And challenging to negotiate high standard bilateral

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and challenging to negotiate, high standard bilateral FTAs would provide these countries with preferential access to the U.S. and include new rules in areas such as SOEs and digital trade. Such FTAs would also provide a basis for the U.S. to ensure that its FTA partners reform their economies and trade practices in ways consistent with U.S. interests and values. The U.S. has already begun “trilateral talks” with the Japan and EU that include topics such as technology transfer, the role of SOEs, and subsidies, and outcomes here could be included in bilateral FTAs with these partners. Unilateral U.S. action How the U.S. fairs in its competition with China will ultimately be determined by actions that the U.S. takes at home. Apart from focusing on its own competitiveness through domestic policies, which are beyond the scope of this policy brief, the U.S. should thoughtfully control access to U.S. technologies through foreign investment and export controls, and use WTO-consistent tariff policies to minimize the harm from Chinese economic practices on U.S. businesses.
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The US-China economic relationship: A comprehensive approach 21 Take domestic action to address China’s technology transfer requirements The U.S. has already made progress domestically on addressing technology transfer issues with the enactment of the Foreign Investment Risk Review Modernization Act (FIRRMA), which included the Export Control Reform Act (ECRA) of 2018. While prima facie country-neutral, FIRRMA/ECRA was intended to address concerns over Chinese investment into the U.S. in “critical technologies,” defined as “emerging” and “foundational” technologies, as well as create, through the U.S. export control system, controls over the export of such technologies. Notably, the legislation expands the Committee on Foreign Investment in the United States (CFIUS) review process to all “non-passive” foreign investments in companies that deal with critical technology, “critical infrastructure,” or sensitive personal data of United States citizens that may be exploited in a manner that threatens national security, among other things. The legislation also requires the U.S. to regulate exports of “emerging” or “foundational” technolo- gies essential to national security that do not fall under U.S. export controls—expanding on the current technologies subject to export controls. While what constitutes such technologies has yet to be determined, the technologies currently targeted for review include additive manufactur- ing, autonomous vehicles, advanced battery, biotechnology, gene editing, and superconducting technology. 81 How the U.S. implements FIRRMA/ECRA will be key to whether concerns over technology transfer to China are addressed adequately. Company decisions as to which technologies to transfer overseas tend to be short-term, risk-based decisions driven by costs, actions of competitors, and returns to shareholders. Companies may not always make optimal decisions
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