Hawaii Pacific Export Council

U.S.-China Trade: Opportunities and Challenges for U.S. Business

OVERVIEW
• International Trade Administration
• China Trade: Opportunities
• Best Prospect Sectors
Support for U.S. Companies
• China Trade: Challenges
• U.S. Response: Three-Pronged Strategy
• ITA MAC’s China Work & Key Contacts

B. U.S.-China Trade: Opportunities
Chinese Middle Class Growth Trajectory

B. Opportunities: Hawaii

C. Best Prospect Sectors

Support for U.S. Companies
Travel and Tourism
Education and Training
Banking Services
Franchises
Medical Equipment
Retail Food/Snacks/Fisheries
Safety and Security
Marine Industries
Construction
Automotive
Water and Waste Management
Oil &Gas / Power Gen / Coal

INDICATIONS
Import U.S. goods to balance trade
RMB 6.6 = $1 by 2009
10th NPC – HU’s “Harmonious Society”

–Medical / Education / Environment
Consumer spending to drive economy
–Growing middle class
–Retail sales up 20% in ’07
–70% of GDP by 2015
Age > 65 = 1995 10% / 2030 22%

Best Prospects
TRAVEL & TOURISM

Best Prospects
EDUCATION / TRAINING
o 67,000 Chinese students in 2007
12% of foreign students

o E-Learning major opportunity
Ministry of Education – “All Schools Connected”
550,000 K-12 schools / 200 M students by 2010
67 universities – E-learning degrees

o Short-term training & workshops / Business Ed. /
Materials & equipment / Lend & exchange faculty /
Educational consulting services

Best Prospects
BANKING SERVICES

Best Prospects
FRANCHISING

Best Prospects
MEDICAL EQUIPMENT

Best Prospects
RETAIL FOOD / SNACKS / FISHERIES

Best Prospects
SAFETY & SECURITY

Best Prospects
MARINE INDUSTRIES

Best Prospects
CONSTRUCTION

Best Prospects
AUTOMOTIVE

Best Prospects
WATER & WASTEWATER MANAGEMENT

Best Prospects
OIL & GAS / POWER GEN / COAL

AISA PACIFIC PARTNERSHIP FOR CLEAN DEVELOPMENT & CLIMATE
2ND TIER URBAN MARKETS

Not just Beijing, Shanghai, & Guangzhou
Another Key Market Driver
2ND TIER URBAN MARKETS
 260+ cities of 1M or more
 Top 14 Second Tier Markets
– 8% population / 54% imports
 Growing 2% faster than national GDP
 Partnership with Chinese Council for the Promotion of International Trade
– Help U.S. business succeed in China

Top Secondary Markets

In China… Everything is possible, nothing is easy. ~ Boccio’s Theorem

U.S. COMMERCIAL SERVICE China

U.S. COMMERCIAL SERVICE China

U.S.Commercial Service - China
19 Cities
– 5 CS Offices
– 14 Secondary markets

150 U.S. & locally- engaged staff

D. Challenges
•Trade deficit
•Economic nationalism
•IPR
•Standards
•Transparency
•Product safety

1. Challenges: China Trade Imbalance

2.Challenges: Economic Nationalism
3. Challenges: Intellectual Property Rights
4.Challenges: Standards
5.Challenges: Transparency
•U.S. commends China on efforts to increase transparency:
•April: NPC mandatory notice & comment for draft laws.
•May: Chinese FOIA
•June: Chinese SED IV commitment - notice & comment on draft State Council rules.

• … but much work remains:
• U.S. businesses still face unclear laws, unfair administration, ambiguous criteria, delays in approval, and insufficient notice about rule changes.

