7230 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

problem: (1) Non-compliance with the

GATT Agreement on Government

Procurement; (2) the type of

discrimination encountered, including

information regarding the date and

nature of affected procurement(s); (3)

policies or practices which are

discriminatory, not transparent or anticompetitive (where possible, include

copies of discriminatory laws, policies

or regulations), and (4) the extent to

which the problem has impeded the

ability of U.S. suppliers to participate in

procurements on terms comparable to

those available to suppliers of the

country in question when they are

seeking to sell goods or services to the

U.S. Government; (5) examples of

failure to maintain and enforce effective

prohibitions on bribery and other

corrupt practices in connection with

government procurement.

Finally, each submission should: (1) If

applicable, identify provisions of the

GATT Government Procurement

Agreement which are not being

observed by the country identified or

describe how the country identified has

maintained a significant and persistent

pattern or practice of discrimination in

government procurement of non-CodeCovered goods or services; (2) identify

the specific impact of the discriminatory

policy or practice on U.S. businesses

(including an estimate of the value of

market opportunities lost and, if any,

the cost of preparing bids which are

rejected during the course of a

procurement evaluation for

discriminatory reasons), and (3)

describe the extent to which the

products or services of the country

identified are acquired in significant

amounts by the U.S. Government.

Frederick L. Montgomery,

Chairman, Trade Policy Staff Committee.

[FR Doc. 95–2977 Filed 2–6–95; 8:45 am]

BILLING CODE 3110–01–P

[Docket No. 301–92]

Determination of Action Concerning

the People’s Republic of China’s

Protection of Intellectual Property and

Provision of Market Access to Persons

Who Rely on Intellectual Property

Protection

AGENCY: Office of the United States

Trade Representative.

ACTION: Notice of determination

pursuant to sections 301 and 304 of the

Trade Act of 1974, as amended (Trade

Act), 19 U.S.C. 2414.

SUMMARY: Pursuant to section

304(a)(1)(A)(ii) of the Trade Act, the

United States Trade Representative

(USTR) has determined that certain acts,

policies and practices of the Chinese

government with respect to the

enforcement of intellectual property

rights and the provision of market

access to persons who rely on

intellectual property protection are

unreasonable and constitute a burden or

restriction on U.S. commerce. Pursuant

to section 304(a)(1)(B) and section

301(b), the USTR has determined that

trade action is appropriate and that

sanctions are appropriate. The sanctions

will take the form of increasing duties

on products listed in the attached

Annex originating in China to 100

percent ad valorem.

EFFECTIVE DATE: USTR’s determination

as to actionability and the specific

action to be taken was made on

February 4, 1995. The increased duties

will be assessed upon all products of

China identified in the Annex to this

notice that are entered, or withdrawn

from warehouse for consumption, on or

after February 26, 1995.

ADDRESSES: Office of the United States

Trade Representative, 600 17th Street,

NW., Washington, DC 20606.

FOR FURTHER INFORMATION CONTACT:

Deborah Lehr, Director for China and

Mongolian Affairs (202) 395–5050,

Joseph Papovich, Deputy Assistant

USTR for Intellectual Property (202)

395–6864, or Thomas Robertson,

Assistant General Counsel (202) 395–

6800.

SUPPLEMENTARY INFORMATION: On June

30, 1994, China was identified as a

priority foreign country under the

‘‘special 301’’ provisions of the Trade

Act for its failure to enforce intellectual

property rights or to provide fair and

equitable market access to persons who

rely on intellectual property protection.

On the same day, the USTR initiated an

investigation of those acts, policies and

practices of China that were the basis for

its identification as a priority foreign

country. See 59 FR 35558 (July 12,

1994).

The effectiveness of China’s

enforcement regime is hampered by,

among other things, internally

inconsistent laws; a lack of transparency

in the enforcement structure; a lack of

protection for existing works; gaps in

responsibility in the enforcement

structure; a lack of consistent

application of the laws throughout the

central, provincial and local

governments; a lack of funding, training

and education; possible conflicts of

interest; burdensome and

discriminatory agency requirements that

restrict foreign access to trademark

protection; overly-broad compulsory

licensing provisions; a failure of

enforcement authorities to coordinate;

and the absence of an effective border

control mechanism.

