International Business Groups Urge China to Cancel Procurement Policy

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Dec. 11 –  The heads of 34 international business groups have sent a letter to Chinese authorities urging them not to push through with plans to implement an Indigenous Innovation Product Accreditation system for high-tech equipment sold to government agencies.

If the regulation is implemented, only companies included in the national catalog of products will be eligible for preferential treatment for government procurement contracts reports The Wall Street Journal. More importantly, products in the catalog will be required to “have Chinese intellectual property and proprietary brands,” and intellectual property must be “totally independent of overseas organizations or individuals.”

The business groups represent the world’s biggest technology companies. In the letter they urge that that if the system is enforced it would “restrict China’s capacity for innovation, impose onerous and discriminatory requirements on companies seeking to sell into the Chinese government procurement market, and contravene multiple commitments of China’s leadership to resist trade and investment protectionism and promote open government procurement policies.”

The letter was addressed to the heads of China’s Ministry of Science and Technology, Ministry of Finance and the chairman of the National Development and Reform Commission.

The deadline for application to be included in the list was yesterday, leaving many companies scrambling to meet requirements that are deemed restrictive and discriminatory for foreign suppliers. The national list of products will clearly disadvantage foreign companies selling software, computer and application devices, telecommunication products, new energy and equipment, energy-efficient products and modern office equipment for Chinese government procurement contracts.

“It is in the interests of both the U.S. and Chinese governments to promote innovation, but innovation is no excuse for discrimination,” spokeswoman of  office of the United States Trade Representative Carol Guthrie told The Wall Street Journal.

According to Ministry of Finance, the country’s total public procurement contracts amounted to US$88 billion last year including non-tech goods.

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