World Bank Transparency Index 2004
(Top 10 Economies in real terms)
6. ProductSafety
• Growing concerns about product safety
• Two agreements were signed last December
• Working with China to improve oversight over the quality of goods and ensure safe supply chains

E. U.S. Response: Three-Pronged Strategy
• Aggressive engagement through bilateral fora: JCCT and SED
• Strict enforcement of trade laws, coupled with robust trade promotion
• Use of multilateral channels to resolve disputes
1. U.S.-China Trade Dialogues

2. Enforcing Trade Laws
• Commerce currently maintains 63 orders on imports from China - 26% of total antidumping/countervailing duty orders currently in effect
• 19 new initiations in 2007 compared to 4 in 2006. 13 initiations in 2008 (up to 7/24)
• Dollar value of trade affected in 2007 was nearly $8 billion

3. Use Multilateral Channels
• Brought 6 cases against China with the WTO Dispute Settlement Body: semiconductors, industrial subsidies, auto parts, IPR enforcement, IP market access, financial information distribution
• Filed 1 case in 2008 and 3 cases in 2007
• Closed 1 (semiconductor), suspended 1 (subsidies), and winning 1 (auto parts in July)

F. ITA MAC China Work: Compliance
• Sector-Specific Casework:
e.g., Redundant regulation of imported medical devices

• 3 elements:
 Pro-active Monitoring
 Compliance Action
 Outreach

ITA China Work: IPR
• China IP Webinar Series: http://www.stopfakes.gov/events/china_webinar_series.asp
• August 12 Webinar on “Olympic Logo Campaign and the Future of Trademark Protection in China”
• To subscribe to China IPR News for U.S. Industry, email Chinaiprnews@mail.doc.
• To register online for free one-hour consultation with a private attorney: http://www.abanet.org/intlaw/china_program2.html
• China IPR Toolkit, online guide to registering, protecting,enforcing your IP in China http://beijing.usembassy-china.org.cn/ipr.html

ITA China Work: Programs, Capacity Building, Missions
• Capacity building:
 Transparency roundtable – leading to NPC notice & comment decision in April;
 Anti-Monopoly Law Program;
 Standards & Conformity Assessment Program;
 Program for Entrepreneurial Growth;
 Telecom Law Program (fall)
• Trade missions: Health Care Mission; APP missions

F. ITA Contacts
Your first resource is: www.export.gov/China or 1-800-USA-TRAD(E).

Considering entering the market?
– Contact your local U.S. Export Assistance Center (USEAC):
– John Holman, Hawaii USEAC Director
– Email: John.Holman@mail.doc.gov– Phone: (808) 522-8041

Facing trade barriers while exporting to China?
– Call your USEAC or contact OCEA:
• Nicole Melcher
• Email: Nicole.Melcher@mail.doc.gov
• Phone: (202) 482-2515

U.S.Commercial Service-China

U.S.
China Business Information Center at export.gov/china
800-USA-TRADE

CHINA
http://www.buyusa.gov.china/en
Export.China@mail.doc.gov

Intellectual Property, A Primer

by E. Milton Wilson
SCORE of Hawaii

A SCORE counselor at times may receive a question about some aspect of so-called intellectual property (IP). Rather than saying, “Sorry, but that is outside my area of expertise,” in many cases you can point the client towards a potential solution to their needs. The Federal IP web sites are excellent and will supply information that will answer the vast majority of client questions. These, and other appropriate sites, are listed below, along with a very brief summary of the fundamentals of the IP area. Always keep in mind that a specialization within the legal profession is that of Patent Attorney and it is essential that you inform the client that (1) you are not a lawyer; (2) the information you are supplying is of a generalized nature as could be found in lay publications and templates; and (3) if written documents are required, or if any litigation is involved, clients should engage the services of a licensed Patent Attorney or other legal counsel as appropriate.

