Locke in China pushes for access, pressed on exports

BEIJING Fri May 21, 2010 7:45am EDT

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BEIJING (Reuters) - U.S. Commerce Secretary Gary Locke aired concerns in Beijing over indigenous innovation policies and other barriers to market access, but was pressed on U.S. restrictions on exports of high-technology goods to China.

Foreign firms in China have been lobbying for months against draft indigenous innovation policies, which would encourage government bodies to buy goods and services developed in China.

China last month issued new draft regulations that appear to ease some of the more stringent requirements.

"We are pleased... the Chinese have modified that proposal, they've come out with a new version, and are allowing some comment on this latest version," Locke told the American Chamber of Commerce.

"But at the same time they're moving to implement measures from the new proposed policy before the comment period ends."

Foreign firms worry the regulations will impede sales of products developed outside of China, and say poor intellectual property protection discourages them from registering patents or conducting sensitive research in China.

"We think it's a very dangerous precedent to have the government actually say these are the companies from which governments can purchase goods and services," he told Reuters.

Locke faced repeated questions about U.S. restrictions on exporting sensitive technology to China, which Chinese officials say are partly to blame for the huge trade surplus with the United States. His trade mission of 24 U.S. companies began on Monday in Hong Kong.

The United States was moving to loosen controls on many commonly available high-tech goods, while boosting protections on the most sensitive technology with military applications, as part of a review likely to last into the summer, Locke told students and journalists.

"What a lot of people don't realize is most of the goods that are exported to China are not even subject to controls ... and only in a few cases are things not allowed to be exported" when licenses are sought, Locke told students at Beijing's Tsinghua University, an elite school for engineers and scientists.

Locke is a former governor of Washington state, home to Microsoft and other high-tech companies that have pushed for reforms of U.S. export controls. He has criticized the current U.S. rules as an artifact of the Cold War and called for their overhaul so that more countries can buy U.S. "dual use" equipment, which can have both military and civilian uses.

China is also likely to press the issue next week when it holds the Strategic and Economic Dialogue with senior U.S. officials, including Locke.

Locke said the debt crisis in Europe, a top market for Chinese goods, made it even more urgent for China not to rely so much "on exports to fuel its economy and instead to increase internal domestic consumption."

In meetings on Thursday, Locke urged Chinese decision-makers not to automatically choose the lowest-cost provider for big wind energy and other projects, arguing higher-priced U.S. equipment was often a better deal in the long run, a Commerce Department official said.

Locke welcomed Chinese removal of domestic content restrictions on wind power, but said restrictions on offshore wind projects are a new concern.

"Sometimes we're concerned as we make progress in one facet, let's say on the energy front, other problems crop up."

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