, which are contrary to China 's obligations under the TRIPS Agreement, 
China thus also violates its commitments under the Working Party Report and thus violates 
Paragraph 1.2 of Part I of the Accession Protocol, which incorporates Paragraph 49 of China 's 
Working Party Report.  
The European  Union considers that China interferes in the technology transfer between 
enterprises contrary to Paragraph 1.2 of Part I of China 's Accession Protocol, which 
incorporates China 's commitment under the second sentence of Paragraph 49 of the Working 
Party Re port, by requiring importers of technology to re -/submit their contracts to the Chinese 
authorities for licensing or registration and to obtain the required approvals. Furthermore, 
China violates Paragraph 1.2 of Part I of the Accession Protocol, which inc orporates 
commitments under the fifth sentence of Paragraph 203 of the Working Party Report, because 
the restrictions set out in the TIER as regards the terms and conditions of technology transfer, 
limit the freedom of contract of enterprises in China.  
(6) Finally, China applies and administers its laws, regulations and other measures governing the 
transfer of technology into China with a view of inducing the transfer of foreign technology to 
China, which is contrary to China's obligations under Article X.3(a)  of the GATT 1994 and 
Paragraph 2(A)2 of the Accession Protocol, because it does not constitute impartial and 
reasonable application and administration of its laws, regulations and other measures.  WT/DS549/1/Rev.1 • G/L/1244/Rev.1 • IP/D/39/Rev.1  
 
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  China's measures adversely affect exports to China of techn ology, including intellectual 
property rights, by European Union undertakings and also nullify or impair the benefits 
accruing to the European Union and its Member States directly or indirectly under the cited 
agreements.  
The European Union reserves its r ights to raise additional measures and claims regarding the 
above matters during the course of these consultations and in any future request for panel 
proceedings.  
 
 
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