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Archive for January 27th, 2009

US claims win over China at WTO

Add comment January 27th, 2009

The US claimed an “important victory” on Monday against lax Chinese enforcement of intellectual property rights, following a mixed verdict by a World Trade Organisation dispute panel.

The panel found China in breach of WTO rules on two of the three counts brought by Washington. But it rejected a key US charge that Beijing’s threshold defining “commercial-scale” piracy and counterfeiting was too high. The panel said more evidence was needed.

Under the WTO’s agreement on trade-related aspects of intellectual property (Trips), illegal copying on a “commercial” scale is subject to criminal procedures and penalties.

Peter Allgeier, acting US trade representative, said: “These findings are an important victory, because they confirm the importance of IPR protection and enforcement, and clarify key enforcement provisions of the Trips agreement.”

He admitted that the conclusion on the “commercial-scale” threshold was “disappointing”, but noted that China had lowered the bar for copyright theft just before the US filed its complaint in April 2007.

This threshold is now 500 copies of a pirated DVD or about $7,000 (€5,291, £4,986) worth of counterfeit goods.

China’s Ministry of Commerce on Tuesday said it ”regretted” the WTO’s decision to uphold US complaints over Chinese Customs’ activities and Copyright Law. It called for greater international cooperation to fight the ”global problem” of intellectual property rights protection and welcomed the WTO finding that the US had not provided enough proof that Chinese criminal deterrents were inadequate and contravened China’s WTO commitments.

Both sides have the right of appeal. But if the panel verdict is upheld, China will have to change its anti-piracy laws or face possible sanctions.

The panel said China was wrong to deny copyright protection to censored works, which the US pointed out could still be produced in China and exported.

Beijing was also criticised for allowing confiscated goods to be auctioned with only the infringing trademark removed. The US said this could further confuse consumers and facilitate rather than deter piracy.

Since China joined the WTO in December 2001, the US has brought seven cases against it, while China has brought three against the US.

The verdict in another intellectual property case, related to Chinese restrictions on distribution of US films and music, is expected in the next months.

The Obama administration has taken a tough line on China’s alleged currency “manipulation”, but has yet to make clear whether it intends to pursue this and other unfair trading practices in the WTO.

By Frances Williams in Geneva

Copyright The Financial Times Limited 2009