WASHINGTON — Counterfeiting in China continues to be a severe problem despite years of engagement with the U.S.

This story first appeared in the May 3, 2010 issue of WWD. Subscribe Today.

China once again topped an annual “priority watch list” from the U.S. Trade Representative detailing the enforcement challenges faced by American companies over their intellectual property rights, administration officials said Friday. Textile and apparel companies have struggled for years to protect their brands abroad.

“The overall level of [intellectual property rights] theft in China remains unacceptable,” the report said. “China’s IPR enforcement regime remains largely ineffective and nondeterrent.”

The report called China to task for not demonstrating “consistent resolve” in prosecuting piracy and counterfeiting online and for failing to establish adequate laws to fight the problem. According to USTR, U.S. trademark and copyright holders reported thresholds that must be met to initiate criminal proceedings in China were too high and the fees levied to punish infringers were so low that they weren’t an effective deterrent.

USTR said intellectual property rights protection in China is likely to come up at the Strategic & Economic Dialogue meeting in June and the Joint Commission on Commerce & Trade later this year.

“Intellectual property theft in overseas markets is an export killer for American businesses and a job killer for American workers here at home,” said USTR Ron Kirk.

China accounted for 79 percent of counterfeit or pirated goods seized at the U.S. border in 2009, according to the report, down from 81 percent in 2008. Last year, U.S. Customs & Border Protection seized about $140 million worth of fake apparel, footwear and accessories.

Beijing’s silk market was once again cited as a conspicuous example of counterfeiting problems. Other problematic markets included three areas in Manila that are havens for fake apparel and accessories.

China was joined on USTR’s priority watch list by Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Pakistan, Thailand and Venezuela.

“Today’s Special 301 Report highlights many of the global challenges confronting the U.S. apparel and footwear industry, an industry that makes everywhere and sells everywhere,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association. “Our industry is experiencing its fastest growth abroad. To foster that growth and create jobs here at home, we must ensure that all of our trade partners value intellectual property the same way we do.”

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