CHINA - CERTAIN MEASURES ON THE TRANSFER OF TECHNOLOGY REQUEST TO JOIN CONSULTATIONS
Document: Communication from Japan
Date: 11 June 2018
Document codes: WT/DS549/2
Complainant: EU
Respondent: China
Dispute stage: Consultation
Agreements cited: Art. 3, 28.1(a), 28.1(b), 28.2, 33, 39.1, 39.2  Intellectual Property (TRIPS)Art. X:3(a)  GATT 1994Annex Z, Art. Para 2(A)2, Part I, para. 1.2,   Protocol of Accession

CHINA - CERTAIN MEASURES ON THE TRANSFER OF TECHNOLOGY
REQUEST TO JOIN CONSULTATIONS
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 " (, , ).
My authorities have instructed me to notify the consulting Members and the Dispute Settlement
Body of the 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 annual 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 stakeholders 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

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 approximately 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.

Regions 2015, which is available at: http://english.sipo.gov.cn/statistics/2015s/12/1061548.htm