China had legitimate grounds for complaint when the US Trade
Representative filed two intellectual property right (IPR) cases
against China in the World Trade Organization.
The cases were taken to the WTO while the Chinese authorities
were dealing with the issue of IPR protection. Enforcement of laws
has been strengthened to protect the interests of IPR holders. But
that didn't impress the US.
Welcome to the world of international litigation. China has to
realize that these cases herald a new phase in the country's
participation in the multilateral trading system six years into
joining the WTO.
As China increases its impact on the world economy, countries
affected by Chinese competition will tend to resort to the WTO
dispute settlement mechanism.
China should not have illusions about the effectiveness of quiet
diplomacy in resolving disputes over fundamental trade interests
unless the country can afford to make endless unilateral
concessions. Otherwise, it will have to keep defending its trade
interests with the legitimate right accorded to it by the WTO.
From now on, China must stand ready to play the WTO game.
US officials characterized the situation as reflecting the
maturity of US-China trade relations. This is probably true.
China's strong protest can reach a very limited audience in the
United States and will have little impact on the US Congress.
A WTO ruling provides more effective protection of legitimate
interests of WTO members.
It is advisable for China to act in a way that will avert the
recurrence of political meddling in China-US economic and trade
relations as occurred before China joined the WTO. China's joining
the WTO makes no sense if the country shies away from using WTO
rules to defend its legitimate interests.
Settling a dispute in the WTO on a specific subject would
probably help the US administration siphon off Congressional
pressure to pass comprehensive protectionist legislation against
China. The dispute settlement procedure provides flexibility to
reach an amicable solution.
If China wins the case, there is no need to make any
concessions. If China is found in breach of WTO obligations, it
should face the fact and take action to rectify it. That is
something a responsible WTO member is obliged to do. If China has
met her obligations, no sanctions against her are justified.
The two IPR cases filed by the United States have very weak
arguments. The accusation of China's failure to enforce IPR
protection law is unjustifiable.
In some cases China has gone to great lengths to accommodate the
interests of foreign IPR holders. For example, the government
endorsed anti-competitive practices by requiring pre-loading of
software in imported computer hardware. This product tie-in will
run into conflict with the competition law now in the offing.
China has met its obligations when legal remedies are available.
The Chinese authorities are making continuous efforts to take
strong administrative measures against piracy. But severe criminal
prosecution cannot completely eliminate piracy, just as in the case
of drug trafficking.
The case of market access for DVDs, CDs and publications is a
non-case. The US increased pressure on China over the IPR issue in
an attempt to secure concessions in audio-visual market access. But
market access is a subject for negotiations on a reciprocal
basis.
There is no relation between market access and IPR piracy. When
the US has not had legal access to the Chinese market, there is no
question of economic loss.
The message of WTO membership is clear: China should not
hesitate to resort to WTO mechanisms for settling trade disputes.
More frequent use of the WTO dispute settlement mechanism is
inevitable. Now that China is the world's third largest trading
country, it cannot avoid conflicts in trade interests with other
WTO members.
China is entitled to use the dispute settlement mechanism to
defend its legitimate interests. Seeking to resolve a trade dispute
in a multilateral forum is in full compliance with China's policy
of building a harmonious world.
The author, China's former senior WTO negotiator, works with
EU-China Trade Project
(China Daily April 18, 2007)