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By Len Bracken
March 3 — Noncompliance with intellectual property rights (IPR) protections by U.S. trading partners, including members of the Trans-Pacific Partnership (TPP) agreement, remains a problem, Senate Finance Committee Chairman Orrin Hatch (R-Utah) said March 3.
At a committee hearing on trade agreement implementation, Hatch said problems with enforcement of existing U.S. trade pacts were “most pronounced” with regard to intellectual property rights, adding that all too often countries are never held accountable for their noncompliance.
“This, to put it bluntly, unfair, and it must stop,” Hatch said.
The U.S. already has preferential trade agreements with six of the 12 TPP countries: Australia, Canada, Chile, Mexico, Peru and Singapore. The other TPP countries—Brunei, Japan, Malaysia, New Zealand and Vietnam—have World Trade Organization commitments.
Without naming specific countries, Hatch pointed to the stakeholder submissions for the annual Special 301 Report issued by the Office of the U.S. Trade Representative. The 2015 report placed Chile on the Priority Watch List and Canada and Vietnam on the Watch List. The lists are administrative categories created by the USTR to serve as warning mechanisms to countries perceived as out of compliance with U.S. preferences on intellectual property rights policy and as ways to apply pressure .
The top issue concerning Chile in the report is the need to implement an effective system for addressing patent issues expeditiously in connection with applications to market pharmaceutical products. Intellectual property rights protections for drugs is one of the main outstanding issues Hatch has raised about the TPP .
The report cited “serious concerns” about the availability of rights of appeal in Canada’s administrative process for reviewing regulatory approval of pharmaceutical products and the lack of clarity and the impact of the heightened “utility requirements” for patents that Canadian courts have applied recently, which was raised in the hearing by Sen. Dan Coats (R-Ind.). He echoed concerns in the report about Canadian courts invalidating several patents held by U.S. pharmaceutical companies on utility grounds, by interpreting the “promise” of the patent and finding that insufficient information was provided in the application to substantiate that promise.
Steven Tepp, president of Sentinel Worldwide and a former U.S. intellectual property trade negotiator, said the rulings were “extremely disappointing” because Canada is the largest U.S. trading partner and is effectively undermining U.S. efforts to implement the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement administered by the WTO. The U.S., he said, is actively pressing Canada to fix the issue, and he held open the possibility that the U.S. could launch a WTO dispute resolution case over the issue.
In Vietnam, online piracy and sales of counterfeit goods over the Internet are common, the report said, adding that the government of Vietnam is in the process of drafting or revising circulars in a number of IPR-related areas, including on guidelines for interagency cooperation on enforcement issues, as well as criminal code reform, and various agencies continue to engage in public awareness campaigns. As with Chile and Canada, the report said the U.S. is “continuing to work with Vietnam to address these and other issues, including in the TPP negotiations.” The 2016 Special 301 Report is due in late April.
Committee ranking member Sen. Ron Wyden (D-Ore.) said now that the TPP has been signed, he expects consultations between lawmakers and the administration on the agreement to “pick up steam.” The pact must be approved by Congress before it can enter into force, and trade analysts see two windows for congressional consideration in 2016: during the May-July period or following the presidential elections in late November or December.
Hatch told Bloomberg BNA in an e-mail statement that the hearing demonstrated a “bipartisan consensus across a variety of sectors that said a clear understanding of our trading partners' laws and regulations is critical to ensure our international counterparts will fully meet the obligations and commitments negotiated in a trade agreement before it enters into force.”
If the pact is ratified, the president must still certify that the TPP countries have met their commitments before it can enter into force. Sean Murphy, vice president at Qualcomm Inc., said his company supports approval of the TPP agreement by Congress while calling for the administration to create a mechanism, a pre-certification checklist or scorecard, as a way for the private sector to provide greater input about facts on the ground in TPP countries.
“As Congress considers new trade agreements, we ought to carefully weigh what we learned today from key industries whose livelihood depends upon fair and open access to foreign markets,” Hatch said.
Glenn Pickett, chief external affairs officer with the Nature Conservancy, said the TPP contains important new obligations for parties to address illegal and unsustainable fisheries practices, and to combat illegal wildlife trade.
In related news, the Joint Economic Committee March 2 issued a response to the 2016 Economic Report of the President that said “several specific elements of the TPP agreement the Administration negotiated are cause for concern,” citing what the report characterized as the failure “to achieve adequate intellectual property protections for innovative American pharmaceuticals” and the failure “to protect proprietary data stored by financial services companies.”
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