The Intellectual Property Rights Protection - Essay Example

BUSINESS LAW - CHINESE TRADE AND INVESTMENT LAW China was so keen on gaining membership in the World Trade Organisation (WTO) because it would be able to promote its national reforms, develop its national economy, and boost economic and trade cooperation between itself and various countries and regions around the world. Its membership would help bring about a steady development of the world economy and contribute to the establishment of a just and reasonable international economic new order (Chen 2000). On the political and diplomatic side China had always wanted to be recognized by the large multilateral institutions, the WTO being prominent on the list of those to which it is not a member (Barshefsky 1999). Significantly, in accordance with the principle of the balance between rights and duties, once China joins the WTO, China is said to be able to enjoy a "most favoured nation status" (Chen 2000). China's interest in WTO according to Chen (2000) is thus - ".the multilateral, stable and unconditional most favoured nation status provided by the WTO members and the achievements gained by other countries and regions from trade liberalization, [the participation] in the formulation of international trading rules, and [utilization of] the WTO's multilateral dispute solution mechanisms to safeguard China's rights and interests" According to the Fact File of the World Trade Organization (2005), the WTO is the only global international organisation dealing with the rules of trade between nations. Its goal is to help producers of goods and services, exporters, and importers conduct their business through agreements, negotiated and signed by the world's trading nations and ratified in their parliaments. Established on 1January1995, and created by the Uruguay Round negotiations (1986-1994), the organization is based in Geneva, Switzerland where 148countries (on 13October2004) are members. It has a budget of 169million Swiss francs for2005 and is now headed by Pascal Lamy as Director-General. The Fact File (2005) further says WTO has the following functions: 1) Administering WTO trade agreements, 2) [Conducting] Forum for trade negotiations, 3)Handling trade disputes, 4)Monitoring national trade policies, 5)[Giving] Technical assistance and training for developing countries, and 6)[Cooperating] with other international organizations. Will joining the World Trade Organisation assist or hinder China's Development From the perspective of Rao (2001), a Chinese biotechnologist and food scientist, yes, China's joining the WTO in the long run will assist its development. Speaking before the WTO, he said China is aware that in so doing, some of its domestic food manufacturers will be hurt or damaged, just as others will not be. The Chinese government are also aware there could be initial shocks in agriculture and food industry, but in the long run "will be converted into a powerful driving force for its development." There are two views over the past years regarding China's accession to WTO: the optimistic view and the pessimistic view. The optimistic view reasons that the availability of cheaper supply food ingredients with higher quality after China's joining the WTO will give competitive edge to Chinese food industry in the international market (Rao 2001). In addition, the optimists say, China's membership will promote the rule of law in the country, undercut state power in controlling the lives of people, and accelerate China's transition from a command economy to a market economy. China's entry will also help modernize accounting, banking, legal, telecommunications, and transportation systems of the country, at the same time reduce corruption, favouritism, and local protectionism (Yu 2001). On the other hand, the pessimistic view says freer international trade and investment will strengthen the competitiveness of foreign food business in China, shrinking the domestic market for manufactured foods on account of the unavoidable decrease in Chinese farmers' income from low productivity. They say this will seriously damage food industry in China (Rao 2001). The pessimists also argue that China's entry into the WTO may disrupt the global trading system on account of China's poor record of fulfilling international obligations. And if China's "rogue state mentality" continues despite its joining the WTO, its actions may cause eventual collapse of the organization (Yu 2001). Two basic reasons pessimists give why China will fail to abide by the WTO rules is given by Yu (2001) - First, China might prefer to compete unfairly against other WTO members by free riding on the benefits of the global trading system. Second, China's socio-economic problems may be so severe that the Chinese leaders will not be able to honour their promises even if they want to do so. Given Chinese leadership's strong desire to minimize friction with other WTO member states, the latter explanation is more likely than the former to account for China's future reckless behaviour. According