Identification of Countries Under Section 182 of the Trade Act of 1974: Request for Public Comment on Out-of-Cycle Review of the People's Republic of China

AGENCY:

Office of the United States Trade Representative.

ACTION:

Request for written submissions from the public.

SUMMARY:

Section 182 of the Trade Act of 1974 (Trade Act) (19 U.S.C. 2242), requires the United States Trade Representative (USTR) to identify countries that deny adequate and effective protection of intellectual property rights (IPRs) or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. In addition, USTR is required to determine which of those countries should be identified as Priority Foreign Countries. Section 182 is commonly referred to as the “Special 301” provision of the Trade Act.

The People's Republic of China (China) was designated a Priority Foreign Country in 1994, and has subsequently remained subject to monitoring under Section 306 of the Trade Act (19 U.S.C. 2416). On May 3, 2004, USTR announced the results of the 2004 Special 301 review and stated that an Out-of-Cycle Review (OCR) would be conducted in early 2005 to assess China's actions to implement effectively the commitments it undertook under the Joint Commission on Commerce and Trade (JCCT), its WTO commitments, and a 1995 bilateral intellectual property agreement with the United States (including additional commitments made in 1996). USTR will examine whether China's actions are producing substantial progress toward a significant reduction in IPR infringement levels in China. USTR requests written comments from the public concerning the acts, policies, and practices relevant for this review under Section 182 of the Trade Act.

DATES:

Submissions must be received on or before 5 p.m. on Monday, January 31, 2005.

ADDRESSES:

Comments should be addressed to Sybia Harrison, Special Assistant to the Section 301 Committee, and sent (i) electronically, to FR0446@ustr.eop.gov, with “Special 301 Out-of-Cycle Review” in the subject line, or (ii) by fax, to (202) 395-9458, with a confirmation copy sent electronically to the e-mail address above.

FOR FURTHER INFORMATION CONTACT:

Victoria Espinel, Deputy Assistant U.S. Trade Representative for Intellectual Property, at (202) 395-6864, Angela Davis, Director of China Affairs, at (202) 395-3900, or Stanford McCoy, Assistant General Counsel, at (202) 395-3581, Office of the United States Trade Representative.

SUPPLEMENTARY INFORMATION:

Pursuant to Section 182 of the Trade Act, USTR must identify those countries that deny adequate and effective protection for intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. Those countries that have the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on relevant U.S. products may be identified as Priority Foreign Countries. Acts, policies, or practices that are the basis of a country's designation as a Priority Foreign Country are normally the subject of an investigation under the Section 301 provisions of the Trade Act. China was designated a Priority Foreign Country in 1994, and has subsequently remained subject to monitoring under Section 306 of the Trade Act.

Improving protection for intellectual property in China is a top priority for this Administration. To that end, during the April 2004 meeting of the Joint Commission on Commerce and Trade (JCCT), China agreed to take certain specific steps toward China's goal of significantly reducing IPR infringement.

On May 3, 2004, USTR announced the results of the 2004 Special 301 review and stated that an OCR would be conducted in early 2005 to assess China's actions to implement effectively the commitments it undertook under the JCCT, its WTO commitments, and the 1995 bilateral intellectual property agreement with the United States (including additional commitments made in 1996). USTR will examine whether China's actions are producing substantial progress toward a significant reduction in IPR infringement levels in China. The direct input of U.S. IPR leaders and participants in China's market is critical to USTR's ability to thoroughly evaluate China's progress.

Earlier this year, Ambassador Josette Sheeran Shiner, Deputy U.S. Trade Representative, sent an open letter to industry requesting data on the prevalence of IPR infringement in China and examples of specific individual cases where IPRs in China have or have not been respected. USTR reiterates this request as part of the formal OCR. Given the scale and nature of the information needed and the importance of this issue, receipt of data regarding both successes and failures from January 2002 and onward is crucial to identifying short- and long-term progress in China, and any additional shortcomings in China's IPR regime. Submission of responses is entirely voluntary, and it is up to each respondent to decide how to respond. For example, industry groups may wish to provide data on prevalence of IPR infringement, while individual companies may wish to focus on specific individual cases of IPR infringement.

