Technology Governance in a Devolved Global Legal Order: Lessons From the China-USA Strategic Conflict

Abstract

China’s successful economic and technological transformation did not depend on “following the rules” of the WTO system, nor did it depend on flouting those rules. China succeeded because of its characteristics as a country and an economy. China developed a sophisticated technological development plan to take advantage of those characteristics. A number of the advantages enjoyed by China cannot be replicated by other low- and middle-income countries. Still there may be some important lessons that can be derived from the Chinese experience.

China’s success has provoked a reaction from the traditional economic and technology powers seeking to slow its march to technological parity, and perhaps even superiority. Some of these reactions are manifestly inconsistent with WTO norms, and some of the challenges to China’s allegedly WTO-inconsistent inconsistent measures or practices are debatable. Of particular concern is that decisions by the United States in particular to ignore WTO rules are weakening the institution, with potential adverse long-term effects.

With that said, it may be that the WTO and its DSB are not the best place either for rule-making or resolution of disputes regarding IP, technology transfer and investment, and that alternative fora are preferable, at least until there might evolve a new “stasis” or general consensus on appropriate policies. Bringing IP and related dispute settlement into the WTO was a controversial concession, including provision for cross-retaliation, when the TRIPS Agreement was negotiated. We might want to “think outside the box” in terms of future reform.

Fragmentation of the global economy is not a good thing -- not simply because there will be less specialization and a related move away from the global production possibility frontier. The risk on the downside is toward the breakdown of political accommodation, and intensification of competition for resources that may lead to violence, i.e., the risks preceding the Second World War. There is no apparent reason for exceptional pessimism, but there is also a need to keep an eye on history. The risks are not peculiar or specific to intellectual property or technology, but conflicts regarding IP and technology are a significant part of the current devolutionary trend.

The February 13, 2021 update of this paper considers the potential implications of the transition to the Biden Administration for US-China trade relations, including with respect to intellectual property and transfer of technology.

Keywords: technology, intellectual property, WTO, China, United States, Section 301, dispute settlement

JEL Classification: F02, F51, F53, K33