Intellectual Property

US vs. China: pointless IPR-related WTO suit drags on

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IPR enforcement in China isn't black and white
About a week ago, the US announced that it was asking the WTO to hear one of the two IPR cases that the US had filed against China back in April. The case in question complains of three weaknesses in China's system for protecting IPR: (1) procedural barriers to criminal prosecution of counterfeiters, (2) redistribution of seized counterfeit product, and (3) withholding of copyright protection for works that have not yet received approval from China's content censors. (The second case, involving objections to China's restrictions on market access for foreign media products, appears to be in limbo.)

While USTR spokesperson Sean Spicer acknowledged that China has made progress in intellectual property protection, he qualified that "important gaps [still] need to be addressed."

China responded by insisting that it is in compliance with its WTO obligations. In the English-language China Daily, Ministry of Commerce spokesperson Wang Xinpei said that China objects to any US attempt to use the WTO dispute settlement process to force developing countries to shoulder additional IPR burdens. The Chinese-language China Business Times, however, asserted that the US is stressing the US-China trade relationship because trade protectionism plays well domestically; and further, that China wants to negotiate as an equal of the US, working cooperatively to resolve trade disputes.

Although both sides' responses contain legitimate points, what seems lost in the conflict is that meaningful IPR protection for foreign media and retail products is probably not possible in China right now. Take, for example, China's struggle to combat the availability of counterfeit medicines. Reporting on last week's Anti-counterfeit Medicine and Distribution Safety Forum, China Business News used the expression "serious, perplexing problem" to characterize the prevalence of counterfeit medicines in China's domestic retail market. Despite high-profile instances of counterfeit medicines resulting in fatalities, the Chinese government faces intractable obstacles in solving this public safety crisis.

Among the obstacles listed in the China Business News article were: (1) the fact that China's State Food and Drug Administration lacks the power to compel compliance with its recommendations, (2) "grey" market distribution networks for counterfeit medicines, and (3) the expense and futility of using bar-code technology to guarantee the safety of medicines, since counterfeiters copy the bar-codes. This combination of factors — weak regulatory power, no operational court system, grey markets, and the absence of effective anti-counterfeiting technology — also exists with respect to counterfeiting of US media and retail products.

With due respect to the industries that lobbied the US government to bring the WTO suits, counterfeiting of their media and retail products simply isn't as important a social issue as counterfeit medicine. Moreover, the counterfeit medicine problem hurts China's laobaixing more profoundly than it impacts any multinational corporation. The Chinese government has much more powerful incentives to solve the counterfeit medicine problem than it does to ease counterfeiting of US media and retail products. And yet counterfeit medicine remains a "serious, perplexing problem" in China.

If the Chinese government can't solve the counterfeit medicine problem, it probably can't solve the fake media and retail products problem, either. With the WTO suit, the US denies that likelihood and oversimplifies China's counterfeiting problem. At the same time, the WTO suit antagonizes China, without any potential upside for the US: even if the US wins, counterfeiting in China would still be endemic.

Given this expensive and wasteful WTO play, if somebody needs a hearing, maybe it's the American taxpayers.

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There are currently 3 Comments for US vs. China: pointless IPR-related WTO suit drags on.

Comments on US vs. China: pointless IPR-related WTO suit drags on

good analysis!

The logic in this piece is like a Markov chain: the logical direction of each sentence is independent of the last.

Isn't the Wang Xinpei objecting "to any US attempt to use the WTO dispute settlement process" basically China trying to take advantage of the privileges of the WTO without assuming the responsibilities due from its members? I'm no expert, but that's what it sounds like.

Also, nobody is asking China to "[solve] this public safety crisis" (whatever that means). The obstacles you listed are *exactly* what China needs to get to work on by putting in place laws and institutions to deal with them, and from the looks of it the main need is for carrot-and-stick tools to encourage cooperation between the central authorities and the provinces, tools which could go towards solving both fake medicine and IPR problems. I'm guessing that the US would be satisfied with a good faith effort, instead what we have is the Chinese side whining like a buncha babies "it's tooooo haaaaaaard" (but using big words, of course, like "intractable" and "perplexing").

I just don't see where your conclusions are supported by the arguments you translate in the body of the post. (And this is true for a lot of posts by this Danwei contributor.)

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