26 May 2005

(USTR's Mendenhall outlines efforts to protect intellectual property rights)

By Berta Gomez
Washington File Staff Writer

Washington -- U.S. lawmakers are increasingly frustrated over the widespread piracy of films, music, software and other copyrighted U.S. products in countries such as China and Russia, says a prominent Republican senator.

Recent reports on global intellectual property rights (IPR) protections paint a "stark and unattractive" picture of the situation in China, where piracy levels in some sectors exceed 90 percent, Utah Republican Orrin Hatch said during a May 25 Senate Judiciary Committee hearing.

He said that Russia, which lacks strong enforcement of IPR laws, is also high on the list of IPR offenders. Russia's insufficient efforts in this area could jeopardize the country's accession to the World Trade Organization (WTO), he added.

"Before the Congress votes in favor of Russia joining the WTO, many of us will have to be convinced that the Russian government is serious about cracking down on theft of U.S. intellectual property," Hatch said.

Intellectual property theft "is more than a problem faced by a few," the committee's ranking Democrat, Patrick Leahy of Vermont, said.  Such theft can have a dramatic impact on the U.S. economy, Leahy said, calling for joint action by the Bush administration and Congress to improve the United States' ability to combat sophisticated piracy operations.

Testifying before the committee, James Mendenhall, acting general counsel at the Office of the United States Trade Representative (USTR) described IPR theft as "an enormous and growing problem" and said the administration is employing various tools to address the situation.

China is a special concern given its rapidly growing trade with the United States and industry statistics showing "rampant" piracy of U.S. software, music and movies, Mendenhall said.

USTR's special review of China's IPR situation, published in April, cited industry reports that 85 percent of sound recordings and 95 percent of films in China were pirate products and accounted for $2.5 billion to $3.5 billion in losses to U.S. industry in 2004, Mendenhall said.

"These are disconcerting figures," he said.

The special review was one of the steps the Bush administration has taken over the past year to "escalate" pressure on China to strengthen its IPR regime, Mendenhall said. "There is simply a lack of enforcement" in China he said. Plants that produce pirated media products, for example, "are shut down one day and re-open the next."

For additional information on IPR and China, see Results of Out-of-Cycle Review on China from USTR’s 2005 Special 301 Report, an annual review of the adequacy and effectiveness of IPR protection in 90 countries, on the USTR Web site.

The Bush administration has set out a "very detailed," multi-faceted work plan for China for the coming year, Mendenhall said.  It includes:
· Working with industry and other stakeholders to ensure that China ismeeting its obligations under the WTO's Agreement on Trade Related Aspects ofIntellectual Property (TRIPs);
· Invoking the transparency provisions of the TRIPs agreement to requireChina to produce more information on certain aspects of IPR enforcement;
· Elevating China onto USTR's Priority Watch List for countries that poseserious IPR challenges;
· Monitoring China's implementation of its bilateral agreements with theUnited States; and
· Utilizing the U.S.-China Joint Commission on Commerce and Trade (JCCT),including its new IPR Working Group, to secure new and specific commitments fromChina on improving IPR enforcement.

Chinese leaders have "taken seriously" the results of USTR's special review, Mendenhall said, adding that Chinese members of the JCCT had traveled to Washington the week of May 23 to discuss IPR issues.

"If there are no results, then we will consider appropriate steps," he said.  But he warned against the option -- championed by some -- of going immediately to the WTO to launch dispute settlement procedures against China for inadequate IPR enforcement.

"If we go to the WTO, we need to have our facts in order," Mendenhall said.

Regarding Russia, Mendenhall said that "incremental" improvements in that country's IPR laws have not been matched by adequate enforcement of those laws.

Copyright piracy in Russia "has increased dramatically" and its effects on U.S. owners of copyrights are compounded by the fact that Russia has become a major exporter of pirated materials, he said.

Bush administration officials have raised IPR-related concerns in the context of Russia's WTO accession negotiations "and have made it clear to the Russian government that progress on IPR will be necessary to complete the accession process," Mendenhall told the senators.

Hatch, who described himself as a long-time supporter of free trade, said that evidence of continued IPR violations by major U.S. partners threatened to dampen overall U.S. support for existing and future trade agreements.  Unless Russia, China and other countries demonstrate effective action to protect U.S. intellectual property, he said, "I can assure you that public support for U.S. trade agreements will be undermined and there will be strong resistance from -– and appropriate action taken by -– members of Congress."

The full text of Hatch’s statement at the hearing is available on the senator’s Web site.  The full text of Mendenhall’s testimony is available at the Senate Judiciary Committee’s Web site.