to the Bureau of Public Affairs, U.S. Department of State (2005), the United States seeks to fully integrate China into the international rules-based economic and trading system, which participation shall nurture economic reform, increasing in turn stability and prosperity of East Asia. U.S. direct investment in China is said to cover a wide range of manufacturing sectors, several large hotel projects, restaurant chains, and petrochemicals with cumulative U.S. investment in that area valued at $48 billion. Further, the same Department said, the United States seeks to expand access of U.S. exporters' and investors' to the Chinese market. Hence, as China grows and develops, its needs for imported goods and services will grow even more rapidly. With the U.S. government continuing to work with China's leadership for conformity with China's WTO commitments, U.S. exports of goods, agricultural products, and services to the PRC will increase. China's entry into the WTO would therefore assist its development. Some sectors of China, however, are taking the line with care. At an informal meeting of the China Working Party days before China would get into WTO, "last minute Chinese commitments" were being made according to Raghavan (2001). He expressed lack of confidence in at least two questions to include insurance and WTO inconsistent anti-dumping and countervailing duty measures. From Raghavan (2001) - "The compromise language used on the Chinese 'commitments' in the insurance sector, and access to be provided to foreign suppliers of life insurance in the Chinese market, and the way the existing 'privileges' of the very powerful (and highly politically connected in the US administration and Congress) American Insurance Group [AIG] have been 'grandfathered' and preserved, and the manner in which China would treat others, however, holds the potential of disputes on this landing before dispute panels and the dispute settlement process, once China completes its domestic processes of ratification and joins the WTO." Raghavan (2001) scores the nature of the WTO dispute settlement process as not exactly the impartial judicial process it is claimed to be and that there will be problems - pitting China, the US, the EU and others against each other in the future. Aside from the insurance issue, Raghavan (2001) says another outstanding question is on China's bilateral agreement with Mexico relating to the over 1,400 and odd (at tariff line level) WTO inconsistent anti-dumping and countervailing duty measures. He says this appears to have been settled in on Mexico's terms - with Mexico securing a 6-year transition period for phasing out or bringing these into conformity with the WTO. China's Efforts. Background notes on Chinese trade given by the US Department of State show 2004 China's merchandise exports totalling $593 billion and imports totalling $561 billion. Its global trade surplus was up by about 25%, to $32 billion and its primary trading partners included Japan, the EU, the United States, South Korea, Hong Kong, and Taiwan. U.S. statistics place China as having a trade surplus with the U.S. of $162 billion in 2004. In November 1991, China was said to join the Asia-Pacific Economic Cooperation (APEC) group, which promotes free trade and cooperation in the economic, trade, investment, and technology spheres. This accordingly was a step in opening its foreign trading system and integrating itself into the world trading system. In December 2001 China formally joined the WTO. WTO Concerns. With the WTO, China agreed to lower tariffs and remove market impediments. Chinese and foreign businessmen had the right to import and export their products without going through government middlemen. Serious concerns remain, however, from China's WTO commitments, particularly in the area of intellectual property rights (IPR) protection. With exports, the United States is said to be one of China's primary suppliers of power generating equipment, aircraft and parts, computers and industrial machinery, raw materials, and chemical and agricultural products. U.S. companies have entered agreements establishing more than 20,000 equity joint ventures, contractual joint ventures, and wholly foreign-owned enterprises in China with more than 100 U.S.-based multinationals having projects in China. Some of the factors, however, that influence the U.S. trade deficit with China include "China's restrictive trade practices, which have included an array of barriers to foreign goods and services, often aimed at protecting state-owned enterprises" (US Department of State, Bureau of Public Affairs 2005). Trade Protectionism. The talk about "sophisticated ability of Chinese producers to manufacture and export textiles as giving rise to every-growing trade friction as well as every-rising vigilance from their American counterparts" appeared in an American newspaper according to Cheng (2005). The same article, picked up by China Daily (July 16, 2005) raised hopes "that the United States adjust its policy on free trade in view of China's rapid rise." This