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[Federal Register Volume 82, Number 163 (Thursday, August 24, 2017)]
[Notices]
[Pages 40213-40215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-17931]

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. USTR-2017-0016]

Initiation of Section 301 Investigation; Hearing; and Request for 
Public Comments: China's Acts, Policies, and Practices Related to 
Technology Transfer, Intellectual Property, and Innovation

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of initiation of investigation; hearing; and request for 
comments.

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SUMMARY: The United States Trade Representative has initiated an 
investigation pursuant to the Trade Act of 1974, as amended (the Trade 
Act), to determine whether acts, policies, and practices of the 
Government of China related to technology transfer, intellectual 
property, and innovation are actionable under the Trade Act. The inter-
agency Section 301 Committee is holding a public hearing and seeking 
comments in connection with this investigation.

DATES: The United States Trade Representative initiated the 
investigation on August 18, 2017. The schedule and due dates are as 
follows:
    To be assured of consideration, written comments and requests to 
appear at the hearing must be submitted by Thursday, September 28, 2017 
at 11:59 p.m. The request to appear must include a summary of 
testimony.
    Tuesday, October 10, 2017: The Section 301 Committee will convene a 
public hearing in the main hearing room of the U.S. International Trade 
Commission, 500 E Street SW., Washington, DC 20436, beginning at 9:30 
a.m. If necessary, the hearing may continue on the next business day.
    To be assured of consideration, post-hearing rebuttal comments must 
be submitted by Friday, October 20, 2017 at 11:59 p.m.

ADDRESSES: You should submit written comments through the Federal 
eRulemaking Portal: http://www.regulations.gov. Follow the instructions 
for submitting comments in section II below. For alternatives to on-
line submissions, please contact Gwendolyn Diggs at (202) 395-3150 
before transmitting a comment and in advance of the relevant deadline.

FOR FURTHER INFORMATION CONTACT: For procedural questions concerning 
written comments or participating in the public hearing, contact 
Gwendolyn Diggs at (202) 395-3150. Direct all other questions regarding 
this notice to William Busis, Deputy Assistant U.S. Trade 
Representative for Monitoring and Enforcement and Chair of the Section 
301 Committee, or Katherine Linton and Arthur Tsao, Assistant General 
Counsels at (202) 395-3150.

SUPPLEMENTARY INFORMATION

A. The President's Memorandum

    On August 14, 2017, the President issued a Memorandum (82 FR 39007) 
to the United States Trade Representative stating inter alia:

    China has implemented laws, policies, and practices and has 
taken actions related to intellectual property, innovation, and 
technology that may encourage or require the transfer of American 
technology and intellectual property to enterprises in China or that 
may otherwise negatively affect American economic interests. These 
laws, policies, practices, and actions may inhibit United States 
exports, deprive United States citizens of fair remuneration for 
their innovations, divert American jobs to workers in China, 
contribute to our trade deficit with China, and otherwise undermine 
American manufacturing, services, and innovation.

    The Memorandum included the following instruction:

    The United States Trade Representative shall determine, 
consistent with section 302(b) of the Trade Act of 1974 (19 U.S.C. 
2412(b)), whether to investigate any of China's laws, policies, 
practices, or actions that may be unreasonable or discriminatory and 
that may be harming American intellectual property rights, 
innovation, or technology development.

    Pursuant to the President's Memorandum, on August 18, 2017, the 
United States Trade Representative initiated an investigation under 
section 302(b) of the Trade Act (19 U.S.C. 2412(b)) to determine 
whether acts, policies, and practices of the Government of China 
related to technology transfer, intellectual property, and innovation 
are unreasonable or discriminatory and burden or restrict U.S. 
commerce.

