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 owned by or licensed, in some cases exclusively, to a Chinese party. In India, in-country testing requirements and data- and server-localization requirements are frequently cited by U.S. industry as inhibiting market access and blunting innovation in the information and communications technology sector. In Indonesia, a foreign party's approval to market pharmaceuticals is conditioned on the transfer of technology to an Indonesian entity or partial manufacture in Indonesia. In Nigeria, the United States is concerned about a push toward localization aimed at protecting, favoring, or stimulating local companies at the expense of foreign exporters and investors. For example, some recent measures require the procurement and use of locally-produced hardware, software, and other technological products, including Subscriber Identity Module (SIM) cards, and require that all subscriber and consumer data be hosted locally.

The United States urges that, in formulating policies to promote innovation, trading partners, including India and China, take account of the increasingly cross-border nature of commercial R&D, and of the importance of voluntary and mutually agreed commercial partnerships.

Challenges Affecting the Copyright and the Information and Communications Technology Sectors

Leveraging the power of the Internet, U.S. stakeholders continue to develop innovative business models that deliver content and services directly to consumers and businesses, support innovative business processes, and allow businesses to collaborate via new and efficient mechanisms. Increasingly, however, trading partners are creating obstacles that threaten continued growth and innovation by U.S. and other participants in the global digital economy. Emerging market access barriers reported by IP-intensive industry stakeholders include: restrictions on cross-border data flows and storage; discriminatory practices in government procurement of Information and Communications Technology (ICT) products and services; local content quotas; obstacles to investment; and other restrictions. As trading partners look to increase their own participation in the growing digital economy, these barriers must be eliminated to support continued innovation and growth.

For example, in 2014 and early 2015, China issued several measures imposing certain trade-restrictive IPR, R&D, and encryption-related requirements on ICT products, services, and technologies used in certain sectors of China's economy. China subsequently suspended one of the measures, which appears to be a signal that China is reconsidering its approach to ICT regulations. The United States welcomes this suspension and calls on China to engage in close consultation with concerned foreign governments and industry.

Some public comments received in response to the 2015 Special 301 Federal Register notice also identified developments in several countries that may have created market uncertainties for both technology companies and online content providers. For example, laws have recently been 23