Nation condemns US' IPR watch list

The Chinese government expressed deep regret about the United States' decision to once again put China on its "priority watch list" of countries who are not providing protection of intellectual property rights or fair access to US companies.

It is the ninth consecutive year that the Office of the United States Trade Representative has placed China on its watch list. The other countries on the list are Algeria, Argentina, Chile, India, Indonesia, Pakistan, Russia, Thailand and Venezuela. Ukraine was the first designated "priority foreign country" in 11 years.

In its 2013 Special 301 Report published on Wednesday, the USTR said it is concerned about the misappropriation of trade secrets in China as well as incremental progress on several of China's significant IPR and market-access challenges.

"Obtaining effective enforcement of IPR in China remains a central challenge, as it has been for many years. This situation has been made worse by cybertheft, as information suggests that actors located in China have been engaged in sophisticated, targeted efforts to steal IP from US corporate systems," the report said.

Cyberattacks and corporate espionage allegedly originating from China have recently strained China-US relations. But trade and law experts expressed concerns about the report's credibility in repeatedly putting strong or emerging economies, such as China and Canada, on its annual list.

James Love, director at the Knowledge Ecology International, a Washington-based think tank, believes China receives attention because of its strong economy. He said the heavily "lobbyist-driven" list doesn't make much sense by repeatedly including countries like China and Canada.

"I think they are just scapegoating in China. I don't think it has anything to do with intellectual property," Love said. "It's not like the Canadians are engaged in all kinds of privacy or anything like that. There is a lot of criticism about the lack of real methodology."

Jeremy Haft, an adjunct professor at Georgetown University, said naming countries on this list will help provide American companies the foundation to seek remedies with the World Trade Organization.

"While it is understandable that the USTR cited China in its Special 301 Report, as it allows for remedies that can be sought through the WTO, the move is not particularly helpful," said Haft. "It obscures how much progress China is making on intellectual property protection, for example, in jurisdiction, enforcement, and education.

Love said the list used to include all major economies, adding: "if you look at the biggest economies in Latin America, they would all be on the list".

Last October, a US congressional report fingered Huawei Technologies and ZTE Corp as threats to national security and called on the US government and private-sector companies to avoid buying equipment from either company.

Fen Hampson, director of the global security program at Canada-based Center for International Governance Innovation, said by compiling the annual list, there is "a real risk of escalation in the IPR and internet 'wars"."It is already proving damaging to relations between the two countries. The fact that Huawei is allowed to do business in Canada is even a sore point in Canada-US relations," Hampson said.

Nonetheless, including China on the priority watch list is nothing new. Haft said that although "there may be some deterioration in business dynamics in the near term longer term, China and the US are inextricably linked as trading partners, and this citation won't impact the overall relationship".

The report also noted several positive developments and said that in the past year, the climate for IPR protection and enforcement has improved.

China's Ministry of Commerce said the central government has made strides to improve IPR protection, legislation and enforcement. The ministry also said the Chinese government "attaches great attention to commercial-secrets protection", and that "China is willing to enhance cooperation with other governments, including the US, to improve the world's IPR protection".

"The situation of IPR infringement is still challenging and we must maintain intensive combat," Vice-Premier Wang Yang said April 28.

President Xi Jinping said during the recent Boao Forum that China will continue to hone its legal system and investment environment so that all companies can enjoy equal access to production, market competition and legal protection.

"The US should increase its high-tech exports to China to narrow the trade deficit rather than frighten China with this annual report, which is not effective and obsolete," said Cao Heping, deputy dean of the Institute of Digital China and a professor at Peking University's School of Economics.