SCORE Sites (Good summaries by patent attorneys of the Phoenix and Tucson Chapters)

http://tenonline.org/sref.df1.html
http://tenonline.org/sref/jp1.html

U.S. Government Sites

www.uspto.gov (National site for all forms of IP)
www.copyright.gov (National site for copyright information only)
www.uspto.gov/web/offices/tac/doc/basic (Basic facts on trademarks)
www.uspto.gov/patft/index.html (Search of U.S. patents)

The Sub-categories of Intellectual Property

Patents – There are two basic forms of patents, Utility and Design. (There are also Plant Patents, but these will be ignored here.) The first named is the most common and concerns inventions related to one of the following: a process, a machine, a means of manufacture, a composition of matter, or an improvement of an existing idea. A Design Patent is issued for a new and original design that is to be used as an ornament for a manufactured article; it does not improve the functionality of the article. A patent is issued by the U.S. Patent and Trademark Office (USPTO) and allows the patent holder to maintain a legal monopoly for a defined period (20 years after the application date for a Utility Patent and 14 years from the date of issuance for a Design Patent) on the use and development of an invention. A Utility Patent must offer something new and novel, and be non-obvious. The USPTO must establish that the inventor has devised a new development in at least one or more of its claimed constituent elements as of the date of conception. With more than 7 million U.S. patents now having been issued, this novelty is far more difficult to achieve than the average amateur inventor realizes. There have been a number of above average inventors approach SCORE for business advice, but unless you are

quite familiar with the world of inventions, you probably should not comment on whether you think the proposed idea is patentable. If you can cite a product you have seen physically, or might have noticed in an ad or media publication, and it is at all similar to the proposed idea, you will be doing the client a favor by informing him or her of this fact so that further investigation might be made as part of their legally required search for proof of novelty.

Trademarks – A trademark or a service mark is a distinctive word, phrase, logo, graphic symbol, or other device that is used to identify the source of a product or of a service. It is used to distinguish it from competitors. Some examples of trademarks are Microsoft for software, Coca-Cola for beverages, and SCORE for business counseling. The mark can be more than just a word, with shapes, letters, numbers, sounds, colors, and even odors falling within the protection of the trademark system. When competing businesses adopt similar names or logos, the rules for resolving these disputes favor whichever business can prove it was first to use the name on a category of goods within a geographic area. Trademark laws are generally considered a subset of unfair competition laws. While you can attempt to defend your trademark through proof of its use over the years, it is far safer to register the mark with the State or Federal government. In the latter area, again it is the USPTO that handles this; it may be done electronically for a fee of $325. The main combined site or the trademark only one listed above are both quite excellent. The duration of a Federal registration is now ten years and it may be renewed indefinitely for additional ten-year periods by timely filings.

Copyrights – This area of IP is probably more misunderstood than any other element of intellectual property. The U.S. Constitution itself states that Congress can pass laws that, for a limited time, protect writings “to promote the progress of science and useful arts.” Laws enacted have greatly expanded the definition of “writings” and generally concern “original works of authorship fixed in any tangible medium of expression.” Works are generally considered to include literary works (books, articles), performing arts works (a play), sound recordings (a song), serials and periodicals (newspapers and magazines), and visual arts (a painting or sculpture). Software is now included within these protection laws, but it is an area of increasingly complex litigation and SCORE clients should properly be referred to a specialist attorney if they seek advice in this area. Works that contain no originality cannot be protected. Formulas, standard calendars, rulers, and scientific tables are examples of items that cannot be copyrighted (adding some original art to a calendar would make it protectable however). Titles, slogans, ideas, and symbols also cannot be protected. When a work is able to be copyrighted, the process is essentially automatic. As these words are being placed within this SCORE document (and provided that I am not considered a Government employee), protection is given to the words and the way that they are arranged. The reason to seek Federal Registration is to give other persons notice that you have and claim a copyright; it serves as an officially dated record of your claim in case there is a later infringement (unapproved copying) of your work. It also gives you additional protection from the U.S. Customs Service against the importation of copies of your copyrighted work. Generally the cost for registration is now $35 and protection is given for the life of the author plus 70 years.

The “circle c” puts the world on notice that you claim a copyright, usually used in this form: © Copyright 2008 E. Milton Wilson.