Why the 2020 U.S.-China Trade Agreement Needs Anti-Corruption Provisions for the Protection of Intellectual Property

Notre Dame Journal of International & Comparative Law, 2020 Forthcoming

Ohio State Legal Studies Research Paper No. 552

28 Pages Posted: 21 Jul 2020 Last revised: 28 Jul 2020

See all articles by Daniel C. K. Chow

Daniel C. K. Chow

Ohio State University College of Law

Date Written: July 14, 2020

Abstract

The United States has created the ultimate enforcement weapon for its intellectual property (IP) rights in Phase I of the 2020 U.S.-China Economic and Trade Agreement (USCTA). Under the USCTA, the United States has a unilateral right to declare China in breach of the treaty and to impose trade sanctions. The USCTA forbids China from retaliating. China’s only recourse is to withdraw from the USCTA. If China withdraws, however, the United States could reinstate the punitive tariffs that were suspended by the USCTA. As a result, China will be subject to tariffs no matter what it decides, either under the USCTA or due to withdrawal from the USCTA. China has been trapped into a no-win situation. As a matter of legal procedure, the USCTA is innovative and path-breaking; it is also clever and ruthless.

As a matter of substantive law, however, the USCTA fails to address problems that have long plagued multinational companies (MNCs) in China. These are problems of pervasive corruption by government and business entities that create barriers to effective on the ground enforcement of IP rights, which is essential to day-to-day operations of MNCs. These problems are especially serious in three areas: demands for payments by PRC authorities in the enforcement of trade secrets, the use of ex parte contacts to influence the results of civil IP litigation, and the use of business bribes in e-commerce platforms that have contributed to an explosion in online sales of counterfeit products.

Fortunately, the United States still has an opportunity to address these issues during the current negotiations on the second phase of the USCTA. This article will offer concrete suggestions on how to draft new provisions to address these major substantive problems that have long plagued MNCs in China.

Keywords: United States, China, corruption, trade, intellectual property

JEL Classification: K3, K33, K4

Suggested Citation

Chow, Daniel Chee King, Why the 2020 U.S.-China Trade Agreement Needs Anti-Corruption Provisions for the Protection of Intellectual Property (July 14, 2020). Notre Dame Journal of International & Comparative Law, 2020 Forthcoming, Ohio State Legal Studies Research Paper No. 552, Available at SSRN: https://ssrn.com/abstract=3650977 or http://dx.doi.org/10.2139/ssrn.3650977

Daniel Chee King Chow (Contact Author)

Ohio State University College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States
614 292-0948 (Phone)
614 292-3202 (Fax)

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