Trading Partners Led By US, EU, Take China To Task In WTO Forum Over Weak Protection Of IP Rights

Major trading powers led by the United States and European Union took China to task in a World Trade Organization forum today (11 July) over the county’s weak intellectual property rights regime.

Dennis Shea, the US ambassador to the WTO, cited “inadequate protection and enforcement of intellectual property rights” among a long list of alleged Chinese unfair trade measures that adversely affect the commercial interests of foreign competitors.

On 10 July, US Trade Representative Robert Lighthizer in announcing the initiation of a new batch of punitive measures (10% tariffs on an additional $200 billion of Chinese imports) under Section 301 of the Trade Act of 1974, said, “for many years, China has pursued abusive trading practices with regard to intellectual property and innovation.”

However, Wang Shouwen, China’s vice minister of Commerce, called on WTO members attending a review of China’s trade regime in Geneva on 11 July “to firmly stand up to trade bully, protectionism and unilateralism… and to tackle the systemic threats posed by such unilateralism actions as Section 232 and 301 investigations to the WTO.”

Shea in critical remarks during the review also said, “China has used the imprimatur of WTO membership to become one of the world’s largest traders, while largely retaining its state-led, mercantilist approach to trade and investment, to the detriment of the United States and other WTO members….”

He also said the state’s role in China’s economy “has increased,” and voiced concerns that “China provides massive, market-distorting subsidies and other forms of state support to its domestic industries, which too often leads to severe excess capacity, and at the same time it actively seeks to impede, disadvantage and harm foreign competition.”

Marc Vanheukelen, EU ambassador to the WTO, said, “EU business continues to struggle with different behind-the-border measures, including … the insufficient enforcement of intellectual property rights.”

These issues need to be highlighted, the EU envoy stressed, “because they are bound to gain relevance as China increasingly focusses on innovation and high-tech production.”

Australia also weighed in and argued, “Intellectual property infringement, particularly counterfeits, is an ongoing concern.”

A WTO secretariat report prepared for the review noted, “Enforcement of IPRs continues to be a major challenge for China,” but also observed, that “China has continued to strengthen its IPR enforcement, both at the administrative and judicial level.”

Moreover, during the review period, it said, the authorities “issued various notices and measures with a view to strengthening China’s capacity to protect and enforce IPRs, and 11 additional specialized IPR courts were established by the Supreme people’s Court in various cities.”

Concerning IPR protection, Wang told WTO delegates, “Trademark law and Anti-unfair Competition Law have been revised, and Copyright Law and Patent Law are under amendment to enhance the level of IPR protection. Besides, reform on trial of IPR cases has been stepped up.”

He also noted that royalties paid to foreign IPR holders “surged from merely $1.9 billion in 2001 to $28.6 billion in 2017.”

In the proceedings, Japan, along with the US the EU, also registered concerns that China’s cybersecurity legislation may be discriminatory for foreign companies.

“Cross-border data transfer is an essential element in conducting global business, and Japan is especially concerned that the data localization and safety assessment obligations stipulated in the Cybersecurity Law may function as an obstacle to the free flow of data,” Japan said.

In a similar vein, Vanheukelen said, “the EU is worried about the wide scope of the measures and potentially discriminatory effects on foreign firms in China.”

Day two of the two-day WTO Trade Policy Review of China is on 13 July.

 

Image Credits: (AP Photo/Evan Vucci)