31. The representative of the United States thanked the Chinese delegation in advance for its attention to the questions raised by the United States and other Members. These questions touched on many issues of concern. The United States had worked hard to address these and similar concerns through meetings of this Council and through constructive bilateral dialogue and cooperation with China. Unfortunately, it had not been possible to resolve all of these issues through these mechanisms alone.
32. His delegation recognized that China had made the protection of intellectual property rights a priority and had taken active steps to improve IPR protection and enforcement. It continued to welcome and appreciate the commitment at the highest levels of China's Government to addressing these issues. However, the United States was concerned that several aspects of the Chinese legal regime actually hindered IPR protection and enforcement and raised WTO concerns.
33. He noted that the WTO Dispute Settlement Body had established a panel to look into three such concerns under the TRIPS Agreement. These related to China's thresholds for criminal copyright and trademark enforcement; customs rules for destructions of infringing goods; and copyright protection for new products that had not yet received Chinese Government approval for publication or distribution.
34. The United States was also concerned about certain Chinese measures that affected market access for films for theatrical release and audiovisual home entertainment products such as DVDs and video cassettes; for books, periodicals, journals, and other publications; and for music. China's barriers to market access for these copyright-dependent products created legal obstacles to legitimate products reaching the Chinese consumer. That, in turn, made it easier for copyright pirates to operate in China's market. It was his delegations view, therefore, that the protection of intellectual property rights and market access for legitimate copyright-dependent products were bound together. He noted that the United States had requested establishment of a WTO panel to look into these market access concerns as well.
35. As the questions from Members today reflected, the concerns that were the subject of the two pending dispute settlement proceedings represented only a part, albeit an important part, of a much larger set of concerns about China's protection and enforcement of intellectual property rights. It was critical that China and its trading partners worked together to aggressively seek solutions to these larger issues.
36. His delegation saw evidence of unacceptable levels of IPR infringement most vividly in the numbers of infringing goods seized at US borders. Mid-year statistics for 2007 showed that China was the source of 81 per cent of infringing goods seized at US borders. China had had a high share of seized goods in past years as well, but it was especially troubling that the seizure of Chinese goods had been increasing, not decreasing, each year since China had joined the WTO in 2001. Exports were only part of the problem, however. US copyright industries consistently reported high rates of piracy within China, although there had been improvement in the software sector. Trade in pirated optical discs continued to thrive. The operation of large retail and wholesale markets for counterfeit and pirated goods had not been deterred. Piracy of books and journals was a key concern. Internet piracy was increasing.
37. Overall, product counterfeiting in China was widespread, affecting pharmaceuticals, electronics, batteries, auto parts, industrial equipment, toys, and many other products. Many of these counterfeit products, moreover, posed a direct threat to the health and safety of consumers in China, the United States and elsewhere around the world. The underlying causes for these problems, and the possible solutions, were too numerous to describe here. The US Government had set out its views on those issues in detail in various reports available on the website of the Office of the US Trade Representative.
38. Last year at the transitional review before this Council, his delegation had noted that the United States looked forward to continuing to engage bilaterally with China on a wide range of IPR issues. At the same time, it had pointed out that the multilateral WTO forum, and the tools provided under the WTO agreements, including reviews like this one, the provision for transparency requests under Article 63.3 of the TRIPS Agreement, and the availability of WTO dispute settlement, were equally indispensable to a healthy international trade environment. His delegation continued to be disappointed at China's apparent reluctance to take full advantage of the capacity of these tools to clarify issues and aid in the exploration of possible solutions.
39. The larger issue before China and its trading partners was how solutions would be found and mutual understandings be reached regarding the various IPR issues discussed today. His delegation had observed that China seemed reluctant to use the transitional reviews before this Council to their full advantage. It had also seen that China was reluctant to respond substantively to requests under Article 63.3 of the TRIPS Agreement. Since the filing of the two WTO disputes against China, it had also noted a reluctance on China's part to engage in bilateral dialogue.
40. The United States continued to believe that deeper multilateral and bilateral dialogue and cooperation was the path to progress. The United States would continue to put serious efforts into its joint work with China on innovation policy, intellectual property protection strategies, and the range of other important matters in its bilateral economic relationship through the US-China Strategic Economic Dialogue, the Joint Commission on Commerce and Trade and other bilateral engagements. He hoped that China would fully embrace all of those opportunities and his delegation viewed the current WTO disputes as evidence of the need for more, not less, bilateral and multilateral cooperation on China's IPR issues.
41. Moving ahead with that work would of course require a willingness to cooperate on the Chinese side. The United States had seen evidence of that in some areas, such as recent joint US – Chinese law enforcement actions and a memorandum of cooperation in the sphere of IPR border enforcement. His delegation hoped to see deeper cooperation in other areas as well, with a view to making progress on the important issues that remain to be addressed with regard to China's IPR enforcement regime.
