• The USTR released its 2018 Special 301 Report listing 36 countries inadequately protecting and enforcing intellectual property rights.
  • China remains on the Priority Watch List for the 14th consecutive year, while Canada is a new entry to the list. 
  • China's Ministry of Commerce has criticised the report for lacking objective standards and impartiality.
The US says China has long-standing and new IP concerns that merit increased attention

The US says China has long-standing and new IP concerns that merit increased attention

A group representing US apparel and footwear brands has praised the publication of a list of 36 countries inadequately protecting US intellectual property rights – with China appearing on the priority watch list for the 14th consecutive year.

The Office of the United States Trade Representative (USTR) released its '2018 Special 301 Report' on Friday (27 April), identifying trading partners that do not adequately or effectively protect and enforce IP rights or otherwise deny market access to US innovators and creators that rely on protection of these rights.

China remains on its 'priority watch list', while Canada has been added over concerns about its border controls and pharmaceutical practices. India also remains on the priority list of 12 countries for long-standing challenges in its IP framework and lack of sufficient measurable improvements, particularly with respect to patents, copyrights, trade secrets, and enforcement, as well as for new issues that have negatively affected US right holders over the past year.

For China, the USTR says the country has long-standing and new IP concerns that merit increased attention, including China's coercive technology transfer practices, a range of impediments to effective IP enforcement, and widespread infringing activity – including trade secret theft, rampant online piracy, and counterfeit manufacturing.

China's Ministry of Commerce, however, has criticised the report for lacking objective standards and impartiality.

In a statement, the Government urges the US to "earnestly fulfil its bilateral commitments, respect the facts, and objectively, impartially, and kindly evaluate" the efforts made by foreign governments, including China, in terms of intellectual property rights and the results achieved.

"The Chinese government attaches great importance to the protection of intellectual property rights, and regards it as the most important content of improving the property rights protection system, and it is the biggest incentive for improving China's economic competitiveness," the Ministry of Commerce said in a statement.

"Over the years, China has continued to improve its legislation and continuously strengthened the administration of intellectual property rights and judicial protection. The relevant systems and protection levels are in line with international rules. At the same time, China persists in opening wider to the outside world and implements the negative list system. It treats domestic and foreign-funded enterprises equally and strives to improve the business environment for foreign investment."

The Trump administration last month proposed tariffs on US$50bn of imports in China under Section 301 of the Trade Act – with an additional $100bn in tariffs against China being considered. China has announced possible retaliatory duties in response.

According to US Government estimates, IP-intensive industries directly and indirectly support 45.5m American jobs, representing around 30% of all employment in the US. The report suggests the steps foreign countries can take to open their markets to IP-intensive goods that will help protect US jobs, create opportunities for job growth, and promote free and fair trade.

"The ideas and creativity of American entrepreneurs fuel economic growth and employ millions of hardworking Americans," says US Trade Representative 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."

The American Apparel & Footwear Association (AAFRA) praised the USTR for the release of the report, particularly given apparel and footwear are regularly found on official lists of counterfeit product seizures.

"The Special 301 Review by USTR is essential in the protection of intellectual property, and serves as an important benchmark for improvements in intellectual property protection around the world," said Rick Helfenbein, president and CEO of the AAFA. "We thank USTR for considering the experiences of our members when compiling this report, and highlighting the importance of intellectual property enforcement measures.

"Preventing intellectual property theft is essential for US businesses and the growth of US jobs. We encourage the administration to continue to use tools like this report to promote better enforcement against counterfeits."

The AAFA submitted written comments and testified as part of USTR's review process for the report.