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China’s Policies ‘Raise Strong Concerns’: USTR Report

The Office of the United States Trade Representative (USTR) released its 2022 Special 301 Report Wednesday evaluating U.S. trading partners’ protection and enforcement of intellectual property (IP) rights, and called out “trading partners that are falling short,” USTR Katherine Tai said.

Intellectual property-intensive industries support more than 60 million jobs, from the independent inventor just starting out to the documentary filmmaker studying critical social issues,” Tai said. “We need robust protection and enforcement in foreign countries to protect these individuals, their livelihoods and ensure they can fairly compete in the global marketplaces…The Biden-Harris Administration will continue to engage with these trading partners to level the playing field for our workers and businesses.”

This annual report details USTR’s findings of more than 100 trading partners after significant research and enhanced engagement with stakeholders. USTR said the Special 301 review of Ukraine has been suspended “due to Russia’s premeditated and unprovoked further invasion of Ukraine.”

The report said the U.S. is closely monitoring China’s progress in implementing its commitments under the United States-China Economic and Trade Agreement (Phase One Agreement). It noted that in 2021, China enacted amendments to its patent copyright and criminal law, as well as other measures aimed at addressing IP protection and enforcement.

“While right holders have welcomed these developments, they continue to raise concerns about the adequacy of these measures and their effective implementation, as well as about long-standing issues like bad faith trademarks, counterfeiting and online piracy,” the report said. “Also, statements by Chinese officials that tie IP rights to Chinese market dominance continue to raise strong concerns.”

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The report also noted that USTR will conduct an Out-of-Cycle Review of Bulgaria to assess whether the country makes material progress on addressing deficiencies in its investigation and prosecution of online piracy cases, particularly its failure to adopt evidence sampling in criminal cases.

The American Apparel & Footwear Association (AAFA) praised the report for identifying foreign countries that deny adequate and effective protection of IP rights or deny fair and equitable market access to U.S. entities that rely upon IP protection. AAFA noted that apparel, footwear, travel goods and related products are regularly found on official lists of counterfeit product seizures.

“Counterfeits are flourishing and endangering consumers and workers around the globe every day,” and “AAFA members continue to report that the pandemic significantly hampers global enforcement efforts,” said Steve Lamar, AAFA president and CEO. “AAFA has appreciated the constructive dialogue with USTR to ensure that intellectual property protection and enforcement against counterfeit and pirated goods remain a top priority in America’s trade relationships to protect creativity and innovation and support jobs across the country”

Several trading partners continued to advance IP protection and enforcement by enacting major legal reforms and joining international IP treaties, USTR noted. For example, the United Arab Emirates enacted new IP, trademark, copyright and cyber-crime laws in 2021, while Chile’s amendment to its IP law took effect in January. Japan’s Trademark Act amendments came into force in April, and Kiribati, Uganda and Vietnam acceded to the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty and the WIPO Copyright Treaty, collectively known as the WIPO Internet Treaties.

Concerns with the European Union’s aggressive promotion of its exclusionary geographical indications (GI) policies persist, the report said. The U.S. continues its intensive engagement in promoting and protecting access to foreign markets for U.S. exporters of products that are identified by common names or otherwise marketed under previously registered trademarks. The U.S. is also concerned about the transfer of much of the GI application review process to EU member states and the reduction of time periods for opposing registration of a GI that is part of the EU’s Common Agricultural Policy, adopted in 2021 and entering into force in 2023.

The report also highlights progress made by trading partners to resolve and address IP issues of concern to the United States. Kuwait was removed from the Watch List this year for making continued and significant progress on concerns that stakeholders identified with IP enforcement and transparency. Saudi Arabia was removed from the Priority Watch List due to steps the Saudi Authority for IP took, such as publishing its IP enforcement procedures, increasing enforcement against counterfeit and pirated goods and online pirated content, and creating specialized IP enforcement courts.

Romania was removed from the Watch List for taking significant actions to improve IP protection and enforcement, while Lebanon was removed because stakeholders did not raise significant concerns about IP protection or enforcement during the Special 301 review.

USTR reviewed more than 100 trading partners for this year’s Special 301 Report, and placed 27 on the Priority Watch List or Watch List. In this year’s report, trading partners on the Priority Watch List present the most significant concerns regarding insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on IP protection. Seven countries–Argentina, Chile, China, India, Indonesia, Russia and Venezuela–are on the Priority Watch List.  These countries will be the subject of particularly intense bilateral engagement during the coming year.

Another 20 trading partners are on the Watch List, and merit bilateral attention to address underlying IP problems. They are Algeria, Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador, Egypt, Guatemala, Mexico, Pakistan, Paraguay, Peru, Thailand, Trinidad & Tobago, Turkey, Turkmenistan, Uzbekistan and Vietnam.

“Our hope remains that countries will rededicate efforts and resources to protect American intellectual property rights,” said Jennifer Hanks, AAFA’s director of brand protection. “Many of the countries AAFA has identified in [its] submission are vital trading partners and the largest sources for the U.S. apparel and footwear industry in producing legitimate U.S.-branded goods. Thus, we must not disrupt legitimate trade. However, we must find ways to identify areas of needed improvement to protect American jobs and economic opportunity across our country, as AAFA members are in nearly every state.”