WORLD TRADE  
ORGANIZATION  IP/C/W/435 
26 November 2004 
 
 (04-5166) 
Council for Trade-Related Aspects 
of Intellectual Property Rights Original:   English 
 
 
 
TRANSITIONAL REVIEW MECHANISM OF CHINA 
 
Communication from the European Communities  
 
 
 By means of a communication from the dele gation of the European Commission, dated 
25 November 2004, the Secretariat has received th e following contribution in the context of the 
transitional review mechanism under Secti on 18 of China's Protocol on Accession.  
 
_______________ 
 
  The European Communities (hereinafter referr ed to as "EC") have identified the following 
statements which are subm itted to the TRIPS Council: 
 
 
1. The EC take the view that the protection of intellectual property (IP) is one of highest 
priorities for the European Union in its trade relations with the People's Republic of China 
(hereinafter referred to as "China").  Experience ha s proven that an effective system of IP protection 
plays an important role in promoting scientific and technological innovation, cultural prosperity and 
economic growth.  An effective IPR protection system is also an important contributing factor for the 
inflow of foreign investment. 
2. Over recent years, China has carried out c onsiderable work to revise its IP laws and 
administrative regulations to bring these into line wi th the TRIPS Agreement.  The EC encourage the 
Chinese Government to persist in its efforts with r espect to IP legislation and firmly urge China to 
prioritise the strengthening of the enforcement of  IPR laws and regulations so as to ensure a 
comprehensive IPR legal system. 
3. The scope of production of count erfeits and pirated goods inside China are extremely high 
and the export of counterfeits a nd pirated goods continues to inflic t severe damage to the markets 
throughout the world.  The European Union is an  important destination of  pirated and counterfeit 
goods.  According to the most recent statistics, it appears that 60% of all fake goods seized at the 
borders of the European Union are of Chinese origin. 
4. The recently announced "Action Plans" of the Ministry of Foreign Trade (MOFCOM) and of 
the State Intellectual Property Office (SIPO) constitute encouraging efforts in the right direction, but the details have not yet been made pub lic and the outcome remains uncertain.  
5. The EC welcome the Chinese leadership's dedica tion to consider IPR infringement a priority 
issue.  China's commitment to step up protection of intellectual property was underscored by 
Prime Minister Mr. Wen Jiabao at the China-EU Investment and Trade Forum which took place in 
Brussels on 6 May 2004.  The Chinese Premier has also  stressed that intellectual property rights must IP/C/W/435 
Page 2  
 
