Two Takeaways From USTR’s Special 301 Report On IPR Protection
May 6, 2016 (Mimesis Law) — Last week, the Office of the United States Trade Representative (USTR) released the Special 301 Report on the global state of intellectual property rights (IPR) protection and enforcement.
The “Special 301” Report is an annual review of the global state of IPR protection and enforcement. The USTR conducts this review pursuant to Section 182 of the Trade Act of 1974. One of the remarkable features of this report is the classification of trading partners into three categories; namely, a Priority Foreign Country (PFC), a Priority Watch List (PWL), and a Watch List (WL) in descending order of alert level. Countries listed as PFCs are subject to the most direct trade sanctions by the United States.
In this year’s Report, while no countries are designated as PFCs, 11 countries – Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Thailand, Ukraine, and Venezuela – are on the Priority Watch List. These countries will be the subject of particularly intense bilateral engagements during the coming year. Furthermore, 23 trading partners are on the Watch List.
As for this year’s report, the following two things are worth noting:
Firstly, no countries are named as PFCs. The only country to be designated as a PFC this century was Ukraine in 2013, although sanctions on the country were not implemented in consideration of its politically unstable situation. This monitoring and retaliatory framework was developed before the establishment of the World Trade Organization (WTO) in 1994; in other words, when no binding international trade rules existed. Therefore, if any WTO member is designated as a PFC in the future, a consistency between sanctions implemented by the United States and WTO/TRIPS rules could be a contentious issue.
Secondly, among trading partners listed on the PWL, this year’s report pays special attention to China and India. Ifn the full report, there are 8 pages specifically allocated to both China and India. Furthermore, the press release of the USTR refers to China and India as “a significant element of the 2016 Special 301 Report” as follows.
“USTR continues to place China on the Priority Watch List. China has undertaken wide-ranging intellectual property law reform efforts and some positive enforcement initiatives, but both longstanding and new IPR concerns merit increased attention including with respect to trade secret theft, rampant online piracy and counterfeiting, continued high levels of physical pirated and counterfeit goods, and localization requirements that condition market access on use of IPR developed in or transferred to China.
India also remains on the Priority Watch List this year for lack of sufficient measurable improvements to its IPR framework despite more robust engagement and positive steps forward on IPR protection and enforcement undertaken by the Government of India. USTR retains the option of conducting an OCR of India should developments—either positive or negative—weigh in favor of a review in advance of the annual cycle.”
Year in and year out, speculation is rife over the possibility of these two countries being designated as a PFC. It remains to be seen whether any changes implemented by the two countries to reinforce IPR protection will be sufficient to keep them off the PWL in next year’s report.
Roy Song is writing under pseudonym and works for an unidentified government and Intellectual Property Office.