Trade liberalisation and overall relationship

2 - Protection of European IPR in China

Grade: B-
Unity 4/5
Resources 3/5
Outcome 5/10
Total 12/20
Scorecard 2012: B- (12/20)

Europeans were united on IPR but less so on technology transfer and patents. Chinese concessions on indigenous innovation were a success story for the EU.

China is currently the largest source (around 60 percent) of counterfeit and pirated products seized at EU borders. The EU is united on seeking better protection of intellectual property rights (IPR) by China, a foundation for better market access for European companies. The EU has networked with China on IPR through a task force, a working group, a joint action plan, as well as customs cooperation. There were sessions of these groups in 2010 and the threads were pulled together at the high-level economic dialogue in December.

Consistent input from the EU has helped improve China’s rules and laws on IPR protection, but local implementation lags behind. Yet since China wants to become a more knowledge- and innovation-driven economy, it would seem that it is in its own interests to protect IPR as part of its internal reform. In 2010, China conducted an enforcement campaign on IPR, which the EU acknowledged. However, this economic shift in China leads to new challenges for Europe, as China’s focus on indigenous innovation and systematic patent applications have become a larger concern for EU also through 2010.

As a result of combined EU and US criticism, including from businesses, China is gradually softening its insistence on indigenous innovation. For example, at the high-level economic dialogue in December, it dropped a requirement for local origin of innovation towards eligibility for government procurement preferences. EU Industry Commissioner Antonio Tajani also called for a complete reform of Europe’s technology transfer process, with oversight similar to the US process, and has denounced the risk of technology leaks. But the EU has not developed a coherent and united response to these new challenges, with free-traders such as the UK opposing restrictions on investments. The EU still has some way to go in convincing China that it should make a clean break with its copycat mode of economic development.