Washington DC
03 April 2017
Reporter: Barney Dixon
US complains about China’s piracy and counterfeiting problems
Intellectual property enforcement has contributed to a reduction in the US goods trade deficit in China, but infringement continues to be a key barrier.

According to the US Trade Representative’s 2017 National Trade Estimate, which was released on 31 March, China has undertaken a “wide-ranging revision of its framework of laws and regulations aimed at protecting the intellectual property rights of domestic and foreign rights holders”, as part of its accession to the World Trade Organisation.

These actions have contributed to a 5.5 percent decrease ($20.1 billion) in the US goods trade deficit with China. The deficit stood at $347 billion in 2016.

But “inadequacies in China’s IP rights protection and enforcement regime continue to present serious barriers to US exports and investment”.

The US is particularly concerned about fake drugs. According to the National Trade Estimate, China repeatedly agreed to amendments to its Drug Administration Law, to require regulatory control of the manufacturers of bulk chemicals than can be used as active pharmaceutical ingredients.

But it said the Chinese government has yet to follow through, reportedly due to the prioritisation of reforming the drug regulatory system to reduce the drug approval lag.

Online piracy continues on a “large scale” in China, and affects most areas of the creative industry, including music, films, books, software and videogames.

China’s enforcement activities have helped to “stem the flow of online sales of some pirated offerings”, according to the report, but “much more sustained action and attention is needed to make a more meaningful difference for content creators and rights holders”.

Bad faith trademark registrations are also a continuing problem in China, but the government has publicly noted the harm that may be caused by these registrations and confirmed that it is taking further steps to combat bad faith filings.

The report also noted that despite China’s increased enforcement actions, several Chinese markets, including Alibaba Group’s Taobao marketplace, were added to the USTR’s 2016 Out-of-Cycle Review of Notorious Markets.

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