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Understanding proposed “China Technology Transfer Control Act”

On Behalf of | May 16, 2019 | Intellectual Property

Senator Josh Hawley (R-Mo.) introduced a bill yesterday aimed at curbing intellectual property theft and unfair trade practices in China. If passed, the China Technology Transfer Control Act would place export controls on technology and intellectual property “important to the national interest of the United States.”

In light of continued trade tensions between the U.S. and China, this new legislation is worth a second look.

What qualifies as “national interest technology?”

The proposed law includes technology or intellectual property assets that:

  • Would “make a significant contribution” to China’s military that would undermine national security in the United States
  • Are necessary to protect the U.S. economy from the “excessive drain of scarce materials” and reduce inflation caused by demand from China
  • Are used by the Chinese government to carry out human rights violations

In a statement on the bill, Senator Hawley noted that the proposed regulation is “an important step toward keeping American technology out of the hands of the Chinese government and its military.”

Proposed controls

The China Technology Transfer Control Act would place core technologies in demand by the Chinese government – including robotics, aerospace and marine technology, artificial intelligence, and semiconductors – on the Department of Commerce’s export control list. To export these products to China, companies will have to acquire export licenses.  

Possibility of sanctions

Senator Hawley’s bill relies heavily on powers outlined in the International Emergency Economic Powers Act, including its penalties. Those include both civil penalties of up to $250,000 and criminal charges.

As trade rules in both China and the United States develop, businesses dealing in tech products will likely need the guidance of an attorney familiar with both sides. A misstep could spell serious trouble for companies in both economies.