[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H. Con. Res. 303 Introduced in House (IH)]







109th CONGRESS
  1st Session
H. CON. RES. 303

Urging the United States Trade Representative to take action to ensure 
 that the People's Republic of China complies with its obligations to 
     protect intellectual property rights, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 17, 2005

 Mr. DeFazio (for himself, Mr. Rohrabacher, Mr. Sanders, Mr. Burton of 
  Indiana, Mr. Ryan of Ohio, Mr. Lipinski, Ms. Woolsey, Mr. Taylor of 
 Mississippi, Mr. McGovern, Mr. Baird, Mr. Stupak, Mr. Brown of Ohio, 
    Mr. Payne, and Mr. Kucinich) submitted the following concurrent 
   resolution; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                         CONCURRENT RESOLUTION


 
Urging the United States Trade Representative to take action to ensure 
 that the People's Republic of China complies with its obligations to 
     protect intellectual property rights, and for other purposes.

Whereas despite signing bilateral intellectual property agreements with the 
        United States in 1992, 1995, and 1996, the People's Republic of China 
        continues to ignore widespread theft of intellectual property within its 
        borders;
Whereas China further undermines intellectual property rights by exporting 
        counterfeit products to other countries;
Whereas even China's accession to the World Trade Organization (WTO) in 2001, 
        which required that China comply with the WTO Agreement on Trade-Related 
        Aspects of Intellectual Property Rights (TRIPS Agreement), has failed to 
        stop the theft of intellectual property in China;
Whereas by committing to the TRIPS Agreement, China is bound by minimum 
        standards of protection for copyrights, trademarks, industrial designs, 
        patents, and similar intellectual property rights;
Whereas by committing to the TRIPS Agreement, China is also bound by minimum 
        standards for administrative, civil, and criminal actions against 
        violators of intellectual property rights;
Whereas the December 2004 report to Congress by the United States Trade 
        Representative (USTR) on China's compliance with its WTO obligations 
        documents that significant problems remain with respect to intellectual 
        property protection in China, particularly the enforcement of 
        intellectual property rights, which the USTR reported ``remained 
        ineffective in 2004'';
Whereas merely changing laws or regulations to provide greater protection for 
        intellectual property rights means nothing unless those rights are 
        vigorously enforced;
Whereas the December 2004 USTR report shows that little progress has been made 
        toward improving enforcement, concluding that ``counterfeiting and 
        piracy are at epidemic levels and cause serious economic harm to U.S. 
        businesses in virtually every sector of the economy'';
Whereas the 2005 National Trade Estimate Report on Foreign Trade Barriers, also 
        prepared by the USTR, reports that administrative enforcement actions in 
        China ``do not appear to deter further IPR infringement'' because the 
        cases result in extremely low fines; the established value for fines is 
        based on the price charged for the counterfeit or pirated good rather 
        than the price of the genuine article; evidence showing a person was 
        warehousing counterfeit goods is not sufficient to prove intent to sell, 
        which means that the value of warehoused goods are not included in 
        fines; and administrative authorities ``rarely forward an administrative 
        case on to the Ministry of Public Security for criminal investigation, 
        even for commercial-scale counterfeiting or piracy'';
Whereas the 2005 Foreign Trade Barriers report also states that criminal 
        enforcement in China ``has virtually no deterrent effect on infringers'' 
        because criminal prosecutions are pursued ``in a relatively small number 
        of cases''; ``a lack of transparency makes it sometimes difficult to 
        find out if they resulted in convictions and, if so, what penalties were 
        imposed and whether the penalties were suspended''; criminal liability 
        thresholds ``were very high and seldom met,'' because, among other 
        things, warehoused goods are not included in calculations of the damage 
        done; and China failed ``to treat the export of counterfeit or pirated 
        goods on a commercial scale as a criminal act'';
Whereas in the 2005 Foreign Trade Barriers report, the USTR also states that 
        ``U.S. companies continued to complain in 2004 that there is still a 
        lack of consistent and fair enforcement of China's IPR laws and 
        regulation in the courts. They have found that most judges lack 
        necessary technical training and that court rules regarding evidence, 
        expert witnesses, and protection of confidential information are vague 
        or ineffective.'';
