China-US Tensions Over IP Measures Rise At WTO Dispute Body

Another debate occurred today at the World Trade Organization between the United States and China over new US measures against China’s alleged failure to fairly protect US intellectual property rights under domestic and international rules.

According to a Geneva trade official, at today’s meeting of the WTO Dispute Settlement Body (DSB), under the agenda “other business,” China raised concern over the United States’ unilateral action against China announced last week. China took issue with the 22 March report (available here) by the Office of the US Trade Representative (USTR) concluding a Section 301 investigation of China. The 200-page report found violations of IP rights and includes a list of actions the US plans to take in retaliation.

The USTR 215-page Section 301 investigation report is available here [pdf]. A fact sheet is here [pdf].

China apparently argued that Section 301 allows the US to make a unilateral determination and take action where dispute proceedings have not been exhausted. But this was challenged by the EU in DS152, US — Sections 301–310 of the Trade Act 1974, where the panel found Section 301 “was not inconsistent only under certain circumstances, and that should the undertakings articulated by the US at the time be removed or repudiated, the findings of conformity would no longer be warranted,” the official said.

The US countered first that WTO rules discourage members entering into substantive discussions under “other business.” The US then called China’s policies “seriously trade-distorting,” as described by the trade official, and urged WTO members to read its report on the USTR website. The report, it said, details Chinese practices on technology transfer that disadvantage foreign firms and pressure them to transfer their technology or licence it to Chinese firms. It also found that this facilitates intrusions into or theft from US companies, and argued that these practices harm every WTO member. The US also argued that the report makes no findings of China’s violation of WTO obligations, and that such violations are being address through the new WTO case filed by the US separately on 23 March. The WTO is not threatened by acts not covered by WTO rules, it said.

Pakistan raised concern about the consequences of the US Section 301 measures for developing countries, the source said, while Japan said it shares the view of the US on stronger IP enforcement, but that trade measures must be consistent with WTO agreements.

China-US Exchange over US Copyright Act Case

Under a separate agenda item, China and the United States had a “sharp” exchange over US failure to comply with a nearly 20-year-old WTO decision against a provision of the US Copyright Act, according to the trade official.

China reacted to the 15 March US update to the DSU on implementation of the WTO ruling in DS160, US-Section 110(5) of the US Copyright Act. The decision in the case is sometimes summarised to have found the US should pay royalties for playing Irish music in bars. China said the US had still not complied after 17 years and was the only WTO member not to comply with a ruling under the TRIPS Agreement, the official said. TRIPS is the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.

The US seemingly responded broadly to say China’s criticisms were unfounded and that its IP rights protection matches or exceeds any other WTO member. China retorted that the agenda item is about the US implementation of its obligations, not that of other WTO members.

Appellate Body Concerns

Separately, the DSB again addressed the ongoing impasse over appointing new Appellate Body members. Mexico, on behalf of 64 WTO members including the 28 EU members, again introduced a proposal that calls for establishing a Selection Committee for appointing new Appellate Body members, according to the official. It called for submission of candidates within 30 days and for the committee recommendations within 60 days.

The EU said the gravity of the situation worsens with each passing month. But the United States was said to continue to take the stance that it is “not in a position to agree” to the proposal. The US concern continues to be a “Rule 15” issue, saying members have not addressed an issue of former Appellate Body members continuing to work on cases after the expiration of their mandates.

Taking the floor to express concern and urge a resolution of the impasse, according to the official, were: Canada, Brazil, India, Pakistan, Korea, Australia, Colombia, Indonesia, China, Panama, Thailand, Norway, Hong Kong China, New Zealand, Switzerland, Peru, Venezuela, Chinese Taipei, Turkey, Singapore, Japan, and Mexico.

Outgoing DSB Chair Amb. Junichi Ihara of Japan called for action to channel the “sense of crisis shared by many members today.”

The next DSB meeting is scheduled for 27 April.

 

Image Credits: Catherine Saez