USTR:China Intellectual Property Policies May ‘Severely Restrict’ Market Access

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WASHINGTON (Dow Jones)– U.S. Trade Representative Ron Kirk, in response to a report released Friday, said China must “maintain a level playing field” by establishing fair and effective legal protections regarding intellectual property rights.

Kirk’s office released Friday its “Special 301 Report,” which scrutinizes global intellectual property rights protection and enforcement. Countries that are found to have unfair or ineffective policies are placed on a blacklist, known as a “Priority Watch List.”

“We are seriously concerned about China’s implementation of ‘indigenous innovation’ policies that may unfairly disadvantage U.S. IPR holders,” Kirk said. “Procurement preferences and other measures favoring ‘indigenous innovation’ could severely restrict market access for American technology and products.”

Kirk’s comments on China come ahead of a high-level meeting slated toward the end of May, where U.S. leaders plan to discuss economic strategies with Chinese leaders.

The Office of the United States Trade Representative publishes the “Priority Watch List” and a “Watch List” annually as required by law.

The 2010 report notes that China is continuing to have severe problems regarding piracy and counterfeiting. This is the sixth consecutive year China was included on the blacklist.

Russia was also placed on the list–the country’s 13th consecutive appearance. This comes after White House economic adviser Lawrence Summers and USTR Kirk reiterated their support for Russia’s entry into the World Trade Organization. The two officials, however, noted several hurdles remain in Russia’s long-running bid to join the trade body.

According to the USTR report, Algeria, Argentina, Canada, Chile, India, Indonesia, Pakistan, Thailand, and Venezuela were also placed on the priority watch list, which is mostly unchanged compared to 2009’s list.

Other issues covered in this year’s report included the “continuing challenges of Internet piracy” in Canada and Spain, among others.

Among the positive developments in the report are Hungary and the Czech Republic’s removal from the watch list. Hungary made “significant improvements on enforcement and other actions” over the past year, while the Czech Republic is being removed because of “significant progress made to effectively control its border markets over the past two years,” the report said.

Poland was also removed because it significantly reduced the “availability of pirated and counterfeit goods at border markets” and enhanced enforcement efforts.

Responding to the report, the American Apparel & Footwear Association said while the U.S. must continue to strengthen intellectual property protections around the globe, it cannot do so alone. “We must have international cooperation if enforcement efforts are to be effective,” the association’s President Kevin Burke said.

Additionally, the U.S. Chamber of Commerce hoped there would be action on its request made in February that the USTR and Congress work to draft legislation that enhances the Special 301 report. In particular, the chamber wants the legislation to “require an action plan for Priority Watch List countries that includes clear benchmarks to measure performance, and meaningful consequences for nations that fail to perform.”

Since the Chamber’s call went unheeded this go-around, the business group, in response to the report, reiterated its goal of working to strengthen the report.

Meanwhile, the USTR’s office, in the year ahead, “looks forward to working with our trading partners to address emerging and continuing concerns, and building on the positive results achieved thus far,” the report said.

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