Cracking down on fake goods

Member countries of the World Trade Organizations are mounting pressure on China to take necessary measures against widespread piracy of copyrighted goods such as DVDs, CDs and computer software, and the counterfeiting of other products. In April, the United States filed two complaints with the WTO against China. The U.S. complains not only about China’s failure to stop piracy of U.S. copyrighted goods but also about China’s market barriers that deny Chinese consumers access to legitimate products and entertainment.

Japan has decided to take part in the U.S.-China consultations under the WTO mechanism as an observer, not as a complainant, in view of China’s promise to improve its protection of intellectual property rights. The European Union is also adopting a harsh attitude toward China. As a WTO member, China has a duty to curb intellectual property rights abuses.

The Organization for Economic Cooperation and Development estimates that counterfeit products account for a whopping 5 to 7 percent of total world trade. Such products not only inflict heavy financial damage on legitimate companies, but also hinder the normal development of trade. The value of pirated and counterfeit products traded worldwide is estimated at 65 trillion yen annually. Most counterfeit products are said to come from China. A February 2004 estimate by the Japan Patent Office shows that financial damage from counterfeit products in Asia amounts to 18 trillion yen annually. For the sake of comparison, Japan imported about 57 trillion yen worth of goods in 2005.

China, which joined the WTO in 2001, has promised to observe the Agreement on Trade-Related Aspects of Intellectual Property Rights and has enacted relevant domestic laws. But its crackdown on piracy and counterfeiting is insufficient. China must work harder to halt both the production and export of such products. For their part, Japan, the U.S. and other countries can cooperate to prevent the entry of these goods into their markets.