Analysis Of Chinese Enterprises' Strategy To Handle U.s. Section 337 Investigation

Regarded as the term of unfair trade practice, U.S. Section 337 oriented from Section 316 of the Tariff Act of 1922, and the Tariff Act of 1930 amended it to§337, from which it got the using name. From the day of birth, the historical process of Section 337 mainly has four stages:"disused" before 1970s, "reviving" after the 1974 Act, "reinforcing" after Omnibus Trade and Competition Act 1988 and "flourishing" from 1990s. From Apr.4 1972 to 2008, ITC issued 669 cases of Section 337 Investigation, involving 58 countries. From 1990 to 2008, it was 388 cases, accounting to 55.7%in the total.After the adoption of reform and opening-up policy, Chinese economy was in rapid development, and Sino-U.S. trade also increased greatly. According to Chinese customs statistics, in 2008, the bilateral trade was 3337.4 billion dollars, up by 10.5%, and China had a surplus of U.S.1708.6 billion dollars. Furthermore, the proportion of advanced technology products in Chinese export volume has increased rapidly in recent years. Based on the incomplete statistics, the export of hi-tech products from China to America raised from 402.1 million dollars in 2004 to 520.4 million dollars in 2005, up 22.7%. That brought tremendous pressure on American domestic enterprises, and therefore the trade between America and China struggled to go on. American export enterprises prevent Chinese export to protect their own interests in U.S. market, using not only anti-dumping but also U.S. Section 337 Investigation. From 1986 when ITC issued the first Section 337 Investigation against China, the disputes on intellectual property rights between America and China never stopped. By the end of 2008, ITC totally issued 89 cases of Section 337 Investigation against China. From 2000 to 2008, ITC issued 241 cases in the world, and 79 cases were against China, which is the most. However, due to the complex investigating procedure and powerful remedies, Chinese respondents always were passive in replying; besides, the high cost also discouraged them, which bring great loss to Chinese economy. Based on the related statistics, it is only about 36%that Chinese enterprises were apparent in the count in the past years. Among the 85 closed cases against Chinese,35 cases were issued the remedies, accounting to 40% in the total. Therefore, China has been the country that suffers the most in Section 337 Investigation, and U.S. Section 337 Investigation is another main barrier for Chinese export to America, except for the anti-dumping.Similar to China's today, in 1970s and 1980s, Japanese enterprises has been the main object of U.S. Section 337 Investigation. During 1972-1989, ITC totally issued 311 cases of Section 337 Investigation, and 78 cases were against Japanese enterprises, which is the most. Many famous enterprises, for example, Sonny, Ericsson, Hitachi and TDY, have been invovled in Section 337 Investigation. At the beginning, most Japanese enterprises passively defended and/or defaulted, suffering a lot. From 1990s, Japanese enterprises began to directly face and positively respond to U.S. Section 337 Investigation, changing the disadvantage situation. In recent years, Japanese enterprises launched large-scale counterstrike, suing the enterprises of other countries, even America. By 2009, Japanese enterprises have issued 17 cases of Section 337 Investigation, which is the most, comparing other countries.From the struggling sufferers to the counterattacking beneficiaries, Japanese enterprise accumulated affluent experiences and lessons, which is valuable for Chinese enterprises. Based on the review of Japanese enterprises responding to U.S. Section 337 Investigation and combining the current situation of Chinese enterprises, this paper proposes the coping tactics for Chinese export enterprises, from defence, respondence and offence.In order to better explain the idea, this thesis is divided into five parts.Chapter 1 is the introduction, including the objectives and meaning, the prior literature on U.S. Section 337 and the structure. As the growth of the trade between China and America and the rise of Sino-U.S. trade friction, American domestic enterprises frequently exploit Section 337 Investigation against Chinese export, bringing great impact to Chinese export enterprises. It is a pressing problem for Chinese export enterprises how to effectively respond to U.S. Section 337 Investigation. The main propose of this paper is improving the responding ability of Chinese enterprises, which is great meaningful for Chinese enterprise to navigate American market and increase the market share. The hotshot of previous studies were the introduction of U.S. Section 337 and the disputes caused by U.S. Section 337;seldom put forward the operable countermeasures from the point of enterprises, and fewer involved the enlightenment of Japanese enterprises'responding to U.S. Section 337 Investigation. After collecting the latest information and systematically analyzing