WTO Inquiry Launched Into US Complaints Against China’s IP Record

By Paul Garwood
A World Trade Organization panel will formally investigate United States complaints that China has failed to adequately protect intellectual property rights on goods such as software and movies, a move criticised by Beijing.

WTO’s Dispute Settlement Body (DSB) on 25 September established a panel following Washington’s second request to look into its allegations against China. Findings from the inquiry would not be released until late 2008, a WTO official said Thursday.

The United States is demanding China be tougher on prosecuting those who breach copyright or trademarks and implement stronger laws on what happens to confiscated pirated material. Washington claims Beijing’s apparent failure to clamp down adequately on intellectual property rights violations has facilitated the growth of one of the world’s largest sources of pirated products, ranging from clothes and sporting goods to drugs, CDs and DVDs.

“The United States recognises that China has made the protection of intellectual property rights (IPR) a priority, and that China has taken active steps to improve IPR protection and enforcement,” US trade official Dan Hunter told the DSB. “The fact remains, however, that bilateral discussions on the specific matters described in the US panel request have not resulted in a mutually agreeable solution to our concerns.”

China hit back at the US panel request, describing it as “regrettable” that Washington had sought for the second time the panel’s establishment and vowing to defend its interests during the panel.

As allowed under WTO rules, China blocked Washington’s first request for a panel on 31 August. WTO rules stipulate that a second request leads automatically to the establishment of a panel, unless the complainant withdraws its proposal.

China alleges that the United States is trying to impose obligations beyond the WTO Trade-Related Aspects of Intellectual Property Rights (TRIPS) on developing countries. It also cited TRIPS provisions that say countries can determine appropriate methods of implementing the agreement within national legal frameworks.

“While remaining confident that relevant measures of China are consistent with relevant WTO rules, we strongly oppose the US attempt to impose on developing members through this case extra obligation that goes beyond what has been prescribed in the agreement,” said a statement released by the Chinese delegation to the WTO.

The latest US complaint is the fifth it has levelled against Beijing and the third time it has sought the intervention of the DSB. China has also initiated a case against the US at the WTO over anti-dumping measures on paper imports from China.

The DSB panel process can take up to 15 months and comprises numerous stages that the parties must go through before any findings are released.

The first step is for consultations and mediation, which is prescribed to take 60 days to complete. This is followed by the setting up of the panel and appointment of its members, a 45 day process. Preparation and provision of the final panel report to the parties involved in the case takes six months, while three weeks is allotted for the same report to be circulated among WTO members. A further 60 days is set aside for the DSB to adopt the report if there is no appeal lodged. In the case of an appeal, a further three months of negotiations is expected to ensue.

Paul Garwood may be reached at info@ip-watch.ch.