The Trump administration placed three dozen countries on an annual list of trading partners that “present the most significant concerns” regarding the lack of intellectual property (IP) rights protections.
Among the worst, placed on the “Priority Watch List,” are Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Saudi Arabia, Ukraine, and Venezuela, according to a 2019 report by the Office of the United States Trade Representative (USTR), an agency that represents the United States in foreign trade talks.
“This Report provides an opportunity to call out foreign countries and expose the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers,” states the report released April 25.
IP theft costs the U.S. economy upward of $225 billion and as much as $600 billion a year in counterfeit goods, pirated software, and theft of trade secrets, according to the 2017 IP Commission Report prepared by the National Bureau of Asian Research, a Seattle-based think tank with strong ties to major U.S. corporations.
While listing the issues of each of the 11 priority countries, the USTR report has a heavy emphasis on China, mentioning the country 154 times.
Of the $500 billion or more in global imports of counterfeit and pirated goods in 2016, half came from China—two thirds if Hong Kong is included, according to estimations in the March report by the Organisation for Economic Co-operation and Development.
Despite a government reorganization and proposed revisions to IP laws and regulations, “China failed to make fundamental structural changes to strengthen IP protection and enforcement,” the USTR report stated.
China also is lacking in opening its market to foreign investment, allowing the market “a decisive role in allocating resources,” and “avoiding government interference in private sector technology transfer decisions,” it said.
“For U.S. persons who rely on IP protection in what is already a very difficult business environment, severe challenges persist because of gaps in the scope of IP protection, stalled legal reforms, and weak enforcement channels.
“High-profile statements in support of IP and innovation by Chinese government officials are no substitute for real structural changes to address shortcomings in China’s IP system, which cannot be excused by the country’s stage of economic development.”
The countries singled out by USTR “will be the subject of increased bilateral engagement with USTR to address IP concerns,” according to an April 25 USTR release.
“For such countries that fail to address U.S. concerns, USTR will take appropriate actions, such as enforcement actions under Section 301 of the Trade Act or pursuant to World Trade Organization or other trade agreement dispute settlement procedures, necessary to combat unfair trade practices and to ensure that trading partners follow through with their international commitments,” it says.
IP violations and theft are a major topic in ongoing U.S.–China trade talks.
President Donald Trump has spoken optimistically about the negotiations after he imposed a 10 percent tariff on $200 billion of Chinese goods in September 2018, on top of tariffs already imposed on $50 billion of goods that were implemented in August. China responded by imposing tariffs on $110 billion of American goods. However, China only imported about $120 billion of American goods last year, which gives America the upper hand in the tariff battle.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will travel to Beijing for trade talks beginning April 30, the White House said in a statement on April 23.
It said Chinese Vice Premier Liu He, who will lead the Beijing talks for China, also will travel to Washington for more discussions starting May 8.
“The subjects of next week’s discussions will cover trade issues including intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, purchases, and enforcement,” the White House said.
Larry Kudlow, director of the White House National Economic Council, said the United States and China were making progress in the talks and he was “cautiously optimistic” about the prospects for striking a deal.
Reuters contributed to this report.