USTR Reports On 2018, Lays Out IP Priorities For 2019; China A Main Target 04/03/2019 by William New, Intellectual Property Watch Leave a Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)The Office of the United States Trade Representative has issued its annual report on trade relations with other nations, essentially a report on progress and problems from last year and an agenda for what’s coming this year. Multilateral approaches came in for touch criticism, and on intellectual property rights, a vigorous, repeated focus is China. The nearly 400-page USTR 2019 Trade Policy Agenda and 2018 Annual Report is available here [pdf]. 2019 Agenda In the chapter on intellectual property rights (p. 139), USTR lists its involvement in the activities of the World Trade Organization Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which as usual met three times in 2018. The chapter also contains a summary of expected activities for 2019, reprinted below: “In 2019, the TRIPS Council will continue to focus on IP and innovation as well as its built-in agenda, on the relationship between the TRIPS Agreement and the Convention on Biological Diversity, on traditional knowledge and folklore, as well as on enforcement and other relevant new developments. U.S. objectives for 2019 continue to be to: resolve differences through consultations and use of dispute settlement procedures, where appropriate; continue efforts to ensure that developing country Members fully implement the TRIPS Agreement; engage in constructive dialogue with WTO Members, including regarding the technical assistance and capacity-related needs of developing countries, and especially LDCs, in connection with TRIPS Agreement implementation; continue to encourage a fact-based discussion within the TRIPS Council regarding TRIPS Agreement provisions and defend against Members seeking to use the TRIPS Council as a forum to criticize robust IP protection and enforcement; ensure that provisions of the TRIPS Agreement are not weakened; continue to advance discussions on IP and innovation, including through data-driven discussions on IPR that promote concrete outcomes; and, intensify discussions within the TRIPS Council on the application of non-violation and situation complaints under the TRIPS Agreement.” China, Multilateral Shortcomings, and Regional Trade Deals A significant focus of the report is aimed at China, whose practices in recent years it says have threatened the very economy of the United States. It said the multilateral system offered no help, leading to the United States’ well-documented criticism of the multilateral process. And it continued its explanation of why regional trade agreements such as the Trans-Pacific Partnership (TPP) were too problematic for the US (including that it would have actually benefited China) and the deals that have been reworked instead, with Canada and Mexico, and with South Korea, are a much more advantageous way to proceed. Reprinted below are several sections capturing the rhetoric and details of USTR’s concerns related to IP: China “[T]he United States faced another major crisis that threatened the very future of its economy. For a country like ours that depends on innovation and creativity for much of its economic growth, strong protection of intellectual property and technology is vital. But the Trump Administration inherited a situation in which China was using a variety of unfair and market-distorting tactics to take valuable U.S. intellectual property. These tactics included joint venture requirements and other foreign investment restrictions, which effectively pressured U.S. investors in China to partner with Chinese companies and provided these Chinese “partners” access to the intellectual property of their U.S. counterparts. Furthermore, when U.S. intellectual property owners were permitted to license their technology in China, they had to do so under discriminatory regulations that barred U.S. owners from receiving market-rate returns. China had also implemented outbound foreign investment programs to obtain U.S. intellectual property through the acquisition of targeted U.S. companies. Finally, in repeated cyber intrusions into U.S. commercial networks, the Chinese government had targeted the business confidential information and other sensitive data of American companies – despite pledges not to do so. In addition, China’s policies effectively deprived U.S. companies of the full value of their intellectual property and technology, and inhibited U.S. companies from fairly competing in China’s large market. Theft of U.S. intellectual property was also threatening American companies’ technological competitive edge in global markets by denying fair returns for American intellectual property investment and discouraging reinvestment in future innovations. Once again, the multilateral trading system offered no practical solution for the United States. Many of the worst actions undertaken by China – such as the numerous informal methods of pressuring U.S. companies to share their technology with Chinese partners – were not captured by China’s obligations at the WTO. Furthermore, key U.S. trading partners showed little willingness to take practical steps to pressure China on these issues. Nevertheless, the United States had to find some way to persuade China to stop its predatory actions.” TPP “As more and more countries moved their production to countries like China, Vietnam, and Malaysia, further loss of U.S. intellectual property and technology would have been inevitable. If anything, it seems likely that over time, even U.S. companies would relocate more of their research and development efforts to be closer to their production facilities.” This would have led to an advantage for China, USTR said. USMCA “For the first time, the USMCA will include strong standards to discourage Canada and Mexico from issuing rules on new geographical indications that would prevent U.S. producers from using common names for food products, and establishes a consultation mechanism for new geographical indications recognized by free trade agreements. The USMCA also includes robust protection of copyrights, including full national treatment, as well as a minimum term of copyright protection that exceeds the TPP standard but does not change U.S. law. The agreement imposes strong measures against circumvention of technological protection measures that often protect digital music, movies, and books. Finally, the USMCA establishes appropriate copyright safe harbors, which protect intellectual property and provide predictability for legitimate enterprises that do not directly benefit from infringement, consistent with U.S. law. The USMCA also requires parties to implement the most comprehensive enforcement measures of any trade agreement, including enforcement measures with regard to the digital environment.” Multilateral System “Meanwhile, President Trump inherited a multilateral trade system that had largely broken down. No new significant multilateral market access agreement has been made at the World Trade Organization (WTO) since it was formed in 1994. The last major effort to reach such an agreement – the Doha Round –collapsed in 2008. While a few members are still trying to revive the Doha Round, such an effort would be a mistake – the Doha Development Agenda (DDA) is outdated and fails to properly address modern issues such as digital trade. Indeed, Ministers at the WTO’s Tenth Ministerial Conference in December 2015 – more than a year before President Trump took office – collectively acknowledged that there was no consensus to reaffirm the DDA’s mandates.24 Some WTO rules are unable to keep up with modern economic challenges and today’s unfair trade practices. The WTO’s inability to adequately differentiate among developing country Members, combined with misaligned expectations about which Members should contribute to negotiated outcomes, are among the factors accounting for the WTO’s lack of achievements in new negotiations.Another important reason for the failure of multilateral negotiations is that judicial activism at the WTO’s Appellate Body tempted countries to demand special privileges through litigation – rather than seeking to build consensus through negotiation. For many years, the WTO Appellate Body repeatedly seized more power for itself – while undermining and disregarding the very rules under which the dispute settlement system was created. The Appellate Body’s actions led to a lack of trust in the decisions that emerged from its process. Years of complaints by prior U.S. Administrations about activism at the Appellate Body were ignored. Furthermore, this activism had the disastrous effect of making it harder for market-based countries like the United States to push back against unfair practices abroad and discouraged them from adjusting their own trade policies in response to growing concerns about globalization. In fact, one of the most striking developments of recent years is that while the United States has long expressed concerns about the Appellate Body, China – an enormous non-market economy – advocates for giving that body even more power over trade policy.” Image Credits: USTR Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related William New may be reached at email@example.com."USTR Reports On 2018, Lays Out IP Priorities For 2019; China A Main Target" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.