it, this paper attempts to make up for the above shortage. Except the introduction and the conclusion, there are three main parts in this paper.Chapter 2 is about the overview of U.S. Section 337. By statically analyzing legal provision and dynamically reviewing the history, it objectively shows the full view of U.S. Section 337 Investigation, including the main contents, the investigating procedures, the remedies, and so on. And then, it summarizes the features and reveals the essence. For a long time after the birth, U.S. Sections 337 Investigation was never used, but in the past years, it revived, mainly involving patent, copyright, trademark, trade secret and others. After finding the violation of Section 337 Investigation, ITC could issue temporary remedies to protect the sufferers, such as Exclusion Orders and Cease and Desist Orders; During the investigation, ITC could also issue the temperary remedies, for example, temperary exclusion order; to implement the above remedies, some supplimentary remedies could also be taken. Furthermore, based on the information above, it summarizes the feature, such as the low requirement of evidence, the short time of investigating, the long validity period of remedies and the strong influence; and it reveals the essence that U.S. Section 337 is a trade regulation to protect American enterprises, on behalf of protecting intellectual property.Chapter 3 talks about the general situation of Section 337 Investigation against China and Japan. Firstly, by data analysis, the paper demonstrates the general situation of Section 337 Investigation against China, which China suffered more and more Section 337 Investigation and the growing rate was over 30%in recent years. Besides, it discloses the deep reasons of Section 337 Investigation against China from the external and internal causes and points out that the root cause is Chinese lacking independent intellectual property. And then it discusses the impact on Chinese enterprises of Section 337 Investigation from four aspects:the investigated enterprises, the upstream and downstream enterprises, the enterprises producing the like products and the whole industry. At last, it generally analyses and reviews the above-mentioned views by a typical case--Sucralose Section 337 Investigation.And then, it reviews the history and presents the recent situation of U.S. Section 337 Investigation against Japan. Japan has been the main subject of U.S. Section 337 in 1970s and 1980s, and now Japan exploits U.S. Section 337 against the enterprises of other countries, even America. And later, it sums up three stages of Japanese responding Section 337 Investigation:passive defense, positive response, and initiative appeal, respectively making a typical example for it. That provides the basis for Chinese enterprises to get the enlightenment of responding to Section 337 Investigation in the Chapter 4.Chapter 4 talks about the enlightenments of Chinese enterprises from Japanese responding to U.S. Section 337 Investigation. Based on the practical situation of Chinese enterprises and the experience of Japanese enterprises'responding to U.S. Section 337 Investigation, the paper advances some strategies of dealing with Section 337 Investigation for Chinese enterprises, from defending, responding and appealing. Firstly, Chinese export enterprises should complete the defence work, intensively studying U.S. Section 337, enhancing the awareness of American intellectual property and reaching a cross-licensing agreement. Later, when prosecuted, they should actively respond to Section 337 Investigation, doing full preparation for responding, reasonably choosing responding strategy, allying others to respond, and seeking appropriate time to settle the case. And then, after owing the intelligent property and accumulating valuable experience, Chinese export enterprises should take offensive measures to make a profit by using Section 337 Investigation, improving the capability of independent innovation, seeking the support of government and industry association, and applying the intelligent property right in America.Chapter 5 is the conclusion. It makes a summary to full text, and points out the significant innovations and the shortcomings.In one word, Based on the experience of Japanese enterprises responding to U.S. Section 337 Investigation and the general situation of Chinese enterprises, it builds a strategy system for Chinese enterprises to effectively deal with U.S. Section 337 Investigation, from three views:defensive, responding and offensive, which is of some theoretical significance and practical meaning and fills the vacancy of the research on Chinese expert enterprises'responding to U.S. Section 337 Investigation. However, owing to the short studying time, limited knowledge of the author, and other restrictions of objective conditions, the paper still has the some deficiencies. On the other hand, the enlightenments of Japanese enterprises'responding to US Section 337 Investigation to Chinese enterprises need to be further studied.