USTR Pledges Progress on Chinese IP Piracy
Intellectual property (IP) rights infringement litigation against China at international and multilateral levels could begin in as little as 6 months, depending on the outcome of U.S. Trade Representative (USTR) talks with industry and trading partners, a House Judiciary panel heard Tues. That prediction came after lawmakers pressed Victoria Espinel, acting asst. USTR for IP, for a time frame in which the U.S. would consider pursuing World Trade Organization (WTO) action against the Chinese govt. WTO cases can take 2 years to initiate, she said.
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The USTR is committed to ensuring Chinese compliance with international treaties, like the WTO’s Trade-Related Aspects of IP Rights (TRIPs) agreement. But “a WTO case against China would be a new area,” Espinel said. Stakeholders, including industry representatives, are weighing options, including WTO litigation, to see which would work best to persuade China to stop IP piracy. USTR’s annual “Special 301” report on China’s IP regime, a result of that office’s out-of-cycle review (OCR), showed infringement unacceptably high throughout China, despite Beijing’s ostensible policing. Earlier this month, USTR elevated China to its priority watch list for failing to live up to a commitment to significantly reduce infringement. Some IP protectionists want USTR to put China even further and apply another OCR later this year. “All options are on the table,” Espinel said.
“China is not going to do anything unless we pull the trigger on those sanction capabilities,” Rep. Issa (R- Cal.) said, voicing skepticism about new USTR Rob Portman’s public pledge to make China and IP infringement a priority. Portman’s predecessor, Robert Zoellick, did likewise but little changed: “How many hundreds of thousands of U.S. jobs and how much was lost as a result of [only] saying we were going to act? Why should this committee believe you until you show us action? What’s different now?” Issa asked. Espinel pointed to an “aggressive series of actions” in recent weeks, including the USTR OCR on China, the watch list elevation and a plan to impose TRIPs transparency procedures. That would require the Chinese govt. to give details about its efforts to curb IP theft. “It’s clear, given the scope of problem, there’s not going to be one single effective approach,” she said.
Other witnesses urged a WTO case against China. The U.S. must “make clear to the Chinese government that they're in jeopardy,” said International Intellectual Property Alliance (IIPA) Pres. Eric Smith. “China needs to feel a lot of pressure before they're going to move on this issue. The more pressure we can bring to bear, and the more this Congress can do, the closer we'll come to that objective,” he said. U.S. Chamber of Commerce East Asia Vp Myron Brilliant agreed that continued pressure is needed to “let the Chinese understand that these are challenging times [and] that we need tangible evidence” of progress. The U.S.-China Joint Commission on Commerce and Trade should force Chinese leaders to provide “a line-by- line contract” detailing their plans for investigations, enforcement and prosecution, he said. Ted Fishman, author of China, Inc., advocated a hard line in which American consumers sacrifice to teach China a lesson. He said taxing all Chinese-made items from firms rooted in IP infringement might work: “You will see rules change very, very quickly.”
Russia Raises Grave Concerns
The committee also heard witnesses call for more focus on Russian IP problems. That country, also on USTR’s watch list, sees especially high levels of CD and DVD piracy and a growing problem with Internet piracy. In coming months an OCR will gauge IP protection progress in Russia against a backdrop of MPAA demands for the strongest possible action against Russian pirates. MPAA has urged keeping Russia out of the WTO until the govt. there addresses IP theft in a meaningful way.
The U.S. and trading partners should learn from China’s WTO accession experience, experts said. Though China broke IP vows, it still enjoyed WTO membership benefits. “We should hope to God that we don’t allow Russia to join with a total ineffective enforcement system,” Smith said. The U.S. shouldn’t miss a chance to ally with trading partners to push Russia to regulate more stringently, panelists agreed. Espinel said the USTR has reached out to Japan and Singapore and, in early June, will seek substantial support from European countries. She said she’s encouraged by preliminary discussions with E.U. govts. that share U.S. concerns about IP protection: “There’s growing recognition that the U.S. -- and no other single country -- can’t do this alone.” Bonnie Richardson, vp-international policy for MPAA, disagreed. She said E.U. members already have ended their WTO negotiations with Russia so “their negotiating leverage is gone.”
Internet and IP Subcommittee Chmn. Smith (R-Tex.) told Espinel to expect an oversight hearing in 6 months. At that point, the USTR will be asked to report on progress regarding Chinese and Russian IP oversight.