The US is likely to announce sanctions against China and may consider complaining to the WTO to protect itself from Intellectual Property Rights violations. President Trump is concerned that counterfeit goods and pirated software are costing the US billions of dollars and protecting these rights is critical to the economy.

What are (IP) Rights?

Copyrights, patents, and trademarks come under (IP) intellectual property rights. These are some of the intangible creations of human intellect and need to be protected at all costs otherwise inventors and businesses face severe economic losses due to their misuse.

China is a haven for producing counterfeit goods, and this makes it difficult to distinguish authentic products. Some of the top popular brands have become a constant target through illicit production and result in huge monetary losses for manufacturers and exporters in the US.

How does it affect businesses in the US?

According to the U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), a record number of 34,143 shipments of goods were seized which violated intellectual property rights (IPR) in FY 2017.

In fact, more than 30,000 shipments of counterfeit and pirated products were seized for IPR. This accrued a loss of more than $1.2 billion to the manufacturers.

To tackle this problem, China, who joined the World Trade Organization (WTO) on December 11, 2001, has recognized a need to stop such violations and has signed numerous treaties, but this does not seem to have had the required effect on the proliferation of counterfeit goods.

The US economy is facing a significant threat from such illegal activities, but there are other critical concerns like funding of international criminal activities, drug trafficking, and forced labor.

Not only this, but these very Chinese counterfeit goods are finding a way back into the US economy itself and further damaging it, besides affecting the exports of original products. This type of illicit trade is making a devastating impact on the US economy, and therefore President Donald Trump is immensely concerned about stopping the same.

US President Donald Trump has asked top authorities to review China’s trade practices regarding intellectual property rights. He has also signed an order which authorizes US Trade Representative Robert Lighthizer to examine if there is a need for an in-depth Section 301 investigation.

Section 301 of the US Trade Act of 1974, authorizes the President to take all appropriate actions that affect commerce due to any unjust act, international trade agreement, policy or practices in the US.

It goes without saying that India should also be reviewing its trade with China given the current scenario as a similar situation could also impact the Indian economy.