Whereas various USTR reports document that, in addition, there is a lack of 
        coordination among Chinese government ministries and agencies that 
        hamper enforcement, and local protectionism and corruption is rampant;
Whereas according to one United States trade association, various counterfeiting 
        and piracy rates in China in 2004 exceeded 90 percent for virtually 
        every form of intellectual property;
Whereas according to the USTR, estimated losses incurred by United States 
        businesses due to counterfeiting and piracy in China range between 
        $2,500,000,000 and $3,800,000,000 annually, with the market value for 
        counterfeit goods in China totaling between $19,000,000,000 and 
        $24,000,000,000;
Whereas according to the USTR, resolving an allegation of patent theft in China 
        takes 4 to 7 years to complete;
Whereas intellectual property losses in China harm United States businesses both 
        large and small, but are particularly problematic for small companies 
        that may not have the resources to navigate the Chinese legal 
        bureaucracy or to withstand financial losses that occur during the 
        lengthy process to resolve disputes;
Whereas the 2004 Economic Report of the President states that ``As trade in 
        goods embodying valuable intellectual property has grown, the protection 
        of intellectual property has emerged as an important policy concern'';
Whereas the report goes on to note that ``The Administration has actively 
        pursued measures in trade agreements to ensure the security of U.S. 
        intellectual property rights'';
Whereas the January 2004 Manufacturing in America report by the United States 
        Department of Commerce concludes that ``To the extent that U.S. 
        investment in research and development provides a competitive edge in 
        the marketplace, the protection of intellectual property developed by 
        U.S. manufacturers, which embodies the product of that research, becomes 
        critical to the future of the manufacturing sector'';
Whereas the 2004 Economic Report of the President states that ``If countries are 
        found to be in violation of their obligations under a trade agreement, 
        the United States could retaliate against those countries across the 
        entire range of transactions covered by the agreement'';
Whereas on March 9, 2004, then-USTR Robert Zoellick testified before the Senate 
        Finance Committee about the ``rampant piracy of intellectual property 
        rights'' in China, and went on to say that ``China's lax enforcement of 
        intellectual property rights, including counterfeiting, is a fundamental 
        issue . . . the practices could subvert the development of knowledge 
        industries and stifle innovation around the world'';
Whereas Mr. Zoellick also testified on March 9, 2004, that ``We recognize that 
        enforcement of China's commitments requires sticks as well as carrots, 
        and we are certainly willing to utilize the tools Congress has made 
        available to us. These include . . . WTO dispute settlement, an option 
        we may need to deploy very soon.''; and
Whereas section 301(d)(3)(B) of the Trade Act of 1974 provides specific 
        protections for intellectual property by noting that an act, policy, or 
        practice of a foreign country is unreasonable if it ``denies fair and 
        equitable . . . provision of adequate and effective protection of 
        intellectual property rights notwithstanding the fact that the foreign 
        country may be in compliance with the specific obligations of the 
        Agreement on Trade-Related Aspects of Intellectual Property Rights'': 
        Now, therefore, be it
    Resolved by the House of Representatives (the Senate concurring), 
That the Congress--
            (1) believes that the failure of the People's Republic of 
        China to protect intellectual property is inconsistent with its 
        obligations under the Agreement on Trade-Related Aspects of 
        Intellectual Property Rights and denies the benefits of this 
        agreement to the United States;
            (2) further believes that China's failure to adequately 
        fulfill its obligations to protect intellectual property is 
        unjustifiable and burdens or restricts United States commerce 
        under section 301 of the Trade Act of 1974;
            (3) strongly urges the United States Trade Representative 
        to take action under section 301 of the Trade Act of 1974 to 
        combat rampant intellectual property violations in China, 
        including the imposition of bilateral tariffs as allowed under 
        section 301; and
            (4) strongly urges the Trade Representative to use all 
        additional means available to the United States, including 
        filing a complaint at the World Trade Organization, to ensure 
        that China complies with its obligations to enforce 
        intellectual property rights.
                                 <all>