US says China should do more for intellectual property protection, as Beijing struggles to meet trade deal targets

Washington has signaled that Beijing is not doing enough to improve protection for American firms’ intellectual property rights, which was one of China’s commitments under the ‘phase one’ trade deal with the US.

The office of the US Trade Representative (USTR) has kept China on its “priority watch list” for intellectual property (IP) rights enforcement problems, according to the agency’s report published on Friday. While the list included eight more countries – Argentina, Chile, India, Indonesia, Russia, Saudi Arabia, Ukraine, and Venezuela – that the US is to monitor more closely, China’s section is the longest, covering 10 pages.

Under the trade agreement signed by the two parties at the beginning of 2020, which marked a truce in the longstanding US-China trade war, Beijing pledged to address US industries’ concerns on trade secrets, patents, trademarks, and copyrights, among other issues. The trade office said that it has been closely monitoring implementation of those commitments.

The latest report acknowledged amendments made by Beijing over the past year, including those in patent, copyright, and criminal laws, as well as the publication of draft IP-related legal and regulatory measures.

“However, these steps toward reform require effective implementation and fall short of the full range of fundamental changes needed to improve the IP landscape in China,” the USTR report said. It also signaled that there are doubts about the effectiveness of legal changes, and stressed that bad faith trademarks and counterfeiting still persist.

The report concluded that it remains to be seen whether China’s commitments under the trade deal “will improve the protection of IP.” It also said that there some concerns over pressuring technology transfer and fair application of IP protection laws to foreign firms operating in China due to recent statements from Chinese officials. 

Since Joe Biden took office, trade officials have not held any meetings to discuss the progress on the trade agreement that was hammered under the previous Trump administration. Earlier this week, US Trade Representative Katherine Tai promised to meet her Chinese counterpart, without elaborating. She said that her office had not yet started its top-to-bottom review of trade policy on China, which could lift some of the still-existing tariffs on billions of dollars’ worth of Chinese goods.

However, American businesses working in China do not expect that the levies will be lifted in the near future. “We don’t really see those tariffs going away any time soon. We certainly have not heard signals of that,” Alan Beebe, president of the American Chamber of Commerce in China, said as cited by the South China Morning Post.

China has been falling short of its purchase targets under the deal, which requires it to buy an additional $200 billion worth of American goods and services by 2022. According to the latest report from Peterson Institute for International Economics (PIIE), China's total imports of American goods included in the deal stood at $36.7 billion in March, compared with a year-to-date target of $49.0 billion. Beijing also missed import targets last year, with imports from the US totaling $99.9 billion, compared with the commitment of $173.1 billion, PIIE data shows.

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