WTO TO CRACK DOWN ON CHINESE INTELLECTUAL PROPERTY PROTECTION

The US is planning to use World Trade Organisation (WTO) initiatives to pressure China into tightening up its intellectual property provisions and live up to its pledges to curb counterfeiting activity. Both Japan and Switzerland are supporting the US in its actions. Theft of copyrighted material is the chief source of aggravation in the US$190bn trade relationship between the US and China.

The problem is particularly acute in the pharmaceuticals industry. Although patent protection legislation in the country has made rapid progress in the past decade, there are still concerns over government enforcement. The country's legal system is also woefully unprepared to deal with the technical issues of patent law, and penalties for violation remain insufficient.

The WTO measures will force China, for the first time, to detail the steps it has taken to crack down on piracy. This will include providing descriptions of both the cases it has pursued, as well as the penalties imposed on perpetrators. If the Chinese government fails to comply, it could face sanctions.

Generics make up approximately 95% of the Chinese drug market, and the vast majority are "unauthorised" copies. Meanwhile, according to a recent survey, 26% of health supplements sold in Chinese retail outlets are fake. Despite increasing WTO pressure, the Chinese government is likely to remain reluctant to curtail the supply of these inexpensive medicines, considering the low-income status of much of the country's population.