by Helen Chen, Sunday March 06
A small biotech can influence what level of tariff applies to biotechnology goods, either in the U.S. or in foreign markets?
Usually one doesn’t associate trade policies in Washington DC with biotechnology. Last month, C&M International, a member of the US-Taiwan Business Council, invited TABA to an educational seminar held in Irvine, California. Among the invited guests were representatives from the Taipei Economic and Cultural Office and the Royal Thai embassy, as well as businesses such as Yamaha.
The dominant theme of the seminar was China, China, China. China offers such a large opportunity, yet many international businesses have failed in China. You may still wonder what this has to do with biotech? Nowadays, importing & exporting also includes trade in technologies, know-how, drugs, biologics, medical devices, and so forth. Many corporations are afraid to set up pharmaceutical facilities in China and in other foreign markets due to the lack of intellectual property protection. Dividing a production process among locations can help reduce proprietary information leakage. Having a strategic combination of patents and trade secrets adds another layer of IP protection.
Some people have the misconception that tariffs, duties and other aspects of trade policy are carved in stone. In reality, trade policies are subject to change and respond to economic and political pressures. In addition, government officials sometimes do not know much about a product, especially in the high tech area. Customs may arbitrarily assign a tariff classification with a high rate of duty. This can be challenged, or the duty level can be lowered through trade agreements. Taking action could mean several million dollars in payments (or savings) for a Chinese herbal medicine importer, or for a biotech company importing a medical device. Therefore, it’s very important to identify what to influence and how, and persuade the government to act on your behalf. As a result, you can reduce or eliminate duties on finished products and raw materials; reduce customs delays in your export markets; or stop arbitrary quarantines.
You may then wonder: would the government listen to a small company’s plea? “Yes, “ said Sandy Kristoff, a former Senior Director for Asian Affairs at the National Security Council in the Clinton administration. “ If today a small paper company comes in versus a large corporation like GM, the government will pay more attention to the small company," Kristoff continued. The government wants to know how it can help small and mid size businesses, which constitute the backbone of the American economy. Therefore, if you have an international issue at stake, communicate with the government, or hire an expert to act as your liaison. You may be surprised at what you can accomplish.