China still heads up USTR's priority watch list

USTR Michael FromanIt is well established that China is by far the largest source of counterfeit goods worldwide, but there are some signs the country is taking steps to tackle the trade.

That is one of the conclusions in the US Trade Representative's just-published Special 301 Report for 2016, which gives a snapshot of the state of intellectual property rights (IPR) protection and enforcement in the US' trading partners around the world.

Products from China accounted for an estimated 52 per cent of the total value of the IPR-infringing products seized at US ports in fiscal 2015, down from 63 per cent in the prior year.

However, products trans-shipped through or designated as originating in Hong Kong - many of which also were produced in China, accounted for an additional 35 per cent of the estimated total value of seizures last year -up from 25 per cent in 2014.

China started a major overhaul of its IPR laws and regulations last year that - along with a pilot study of specialized IP courts and other initiatives such as joint US-Chinese training for customs on intercepting counterfeit products - suggest it is starting to take a firmer line on IP protection and enforcement.

On the other hand, China remains on the priority watch list because "longstanding and new IPR concerns merit increased attention including with respect to trade secret theft, rampant online piracy and counterfeiting, continued high levels of physical pirated and counterfeit goods, and localization requirements that condition market access on use of IPR developed in or transferred to China."

Moreover, the USTR says it has "particular concern" about the proliferation of counterfeit pharmaceuticals that are manufactured, sold, and distributed in trading partners "such as Brazil, China, Guatemala, India, Indonesia, Lebanon, Peru, and Russia."

All told, 97 per cent of all counterfeit medicines seized at the US border in fiscal 2015 were shipped from four countries - China, Hong Kong, India, and Singapore.

The updated watch lists in the 2016 report are as follows (in alphabetical order):

Priority watch list

  • Algeria
  • Argentina
  • Chile
  • China
  • India
  • Indonesia
  • Kuwait
  • Russia
  • Thailand
  • Ukraine
  • Venezuela

Watch list:
  • Barbados
  • Bolivia
  • Brazil
  • Bulgaria
  • Canada
  • Colombia
  • Costa Rica
  • Dominican Republic
  • Ecuador
  • Egypt
  • Greece
  • Guatemala
  • Jamaica
  • Lebanon
  • Mexico
  • Pakistan
  • Peru
  • Romania
  • Switzerland
  • Turkey
  • Turkmenistan
  • Uzbekistan
  • Vietnam

USTR has also said it intends to carry out out-of-cycle reviews (OCRs) of Colombia, Pakistan, Spain and Tajikistan to gauge their compliance with IP commitments.

According to estimates, approximately 70 per cent of the value of US publicly-traded companies is attributable to intangible assets - such as IPR.  In 2010, the value added of US-held IPR was approximately $5trn, contributing 34 per cent to the country's Gross Domestic Product (GDP).

Protection and enforcement of IPR around the globe directly and indirectly support an estimated 40 million US jobs in IP-intensive industries, which pay on average 42 per cent higher wages than other jobs.

"IP is a critical source of economic growth and high-quality jobs for the US, and it is more important than ever to prevent foreign governments and competitors from ripping off US innovators who are trying to support high-paying jobs by exporting their goods and services to consumers around the world,” commented US Trade Representative Michael Froman. 

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