Senators demand changes to China's IP, economic policies

A bipartisan group of senators on Wednesday demanded that China do more to protect U.S. intellectual property and end practices that favor domestic businesses following the release of a report detailing potential job losses. 

Senate Finance Chairman Max Baucus (D-Mont.), ranking member Orrin Hatch (R-Utah) and panel member Chuck Grassley (R-Iowa) jointly argued that China's policies are costing billions of dollars and millions of U.S. jobs, following the release of a report they requested last year from the U.S. International Trade Commission (ITC).

“Time and time again, China has failed to protect and enforce American intellectual property rights, and it continues to discriminate unfairly against American businesses," Baucus said. "We cannot pretend that there aren’t real consequences to these violations when these numbers show that millions of American jobs are on the line.”

The U.S. economy lost more than $48 billion because of intellectual property infringement by China in 2009, the report showed. Of that total, approximately $36.6 billion, or 75.9 percent, was attributed to lost sales, while the remaining $11.6 billion was caused by combination of lost royalty and license payments as well as other unspecified losses.

More than $26 billion in losses were in the information and service sector and more than $18 billion were from the high-tech and heavy manufacturing sector.

“Our nation plays by the rules, so too must China,” Hatch said. “I hope the report’s findings spur the administration to deepen their efforts to meet this challenge.”

The report also estimates that U.S. firms spent approximately $4.8 billion in 2009 to address China's policies. 

“China wants the benefits of an economic relationship with the United States but won’t hold up its end of the bargain,” Grassley said. "This report quantifies how extensive the damage is on the American economy. It shows the importance of negotiating strong intellectual property protections in trade agreements and enforcing those rights once the agreements are in place.”

If China complied with their current international obligations to protect and enforce intellectual property rights, 2.1 million jobs could be created in the in the United States, according to the report. 

"As a direct result of competition from lower-priced infringing goods, U.S. firms also reported lower revenues because they lowered their prices in the China market or reduced the number of products they sold in that market, thereby also possibly losing market share in China," the report said. 

China’s policies also give preferential support to Chinese companies, which could lead to more U.S. job losses, the report said. 

The report is the second in a pair requested by the lawmakers, with the first released in December 2010.