WTO's 3rd Trade Policy Review Addresses IPR in the PRC
June 2, 2010. The World Trade Organization's (WTO) held a meeting in Geneva, Switzerland, regarding its third "Trade Policy Review of China" on May 31 through June 2, 2010.
The WTO stated in a release that among the issues addressed were "concern about China's indigenous innovation policies, and their effect in restricting access for foreign products, investors, technology and intellectual property", and "accelerating progress towards China's goal of comparatively high standards for intellectual property rights by 2020".
The European Commission issued a statement on June 2 in which it wrote that it "acknowledged improvements in Intellectual Property Rights protection in China, but emphasised the urgent need for greater enforcement efforts, including effective customs controls and criminal prosecution."
The WTO Secretariat wrote in its April 26 report that "China has become increasingly aware of the importance of IPR protection in facilitating innovation in the economy, and has been strengthening the administration of all main categories of IPR. For much of the past decade, China had double-digit annual growth in its use of the PCT system. Other areas of IP, such as trademarks, had similar growth levels, and the proportion of domestic use of the IP system is among the highest in the world. Such an increase in innovation can be expected over time to increase public awareness of the need to protect IPRs and to make effective use of the IP system as a tool for economic growth. In addition, better protected IPR could encourage technology transfers from those FIEs with more advanced technology. China has identified building an innovative country as a national development strategy." (The relevant section of the report [MS Word] addresses IPR at pages 151-176, on pages 61-68.)
John Clarke, the EU Head of Delegation, gave a speech [4 pages in PDF] on May 31 in which he stated that the People's Republic of China (PRC) "is set to overtake Japan as the world's second largest national economy in 2010" and that the PRC's "domestic policies and measures increasingly affect economic and trading trends globally".
He said that "the level of state interference in the economy is still noticeable and less and less compatible with China's level of economic development". He also called for greater procedural and regulatory transparency, and more protection and enforcement with respect to intellectual property rights.
He said that "Public consultations should be systematically held for all new measures with an effect on trade. And these consultations should provide a reasonable period for comments by both foreign and domestic stakeholders, which does not always happen. An illustrative example was the draft notice on the Indigenous innovation scheme which was initially about to enter into force on 10th of May, the same date as the deadline for comments. This is neither good regulatory practice".
He continued that "We still see this lack of transparency in China's regulatory processes. China's Compulsory Certification Scheme (CCC) continues to be a major obstacle for foreign exporters due to the complexity, costs and length of the procedure. Instead of trying to reduce the administrative burdens and trade disruptions reported by many Members in the TBT Committee, China seems determined to expand the scope of the CCC to new items such as ICT products."
He also said that "fostering innovation goes hand in hand with a solid protection of the related IP rights. EU acknowledges China’s continued efforts and determination in building up its legislative framework and intensifying the enforcement of IPR protection, which is crucial in facilitating domestic innovation. Through its National Intellectual Property Strategy China has set itself a deadline to become by 2020 “a country with a comparatively high level in terms of creation, utilization, protection and administration of IP rights”. We invite China to share its assessment about the success in implementation of this IP Strategy. We remain concerned that enforcement remains insufficient, notably in regional and local levels, and deficiencies and obstacles in solving complaints persist. EU urges China to step up its efforts in enforcing IPR protection, including effective customs control."
The PRC submitted a report [26 pages in MS Word] on April 26, 2010, in which it addressed, among other things, intellectual property.
It wrote that "As a developing country, China still lags behind in its overall development level of science and technology, with quality of scientific research not high enough and funding in the field of science and technology still insufficient. In particular, with respect to import of hi-tech products and transfer of technology, China, like other developing countries, has long been subject to unfair and unreasonable unilateral restrictions imposed by some developed countries having comparative advantages in this regard."
However, this report did not name or explain any of these "unfair and unreasonable unilateral restrictions".
The PRC report also states that "Intellectual property rights are of utmost importance for China in its transformation of the pattern of economic development. In June 2008, the State Council promulgated Outline of National Intellectual Property Rights Strategy. The paper summarized the intellectual property rights system and their protection in China, and made the intellectual property rights strategy a clear and important national strategy. It also proposed to enhance comprehensively the capabilities of creating, using, protecting and managing intellectual property rights to contribute to the innovation capacity of the nation and to the building of an innovative society. Over the past two years, a number of laws and regulations concerning intellectual property rights were improved with new amendments, including for example the Patent Law and its implementation regulations, and the efforts of law enforcement to protect intellectual property rights were also further strengthened."
The report also mentioned telecommunications. "In September 2008, Regulations on Administration of Foreign-Invested Telecommunications Enterprises was amended. The minimum registered capital requirement of a foreign-invested telecommunications enterprise providing basic telecommunications services was reduced by half. The approval procedures for telecommunication enterprises in China to be listed overseas were further simplified."
The PRC also wrote that it welcomes research and development centers in the PRC. Finally,
it stated that "The Chinese Government opposes protectionism in any form." It added
that "As proven by history, protectionism can only aggravate trade disputes and deepen
crises. It never helps to turn around economic recession but instead delays the
process of recovery."