3.
circumvention - but would take steps now to stop. There could be further difficult exchanges ahead over extension of the MFA and the bilateral textile agreements.
a continuing dispute over intellectual property (see below) which seems likely to get worse before it gets better.
c)
I attach one or two press cuttings. I had a word with Joe Massey on 8 March. He said that the recent visit to Beijing had indeed been confined entirely to a review of intellectual property issues in preparation for the next Special 301 decisions (due on 30 April). The various US intellectual property associations estimated the total loss to them from piracy by China at $400 million annually. I always take these figures with a large pinch of salt, but this is the largest such figure for any of the US trading partners and the industries, according to Massey, have put China top of their list for priority country status under Special 301. If USTR agrees, that will mean the initiation of a formal Section 301 case on the special, fast-track timetable laid down in the Special 301 statute. initiated an "ordinary" 301 case on intellectual property against Thailand a couple of months ago.)
4. Joe ran over for me the issues raised in the recent discussions:
5.
(USTR
A
a) The new Chinese copyright law was to take effect on 1 June. But the regulations had not even been drafted. major problem with the law was its failure to provide for international copyright relations. Protection dated from the date of publication in China, with no provision for protecting works published elsewhere. The Chinese had said they were prepared to negotiate a bilateral agreement and/or to consider adherence to the Berne Convention. But it was very unclear when they would do this;
b)
On software copyright, which the Chinese have treated separately from literary works (less protection over shorter periods), the regulations were available and had been shown to the US side. But they were extremely unsatisfactory. There was a non-transparent procedure of mandatory registration. There were also numerous loopholes; for example, research, educational and other public institutions would be free to copy software without permission or compensation and without limit on the number of copies that could be made;
c) On patents, the Chinese had promised to try to amend their patent law. But they were still talking only about product patent protection; they were not willing to consider process patents for chemicals and pharmaceuticals. Moreover, although the State Council was considering the issues, nothing had been done because of inter-agency disagreement. The Chinese had been unable to forecast when they would enact changes.
More generally, Joe agreed that the trade issues were bound to play unhelpfully into the question of renewing MFN. For trade rather than political reasons "the US would have to engage the
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