US keeps China on IP priority watch list

China says US move lacks objective standards, and urges it to fulfil bilateral commitments

WASHINGTON • The Trump administration has labelled 36 countries as inadequately protecting US intellectual property (IP) rights, keeping China on a priority watch list and adding Canada over concerns about its border controls and pharmaceutical practices.

The US Trade Representative's (USTR) annual report on global IP concerns is separate from the "Section 301" report on Chinese technology transfer practices that has led the world's two largest economies to threaten each other with tariffs.

The so-called Special 301 Report on Intellectual Property Rights last Friday calls out China for its "coercive technology transfer practices" and "trade secret theft, rampant online piracy and counterfeit manufacturing".

It is the 14th straight year that China has been placed on the priority watch list.

The report was met with opposition from the Chinese Commerce Ministry, which said the United States lacks objective standards and fairness.

"The Chinese side opposes this, and urges the US to earnestly fulfil its bilateral commitments, respect the facts and objectively, impartially evaluate with positive intentions the efforts made by foreign governments, including China, in the area of intellectual property rights and the results achieved," the ministry said in a statement on its website yesterday.

The biggest surprise in Friday's report was the decision to move Canada from the lower-level watch list to the same priority list as China.

US Trade Representative Robert Lighthizer is due to travel to China later this week, along with other senior Trump administration officials, for talks on US demands for changes in Beijing's trade and intellectual property policies.

President Donald Trump has threatened up to US$150 billion (S$198 billion) worth of tariffs on Chinese goods, and China's Ministry of Commerce has threatened to retaliate in equal measure.

A USTR official declined to comment on Mr Lighthizer's specific message to his Chinese counterparts, but said American officials "anticipate engaging with them meaningfully on all these issues".

The biggest surprise in last Friday's report was the decision to move Canada from the lower-level watch list to the same priority list as China.

USTR cited Canada's "poor border enforcement", especially for counterfeit goods shipped through the US' northern neighbour, and concerns about IP protections for pharmaceuticals.

US pharmaceutical companies have long complained that generic versions of drugs still under patent protection in the country flood in from Canada at much cheaper prices.

The increased criticism of Canada was revealed as Canadian Foreign Minister Chrystia Freeland was locked in intense negotiations with Mr Lighthizer over updating the North American Free Trade Agreement.

Washington has demanded that a modernisation of the 1994 pact include stronger IP protections.

Colombia also was added to the priority watch list for failing to revise its copyright laws as required under a free trade agreement with the US.

Saudi Arabia and the United Arab Emirates were added to the watch list as well. Concerns about pharmaceutical intellectual property protections, pirated software and counterfeit goods were factors in those decisions, USTR said.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on April 29, 2018, with the headline 'US keeps China on IP priority watch list'. Print Edition | Subscribe