When you break it down, Donald Trump’s trade policy was simple. “No more bad deals,” he’d say while flexing America’s economic muscle and bringing miscreant trading partners back into line.
Joe Biden, on the other hand, has yet to make his trade priorities clear.
There are a few things we do know. One, he’s eager to reunite with partners on the world stage. With the pandemic and climate change as the centerpieces of his administration’s international efforts, we can expect trade pacts to be less important. Two, the president says he wants to fix or build back America before he launches any trade initiatives. Three, he wants to be sure trade initiatives will be “worker-centered” but hasn’t explained what that would look like.
Going forward, the priorities for U.S. trade policy overall ought to be bringing U.S. jobs and manufacturing back from overseas and encourage emerging industries to develop new technologies here in the United States. Internationally, as an example, the White House must convince much of the world to eschew products made by Chinese-owned Huawei when building out 5G networks.
At home, the president and his trade team need to make sure that the innovative activities of companies creating emerging technologies on which we’re all dependent are not being crushed by government bodies like the U.S. International Trade Commission, a six-member, independent, quasi-judicial federal agency that settles certain kinds of trade disputes.
Of late, the commission is a place where non-practicing entities (they’re more commonly called “patent trolls”) are violating patent rights. Through expensive and extensive litigation, patent trolls ask the International Trade Commission to find that a company manufacturing and innovating some product is making illegitimate use of a non-practicing entity’s intellectual property — and, because of it, any device using said infringed-upon patents must be banned from the U.S. marketplace.
That is exactly what Swedish telecom giant Ericsson is asking the commission to do to Samsung and a range of other smart devices and its 5G-related infrastructure equipment. Ericsson is a telecom infrastructure equipment manufacturer, but these days close to a third of its operating profit comes from IP licensing.
Ericsson is currently negotiating with Samsung to renew a patent cross-licensing agreement. Instead of continuing to negotiate, Ericsson is using the threat of a massive U.S. import ban on Samsung products to try to get its way.
If Ericsson’s backup strategy prevails and Samsung devices including cell phones and tablets are excluded from the U.S. market, or if it gets the International Trade Commission to block one of its key competitors in the 5G infrastructure market, it would be a disaster. The digital divide would widen just as the Biden Administration is proposing trillions in new infrastructure spending including broadband.
Spending billions of taxpayer dollars on broadband while at the same time excluding Samsung infrastructure equipment and devices from the market makes no sense. The International Trade Commission will have given Ericsson dominant market power in 5G infrastructure equipment and limited device choices for U.S. consumers. It would be shockingly counterproductive to give Apple a virtual monopoly on sales of sophisticated phones while opening the door to Chinese manufacturers like Huawei, ZTE or their home-grown rivals to service the rest of the U.S. market at a time when the U.S. government is working to prevent Chinese tech attacks on U.S. information security.
There is a better way to settle what is essentially a dispute over patent royalties – the traditional court system.
Ericsson took its complaints to the International Trade Commission because it knows that an exclusion order would nearly cripple its rival. At a minimum, it would give it tremendous negotiating leverage.
It’s time for the president to propose and for Congress to reform the International Trade Commission by addressing weaknesses that enable these kinds of manipulative and illegitimate cases.