Tuesday, March 03, 2009

Why STAs are Different From EPAs/FTAs and Influencing IPR norms is Preferable to Being Influenced

Professor Peter K. Yu , one of the leading scholars on Intellectual Property Rights in China (director of the Intellectual Property Law Center at Drake University School of Law), informed me that he just wrote a paper called 'Sino Trade Agreements and China's Global Intellectual Property Rights'. It is a great thought provoking read. In the first part Professor Yu explains why a Sino Trade Agreement (STA) is different from a European Partnership Agreement (EPA) or US Free Trade Agreement (FTA). In the second part he gives reasons why China keeps a low profile in the global IPR policy arena, but should be more assertive to help shape global IPR norms.

What makes STAs different from EPAs/FTAs

STAs include Chile-China FTA (November 18, 2005) , Pakistan-China FTA (November 24, 2006), New Zealand-China FTA (April 7, 2008) and China-Singapore FTA (October 23, 2008).
China has, according to Professor Yu, at least the following goals for STAs:
  1. secure energy sources;
  2. facilitate trade between China and signatory countries;
  3. attract Foreign Direct Investments (FDIs) from signatory countries;
  4. strengthen China's diplomatic ties with signatory countries;
  5. cultivate goodwill among its neighbours;
  6. improve China's position within WTO.
The strategies deployed by China to develop such STAs are also different from the strategies deployed by the EU and US, respectively, to develop EPAs and FTAs:
  • governed by the principles of national sovereignty, self-determination and non-interference in the internal matters of the signatory countries;
  • gradually developed;
  • more flexibile terms;
  • no ambition to impose Chinese laws upon signatory countries;
  • focus more on acceptance and accommodation, rather than on conversion and harmonization.

In other words: STAs are more pragmatic and tailor-made to the conditions of each signatory country. Therefore, each STA is very different from the other. Examples of the differences between the STAs: In the New Zealand-China Free Trade Agreement there is a full chapter (Chapter 12 articles 159-166) on IPR, while you cannot find a word about it in the China–Singapore FTA. Professor Yu mentions that while article 111 (a) Chile–China FTA states the Doha Declaration on TRIPs on Public Health and identifies as an important goal the prevention of abuse of intellectual property rights and restraints on competition, the New Zealand-China FTA omits both issues.

According to Professor Yu, so far, China has not shown any ambition to develop the existing STAs into a multilateral agreement in the future.

Professor Yu notices that STAs are hardly ever TRIPs plus, contrary to many EPAs and FTAs. Professor Yu argues that maybe the only exception to this might be article 165 New Zealand-China FTA, which focuses on the protection of genetic resources, traditional knowledge, and folklore, as an anticipation of the amendments in China's Patent Law. Then again this protection is optional. Many TRIPs-plus Bilateral and Regional Agreements resulted from an asymmetric power relationship. One can argue that this is also the case with China. However, it is not in China's interest to push for TRIPs-plus STAs, since China itself does not want to comply to TRIPs-plus norms at the moment.

Why China keeps a low profile

Professor Yu contends that China keeps a low profile in the arena of global IPR norms, because:

  • several parts of China have not yet reached the point where companies and citizens start demanding higher levels of IPR protection and enforcement; therefore it is very difficult to come up with one IPR policy that deals with all the different challenges within China;
  • China's leadership prefers to focus on its enormous domestic problems;
  • The challenge for China to meet its many international commitments is difficult as it is; it is not the time to assume a leadership role in this respect, yet.

Why China needs to become an influencer of global IPR norms

Professor Yu advises China to be more assertive in shaping the global IPR norms. Only the very fact that the global IPR norms will be used in dispute settlements with WTO members to interpret whether China complied these international IPR norms, for example TRIPs as was the case with DS 362) justifies an effort by China to influence global IPR norms that could possibly prevent future problems.

  • China acceded to the WTO on December 11, 2001, which is rather late. It is time to start influencing rather than being influenced;
  • it could help get rid of the external pressure from the EU and US;
  • it could formulate solutions to China's specific IPR challenges;
  • to assume leadership in the less developed world, so that it could gather a collective bargaining position to influence the global IPR norms.

I concur with Professor Yu that it is in China's interest to try to assume a leadership role so it can help shape global IPR norms (or at least set the IPR policy agenda) and that China should consider developing coalitions with other less developed countries to change some IPR treaties to their wishes. However, I am wondering whether this would intensify the trend in the more developed countries to migrate to different forums (as they are already doing, for example it is said there is a migration going on from TRIPs to ACTA) and also to increase the number of Bilateral and Regional Agreements.

Coming Up: China-Costa Rica Free Trade Agreement

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