After giving China a number of warnings for violating intellectual property rights (IPR), the US has finally asked the dispute settlement body (DSB) of the WTO to take action against China for infringing the Trade Related Aspects of Intellectual Property Rights (Trips) Agreement.
The WTO panel will formally investigate US complaints that China has failed to adequately protect IPR on goods such as software and movies, a move criticised by Beijing. WTO?s DSB on September 25 established a panel following Washington?s second request to look into its allegations against China. Findings from the inquiry would not be released until late 2008, a WTO official said.
The US is demanding that China get tougher on prosecuting those who breach copyright or trademarks and implement stronger laws on what happens to confiscated pirated material. Washington claims Beijing?s apparent failure to clamp down adequately on IPR violations has facilitated the growth of one of the world?s largest sources of pirated products, ranging from clothes and sporting goods to drugs, CDs and DVDs.
?The United States recognises that China has made the protection of IPR a priority, and that China has taken active steps to improve IPR protection and enforcement,? US trade official Dan Hunter told the DSB. ?The fact remains, however, that bilateral discussions on specific matters described in the US panel request have not resulted in a mutually agreeable solution to our concerns.?
China hit back at the US panel request, describing it as ?regrettable? that Washington had sought for the second time the panel?s establishment and vowing to defend its interests. China claims that it is making all efforts to protect the IPR of all concerned under the Trips agreement. Hence, the US should have waited before sending the second request for establishment of a panel to the DSB.
As allowed under WTO rules, China blocked Washington?s first request for a panel on August 31. WTO rules stipulate that a second request leads automatically to the establishment of a panel, unless the complainant withdraws its proposal. China alleges that the US is trying to impose obligations beyond the Trips agreement on developing countries. It also cited Trips provisions that the countries can determine appropriate methods of implementing the agreement within national legal frameworks.
The first step for the DSB is for consultations and mediation, prescribed to take 60 days to complete. The setting up of the panel and appointment of its members, a 45-day process, follows this. Preparation and provision of the final panel report to the parties involved in the case takes six months, while three weeks is allotted for the same report to be circulated among WTO members. A further 60 days is set aside for the DSB to adopt the report if there is no appeal lodged. In the case of an appeal, a further three months of negotiations is expected to ensue. It is often argued that the efficacy of the rule of law always depends on the effectiveness of its dispute settlement machinery. Stated differently, if disputes in a particular legal system are settled amicably and judiciously within a stipulated period of time, then one can assume that the writ of rule of law runs well in that system.
Since implementation of the WTO on January 1, 1995 its dispute settlement system has worked well, as some numbers will suggest. In the first ten years of its existence about 300 cases have been brought to the DSB. In fact, the US has taken a very strong beating at the DSB, losing several cases. The victory of smaller countries over bigger powers has certainly played an important role in developing the faith of these countries not just in the DSB but also in the multilateral trading regime. Interestingly, China has a very large number of IPR violations. Let us hope that China will improve its IPR regime and will not force the US from pursuing the IPR cases at the DSB further.
?The writer is a trade professor at Icfai Business School, Chandigarh. He can be contacted at vasu-22@gmail.com
