CHINA OBJECTS TO SPECIAL 301 DESIGNATION, WANTS MORE

UNCLAS SECTION 01 OF 02 BEIJING 001463 SENSITIVE SIPDIS State for EAP/CM - SFlatt, PPark State for EEB/IPE - RWatts, JUrban, TMcGowan State for EEB/CIP - SFlynn, FSaeed USTR for China Office - TStratford, TWineland, AWinter USTR for IPR Office - JRagland, SMcCoy Commerce for National Coordinator for IPR Enforcement Commerce for MAC NMelcher, JWu, ESzymanski Commerce for MAS RLayton, SMathews LOC/Copyright Office - STepp USPTO for International Affairs - LBoland, EWu, STong DOJ for CCIPS - MDubose and SChembtob FTC for Blumenthal FBI for LBryant DHS/ICE for IPR Center - DFaulconer, TRandazzo DHS/CBP for IPR Rights Branch - GMacray, PPizzeck ITC for LLevine, LSchlitt E.O. 12958: N/A TAGS: ETRD EIND KIPR ECON CH SUBJECT: CHINA OBJECTS TO SPECIAL 301 DESIGNATION, WANTS MORE CARROT AND LESS STICK This cable is sensitive but unclassified and is not for Internet distribution. Ref A: State 41880 ¶1. (SBU) Summary: China objects to its designation as a Priority Watch List (PWL) country in the U.S. Trade Representative's (USTR) 2009 Special 301 Report, Department of Treaty and Law Director General Li Ling of China's Ministry of Commerce told visiting USTR officials on May 27. She said that China has "tried its utmost to improve IPR protection," and that while some problems remain, piracy levels have declined consistently in recent years. The United States has its own IPR problems, she asserted, and too often uses a stick (e.g., the 301 Report) in international relations, instead of the carrot of cooperation. USTR officials acknowledged that China has made progress on IPR, and repeatedly stressed USG interest in collaborating with China towards progress on IPR protection. End Summary. ¶2. (SBU) Assistant USTR Tim Stratford and USTR China Office Chief Counsel Claire Reade met on May 27 with Department of Treaty and Law Director General Li Ling at China's Ministry of Commerce to discuss the 2009 Special 301 Report's designation of China as a Priority Watch List country with Section 306 monitoring. Per reftel instructions, Emboffs notified DG Li by fax of the contents of the 2009 Special 301 Report on April 30, at which time Li's ministry had no substantive reaction. ¶3. (SBU) Stratford began and ended the discussion with assurances of USG interest in working together with China on IPR protection, and acknowledged his awareness that MOFCOM is very concerned with strengthening China's IPR environment. Stratford also cited several specific rightholders' concerns in China, particularly in the area of Internet piracy. He emphasized that USTR always seeks input from the Chinese government in preparing the report, and especially values reports of positive IPR developments in China. ¶4. (SBU) Li responded that China objects to the designation of PWL in the 301 Report, and has "tried its utmost to improve IPR protection." As examples, she noted the 2008 publication of China's National IPR Strategy and the publication in the past four consecutive years of China's IPR Action Plan. No other developing countries, to her knowledge, undertake similar efforts, she said. Li also noted that a recent report (probably the Business Software Alliance's annual Global Software Piracy Study) showed piracy levels in China declining over the past several years. While problems still exist, Li said, there has been progress. ¶5. (SBU) Li asserted that "even the United States" has IPR problems, and that Internet piracy, especially, is a global issue. As an example, she cited her son, who she said is in the United States and downloads pirated music from U.S. websites. She asserted that neither the U.S. nor the EU have found effective ways to deal with the problem. Li said the United States too often uses a stick (i.e., the 301 Report) and not the carrot of cooperation in pursuing its international relations objectives. ¶6. (SBU) Stratford thanked Li for her feedback and acknowledged the progress China has made in IPR protection. He again stressed USG interest in cooperating with China on IPR issues, and noted the importance of the upcoming IPR Working Group under the Joint Commission on Commerce and Trade as one important opportunity for BEIJING 00001463 002 OF 002 both countries to work together toward common goals. PICCUTA