By  on April 28, 2008

WASHINGTON — The manufacture of counterfeit fashion products in China showed few signs of weakening last year and is a concern for U.S. trade officials trying to prod the Chinese to make reforms, according to a new government report.

The U.S. Trade Representative's office put China and eight other countries on a "priority watch list" in an annual report released Friday, saying those nations did not provide "adequate levels" of intellectual property rights protection or enforcement.

"Despite antipiracy campaigns in China and an increasing number of [intellectual property rights] cases in Chinese courts, overall piracy and counterfeiting levels in China remained unacceptably high in 2007," the report said.

Among the other countries that will receive intense scrutiny this year because they were also placed in the top tier by USTR are Russia, Chile, Argentina, India, Pakistan, Thailand, Israel and Venezuela. But China remains the number-one culprit for fashion counterfeits that expose U.S. brands to millions of dollars in lost revenue.

The most recent statistics show U.S. Customs seized $77.8 million in bogus footwear in the 2007 fiscal year, $27 million in apparel, $14.2 million in handbags, wallets and backpacks, $13.4 million in watches and $4 million worth of sunglasses.

"There is a list in the report of markets that are subjects of concern," said Stan McCoy, assistant USTR for intellectual property and innovation. "That is part of our ongoing discussion with a number of countries around the world in terms of physical markets like the Silk Market in Beijing and in terms of virtual markets on different Internet Web sites that buy pirated and counterfeit goods."

In addition to the Silk Market, the "hot spots" for counterfeit fashion operations in China were Beijing's Tianyi and Yaxiu Markets and Fujian and Guangdong Provinces.

"In spite of increasing attention from foreign governments, the media and China's central and local governments, the Silk Market in Beijing remains possibly the world's most notorious market for counterfeit goods," the report said. "Law enforcement cooperation with U.S. right holders appears to have deteriorated."

The U.S. took action against China in two cases filed in April 2007 with the World Trade Organization over protections for intellectual property rights. Those cases are pending. If the WTO rules against China and the country fails to reform its policies, the U.S. could be granted the right to impose retaliatory sanctions against Chinese imports.In addition, the U.S. joined with the European Union and six other trading partners last October to begin negotiations for an anticounterfeiting trade agreement that could force China to step up its enforcement and penalties.

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