Senate Bill Would Let President Choose Penalties for ‘Special 301’ Violators
The annual “shaming exercise” that is the U.S. Trade Representative’s “Special 301” list of nations not respecting intellectual property would get “real teeth” from a new bill, an aide to Senate Finance Committee Chairman Max Baucus, D- Mont., told reporters Wednesday. That day, Baucus and Sen. Orrin Hatch, R-Utah, introduced the International Intellectual Property Protection and Enforcement Act, intending to free the president to punish countries that don’t shape up after a year on the list.
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The bill would complement provisions in a domestically- focused IP enforcement bill from Senate Judiciary (WID July 25 p3) set for markup Thursday, Baucus and Hatch aides said. They expect the new bill to be assigned to Finance. A Hatch aide said the bill had been in the works for a year, with “extensive consultations” with all stakeholders.
Presidents hesitate to give countries the list’s gravest designation because current law “ties their hands” with mandatory actions, a Baucus aide said. That means “virtually no countries are named to that list,” the aide added. This year nine countries made the “priority” list, including China, Russia, Argentina, Israel and Thailand (WID April 28 p7). The new bill would have USTR develop an “action plan” for each country on the 301 list for a year or more, describing actions that nation must take to protect IP and market access or “make significant progress” toward those goals and getting off the list.
Participants in the bill’s drafting “went back and forth” on whether to mandate sanctions, settling on leaving that to presidential discretion, a Baucus aide said. Under the bill, the President could take up to six actions if a listed country didn’t comply with its action plan after a year. Those include suspending, restricting or prohibiting: procurement by the government from the targeted country, new Overseas Private Investment Corp. or Export-Import Bank investment there, U.S. Trade and Development Agency assistance for projects in the affected nation, or preferential treatment for that nation under U.S. preference programs. The President also could tell the U.S. executive director of each “multilateral development bank” to oppose new financing in targeted countries.
The bill provides funding for USTR to help developing countries comply with action plans, including training for IP enforcement officials and “capacity building.” Within two years of the bill’s enactment, the President would have to place a “Minister-Counselor” -- basically an attache -- in the U.S. embassy of every foreign country the President deems to have a “commercially significant relationship” with the U.S. That likely would include Russia and China, perennial 301 violators, a Baucus aide said. USTR, though, wouldn’t get any funding specifically to devise action plans, the aide said.
The President now can act unilaterally on some steps the bill cites, but there are “pretty high standards for cutting off GSP,” the USTR’s Generalized System of Preferences, a Baucus aide said. “It’s not extremely clear to the trading partner” what actions would trigger U.S. retaliation on IP matters, a Hatch aide said.
The Baucus-Hatch bill shouldn’t be deemed a rival to the Enforcement of Intellectual Property Rights Act in Judiciary, aides said. A member of both Finance and Judiciary, Hatch believes the Judiciary bill is a “piece of the puzzle” but lacks an international component, a Hatch aide said. There’s “certainly no conflict between the two bills,” a Baucus aide said. No hearing has scheduled for the new bill, and it’s “reasonable” to think it could become a “marker” in the Trade Adjustment Assistance bill, Baucus’s highest priority, in the next Congress, the aide said. A spokeswoman for Judiciary Chairman Patrick Leahy, D-Vt., told us he hadn’t reviewed the new bill and was focused on the Thursday markup of his own bill.
Canadian leaders weren’t consulted on the bill’s provisions, a Baucus aide told us, though the bill was written to be “WTO-consistent” to avoid violating U.S. agreements with Canada and others. In 2007 Canada made the Congressional Anti-Piracy Caucus watch list, and the International Intellectual Property Alliance said Canada should go on the USTR “priority” list this year due partly to its inattention to Internet piracy (WID Feb 12 p2). Canada has been on USTR’s regular watch list for several consecutive years, including 2008. Canada is enmeshed in heated disputes over a copyright overhaul proposal critics say would be more draconian than the DMCA (WID June 16 p9). Hatch hopes the Canadian government “speedily” passes that overhaul, an aide said.
Intellectual property groups were predictably jubilant about the bill. The International Intellectual Property Alliance said its enactment would “strengthen the hand of the U.S. to persuade countries to improve protection.” The bill, through its funding for compliance, recognizes that “lack of political will” may not be a problem for some countries, said Neil Turkewitz, RIAA executive vice president, international. Caroline Joiner, vice president of the U.S. Chamber’s Global Intellectual Property Center, called the bill timely, given “government-sanctioned assaults” on IP in Thailand and Brazil through compulsory licensing. Katherine McGuire, vice president of government relations for the Business Software Alliance, made sure to cite as “helpful” the Judiciary bill and its committee sponsors.