November 15th, 2006 15:03 EST
Chinese Intellectual Property Theft Could Spur U.S. Protectionism
Washington -- Widespread theft of intellectual property in China can undermine support in the United States for expanding trade between the two countries, U.S. Commerce Secretary Carlos Gutierrez says.
Gutierrez said that some Americans are “anxiously” cautious about the growing U.S. economic relationship with China. But others point to trade and financial flow imbalances between the two countries to justify their protectionist initiatives, he said.
The commerce secretary spoke on the issue November 14 at an intellectual property (IP) round table discussion in Beijing and November 15 at the American Chamber of Commerce in Shanghai, China.
U.S. critics of China’s policies blame the huge U.S. trade deficit in goods with that country on what they perceive as Chinese unwillingness to crack down hard on IP pirates and counterfeiters.
In September, the U.S. deficit with China in trade in goods rose to $23 billion from $18 billion in January, according to the U.S. Census Bureau. The cumulative deficit for the first nine months of 2006 reached $166 billion and, according to experts, is likely to exceed for the entire year the $202 billion recorded in 2005.
Even if some of the fears related to the deficit are misguided, Gutierrez said, China can do more to help address other concerns.
Several bills with bipartisan support currently pending in the U.S. Congress would punish China economically for what the legislative sponsors view as that government's manipulation of its currency for trade advantage. Theft of U.S. intellectual property also has prompted congressional critics to call for action against China.
Gutierrez said the results of the U.S. November midterm elections in which Democrats gained a majority in both chambers “foretell what may be greater challenges to those in the U.S. who believe in the value of open markets.”
Democrats generally have been perceived by the media and congressional observers as less friendly toward free trade than Republicans. On several occasions, Democrats have succeeded in slowing approval of bilateral free trade agreements by insisting on inclusion of strong labor and environmental protections.
However, many newly elected Democratic legislators are considered moderates, and Gutierrez said the Bush administration is encouraged by initial signs that the new Congress, which will convene in January 2007, is willing to work with it on a “positive trade agenda.”
Nevertheless, he said, specific action is needed to address protectionist sentiments in both countries.
“We can’t disprove the critics with rhetoric,” he said. “We need results.”
Gutierrez said China has made progress in several areas of intellectual property rights protection, such as moving against counterfeiters of pharmaceuticals; court actions to protect trademarks and patents; and revocations of business licenses for piracy of audiovisual products.
He identified other problem areas, however, which he said should be addressed in the “very near term.” He cited as particularly urgent lowering the criminal threshold for prosecuting commercial piracy and counterfeiting, expanding market access for audiovisual products, and sharing internationally data that allows tracing pirated discs to their source.
“It’s time for us to demonstrate that the real strength of our relationship is our ability to solve difficult problems and create even more opportunity for growth and innovation within our economies,” Gutierrez said.
He said the best way to fight protectionism is to ensure that U.S. businesses have fair access to the Chinese market.
The commerce secretary said his Chinese hosts, who included China’s premier, Wen Jiabao, have agreed with him that they must work to close the bilateral trade gap by expanding U.S. exports, not by restricting Chinese imports.
Gutierrez said U.S. companies would like to see broader access in markets, such as for motion pictures, beef, medical devices, financial services, telecommunications and retail sales.
More than two dozen U.S. executives hoping to initiate or expand business in China have accompanied the commerce secretary on his November 13-16 trip to the country.
For more information on U.S. policies, see Protecting Intellectual Property Rights.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)