The European Commission initiated a legal proceeding against China before the World Trade Organisation. The reason for that move was alleged unfair practices regarding technology transfer and intellectual property set by the Chinese legislation.
The main problem here is the requirement that every European company that wants to enter the Chinese market has to share technologies and intellectual property with a domestic partner.
According to the European Commision, this practice is against the WTO’s rules and can be identified as unfair and not market-based.
Commissioner for Trade Cecilia Malmström said: “Technological innovation and know-how is the bedrock of our knowledge-based economy. It’s what keeps our companies competitive in the global market and supports hundreds of thousands of jobs across Europe. We cannot let any country force our companies to surrender this hard-earned knowledge at its border. This is against international rules that we have all agreed upon in the WTO. If the main players don’t stick to the rulebook, the whole system might collapse.”
Source: European Commission.