April 29,2005

Grassley, Baucus, Colleagues Urge Crackdown on China’s Intellectual Property Rights Violations

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen.Max Baucus, ranking member, today sent a letter signed by all of their fellow committee members urging the President to ensure China’s compliance with intellectual property rights protections, even bringing a World Trade Organization case if necessary.

“China is a member of the World Trade Organization now,” Grassley said. “As a member,China can’t make up its own set of rules for intellectual property rights. The Chinese have to abideby the same rules as everybody else.”

Baucus said, “China is an important trading partner, but it must live by the obligations itundertook when it joined the WTO. I am very disappointed in China’s IPR record. We should use all tools available to us, including WTO dispute settlement, to ensure that China plays by the rules.”Grassley said he plans to have the committee discuss China’s shortcomings on intellectual property rights in a committee hearing to focus on various aspects of U.S.-China trade relations.That hearing will be held before July 15; no date has been set.

The text of the letter signed by all 20 Finance Committee members follows.

April 29, 2005

The Honorable George W. Bush
President of the United States of America
1600 Pennsylvania Avenue, NW
Washington, DC 20500

Dear President Bush:

We are writing to express our serious concern with the lack of adequate and effective enforcementof China’s intellectual property rights (IPR) laws. We recognize that China has made progress sincejoining the World Trade Organization in 2001, particularly in adopting a wide range of legalmeasures. However, significant deficiencies remain.

In April 2004, the Chinese Government promised to “substantially reduce IPR infringement” byincreasing criminal prosecutions of IPR violations, conducting enforcement actions, and launching a national education campaign. Instead of decreasing violations, piracy and counterfeiting continueat, what USTR calls, “epidemic levels.” We have seen an increase in exports of pirated goods fromChina. And there are continued reports of widespread Chinese government use of pirated software.IPR infringement in China is having a real impact on U.S. companies in a wide range of industries,including motion pictures, software, chemicals, pharmaceuticals, information technology, andconsumer goods. According to certain estimates, piracy alone accounts for roughly $2.5 to $3.8billion in losses to the U.S. industry.

We need to see immediate results to eradicate these problems in China. Unfortunately, the Chinesegovernment does not seem fully committed to doing so. Recently, the Chinese government issueda white paper, which praised China’s progress on IPR issues. The paper noted that, “while adheringto the international rules on IPR protection, China has decided on a level of IPR protection appropriate for its own national situation.”

China cannot unilaterally establish its own measures for judging its success in dealing with its IPRcrisis. Instead, as a signatory to the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), Chinese progress must be judged by the same standards all WTO Members.

We urge your Administration to intensify your efforts to ensure China’s compliance with its TRIPS obligations, including, as appropriate, through WTO dispute settlement. We look forward to working with you to improve the IPR environment in China. Thank you for your ongoing attention to these important concerns.

Sincerely,

Charles E. Grassley 
Max Baucus
Orrin G. Hatch 
John D. Rockefeller IV
Trent Lott 
Kent Conrad
Olympia J. Snowe 
James M. Jeffords
Jon Kyl 
Jeff Bingaman
Craig Thomas 
John F. Kerry
Rick Santorum 
Blanche L. Lincoln
Bill Frist 
Ron Wyden
Gordon Smith 
Charles E. Schumer
Jim Bunning
Mike Crapo