India gets tongue lashing from US on IP
When world economies slow down, national economies bicker with one another. Trade wars throughout history between rival economic powers often act as prologues to military conflict. In the twenty-first century, however, trade wars have a new dimension: the intellectual property trade war.
Intellectual Property Watch reported today that the United States expressed displeasure with IP law in India. US trade reps fired verbal salvo but didn’t accuse India’s laws of violating World Trade Organization guidelines for IP. India drafted sweeping IP law reform in 2005 required by the WTO’s 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights. Still, some national governments are suggesting more needs to be done. US Ambassador Michael Punke stated that India’s IP law "fell well short of best practices."
As yet, no one has directly challenged India’s law in the WTO. Rather, countries often attempt to exert pressure on India through stern warnings. The effect thus far has been underwhelming. The country’s trade policies are under review, particularly with respect to IP. Collecting hard data on the subject can be problematic, however—the WTO leaves it up to member nations to gather their own statistics for reports.
The tough language used against India can hardly be viewed in isolation. The world’s second-largest market sits across a border from the largest, China. Sino-American trade relations provide an example of IP conflicts bleeding over into trade war. In the Senate on Wednesday, Debbie Stabenow spoke out for tough action against China on the subject of IP and trade. The Chinese government demanded proprietary engineering information from Chevrolet in exchange for lucrative subsidies related to manufacturing the electric car Volt in the PRC. The "New York Times" stated, “Policies to force technology transfers from non-Chinese companies have already helped this nation build big industries in areas like wind turbines, high-speed trains and water purification.”
IP theft is such a problem in China that the government maintains a reference guide for American companies doing business in China on how to protect their IP. Recently, American media reported that businesses run the risk of having not only their patents stolen in China but entire business models as well. The Chinese allowed bootleg Apple stores to operate with relative impunity. The stores provide a pitch-perfect replica of an American apple store, including sales associates lounging around as if they were throwing a cocktail party.
Trade conflicts with China are not limited to IP. China and the United States are engaged in a nascent trade war, with the WTO rejecting an appeal by China last week to force the US to drop tariffs on imported Chinese tires. While trade complaints about IP can be hard to prove to the WTO, drafting a new tariff law for an unrelated matter is as easy as getting a bill passed. In a political environment where China is increasingly demonized in the West, passing protectionist trade laws is easier than ever.
Clearly China and India are not the same. While the former has often had a combative relationship with the West, India, even though it is a member of the Non-Aligned Movement, has generally maintained close social, political and economic ties to the West. China and India have, for their part, traditionally been enemies since Indian independence, fighting no fewer than three brief border wars in the 1960s. Still, a re-ascendant Russia, another longstanding enemy of China, provides India with some room to maneuver politically without recourse to Western patronage. If IP conflicts can lead to trade wars and trade wars can lead to military exchanges, it might be possible to draw a straight line from IP disputes to war.