The Political Economy Of Sino-US Frictions On Intellectual Property Rights Protection

As the trade between China and USA grows rapidly, trade frictions between these two countries have also been happening frequently, among which, the intellectual property protection (IPP) friction since 1980s has been evolving until now and China's protection of intellectual property rights (IPRs) is still the focus of United States in the bilateral trade relations. This paper has made an effort to research on the characters of IPP friction and its formation mechanism and the effect of IPP friction on China's actual protection level of IPRs from the perspective of political economy of trade. By doing so will not only help to understand the causes and effects of IPP friction, but also help to reply to IPP friction from the aspect of political economy.Firstly, the research background and significance was elaborated and the literature review was conducted. The existing research related this topic is from three aspects:many research was about the effect of IPP, such as the effect of IPP to technical progress, economic growth and social welfare or the effect of IPP to international trade, FDI, international transfer of technology. These studies emphasized the conflict of economic interests between Northern countries and Southern countries. The second stream of research was about the development of Chinese IPRs system, IPP frictions especially those between US. and China from the aspect of law; the third stream was about the political economy of trade friction which modeled the endogenous formation progress of various kinds of trade protection friction. Based on these researches, the political economy of IIP friction between Sino and US was conducted in this paper.Secondly, the evolving progress of various kinds of IPP frictions between China and USA was reviewed and the political economy characteristics behind these frictions were illuminated. Three kinds of IPP friction were prominent, one is that China was frequently listed on the annual "Special 301" report as "Priority Foreign Country" or "Priority Watch Country" or "Section 306 monitoring". China was also the No.1 object of USA's "337" investigations from 2002 to 2010. China also suffered a claim related with China's compliance of TRIPS raised by USA to the WTO dispute settlement body in 2007. Behind all these frictions, the political and economic factors have played important roles. U.S. interest groups, with IIPA a prominent example, have participated in and promoted the IPP frictions by acting aggressively in the political stages by various means. Interest groups have been working to bring "special 301" system come into place and been affecting its enforcement. They have worked to make several revisions of "337" clause and make it a protectionist tool to target foreign competitors from exporting high technology goods to US market. They also have worked to push USTR to bring China to WTO's Dispute Settlement Mechanism in 2007.Thirdly, the IPP decision mechanism of USA and China was explored from the perspective of political economy. Since 1970s US has begun to be a trade deficit country and its hegemony has begun to decay. U.S has made a strategy by linking its trade partner' protection of US IPRs with the market access opportunity given to this partner, with the hope of maintain or strengthening its hegemony. This strategy was strengthened in the 21st century, with its Congress, the administration and interest groups from iprs-intensive industries have been consistently advocating high level of IPRs international protection and have been working closely to achieve this goal. China has been the most important target of US. Under the "market-preserving federalism" political system, Chinese government has begun to introduce modern IPP systems into China as a measure to execute the open-door strategy which was mainly the idea of China's supreme leaders. Under this strategy, China's foreign trade policy and IPRs policy was decided by the leaders by trading off the benefits and costs of strengthening IPP under the outer pressure and internal development demand. Interest groups and their activities only had a "marginal" effect to China's IPP decision, but with the development of science and technology, economy, social and law systems, more supporting strengths have emerged and making higher degree of IPP benefit China more. After China's WTO accession, the IPP legislation level has approached that in developed countries and the enforcement of IPRs is still the focus of USA's monitoring. Chinese government has made great effort to fulfill the requirements of US and international agreements of IPP but in recent years China has been more actively in enforcing IPRs with a view to stimulating indigenous innovation.Fourthly, the empirical analysis of Sino-US IPP friction on China's actual IPP level was conducted. After review of the measurement of actual IPP level, a times-series econometrical model was constructed with the data from 1985-2009 and 18 specific equations were regressed. Results showed that the pressure under the "special 301" system has not significantly affected China's actual level of IPP, but "Trips" has significantly and immensely promoted the increase of IPP level. Considering that "Trips" is also a channel by USA to strengthen international protection of IPRs which was brought into WTO by USA and other developed countries. It was concluded that the IPP friction between USA and China has truly promoted the increase of the IPP actual level in China and made the process of our country's IPP evolvement an international political economic progress. The case study to the Sino-Us copyright friction and the progress of promoting use of authorized software showed that BSA has on one hand intensify the copyright friction between USA and China, on the other hand BSA has worked with domestic interest groups to pressure Chinese government promote the authorization of software in China.Finally, the future trend of IPP friction between USA and China and its effect on the bilateral trade relations was analyzed. In a long period in the future, the IPP friction will not stop and will show a great sophistication but it will not affect the whole bilateral trade relations. Based on these judgments, some strategic counter-measures for China to respond to the IPP friction were put forward and the future research topics were raised from both the theoretical and empirical aspects.