points now to some American trade insecurity about China. In fact, there have been developments toward this as reported by Cheng (2005) as though US is reconsidering free trade policy and has become tougher as hoped for by its own businessmen. In Cheng's words - Since China joined the WTO, the United States has adopted a tougher policy of trade protectionism towards China in a step-by-step fashion. A series of make-or-break measures have been outlined and adopted successively, for example the imposition of high duties on imported steel, anti-dumping cases against China-made televisions and the imposition of quota restrictions on China-manufactured textiles. All of above-mentioned issues give full expression to the fact that the United States has earnestly implemented a policy of trade protectionism. If protectionism is to be sustained by United States, WTO's primary beneficiary, China would naturally react to protect its own interests, creating in the process an impasse. Traders hope that the world trade system does not move into an indefinite period of protectionism. Rights and Duties. Chen (2000) gives an analytical assessment of correctly understanding the principle of balance between rights and duties in relation to China's entry into the WTO. Logically, both two transacting parties must toe the line in order for development to ensue at both ends. Here is Chen's (2000) argument - After China's accession to the WTO, the rights it will be able to enjoy are identical with the duties it has to fulfil. For the WTO members, China's market potential has a great appeal to them. China's entry into the WTO, its observance of the WTO rules and performance of the duty of opening its markets promised during negotiation will provide its trade partners in various countries and regions with better and more stable market access opportunities. In order to achieve the right to such an opportunity for entry into the Chinese market, the WTO members must also perform corresponding duties in relation to China, thereby laying a stable foundation for the long-term development of China's economic and trade relations with various countries and regions. Cheng's (2005) assessment to the question whether China's WTO membership would assist its development, dovetails with Chen's (2000) argument for a correct interpretation of the principle of balance between rights and duties. In sum, what Chen meant was that for China to develop, her rights in joining WTO should be identical to her duties. Albeit these are normative propositions, the other author Cheng says America is the primary beneficiary of WTO. His accounts on American idea of reconsidering free trade policies with China imply that CHINA IS DEVELOPING to a scale that United States is now "holding high the banner of protectionism." Consider this from Cheng (2005) - "The true story behind China's trade surplus with the U.S. is that American businessmen have pocketed much of the earnings and Chinese manufacturers only have got modest economic returns. "China's miraculous rise is attributed to globalization, trade liberalization and the thriving domestic market of the United States. Thanks to unremitting and dauntless efforts made by Chinese people from all sectors of the society, China's economy is developing at a dizzying pace. Compared with other developing country, China enjoys a huge domestic market and its economy is of a grand scale. China has emerged as a world factory. The United States keeps up its guard against China's fast-paced development with a sense of insecurity. So that the United States is seeking to hinder china's rapid development and hold high the banner of trade protectionism" Working Hard. China is said to be working hard in its WTO commitments particularly in the area of intellectual property rights protection which United States said is "a serious concern remaining." In fact, People's Daily (2005) writes of people's courts of all levels in China having stepped up efforts in IPR protection. In 2004 all people's courts in China were said to have settled 8,332 IPR cases and 653 criminals were sentenced. China also has acquired a symbol for publicity on IPR protection, and a first IPR park in Yangpu district speeding up industrialization. The paper reports that Jiang Zhuoqing, Chief Executive of the Yangpu district, "would strive to turn the Shanghai IPR Park into an influential technological transfer and incubation platform in China." All of these that China has been doing for intellectual property rights as a serious concern for WTO is doing much good for the international market. Not that China has to cope with standards in order to pass stringent market procedures. In a very great way, WTO membership requires of its members to learn "the proper way" to trade clean, which is good for their own development. In terms of quality, WTO as a trade fiscaliser is doing great for China's development. The Special 301 Report required by U.S. trade law in fact reports that as of 2004, China was only one of a total of 52 countries or economies having IPR-related