RENEWED PUSH IN HONG KONG TOWARD LEGISLATED

UNCLAS SECTION 01 OF 02 HONG KONG 000754

SENSITIVE
SIPDIS

STATE FOR EAP/CM AND EEB/IPE, USPTO FOR TIM BROWNING, USTR
FOR LEWIS KARESH

E.O. 12958: N/A
TAGS: ECON EFIN EINV ETRD HK CH
SUBJECT: RENEWED PUSH IN HONG KONG TOWARD LEGISLATED
PROTECTION OF INTELLECTUAL PROPERTY RIGHTS IN DIGITAL REALM

REF: 08 HONG KONG 2121


1. (SBU) Summary: USTR Assistant U.S. Trade Representative
for China Affairs Timothy Stratford reassured Hong Kong-based
business executives that the Obama administration will seek
to maintain a bipartisan consensus in favor of free trade.
During the April 4 discussion, Stratford described the
potential benefits for China-U.S. trade resulting from the
newly expanded bilateral Strategic and Economic Dialogue.
The Hong Kong head of the Motion Picture Association of
America (MPAA) said participants in the HKG-led "Tripartite
Forum" (TF) agreed to abandon the TF's efforts toward a
voluntary framework governing IPR protection in the digital
realm; TF participants will instead petition the HKG to
resume efforts toward legislated amendments to Hong Kong's
existing Copyright Ordinance. Stratford listened to
criticisms of the U.S. Consumer Product Safety Improvement
Act (CPSIA) of 2008, and said he had heard that the U.S.
Congress is examining technical amendments to improve the
law. End summary.


2. (SBU) Comment: Post supports efforts by TF participants to
request near-term legislated amendments that will establish a
formal IPR protection framework for the digital realm in Hong
Kong. The TF's contentious meetings over the past several
months highlighted impasses among Internet service providers
(ISPs)/online service providers (OSPs),content providers and
content users that will likely not be resolved through
memoranda of understanding or other "voluntary" solutions
(reftel). End comment.

Stratford Discusses U.S. Trade Policy
--------------


3. (SBU) USTR Assistant U.S. Trade Representative for China
Affairs Timothy Stratford met on April 4 with private sector
executives in Hong Kong to discuss trade-related issues
including: IPR protection, local market access for U.S. beef,
and the CPSIA's effects on local and regional companies. In
introductory remarks, Stratford said the Obama administration
is committed to maintain a bipartisan consensus in support of
free trade. He said U.S. Trade Representative Ron Kirk
envisions spending "much time on Capitol Hill" to understand
the trade-related concerns of both political parties.


4. (SBU) Stratford told his interlocutors that China
recognizes the importance of free trade, generally supports
the integrity of the World Trade Organization (WTO),and
appreciates the value of WTO rules to help prevent
protectionism, which would surely hurt China's exporters. At
the same time, China faced protectionist pressures
internally, and USTR is monitoring the situation closely. He
said Chinese leaders are "more pragmatic than ideological"
regarding trade issues, and the new Strategic and Economic
Dialogue with China represents an opportunity to improve the
bilateral political relationship, with positive spillover
effects into discussions on economic issues. The JCCT would
also continue as an important mechanism for resolving trade
issues.

Protection of IPR in Digital Realm
--------------


5. (SBU) MPAA Director Sam Ho described the HKG-led
Tripartite Forum (TF) among ISPs/OSPs, content providers and
content users. Established in late 2008 to design a
voluntary code of conduct governing electronic copying and
transmission of copyrighted content, the TF has failed to
generate consensus among its participants. Ho described an
April 3 meeting among TF members that included the MPAA, the
International Federation Against Copyright Theft, the Hong
Kong ISP Association, the Hong Kong Internet Society (a
content user association),and Yahoo Asia - at which they
decided to abandon the TF's efforts toward a voluntary
framework. They agreed to jointly ask the HKG to restart its
earlier substantial efforts toward legislation-backed
regulations that will protect copyright owners in the digital
realm. The amendments would also clarify ISP/OSP compliance
requirements, and further define penalties for illicit use of
protected content.

U.S. Beef Exports to Hong Kong
--------------


6. (SBU) Asia Pacific Senior Vice President for the U.S. Meat
Export Federation Joel Haggard asked Stratford about possible

HONG KONG 00000754 002 OF 002


USTR assistance to further open Hong Kong's market to beef
exports from the United States. (Note: Hong Kong partially
lifted its ban on U.S. beef in December 2005. The HKG now
allows entry of U.S. boneless beef from cattle under 30
months of age. Bone-in beef and beef offals from the United
States remain banned. Prior to the ban, Hong Kong annually
imported almost USD 109 million of U.S. beef and offals.
2008 imports totaled only USD 55 million. End note.)
Stratford described the USG's recent beef export agreement
with Korea and said USTR would concentrate next on reaching a
beef agreement with Taiwan, with Hng Kong-related
discussions to follow.

CPSIA n "Effective Trade Barrier?"
--------------


7. (SBU) Andrew Schroth, partne at U.S. law firm Grunfeld
Desiderio, said the CPIA's rapid implementation timeframe,
product labling requirements and severely tightned
restrictions on phthalates and lead have had a "devastating"
impact on Hong Kong-based manufacturers operating in China's
Guangdong province. He told Stratford that uncertainties
about the U.S. Consumer Products Safety Commission's (CPSC)
new CPSIA-related regulations and expedited implementation
timeframes have "created an effective trade barrier" for
Chinese manufacturers. Stratford responded that he had heard
that meember of Congress are examining technical amendments
to the CPSIA to clarify the law and provide some relief to
U.S. importers and global manufacturers, while maintaining
the fundamental consumer product safety protections provided
under the law.
DONOVAN