WASHINGTON—For China to truly become a nation built on innovation, Beijing must improve its intellectual property rights protections, the National Chamber of Commerce said Sept. 24. While software piracy rates have declined by 12 percent over the last two years, the theft rate is still 80 percent.
"China must take steps to protect foreign investors. You cant be an innovative society without IPR [intellectual property rights] protections," Myron Brilliant, the Chambers vice president for East Asia, said at a press briefing, adding that China is Americas most important trading partner. In 2006, the United States exports to China totaled $55 billion while U.S. imports from China hit $287 billion.
Brilliants comments on IPR protections were part of a wide-ranging presentation on the Chambers upcoming Sept. 27 China trade relations testimony before the Office of the United States Trade Representative. In addition to greater IPR protections, the Chamber is focusing on currency rate exchanges, food and product safety and defusing growing congressional concerns over trade with China.
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"There are heightened concerns over Chinas discriminatory industrial and investment policies that effectively limit access to its markets for American firms, particularly in the services sector," he said. "China should understand that it must take steps to address these concerns or face a significant erosion of support for the U.S.-China commercial relationship in the United States."
Despite the concerns of U.S. lawmakers, Brilliant said, "We do not want to retreat to protectionism." In particular, the Chamber opposes congressional legislation aimed at pegging the Chinese currency rate at market levels. Many in Washington argue that Beijing keeps the yuan exchange rate artificially low to help Chinese exports.
"Outside of Washington and Beijing, currency is not that important," Brilliant said.
A new Chamber report authored by Brilliant says China has instituted some intellectual property reforms but they "remain toothless without effective implementation and enforcement mechanisms." Nevertheless, Brilliant said China has made significant progress on IPR protections.
The Chamber report cites Beijings efforts to force Chinese computer makers, enterprises and the government itself to use legally licensed software. In addition, the report states, "notable progress" has been made in China to ensure that computer makers ship new products with legal software installed.
However, without further progress in protecting software, the report notes, "Counterfeiting and piracy constitute a fundamental blight on Chinas economic progress that will lead political leaders in the United States and other countries to call into question Chinas status as a responsible global power."
Brilliant also said Beijing has a number of concerns about dealing with the U.S. The report states that the Chamber is sympathetic to Chinese questions about restrictive visa policies, "out of step" export control regulations and "excessive mistrust" of Chinese investment in the United States.
"The Chamber … recognizes that the trade relationship is not a one-way street," Brilliant wrote. "Chinese business and government leaders have a range of concerns about U.S. policies and practices that warrant serious attention."
That is not likely to happen, Brilliant said, until the political primary season ends next year.
"Its the funny season in Washington with [Congress] gearing up for the presidential elections," he said. "Theyll be lots of talk and lots of speeches that probably wont be helpful to the U.S.-China relationship."
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