In the area of market access, the most

serious problems with the Chinese

system are found in the areas of audiovisual products, sound recordings, and

published written materials. Particular

concerns include a hidden system of

internal quotas, a lack of transparency,

a lack of consistency in application,

monopoly control over the importation

and distribution of products embodying

intellectual property, and a prohibition

on the production or distribution of

products embodying intellectual

property that is not related to the

content of those products.

Extension of Investigation, Proposed

Determinations, and Public Comment

On January 5, 1995, the USTR

published a notice that the six-month

statutory deadline for the close of this

investigation had been extended until

February 4, 1995, in light of the

complex and complicated nature of the

issues involved. See 60 FR 1829, 1830

(January 5, 1995). In that notice, the

USTR also published a proposed

determination of action and request for

public comment concerning the

proposed action. The USTR proposed to

determine that China’s failure to enforce

intellectual property laws or to provide

market access to persons who rely on

intellectual property protection is

unreasonable and discriminatory and

constitutes a burden or restriction on

U.S. commerce. If that determination

were finally made, the USTR also

proposed to increase duties on certain

products of China in an amount

equivalent to the damaged caused by the

Chinese acts, policies and practices

which formed the basis of the

investigation. The USTR published, as

an annex to the notice, a list of products

from which specific products could be

selected for the imposition of increased

duties.

In response to the January 5, 1995,

Federal Register notice, the USTR and

the section 301 Committee receive

approximately 198 sets of written

comments and heard the oral testimony

of 53 witnesses at public hearings held

on January 24–25, 1995. The comments

primarily focused on the

appropriateness of subjecting the

products listed in the proposed

retaliation list to an increase in duties,

the levels at which duties on particular

products should be set, and the degree

to which an increase in duties on

particular products might have an

adverse effect on U.S. consumers,

workers and industries.
Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices 7231

The United States estimates that the

damage caused by China’s failure to

provide adequate intellectual property

protection or market access for persons

who rely on intellectual property

protection is at least $1.08 billion on an

annual basis. The USTR has directed the

section 301 Committee to examine the

effect on U.S. commerce of the export of

infringing products from China to third

countries.

Determination and Action

Numerous meetings have been held

with the Chinese Government on these

issues since the initiation of this

investigation. While China has

indicated it will take some action to

address U.S. concerns, issues remain

unresolved. Consequently, pursuant to

section 304(a)(1) of the Trade Act, the

USTR has determined (1) that China’s

acts, policies and practices which

formed the basis of the investigation are

unreasonable and discriminatory and

constitute a burden or restriction on

U.S. commerce, and (2) that trade action

is appropriate. Pursuant to section

301(b) and 301(c), the USTR has

decided to increase duties to 100

percent ad valorem upon goods

described in the Annex to this notice

that are of Chinese origin. These

products were selected in light of the

comments submitted to the section 301

Committee in response to the January 5,

1995, notice and the testimony

presented at the public hearing held on

January 24–25, 1995.

Accordingly, effective with respect to

articles entered, or withdrawn from

warehouse for consumption, on or after

February 26, 1995, the Harmonized

Tariff Schedule of the United States

(HTS) is hereby modified by inserting

the provisions listed in the Annex to

this notice in numerical sequence in

subchapter III of chapter 99, with the

content of the new subheadings and

superior text set forth in the HTS

columns designated ‘‘Heading/

Subheading’’, ‘‘Article Description’’,

and ‘‘Rate of Duty General’’,

respectively. The amount of trade

affected by this action is equivalent to

the value of the burden or restriction on

U.S. commerce by the Chinese practices

that formed the basis of the

investigation.

Irving A. Williamson,

Chairman, Section 301 Committee.

BILLING CODE 3190–01–M
7232 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices
Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices 7233
7234 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

[FR Doc. 95–3129 Filed 2–6–95; 8:45 am]

BILLING CODE 3190–01–C