[Congressional Record Volume 141, Number 36 (Monday, February 27, 1995)]
[House]
[Page H2230]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page H2230]]
                 CHINA AND INTELLECTUAL PROPERTY RIGHTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 4, 1995, the gentlewoman from California [Ms. Pelosi] is 
recognized during morning business for 5 minutes.
  Ms. PELOSI. Mr. Speaker, this weekend U.S. Trade Representative 
Mickey Kantor announced that the United States and China reached an 
agreement that will provide protection of intellectual property rights 
for the United States companies and provide market access for 
intellectual property-based products. Good for him, and I commend the 
Clinton administration for their tough negotiating stand that they took 
on reaching this agreement.
  The agreement between China and the United States contains the 
following commitments from China: to take immediate steps to address 
rampant piracy throughout China; to make long-term changes to ensure 
effective enforcement of intellectual property rights; to provide 
United States rights holders enhanced access to Chinese markets. This 
includes a commitment for no quota on United States audio-visual 
products among other provisions.
  Mr. Speaker, this agreement--and it was necessary for the 
administration to be so very tough--this was necessary because about 3 
years ago, the Bush administration, in addressing this intellectual 
property problem, engaged in a memorandum of understanding with the 
Chinese. Operating in good faith, the United States entered into this 
agreement which, unfortunately, the Chinese did not enter into in good 
faith. Because China did not live up to its obligation of the agreement 
to enforce its laws and regulations, intellectual property rights have 
been virtually absent in China. Respect for them have been absent and 
piracy rates are soaring in all the major centers along China's 
increasingly prosperous east coast. In the past 2 years Chinese 
companies have been exporting pirated products in large volume. Not 
only are they pirating intellectual property for domestic consumption, 
they have become exporters to Asia and Latin America, Canada and the 
United States of our intellectual property.
  For example, Mr. Speaker, China--in China they have a capacity to 
produce 75 million CD's for a domestic market that can only absorb 5 
million CD's annually. So they produce 15 times more than they can 
possibly consume domestically under the present circumstances.
  So it was, as I say, I thought that the memorandum of understanding 
was weak when it was entered into, but the Bush administration gave the 
Chinese the benefit of the doubt.
  Since that time, as you know, Mr. Speaker, there has been a boom in 
the Chinese economy, the rates of growth have been record highs--have 
reached record highs. And with that increase in the boom have increased 
the piracy and violations of our intellectual property agreement.
  The agreement is one thing, however, and enforcement is another. 
Today's action was necessary because of the failure of the MOU, as I 
mentioned.
  Why am I suspicious and why do we have to be very vigilant as far as 
the Chinese on the enforcement of the intellectual property? Because of 
several factors.
  In the past 5\1/2\ years, since Tiananmen Square, the trade deficit 
with China, largely because of unfair trade practices of the Chinese, 
has increased from $6 billion to $30 billion--$30 billion trade 
deficit. I told you about the CD's, 75 million--for domestic 
consumption, 5 million. At that, pirated, even the 5 million would be 
pirated.
  You may recall, Mr. Speaker, that the paramount leader, Deng Xiaping 
visited south China to support the market reforms going on there and 
with great pride he visited the Shen Fei factory in 1992, the very 
factory that was producing pirated illegal U.S. intellectual property.
  Many of us, people even in the administration, are suspicious of the 
Chinese willingness to crack down on that particular factory because 
relatives of the highest leaders in China benefit from the profits. 
They are the owners. Indeed, it might surprise you, Mr. Speaker, to 
know that even the trade ministry of China uses pirated Microsoft 
software. So when I say that they do not operate in good faith in the 
memorandum of understanding, you know why I am suspicious.
  But one other thing happened over the weekend in relationship to 
China. I wanted to call it to the attention of our colleagues.
  Twelve intellectuals petitioned China on corruption. The dozen 
prominent intellectuals formally petitioned the parliamentary bodies to 
conduct an independent investigation into corruption of the Chinese 
leadership. The presentation of the 2,000-word petition marks the first 
time in a year that an organized group of scholars, writers, and former 
Communist Party members--indeed, two of these people were former 
editors of the People's Daily; they had been fired because their 
prodemocratic sympathies, proreform sympathies.
  In any event, my point is: If the administration pays at least 1 
percent of the time to the rights of the intellectuals, the workers, 
the people of China as it is done to intellectual property rights, we 
might be able to have some success in that arena as well.
  I wanted to make sure our colleagues were aware of the petition of 
the intellectuals.


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