Intellectual Property

China, US getting nowhere fast in the WTO

China "strikes hard" against counterfeits
No news isn't good news when it comes to the two IPR-related WTO cases that the US filed against China on April 11. According to WTO procedures, the parties were to have had 60 days to negotiate. If they didn't settle the dispute within those 60 days, the WTO would then convene a panel to arbitrate.

Sixty days has obviously come and gone and, while the US and China have met for two days of talks, the scarce media reports haven't shed much light on the outcome of the negotiations. Then, in early July, State Intellectual Property Office Director Tian Lipu announced that the US should withdraw the WTO cases. Claiming that China is "striking hard" against counterfeits and expending huge efforts to strengthen its IPR protection, Director Tian concluded that the WTO complaints are "unreasonable and should be withdrawn."

Whatever prompted Director Tian to issue this tautological announcement remains unclear. He himself is fuzzy about the precise state of the WTO proceedings: "So far as I know," he said, "at this moment, the US and China are still the process of consulting within the WTO framework." Why the US and China would still be negotiating a month after the 60-day period lapsed is unexplained — and why China's top IPR official would be in the dark about where things stand with China's top international IPR conflict is also unclear.

What seems clear, however, is that whatever the US hoped to achieve with the WTO cases is going to be slow in coming. For progress, one might look instead to the Cooperation Memorandum on Strengthening the Intellectual Property Rights Law Enforcement, which the US and China signed in late May at the US-China Strategic Economic Dialogue in Washington, DC.

That the two countries could conclude this agreement in the course of their regularly-scheduled trade talks might raise the question — as your correspondent has done previously — of why the extraordinary measure of filing WTO complaints was necessary.

Moreover, as Mou Xinsheng, director general of China's General Administration of Customs, explained: notwithstanding the WTO cases, China signed the Cooperation Memorandum because IPR is a global problem that no country can solve by itself, and because the US is an important trading partner. Director General Mou's reasoning sounds very pragmatic. Let's hope the US can show the same good sense in its WTO strategy.

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There are currently 3 Comments for China, US getting nowhere fast in the WTO.

Comments on China, US getting nowhere fast in the WTO

WTO consultations are really just a process of going through the motions. You can't force people to negotiate if they don't want to. You sometimes get some panicked bargaining at the end of them if one party really wants to avoid a WTO case going ahead, but usually in effect they're just a prelude to the real action.

IPR is just a way for wealthy nations to maintain their lead over poor ones. It is a form of rentier control, so often criticized in moral terms by Western economists. In fact many Western corporations simply live off the rent of bursts of creativity from long ago. It is the West that is the biggest rentier! Look at Giuliani, with his "consulting" service, simply living large off his celebrity as ex-mayor of NY.

As inconvenient and unfair as the WTO case may seem to Chinese authorities, in many ways the United States is actually doing China an enormous favor. China's economic growth has largely been the result of the export of labor-intensive goods: textiles, home products, etc. - not the capital-intensive goods that developed economies specialize in. If China can abide by its international agreements and provide its own industries with intellectual property protection at the level that developed nations enjoy, investor confidence and consumer confidence in Chinese creative and high-tech industries will increase. If the US trade reps were smart, they would just let the IPR issue die. They did this to the Japanese a few decades ago; now Toyota is the most popular carmaker in the country and poised to put GM out of business.

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