B. The Chinese Government's Acts, Policies and Practices

    The acts, policies and practices of the Government of China 
directed at the transfer of U.S. and other foreign technologies and 
intellectual property are an important element of China's strategy to 
become a leader in a number of industries, including advanced-
technology industries, as reflected in China's ``Made in China 2025'' 
industrial plan, and other similar industrial policy initiatives. The 
Chinese government's acts, policies, and practices take many forms. The 
investigation initially will consider the following specific types of 
conduct:
    First, the Chinese government reportedly uses a variety of tools, 
including opaque and discretionary administrative approval processes, 
joint venture requirements, foreign equity limitations, procurements, 
and other mechanisms to regulate or intervene in U.S. companies' 
operations in China, in order to require or pressure the transfer of 
technologies and intellectual property to Chinese companies. Moreover, 
many U.S. companies report facing vague and unwritten rules, as well as 
local rules that diverge from national ones, which are applied in a 
selective and non-transparent manner by Chinese government officials to 
pressure technology transfer.
    Second, the Chinese government's acts, policies and practices 
reportedly deprive U.S. companies of the ability to set market-based 
terms in licensing and other technology-related negotiations with 
Chinese companies and undermine U.S. companies' control over their 
technology in China. For example, the Regulations on Technology Import 
and Export Administration mandate particular terms for indemnities and 
ownership of technology improvements for imported technology, and other 
measures also impose non-market terms in licensing and technology 
contracts.
    Third, the Chinese government reportedly directs and/or unfairly 
facilitates the systematic investment in, and/or acquisition of, U.S. 
companies and assets by Chinese companies to obtain cutting-edge 
technologies and

[[Page 40214]]

intellectual property and generate large-scale technology transfer in 
industries deemed important by Chinese government industrial plans.
    Fourth, the investigation will consider whether the Chinese 
government is conducting or supporting unauthorized intrusions into 
U.S. commercial computer networks or cyber-enabled theft of 
intellectual property, trade secrets, or confidential business 
information, and whether this conduct harms U.S. companies or provides 
competitive advantages to Chinese companies or commercial sectors.
    In addition to these four types of conduct, interested parties may 
submit for consideration information on other acts, policies and 
practices of China relating to technology transfer, intellectual 
property, and innovation described in the President's Memorandum that 
might be included in this investigation, and/or might be addressed 
through other applicable mechanisms.

C. Relevant Provisions of the Trade Act

    Section 302(b)(1)(A) of the Trade Act authorizes the United States 
Trade Representative to initiate an investigation to determine whether 
conduct is actionable under section 301 of the Trade Act.
    Actionable conduct under section 301(b)(1) includes, inter alia, 
acts, policies and practices of a foreign country that are unreasonable 
or discriminatory and burden or restrict U.S. commerce. Unreasonable 
actions are those that while not necessarily in violation of, or 
inconsistent with, the international legal rights of the United States 
are otherwise unfair and inequitable.
    Pursuant to section 302(b)(1)(B), the United States Trade 
Representative has consulted with appropriate advisory committees. The 
United States Trade Representative also has consulted with members of 
the inter-agency Section 301 Committee. On the date of initiation, the 
United States Trade Representative requested consultations with the 
Government of China concerning the issues under investigation, pursuant 
to section 303(a)(1) of the Trade Act (19 U.S.C. 2413(a)(1)).
    Pursuant to section 304(a)(2)(B) of the Trade Act, 19 U.S.C. 
2414(a)(2)(B), the United States Trade Representative must determine 
within 12 months from the date of initiation of the investigation 
whether any act, policy, or practice described in section 301 of the 
Trade Acts exists and, if that determination is affirmative, what 
action, if any, to take.

II. Request for Comments and To Testify at the Hearing

A. Topics and Schedule

    The Office of the U.S. Trade Representative (USTR) invites written 
comments on:
    1. The acts, policies, and practices of the Chinese government 
described in Section I.B above.
    2. Information on other acts, policies and practices of China 
relating to technology transfer, intellectual property, and innovation 
as described in the President's Memorandum, which might be included in 
this investigation, and/or might be addressed through other applicable 
mechanisms.
    3. The nature and level of burden or restriction on U.S. commerce 
caused by the applicable acts, policies and practices of the Government 
of China, and/or any economic assessment of that burden or restriction.
    4. The determinations required under section 304 of the Trade Act, 
that is, whether actionable conduct exists under section 301(b) and 
what action, if any, should be taken.
    To be assured of consideration, USTR must receive initial written 
comments by 11:59 p.m. on September 28, 2017, in accordance with the 
instructions in section II.B below.
    The Section 301 Committee will convene a public hearing in the main 
hearing room of the U.S. International Trade Commission, 500 E Street 
SW., Washington DC 20436, beginning at 9:30 a.m. on October 10, 2017. 
Persons wishing to appear at the hearing must provide written 
notification of their intention and a summary of the proposed testimony 
by 11:59 p.m. on September 28, 2017, in accordance with the 
instructions in section II.B below. Remarks at the hearing may be no 
longer than five minutes to allow for possible questions from the 
Section 301 Committee. The deadline for submission of post-hearing 
rebuttal comments is 11:59 p.m. on October 20, 2017.
    Indicate in the ``Type Comment'' field if you are submitting a 
request to appear at the hearing, and include the name, address and 
telephone number of the person presenting the testimony. A summary of 
the testimony should be attached by using the ``Upload File'' field. 
The file name should include the name of the person who will be 
presenting the testimony.