 be protected more effectively and that piracy a nd infringements must be punished according to the 
law.
1 
6. The EC are aware of the particularity of the Ch inese IP enforcement system:  IP right holders 
may either bring a lawsuit to the court or file a complaint to the administrative agencies.  The 
sanctions which can be taken by administrative agen cies are sometimes important.  However, they do 
not constitute a sufficient deterrent to curb down the very high rates of counterfeiting and piracy. 
7. The EC advocate that criminal penalties should be  made available whatever the seriousness of 
the infringement.  Only a system where infringe rs at all levels of the consumption chain 
(manufacturer, shipper, distributor, seller) could be  subject to criminal prosecution, has a true 
deterrent impact. 
8. The EC concern of ineffective IP enforcement in  China has been raised for several years and 
was again brought forward during the first EU-China IPR Dialogue which took place in Beijing on 21-22 October 2004.  In particular, the EC calle d for a more comprehensive approach to IP 
enforcement and contended that awareness raising was a key issue.  The Dialogue was constructive 
and useful, both parties exchanged information on multilateral and bilateral issues and on national 
legislation and practices.  Weaknesses were id entified and proposals for improvement suggested. 
9. The EC will continue to monitor the situati on in China and to ensure that its economic 
interests are appropriately safeguarded.  The EC  are also committed working together with the 
Chinese Government to improve the situation, thereb y creating a favourable situation for all parties.  
Support to China in the area of legislative and administrative reform and in the area of IP 
enforcement, was provided by th e "EU-China Intellectual Property Rights Co-operation Programme" 
launched in 1996 and recently terminated.  The EC are about to launch a new IP cooperation 
programme.  This new programme will focus on legislative aspects, judicial, public and 
administrative enforcement, co-ordination betw een agencies, and public awareness-building.  
10. At the EU-China IPR Dialogue, and in addition to  an enhanced technical cooperation, parties 
agreed to encourage the private sector to work toge ther with the public authorities, such as through 
public-private partnerships. In this respect, the EC proposed the creation of an "EU-China Working 
Group on IP Enforcement" which would formulat e objectives and benchmarks with a view to 
regularly assessing progress achieved. The EC deem that  such public-private partnership is essential 
for identifying the priorities of the future techni cal cooperation as well as  effectively combating 
piracy and counterfeiting. The EC are looking fo rward to a positive response from China in this 
respect. 
11. On enforcement, the EC would appreciate receivi ng China's reply to the following enquiries: 
(i) Vice Premier Wu Yi has announced that China would undertake a series of near-term actions 
with the objective of significantly reducing IP infringement levels.  The recently created "State Intellectual Property Working Group" is to  play a strong coordinating role for this 
"Action Plan".  The EC would appreciate rece iving full details of the actions that China 
foresees to undertake to curb down the current le vels of counterfeiting and piracy in China.  
The EC would also like to learn more about th e precise task and purpose, as well as structure, 
composition, human and financial resources of  the recently created "State Intellectual 
Property Working Group". 
                                                     
 
1 Report on the Work of the Government delivered by Premier Wen Jiabao at the Second Session of the 
Tenth National People's Congress on 5 March, 2004.  IP/C/W/435 
 Page 3 
 
 
 (ii) In April 2004 the State Intellectual Property O ffice (SIPO) announced a "National Strategy on 
IPR".  This new Strategy would shortly be la unched and would have as its main objective the 
enhancement of competitiveness of Chinese bus inesses in the global economy.  The EC 
would appreciate to obtain more detailed informa tion regarding this strategy plan.  Does the 
National Strategy on IPR foresee more transpar ency in the decision making process and to 
accelerate procedures for the registration of patents and trade marks?  Does the National 
Strategy on IPR also include specific measures to reinforce th e combat against counterfeiting 
and piracy?  Will the National Strategy on IP R also include an educational programme to 
deepen IPR knowledge among officials at ministerial and provincial levels? 
(iii) In 2001, the State Council issued regulations aiming at promoting the transfer of infringement 
cases from administrative bodies to Public Securitie s Bureaus (PSB).  Because there is a lack 
of clear understanding by local authorities of th e relevant criminal liability standards, new 
Judicial Interpretations are expected to be i ssued soon.  The EC would value the opportunity 
to comment on the Judicial Interpretations before  their adoption.  The EC would also like to 
know whether China envisages reviewing the crim inal liability standards.  Finally, the EC 
would appreciate receiving the most recent statistics of cases that were transferred for 
criminal prosecution and which have led to effective criminal sentencing. 
12. On copyright, the EC would appreciate recei ving China's reply to the following enquiries: 
(i) China recently indicated that it intends to jo in the 1996 WIPO Internet treaties (WCT and 
WPPT), before the end of 2005.  According to th e EC understanding, China is in the process 
of drafting Internet-related Implementing Rules by the end of 2004.  The EC would welcome 
additional information regarding these implementing rules. 
(ii) The current Chinese legislation appears to provi de broadcasting or public performance rights 
only to video producers.  The EC would like th e Chinese authorities to explain whether it is 
foreseen that similar rights would also be introduced for sound recordings. 
(iii) According to the EC understanding, China intends  to enact, before the end 2004, new rules on 
Collecting Societies.  The EC would appreciat e receiving further information and an advance 
copy of such new rules. 
__________