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U.S. Worried China Will Renege on IP Enforcement

As the global economic situation continues to deteriorate, U.S. trade officials are concerned China could regress on intellectual property protections.

WASHINGTON — As the global economic situation continues to deteriorate, U.S. trade officials are concerned China could regress on intellectual property protections, according to a new report.

This story first appeared in the May 1, 2009 issue of WWD.  Subscribe Today.

According to an annual “priority watch list” released by the U.S. Trade Representative’s office on Thursday, reports have emerged that despite increased attention to intellectual property rights in China, officials there are pushing for less stringent enforcement efforts, a trend of particular concern for apparel and footwear companies struggling to protect their brands abroad.

“I am particularly troubled by reports that Chinese officials are urging more lenient enforcement of IPR [intellectual property rights] laws, motivated by the financial crisis and the need to maintain jobs,” said U.S. Trade Representative Ron Kirk. “China needs to strengthen its approach to IPR protection and enforcement, not weaken it.”

China was one of 12 countries named on the USTR’s priority watch list for countries that don’t adequately safeguard or enforce intellectual property rights. The list also included Russia, India, Thailand, Pakistan, and, for the first time, Canada.

According to the most recent statistics from U.S. Customs and Border Protection, $102.3 million worth of fake shoes was seized in fiscal year 2008. An additional $25.1 million of apparel and $29.6 million of handbags, wallets and backpacks were seized during the same period. China was the source of 81 percent of all goods seized for intellectual property violations in 2008.

It is important for the U.S. to maintain a strict trademark and copyright policy to protect apparel and footwear companies, said Kevin Burke, president of the American Apparel & Footwear Association.

The Silk Street Market in Beijing was named as “an egregious example” of the counterfeiting of consumer products that is “endemic” in markets throughout China, the report said. The notorious market, where many counterfeit apparel and accessories can be found, has been the focus of a number of government and industry efforts to protect U.S. brands in China. Despite pressure from authorities to improve compliance beginning in 2005, “the intervening years have brought limited progress,” the report said.