problems. Fourteen U.S. trading partners are on the 2005 "priority watch list" including Argentina, Brazil, China, Egypt, India, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the Philippines, Russia, Turkey and Venezuela (People's Daily 2005). In analysing China's entry into the WTO, Yu (2001) goes beyond Rao (2001) and introduces a third group beyond the optimists and pessimists - a hybrid between the two, which he said "considers China's entry a double-edged sword." China, he said, may intend to be a responsible member of the WTO, but the current socio-economic conditions in the country may make it difficult for China to do so. Like the doubting Raghavan (2001) of Third World Net, Yu (2001) claims one's side actually depends on one's confidence in China's ability to honour promises and to fulfil treaty obligations. Yu (2001) declares boldly that China's WTO membership will only "exacerbate existing socio-economic problems." Here is what Yu (2001) claims - Since the reopening of China in the late 1970s, China's economy has been growing at an enviable average annual rate of about 7 percent. Unfortunately, this rapid economic growth has brought about serious domestic problems. These problems include decreasing control by the state, decentralization of the central government, significant losses suffered by the inefficient state-owned enterprises, the widening gap between the rich and the poor and between the urban and rural areas, massive urban migration, widespread unemployment, corruption, and growing unrest in both the cities and the countryside. With the opening of China's market to foreign competition, these problems will likely be exacerbated. For example, the streamlining, restructuring, and closure of state-owned enterprises may lead to massive layoffs while automation and high-technology equipment may transform labour-intensive industries. As a result, the Chinese economy will undergo major structural changes, and tens of millions of farmers and workers may lose their jobs over the next five years. The generation of Jiang Zemin, Zhu Rongji, and Li Peng are pondering retirement, Yu (2001) says, and there would be battles for succession of leadership, adding to domestic problems. The WTO is a new ballgame, he said, and as a result, many of those who were used to prosper under the old system will find the WTO system very irritating. With China's accession to the WTO, the Chinese authorities may adopt harsh measures, undermining civil liberties and human rights, even tightening information controls to minimize criticism of the government. To US Trade Representative Barshefsky (1999) however, the United States seems ready to deal with the apprehensions of Yu (2001). She says WTO agreements establish certain principles and creates spill-over effects in other areas beyond commerce like principles of transparency, of regularity in the economic system, notions of contract and rule of law, the peaceful settlement of disputes. More than that, the United States shall take this measure according to her - "The U.S. needs to ensure to the maximum extent it can that China is a constructive force in Asia, not a destructive force. To the extent that China is brought into multilateral institutions with defined rights and responsibilities, that means that China has an absolute interest in peace and stability beyond its borders. WTO accession is an important step in that direction." Barshefsky (1999). CONSCIOUSNESS. The Intellectual Property Rights (IPR) Protection is a classical example of how China may fare under the WTO. The following are some exchanges made on Trade Related Intellectual Property Rights or TRIPS (03 Jun 2003) between Chinese citizens sparked by their country's accession into WTO. The author of the message asks about a hypothetical case where a disease-causing virus would be submitted in China for patenting, but would have to face national and international trade and other pertinent laws. The others repartee and analyse scenarios in the international level, particularly in relation to some countries and their constitutions - Zhang Gaotong (Author): "If a patent application for disease-causing virus is submitted in China, it will face the PRC Patent Laws, Article 5, in Chapter I: General Provisions which says - "No patent right shall be granted for any invention-creation that is contrary to the laws of the State or social morality or that is detrimental to public interest. Thus, I believe that such an application will be rejected on the social morality and public interest grounds, even though it can satisfy the "Requirements for Grant of Patent Rights of the Laws, Chapter II." "And a similar approach could be also found under US law" (Repartee 1): It too came as a surprise to me that the "GENOME CODE OF (naturally occurring) VIRUSES" can be patented. I do not know whether this particular aspect of patent laws as in USA or France (since the genome code of AIDS virus has been patented) falls within the broader framework of Trade Related Intellectual Property Rights ("TRIPS") Agreement / TRIPS regime under the World Trade Organisation ("WTO"). If it does, then it is not only permitted in USA/France but maybe also permissible in some other 140 countries including PRC (whether they have legislated for it or on it, but there would be no bar from TRIPS for such national legislation, issues of their constitution aside.) In which case the solution is to address the WTO Laws and not just the countries' constitutions and the countries' national laws. (Repartee 2): If this particular aspect of patenting genome code of naturally occurring viruses is outside the ambit of TRIPS, as I am provisionally inclined to think it is outside the ambit of TRIPS, then this particular aspect of patenting genome code of naturally occurring viruses would fall within the constitutional codes of each respective state as Zhang Gaotong has tried to elucidate. (Repartee 3): I would support Zhang Gaotong's reasoned view that the "apparent" patenting of genome code of any and all disastrous naturally occurring viruses, whether the 1918 Influenza Virus or the AIDS virus or SARS virus are unconstitutional. I agree with Zhang Gaotong that such disastrous afflictions may occur from time to time throughout the whole world, and any patent on the genome code of such disastrous naturally occurring viruses would possibly hinder global research to find cures, and such apparent patenting should be disallowed under the national laws, (and their constitution or bill of rights) in the interest of the world. The above is a picture of how far China's people have developed in their consciousness with regards to trade and investment development since their country's WTO accession. For a recap of the fate of China whether its membership with WTO has assisted or hindered its development, the speech of Dr. RANA (2004), Deputy Director-General of World Trade Organization before the WTO may lend insights. Rana underscored China's positive progress, saying China has made important strides since it joined the WTO. He compares China now as competitive as Japan, United States, and Germany in some aspects. Rana said of China - "Recently compiled international trade data by the WTO shows that China already imports more goods that Japan and it is expected that China will surpass Japan's total merchandise exports [for] 2004. China is also likely to very soon become the world's third largest trading nation behind the United States and Germany. The growth in communications, so essential in today's world, is equally impressive. China already has the fourth largest internet market in the world. And judging by the communications infrastructure being put in place, there is no doubt that China will quickly vault to the top of the league." References Cited 'Background Note: China,' Bureau of Public Affairs, U.S. Department of State, http://www.state.gov/r/pa/ei/bgn/18902.htm, viewed on 02 Sept. 2005. 'Barshefsky: It is political legitimacy,' (TIME interview with correspondent Barry Hillenbrand), (19 Nov. 1999, vol. 154. no. 21) [Online], available at http://www.time.com/time/asia/magazine/99/1129/wto.barshefsky.html viewed on 02 Sept. 2005. 'Correct Understanding of Right-and-Duty Balance Related to China's WTO Entry.' Editorial, People's Daily (11 Feb 2000), [Online], available at http://english.people.com.cn/english/200002/11/eng20000211A101.html, viewed on 02 Sept 2005. 'What is the WTO' Fact File, Word Trade Organization, http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm, viewed on 01 Sept. 2005. "China Steps up Efforts on IPR protection," People's Daily [Online] (04 Feb 2005) available from http://english.people.com.cn/200502/04/eng20050204_172996.html, viewed 02 Sept 2005. "TRIPS" Agreement / TRIPS regime under the World Trade Organisation ("WTO") (03 Jun 2003), [Message board], http://boards.lp.findlaw.com/cgi-bin/WebX.fcgi127@150.Z5kUcZPSvJh^1@.ef272cd viewed on 03, Sept. 2005. Cheng, D, 'Does China make US Reconsider Free Trade policy' China Daily News (06 July 2005) [Online], available at http://www2.chinadaily.com.cn/english/doc/2005-07/06/content_457693.htm, viewed on 02 Sept 2005. Raghavan, C, 'China WTO Accession Terms Settled,' Third World Network (TWN 2001) [Online], available at http://www.twnside.org.sg/title/settled.htm, viewed on 02 Sept 2005. Rana, K Al Azad, 'The State of the Doha Development Agenda Negotiations and the Impact of the DDA on China's Economic Environment,' China WTO Forum (Keynote address, 09 Dec. 2004), http://www.wto.org/english/news_e/news04_e/speech_rana_14dec04_e.htm, viewed on 02 Sept 2005. Rao, P. F, 'The Meaning of China's Entry into the WTO: A Chinese Perspective.' [Session 17, Business opportunity in post-China WTO: Part 1: Current Status and Perspectives] available at http://ift.confex.com/ift/2001/techprogram/paper_6124.htm, viewed on 02 Sept. 2005. Yu, P. K, 'The Ramifications of China's Entry into the World Trade Organization: Will the Global Community Benefit' FindLaw's Writ Database, 04 Dec 2001, http://writ.news.findlaw.com/commentary/20011204_yu.html, viewed on 01 September 2005. Read More