The following information will be particularly useful for the OCR evaluation process:

—Detailed retail and consumer market surveys (for example, calculating on a monthly basis the rates of pirated or counterfeit product available through various retail channels in major cities across China);

—Detailed reports on major centers around China dealing in or producing infringing product and the success or failure of Chinese authorities in eliminating those centers;

—Detailed reports on particular geographic areas or sectors where China's enforcement of IPRs is notable for either its weakness or its strength;

—industry data on exports of infringing products from China to the United States and other international markets;

—information on sources and supporters of the production of infringing products (e.g., whether infringing production is individual, corporate, state-supported, supported by organized crime or official corruption, etc., and whether such support is local, provincial, regional or national in scope);

—trade estimates showing any effect on trade of IPR infringing goods;

—statistical data, if appropriate, aggregated from the experiences of members of right holder organizations, on the actions undertaken and results produced by China's authorities responsible for enforcement of specific IPRs of concern to industry, including data based on right holder experience with

■ type and amount of penalties (e.g., fines, license suspensions, imprisonments) and seizures of infringing goods and implements used to make them;

■ frequency and type of all relevant forms of enforcement action, such as initiation of administrative action, raids, referrals for criminal prosecution, imposition of penalties, and other relevant enforcement actions; and

■ data on deterrence or lack thereof, e.g., recidivism; and

—dossiers prepared by individual right holders on significant enforcement cases, preferably in the format specified by the template available on the USTR Web site (referenced below), together with other information that right holders consider to be relevant.

In addition to this factual information, USTR encourages respondents to provide a detailed evaluation of specific strengths and weaknesses of China's legal regimes for enforcement of IPRs in light of relevant international standards and U.S.-China bilateral commitments. In particular, we seek comments on implementation of China's JCCT commitment to issue new judicial interpretations by the end of 2004 that will (a) lower the value thresholds that trigger criminal investigation and the application of criminal penalties for IPR violations; and (b) facilitate the application of criminal sanctions to on-line piracy and to the import, export, distribution, storage and sale of counterfeit and pirated goods by clarifying the standards for such application.

Any submitted information that respondents wish to remain confidential should be certified and marked as indicated in this notice.

Requirements for Comments: Comments should include a description of the problems experienced and the effect of the acts, policies, and practices on U.S. industry. Comments should be as detailed as possible and should provide all necessary information for assessing the effect of the acts, policies, and practices. Any comments that include quantitative loss claims should be accompanied by the methodology used in calculating such estimated losses. A template available on the USTR Web site provides optional guidance for submission of information on specific cases. Respondents using the template may depart from the template as necessary and are encouraged to provide supplementary information.

Comments must be in English. No submissions will be accepted via postal service mail. Documents should be submitted as either WordPerfect, MS Word, or text (.TXT) files. Supporting documentation submitted as spreadsheets is acceptable as Quattro Pro or Excel files. A submitter requesting that information contained in a comment be treated as confidential business information must certify that such information is business confidential and would not customarily be released to the public by the submitter. A non-confidential version of the comment must also be provided. For any document containing business confidential information, the file name of the business confidential version should begin with the characters “BC-”, and the file name of the public version should begin with the character “P-”. The “P-” or “BC-” should be followed by the name of the submitter. Submissions should not include separate cover letters; information that might appear in a cover letter should be included in the submission itself. To the extent possible, any attachments to the submission should be included in the same file as the submission itself, and not as separate files.

All comments should be addressed to Sybia Harrison, Special Assistant to the Section 301 Committee, and sent (i) electronically, to FR0446@ustr.eop.gov, with “Special 301 Out-of-Cycle Review” in the subject line, or (ii) by fax, to (202) 395-9458, with a confirmation copy sent electronically to the e-mail address above.

Public Inspection of Submissions: Within one business day of receipt, non-confidential submissions will be placed in a public file open for inspection at the USTR reading room, Office of the United States Trade Representative, Annex Building, 1724 F Street, NW., Room 1, Washington, DC. An appointment to review the file must be scheduled at least 48 hours in advance and may be made by calling Jacqueline Caldwell at (202) 395-6186. The USTR reading room is open to the public from 10 a.m. to noon and from 1 p.m. to 4 p.m., Monday through Friday.