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 At the December 2010 JCCT meeting, China took important steps to address U.S. concerns about its indigenous innovation policies. China agreed not to maintain any measures that provide government procurement preferences for goods or services based on the location where the intellectual property is owned or was developed. China also agreed to take into account U.S. views on its Draft Regulations Implementing the Government Procurement Law, which provide for government procurement preferences for indigenous innovation products. During President Hu Jintao's January 2011 state visit, China further committed to delink its innovation policies from the provision of government procurement preferences. To implement President Hu's commitment, at the May 2011 S&ED, China agreed to eliminate all of its government procurement product accreditation catalogues and revise the Draft Regulations Implementing the Government Procurement Law to eliminate the provision requiring government procurement preferences for indigenous innovation products. During the 2011 JCCT meeting, China announced that the State Council had issued a measure requiring provincial, municipal, and autonomous regional governments to eliminate by December 1, 2011 any catalogues or other measures linking innovation policies to government procurement preferences. The United States is carefully monitoring China's commitments in this area.

Indigenous Innovation and Place of Intellectual Property Ownership or Development

During the 2010 JCCT process, including at a meeting of the JCCT IPR Working Group and at the JCCT plenary meeting, the United States requested that China not condition government preferences on the location of intellectual property ownership and development. The United States recognized that the requirement for "Chinese intellectual property and proprietary brands" in the Indigenous Innovation Product Accreditation System was also a factor referenced in important Chinese government statements and other Chinese measures. For example, the October 2010 State Council Decision on Accelerating the Cultivation and Development of Strategic Emerging Industries states that, "China shall boost the cultivation and development of strategic emerging industry and hold the core technologies and intellectual property as well as enhance independent growth capability." In addition, the Measures for Administration of Recognition of Innovative and High-Tech Enterprises, Guo Ke Fa Huo [2008] No. 172, adopted in final form, without opportunity for public comment, by MOST, MOF, and the State Administration of Taxation, provide for certain tax benefits for qualifying enterprises. One of the eligibility criteria is that "Enterprises registered in China . . . have independent intellectual property rights over the core technology of major products through independent research and development, transfer, recipient, mergers and acquisitions within three years or through exclusive licensing over five years."

At the 2010 JCCT, China agreed not to "adopt or maintain measures that make the location of the development or ownership of intellectual property a direct or indirect condition for eligibility for government procurement preferences for products and services. China and the United States will continue to discuss whether this principle applies to other government measures."

During the 2011 JCCT, China and the United States agreed, building on the previous years' commitment, and the innovation principles agreed to in the APEC 2011 Leaders' Declaration, to study other measures, including investment and tax related measures in 2012, to determine whether the receipt of government benefits is linked to where intellectual property is owned or developed, or to the licensing of technology by foreign investors to host country entities. 33