It is easy to see why the US gets so passionate about IP, but it is not the “existential” issue so many Americans claim. IP may be central to the US’ view of itself as the world’s technology leader – but it is also a massive earner. The US may have a miserable trade deficit in manufactures, but it has a handsome surplus in services exports, and right up there is the money it earns from royalties in payment for IP rights....... In 2017, this amounted to US$128 billion – second only to earnings from tourism and education services (US$211 billion), and well ahead of financial services (US$109 billion) and transport services (US$89 billion). A tighter deal on IP protections would mean a significant boost to services exports........ Flying in the face of claims that China abuses IP rights is the reality that China pays more to the US in royalties than any other economy. Wanting to sell more IP to China is, just like wanting to sell more beef or soya, a perfectly reasonable aspiration. So is selling legal services – and there can be no bigger beneficiary of negotiating IP arrangements than the US’ army of IP lawyers. ...... China is not wrong to try to keep the cost of royalty payments at a manageable level, so there is a perfectly reasonable negotiation to be had over rules for royalty payments. There is no place for electorally pungent claims that China is in some way “stealing its way up the economic ladder”, as Christopher Wray at the FBI puts it....... The relative market calm suggests that no one believes this breakdown will not be resolved.
No trade deal? Why China should walk away and hit back at the US, in the sectors where it really hurts
