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The Implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights

Paolo Davide Farah and Elena Cima, ‘The Implementation of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) in China - Tsinghua Law Review (2:317), 2010. Online: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1679999

China’s accession to the World Trade Organisation (WTO) in 2002 has been regarded as a pivotal milestone in the nation’s transition from a planned economy to a “socialist market economy” that began after 1978. However, authors Paolo D. Farah, Visiting Scholar at Tsinghua University, and Elena Cima, Visiting Researcher at Harvard University, observe that the extent of China’s adherence to the terms of its accession to the WTO have disappointed onlookers in the international community. During the negotiations that led to China’s accession, it was agreed that China would be subject to a more intensive review of its policies pertaining to the economy and trade than members of the WTO are typically subject to under the standard WTO Trade Policy Review Mechanism (TRPM) which all members of the WTO are party to. It is suggested that subsequent failures by China to fully comply with these requirements can be attributed to China’s discontentedness with being the subject of specific non-reciprocal requirements, the lack of harmonisation between many domestic Chinese laws and WTO requirements at the time of China’s accession.

Transparency requirements were introduced upon China’s accession to the WTO which apply to equally to all regions in China, and necessitated structural changes to the country’s administrative law procedures. However, regional governments have proven hesitant to comply with these requirements, and it is suggested that this may be due to fears that said requirements would reduce their ability to control local business deals. Furthermore, it is noted that whilst developments regarding China’s administrative law processes are indicative of progress, transparency issues remain pervasive in practice due to the fact that regional governments are bound to follow a wide range of often conflicting bodies of rules, from “normative documents” which exist outside of the traditional legal and administrative framework, to unpublicised regulations and circulars. Thus, foreign investors into China will typically be uncertain about what rules will apply to them.

To help improve transparency, the National People’s Congress (NPC) implemented a procedure requiring that local governments provide the public with notice and opportunity for comment on draft laws. However, the authors observe that whilst these requirements have spurred positive developments like the holding of open hearings on draft legislation in municipalities like Beijing and Shanghai, in general comments often only be solicited from specially selected persons or groups. Furthermore, the practices of various government institutions continues to vary significantly, with some publishing all draft measures and regulations, and others failing to make any disclosure whatsoever.

Farah and Cima provide an overview of the Chinese legal regime for the protection of copyright, patent and trademark laws, and the extent to which they can be regarded as conforming with international requirements that China is bound to comply with by virtue of being party to the Trade-Related Aspects of Intellectual Property Rights (TRIPs). Regarding interpretation of the TRIPs agreement, the authors present a case-study of a WTO dispute between the US and China, in which it was alleged that China was failing to satisfy its enforcement obligations as per the agreement. The case was ultimately decided in China’s favour.

The authors find that after China acceded to the WTO, significant developments have been made regarding China’s intellectual property right (IPR) legal enforcement system. IPR rights are now potentially protectable via administrative, judicial or civil remedies, as well as via border enforcement. Administrative remedies are identified as the most commonly sought, but it is noted that protectionism and China’s large size and decentralised governance structure impede the effectiveness of this avenue of protection for claimants. Meanwhile, it is argued that civil remedies are often unsatisfactory and require the claimant to satisfy an overly onerous burden of proof. Criminal sanctions are similarly regarded as inadequate, and that criminal law enforcement institutions do not coordinate sufficiently with administrative and judicial bodies.

In light of all of the above findings, the authors conclude that reform is necessary in order to bolster China’s multilateral relations with other WTO members, and to reduce increasing the risk of future disputes.