B. Requirements for Submissions

    Persons submitting a notification of intent to testify, a summary 
of testimony, or written comments must do so in English, and must 
identify this matter (on the reference line of the first page of the 
submission) as ``Section 301 Investigation: China's Acts, Policies, and 
Practices Related to Technology Transfer, Intellectual Property, and 
Innovation.''
    To be assured of consideration, you must submit written comments, 
requests to testify, and summaries of testimony by 11:59 p.m. on 
September 28, 2017. The deadline for submitting rebuttal comments is 
11:59 p.m. on October 20, 2017.
    All submissions must be in English and sent electronically via 
www.regulations.gov using docket number USTR-2017-0016. You must make 
any alternative arrangements in advance of the relevant deadline and 
before transmitting a comment by contacting Gwendolyn Diggs at (202) 
395-3150.
    To make a submission via www.regulations.gov, enter Docket Number 
USTR-2017-0016 on the home page and click ``Search.'' The site will 
provide a search-results page listing all documents associated with 
this docket. Find the reference to this notice and click on the button 
labeled ``Comment Now.'' For further information on using the 
www.regulations.gov Web site, please consult the resources provided on 
the Web site by clicking on ``How to Use Regulations.gov'' on the 
bottom of the home page.
    The www.regulations.gov Web site allows users to provide comments 
by filling in a ``Type Comment'' field, or by attaching a document 
using an ``Upload File'' field. USTR prefers that you provide 
submissions as an attached document. If a document is attached, it is 
sufficient to type ``see attached'' in the ``Type Comment'' field. USTR 
prefers submissions in Microsoft Word (.doc) or Adobe Acrobat (.pdf) 
format. If the submission is in another file format, please indicate 
the name of the software application in the ``Type Comment'' field. 
File names should reflect the name of the person or entity submitting 
the comments.
    Indicate in the ``Type Comment'' field if you are submitting a 
request to appear at the hearing, and include the name, address and 
telephone number of the person presenting the testimony. The file name 
should include who will be presenting the testimony.
    Please do not attach separate cover letters to electronic 
submissions; rather, include any information that might appear in a 
cover letter in the comments themselves. Similarly, to the extent 
possible, please include any exhibits, annexes, or other attachments in 
the same file as the comment itself, rather than submitting them as 
separate files.

[[Page 40215]]

    For any comments submitted electronically containing business 
confidential information, the file name of the business confidential 
version should begin with the characters ``BC''. Any page containing 
business confidential information must be clearly marked ``BUSINESS 
CONFIDENTIAL'' on the top of that page and the submission should 
clearly indicate, via brackets, highlighting, or other means, the 
specific information that is business confidential. If you request 
business confidential treatment, you must certify that the information 
is business confidential and would not customarily be released to the 
public. Filers of submissions containing business confidential 
information also must submit a public version of their comments. The 
file name of the public version should begin with the character ``P''. 
The ``BC'' and ``P'' should be followed by the name of the person or 
entity submitting the comments or rebuttal comments. If these 
procedures are not sufficient to protect business confidential 
information or otherwise protect business interests, please contact 
Katherine Linton at 202-395-3150 to discuss whether alternative 
arrangements are possible.
    We will post comments in the docket for public inspection, except 
business confidential information. You can view comments on the https://www.regulations.gov Web site by entering docket number USTR-2017-0016 
in the search field on the home page.

William L. Busis,
Chair, Section 301 Committee, Office of the United States Trade 
Representative.
[FR Doc. 2017-17931 Filed 8-23-17; 8:45 am]
 BILLING CODE 3290-F7-P
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