US cites 12 countries for inadequate IP protection

China has made the US Trade Representative’s Priority Watch List for the 14th year in a row for alleged intellectual property failings.

Alongside China, the 2018 Special 301 Report on intellectual property rights listed 35 other countries deemed to have “inadequate or ineffective” IP protection or enforcement or which deny market access to people relying on IP protection.

Of the 36 countries, 12 were identified on the Priority Watch List, with 24 named on the Watch List.

Those on the Priority Watch List included: Algeria, Argentina, Canada, Chile, China, Colombia, India, Indonesia, Kuwait, Russia, Ukraine and Venezuela.

“The report reflects the resolve of this Administration to call out foreign countries and expose the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for US inventors, creators, brands, manufacturers, and service providers,” the report said. “The identification of the countries and IP-related market access barriers in this report and of steps necessary to address those barriers are a critical component of the Administration’s aggressive efforts to defend Americans from harmful IP-related trade barriers.”

China continues to be listed on the Priority Watch List, reflecting the “urgent need to remediate a range of IP-related concerns, including as to trade secret theft, online piracy and counterfeiting, the high-volume manufacture and export of counterfeit goods, technology transfer requirements imposed as a condition to access the Chinese market, the mandatory application of adverse terms to foreign IP licensors, and IP-ownership and research and development localisation requirements”, the report said.

It also mentioned structural impediments to administrative, civil, and criminal IP enforcement as problematic in China, as well as various impediments to pharmaceutical innovation.

“Assertions by Chinese government officials that China’s shortcomings should be excused in light of the country’s stage of economic development appear to suggest an underlying lack of commitment to address longstanding problems and undermine any confidence stemming from positive developments and high-level statements in support of IP and innovation,” the report said.

China has objected to the listing, claiming that the report lacks objective standards and fairness.

“The Chinese side opposes this, and urges the US to earnestly fulfil its bilateral commitments, respect the facts, and objectively, impartially, evaluate with positive intentions the efforts made by foreign governments including China in the area of intellectual property rights and the results achieved,” the Chinese commerce ministry was cited by Reuters as saying.

Meanwhile, in a surprise move, the USTR has moved Canada from the Watch List onto the Priority Watch List, making it the only G7 country identified in the report, claiming that the shift reflects Canada’s failure to make progress on overcoming important IP enforcement challenges.

Key concerns include poor border enforcement generally and, in particular, lack of customs authority to inspect or detain suspected counterfeit or pirated goods shipped through Canada. There are also concerns about IP protections and procedures related to pharmaceuticals, deficient copyright protection, and inadequate transparency and due process regarding the protection of geographical indications, the report noted.

The 24 trading partners identified on the Watch List include: Barbados, Bolivia, Brazil, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Saudi Arabia, Switzerland, Tajikistan, Thailand, Turkey, Turkmenistan, the United Arab Emirates, Uzbekistan, and Vietnam.

Particular areas of concern mentioned among all countries were the overall lack of IP enforcement in the countries listed, such as inadequate and ineffective border enforcement against counterfeit and pirated goods, while several countries were also singled out for failing to address the continuing and emerging challenges of copyright piracy. Restrictive patentability criteria that undermine opportunities for export growth in several countries, and inadequate protection for trade secrets were also cited as concerns.

Pharmaceutical and medical device manufacturers were named as having particular IP-related issues in countries outside the US.

The USTR said the IP issues in the countries listed would be the subject of intense bilateral engagement during the coming year.

Meanwhile, the report also singled out the EU, highlighting the “negative market access effects” on US producers and traders of the EU’s “aggressive promotion of its exclusionary geographical indications (GIs) policies”.

“The EU GI agenda remains highly concerning, especially because of the significant extent to which it undermines the scope of trademarks and other IP rights held by US producers, and imposes barriers on market access for American-made goods and services that rely on the use of common names, such as parmesan or feta,” the report said.

It added: “The United States runs a significant deficit in food and agricultural trade with the EU. The EU’s GI system contributes to this asymmetry in US-EU trade in agricultural products for products subject to the EU’s GI regime. Despite these troubling aspects of its GI system, the EU continues to seek to expand its harmful GI system within its territory and beyond.”

The USTR noted that it will continue to engage in promoting and protecting US exporters of products that are trademark protected or are identified by common names.

The USTR also called on US trading partners to address IP-related challenges.

“The ideas and creativity of American entrepreneurs fuel economic growth and employ millions of hardworking Americans,” said USTR Robert Lighthizer. “This report sends a clear signal to our trading partners that the protection of Americans’ intellectual property rights is a top priority of the Trump Administration.”

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