US, China Fail To Resolve Differences In Consultations On WTO IP Cases

By William New
The United States and China last week failed to resolve differences raised by the US dispute at the World Trade Organization over China’s intellectual property protection and market access for US copyrighted material, according to the Chinese government.

The United States filed two WTO disputes on 10 April (IPW, Subscribers, 24 April, 2007), and the two sides had 60 days for consultations before the US could raise the disputes to the next level, which is the formation of an arbitration panel. The original requests and statements are available at: (IPW, Subscribers, 12 April 2007).

The consultation on the US case challenging aspects of China’s IP protection was held on 7-8 June, and the consultation on the challenge to importation rights and redistribution was held on 5-6 June, China said.

The Office of the US Trade Representative could not offer a comment on the consultations by presstime.

In a 9 June statement, China emphasised the importance of intellectual property rights protection to its economy and of fulfilling its WTO commitments, and asked for patience and understanding. It claimed it has “made great achievements” on IP rights legislation and enforcement since joining the WTO in
2001.

China highlighted Article 1.1 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which states that, “Members shall be free to determine the appropriate method of implementing the provisions of the TRIPS Agreement within their own legal system and practice.”

The Chinese government insisted after the consultation that the measures challenged by the United States “are fully consistent with the TRIPS Agreement and should bear no blame.”

“China strongly opposes any attempt by any other WTO Member to impose additional obligations beyond the TRIPS Agreement through inappropriate application of the WTO dispute settlement mechanism, and believes that the impact resulted therefrom would by no means be accepted by other developing members,” it added.

China also said it “has participated in these consultations seriously and constructively,” sending officials from more than 10 Chinese governmental bodies to Geneva. The government said the consultations helped to “clarify” some issues and contribute to communications between the two sides, but criticised the US approach.

“China regrettably notes that, on one hand, the United States fails to correctly understand China’s legal system and basic concepts of IPR protection,” it said. “On the other hand, the United States, having spent long time preparing a lengthy list of questions, left China only one week to respond them.”

The government called on the US to review materials provided by China and “make a right decision for the next step.”

What that next step will be was not clear at press time as US officials could not be reached.

The cases are:
“China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights” (WT/DS362/1).

“China – Measures Affecting Trade Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products” (WT/DS363/1).

Canada, European Union, Japan, and Mexico have joined one or both of the cases as third parties.

According to the WTO website, dispute settlement procedures follow this timeline:
60 days – consultations, mediation, etc.
45 days – panel set up and panellists appointed
6 months – final panel report to parties
3 weeks – final panel report to WTO members
60 days – Dispute Settlement Body adopts report (if no appeal)
(approximate) total = 1 year (without appeal)

An appeal can add another three months.

William New may be reached at wnew@ip-watch.ch.