US raises ‘grave concerns’ over China’s theft of trade secrets

01 May 2013 19:59  [Source: ICIS news]

WASHINGTON (ICIS)--US trade officials expressed continuing and “grave concerns” on Wednesday over misappropriation of trade secrets in China and a lack of substantive progress by Beijing toward improving protection for intellectual property rights.

In its annual report on protection of trademarks, patents, copyrights and other intellectual property rights (IPR), the US Trade Representative (USTR) again singled out the Middle Kingdom for failing to live up to IPR obligations required by China’s admission to the World Trade Organization (WTO) in 2001.

China’s trade policies have been the frequent focus of Congress, the USTR and other US policymakers, with the US accusing Beijing of outright technology thefts and other industrial espionage, targeting US chemicals producers among other strategic industries.

In the “Special 301 Report” issued on Wednesday (named after a section of the 1974 Trade Act), the USTR devoted more than six pages to on-going problems with China. Most other nations cited in the report were discussed in a paragraph or two.

The report noted that China remains on the USTR’s “priority watch list”, meaning it presents “the most significant concerns regarding insufficient IPR protection or enforcement, or otherwise limited market access for persons relying on intellectual property protection”.

Nine other nations are on that list – including India, Pakistan, Russia and Venezuela – but China remains the principal focus of USTR concerns, as indicated by the report.

“Obtaining effective enforcement of IPR in China remains a central challenge, as it has been for years,” the report said.

Far from improving and despite years of US diplomatic representations and appeals, “the situation has been made worse by cyber theft, as information suggests that actors located in China have been engaged in sophisticated, targeted efforts to steal IP from US corporate systems”.

“The theft of trade secrets is an escalating concern,” the report said. 

“Not only are repeated thefts occurring inside China but also outside China for the benefit of Chinese entities,” the analysis added.

The report highlighted continued lack of progress by Beijing in implementing promised reforms and enforcement.

As bad as they already are, conditions for IPR protection in China, the report said, “are likely to deteriorate as long as those committing the thefts and those benefitting continue to operate with relative impunity”.

In addition to the theft of trade secrets and technology, the report noted that “problems with counterfeiting in China remain widespread”.

Included on a partial list of commonly counterfeited products were chemicals, along with food and beverages, computers, electronic components, software, appliances and auto parts.

The US already has a case pending against China before the WTO for Beijing’s restrictions on access to and export of rare earth elements (REEs). 

In addition, a special congressional commission set up to monitor China’s compliance with WTO obligations recently recommended that the US begin banning the import of some Chinese products and bar dealings with some Chinese firms.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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