Published: December 08, 2005

U.S. Eyes Tougher Actions on Intellectual Piracy in China, Russia

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WTO complaint, trade benefits withdrawal contemplated, USTR's Espinel says

Washington - The Bush administration is considering stronger actions against China and Russia if those countries fail to fulfill their commitments to protect intellectual property rights (IPR) and to take more decisive enforcement steps against piracy and counterfeiting of goods.

The U.S. private sector has claimed that China and Russia are the two countries with the most rampant intellectual property piracy and counterfeiting. U.S. industries most affected by these activities include software and movie producers, who have pressed the administration to use tougher measures against these countries such as filing a case with the World Trade Organization (WTO) against China and denying trade benefits to Russia.

Acting Assistant U.S. Trade Representative (USTR) for Intellectual Property Victoria Espinel said December 7 that the trade office is collecting from U.S. industries information to see whether insufficient enforcement of IPR in China would justify a request for WTO dispute settlement with China. The United States, joined by Japan and Switzerland, also has filed a formal request with the WTO for information from China on the country's IPR enforcement efforts. The latter action was necessary, she said, because "China does not share the same level of transparency regarding enforcement actions as the United States."

"China's response to these requests, anticipated in early 2006, will be a test of whether it is serious about resolving the rampant IPR infringements found throughout its country," Espinel told a panel of the House of Representatives Judiciary Committee December 7.

In its special report in April, USTR concluded that China's IPR efforts had been insufficient, particularly in deterring piracy and counterfeiting, and, as a result, placed the country on its priority watch list of countries that do not provide adequate level of IPR protection, enforcement or market access for IPR-related goods or services.

The priority watch list designation is intended to indicate serious concern about IPR protection, enforcement and market access, and to send a warning to U.S. trading partners and companies seeking to do business in China as well as a strong message to the country's government that these concerns must be addressed, Espinel said.

She said that China made a number of commitments in July on IPR enforcement and trade in pirated and counterfeit goods. But she gave a mixed review of China's progress on fulfilling these pledges.

Espinel called IPR protection a "significant problem" in Russia, which also was placed on the priority watch list. She said that Russia has made some improvements in national IPR laws but added it must do "much more" to reduce the level of piracy and counterfeiting. Particularly, Espinel said, it needs to use stronger IPR enforcement and border protection measures and begin imposing effective criminal penalties.

She said that the Bush administration has raised concerns about Russia's IPR regime in this country's WTO accession negotiations.

"We have made it clear to the Russian government that progress on IPR will be necessary to complete the accession process," she said.

U.S. PRIVATE SECTOR DISAPPOINTED BY NEGLIGIBLE PROGRESS

Eric Smith, the president of the International Intellectual Property Alliance (IIPA), which represents U.S. copyright-based industries, expressed the U.S. private sector's disappointment with China's and Russia's IPR actions. Even though other countries have been able to reduce piracy significantly in a short period, he said, progress in reducing copyright piracy in the two countries has been "negligible to non-existent" in the last six months.

He said criminal prosecution against piracy in China has not increased in this period and the government has "totally" rebuffed all requests to improve market access.

The piracy problem in Russia, which Smith called "enormous," has grown even worse in the last six months, particularly in relation to piracy of optical discs containing movies, recorded music, computer programs and videogames.

Smith said that law enforcement raids on manufacturing facilities have produced no equipment seizures and only suspended sentences against a few employees. Despite those actions, the number of plants manufacturing pirated discs has increased in the past six months, he added.

Smith said that both countries lack the political will to tackle piracy decisively, and need to be prodded into action. He called for the withdrawal of all or some of Russia's duty-free trade benefits tied to the General System of Preferences (GSP) and a hold on country's admission to the WTO until it provides "real deterrent enforcement."

Espinel said that a decision on GSP benefits can be made before July 2006, the statutory deadline for an interagency review of a formal petition regarding Russia filed by the U.S. copyright-related industries.

The Generalized System of Preferences provides preferential duty-free entry to approximately 3,000 products from designated beneficiary countries and territories.

For additional information on U.S. policy, see Protecting Intellectual Property Rights.

Source: U.S. Department of State