China tops annual U.S trade Watch List

The Office of the United States Trade Representative (USTR) has released the 2016 Special 301 Report on the global state of intellectual property rights protection and enforcement.

USTR reviewed 73 trading partners for this year’s Special 301 Report, and placed 34 of them on the report’s so-called Priority Watch List and Watch List.

China remains on the top of the list, although the United States said there are some positive developments.

“In 2015, China continued to pursue a broad-ranging overhaul of its intellectual property-related laws and regulations, as well as a pilot study of specialized intellectual property courts,” the report states.

Theft of trade secrets, however, remains a serious and growing problem in China, according to the report.

“The United States urges China to consider drafting a stand-alone trade secrets law, which would provide an opportunity to address a broader range of concerns,” a USTR spokesperson said.

According to the report, China remains the world’s largest online piracy market, causing substantial losses for American owners of intellectual property rights in music, movies, books, periodicals, video games, software and in other fields.

The world’s largest internet market, with about 650 million internet users — an estimated 560 million are mobile users — China’s annual internet sales have reached some $500 billion annually. In 2014, China’s State Administration for Industry and Commerce cited a study revealing that more than 40 percent of products purchased online in China were “fake products,” indicating pirated and counterfeit goods are rampant within its borders.

China is also one of the world’s largest generic drug producers. According to the 2016 Special 301 Report, 97 percent of generic drugs seized at the U.S. border in 2015 were from China, Hong Kong, India and Singapore.

“I think the report shows areas [in which] we found progress, but also areas that continue to seek vigorous improvement,” said Stanley Pierre-Louis, general counsel of the Washington-based Entertainment Software Association, a trade group that is known to lobby Congress.

Other listed countries

India also remains on the 2016 Priority Watch List “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.” The Priority Watch List includes a total of 11 countries, including Algeria, Argentina, Chile, Indonesia, Kuwait, Russia, Thailand, Ukraine and Venezuela.

The standard Watch List includes: Barbados, Bolivia, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Switzerland, Turkey, Turkmenistan, Uzbekistan, Vietnam.

Switzerland, historically considered a strong partner on intellectual property rights issues, was added to the regular watch list this year because it has become an increasingly popular host country for copyright-infringing websites, “belying its generally strong record on IP issues,” USTR said.

USTR issues the annual report pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act.