New York Times Op Ed page

May 12, 2005

The Pirate Kingdom

By PAT CHOATE

Washington D.C.

CHINA is the global epicenter of pirating and counterfeiting. By its government's own estimate, China's domestic trade in bogus goods accounts for $19 billion to $24 billion annually. That is undoubtedly a significant understatement, and it doesn't even include the stolen technologies and phony brands China exports to the rest of the world. Since welcoming China into the World Trade Organization in 2001, the United States has had a historic opportunity to stop the Chinese piracy trade. So far, the Bush administration has failed to seize it.

I opposed bringing China into the trade organization, and I don't like the idea of subordinating America's sovereignty to undemocratic international institutions like the W.T.O. But those decisions are behind us, and the worst thing we can do now is to fail to use the limited tools that the W.T.O. provides for protecting our economic interests.

On joining the W.T.O., Chinese leaders assumed certain obligations to the other 147 member states. Specifically, as a signatory to the Trade-Related Intellectual Property System, China pledged to accept minimal standards of patent, copyright and trademark protection; to treat foreigners' and its own citizens' intellectual properties equally; and to submit to the W.T.O.'s procedures for settling disputes.

Four years later, China has not met its intellectual property obligations, and the United States has failed to leverage the W.T.O. mechanisms that might bring China into compliance. Although China has passed intellectual property laws that accord with W.T.O. requirements, the Office of the United States Trade Representative reported to Congress in last December that enforcement of those laws was inconsistent, ineffective and discriminatory against foreigners. The same report found intellectual property infringement in China to be rampant, with violations worsening.

In effect, China has created a Potemkin village of intellectual property protections. Fortunately, the W.T.O. provides a way to confront that problem. If the United States can prove to a three-judge W.T.O. panel that China is out of compliance and is harming intellectual property owners, it can seek damages. If the W.T.O. grants such a judgment, the United States can impose tariffs on Chinese goods. Those monies could then be distributed among American complainants.

The United States has used these mechanisms in the past. From 1995 to 2000, the Clinton administration filed 13 intellectual property cases at the W.T.O. against other nations. All of them were resolved to the United States' satisfaction. The United States Chamber of Commerce, hardly a protectionist group, has called for the Bush administration to initiate such a case against China at the W.T.O. But the administration remains strangely passive in the face of Chinese pirating and counterfeiting. In fact, this administration has not filed a single intellectual-property case, against any nation, at the W.T.O. since it took office.

The United States has paid a high price for those languishing W.T.O. protections. A decade ago, the United States agreed to eliminate all import quotas on textiles in exchange for the developing world's acceptance of intellectual property protections. The United States has kept its side of that deal, sacrificing almost one million domestic apparel and textile jobs to foreign producers since 1994. China, the greatest violator of the W.T.O.'s intellectual property requirements, is also the biggest beneficiary of that arrangement: Chinese producers now supply 25 percent of the clothing in the United States and are expected to provide 75 percent by 2010.

The United States should bring an intellectual property case against China at the W.T.O. Then, if China still won't honor its intellectual property obligations, President Bush and Congress will need to reconsider this country's trade relations with China.

Pat Choate, the author of Hot Property: The Stealing of Ideas in an Age of Globalization, was the Reform Party's vice-presidential candidate in 1996.