Tuesday, April 11, 2006

Chinese IPR Concessions Could Stave Off US WTO Lawsuit Against China

Today, the Chinese iron lady Vice Premier Wu Yi and US Trade Representative Rob Portman and US Commerce Secretary Carlos Gutierrez discuss US-China trade and IPR, seeking to ease tensions before President Hu Jintao's visit to the US next week and preventing a WTO complaint by the US. China may agree to extend a crackdown on makers of pirated movies and enforce a ban on use of illegal software. However it probably will be made official when Hu visits Washington. Read Mark Drajem's story for Bloomberg about it here.

As a WTO member since 2001, China has to comply with WTO requirements, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Since WTO's Agreement on TRIPs the absoluteness of property in Intellectual property is under pressure. The advantage of TRIPs is that is builds on WIPO's Paris Convention for the Protection of Industrial Property and that is gives it teeth, because of the binding character of WTO's Dispute Resolution Body. However, the disadvantage is that it mixes trade with intellectual property, so that if one state is infringing IPRs, it can be sanctioned with trade measures and vice versa, so instead of direct enforcement of IPRs. Or in other words, a state can compensate IPR infringement instead of fixing it.

Now what will happen if the US WTO lawsuit against China cannot be averted? First US officials wanted to base a suit on data showing the volume of illegal merchandise. However, the data has proven difficult to obtain. To base a complaint on allegations that China fails to fulfill WTO standards (read TRIPs) requiring criminal prosecutions and transparency of rules seems more succesfull. Read Mark Drajem's Bloomberg story about it here.

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