Intellectual Property Protection in the Trans-Pacific Partnership

Strategic Protection of Vital U.S. Assets Abroad: Intellectual Property Protection in the Trans-Pacific Partnership

A thesis submitted to the Graduate School of the University of Cincinnati in partial fulfillment of the requirements for the degree of

Master of Arts

in the Department of Political Science

of the College of Arts and Sciences

Kyla Dahlquist

B.A. University of Cincinnati

June 2012

Committee Chair: T.G. Moore, Ph.D.

Abstract

In 2012, the United States Trade Representative (USTR) submitted a high- standards intellectual property (IP) provision to the Trans-Pacific Partnership (TPP) negotiation forum. Indications that this provision is incredibly aggressive were seemingly confirmed by a series of draft leaks on the Internet, leading to overwhelmingly negative assessments of the USTR and the U.S. trade agenda in the Asia-Pacific. However, these scholars and analysts have not adequately addressed the strategic element of the U.S. trade agenda regarding intellectual property. Arguments have been made regarding the strategic importance of the TPP negotiations, as a whole, to the U.S.: economically, politically, and even militarily. I will argue that the U.S. trade agenda regarding intellectual property in the Asia-Pacific region, specifically, is not counter to these strategic interests. Examining the reasoning behind this policy is the primary objective of this comparative analysis of the perceived intellectual property protections of TPP states. One of the primary, overarching purposes of this examination is to contribute to the discussion of intellectual property as an all-encompassing security issue. I propose that promoting the effective enforcement and implementation of intellectual property protections within other countries provides the United States with a mechanism for countering the unilaterally insurmountable security issues of the twenty-first century, including cyber-espionage and forced technology transfer. I will argue that it is the long-term external effects that provide the most persuasive explanation for U.S. behavior in the Trans-Pacific Partnership negotiations. The United States is still proceeding in a strategic manner, establishing long-term mechanisms for the protection of U.S. interests abroad through bilateral and small-scale trans-regional agreements with limited membership rather than global international institutions in an effort to hedge against the rising power in Asia: China. I have conducted a descriptive, exploratory analysis of the U.S. perception of the intellectual property protections provided in trade partner states. I have defined these protections according to the legal infrastructure and the enforcement capacity of that trade partner. In addition to China, four TPP negotiation members have been selected as case studies for this analysis based upon their Special 301 designations from 2001 to 2014: Canada, Chile, Peru, and Vietnam.

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Table of Contents Title Page Abstract Table of Contents List of Tables and Figures Abbreviations I. Introduction 9 II. Research Objective and Hypotheses 12 A. Research Objective 13 B. Research Questions and Hypotheses 13 C. Caveats and Contextualization 15 III. Background 17 A. Defining the Concept: Intellectual Property 18 B. The Internationalization of IP Law: The Multilateral Approach 23 C. The Internationalization of IP Law: Moving Away from Multilateralism? 29 i. U.S. Unilateralism 30 ii. U.S. Bilateralism and Plurilateralism 31 iii. The Trans-Pacific Partnership Agreement 36 a. The Trans-Pacific Partnership: What Is It? 36 b. The Trans-Pacific Partnership: Perspectives 37 1. Human Rights 37 2. Institutional Undercutting 40 3. Inconsistency 41 4. Back-Door Politics 42 5. Introducing a Balanced Analysis of the Unknown 43 IV. Theoretical Foundation 46 A. Power and Transformations 47 B. International Political Economy and International Relations Theory 52 i. State-centricity 53 ii. Security 54 a. Defining “Security” 55 b. The Security in the Protection of Intellectual Property 57 C. International Relations Theory and the Rise of China 60 V. Methodological Approach 67 A. Methods 67 B. Case Selection 68 C. Data 70 i. Sources of Data 71 ii. Coding and Interpreting the Data 72 a. Enforcement Capacity Issues (ECI) 73 b. Lacking Legal Infrastructure (LLI) 75 VI. Case Profiles 76 A. Canada 76 i. The U.S.-Canada Relationship 76 ii. Perceived IP Protection Issues 79 B. Chile 84

i. The U.S.-Chile Relationship 85 ii. Perceived IP Protection Issues 86 C. Peru 91 i. The U.S.-Peru Relationship 91 ii. Perceived IP Protection Issues 93 D. Vietnam 96 i. The U.S.-Vietnam Relationship 96 ii. Perceived Intellectual Property Protection Issues 98 E. China 102 i. The U.S.-China Relationship 103 ii. Perceived Intellectual Property Protection Issues 104 VII. Comparison and Results 115 VII. Conclusions and Possibilities for Further Research 118 Bibliography 121 Appendices 147 Appendix 1. Special 301 Designation Charts 147 Appendix 2. Perceived Intellectual Property Protection Issues Scoring 155 Appendix 2.1. Perceived Intellectual Property Issues—Canada 155 Appendix 2.2. Perceived Intellectual Property Issues—Chile 169 Appendix 2.3. Perceived Intellectual Property Issues—China 183 Appendix 2.4. Perceived Intellectual Property Issues—Peru 211 Appendix 2.5. Perceived Intellectual Property Issues—Vietnam 225 Appendix 3. International Legal Framework 239

Tables and Figures Tables Page Table 1. Canada: Perceived IP Protection Issues, 2001-2014 83 Table 2. Chile: Perceived IP Protection Issues, 2001-2014 89 Table 3. Peru: Perceived IP Protection Issues, 2001-2014 95 Table 4. Vietnam: Perceived IP Protection Issues, 2001-2014 100 Table 5. China: Perceived IP Protection Issues, 2001-2014 111

Figures Page Figure 1. Special 301 Designations: Average, 2001-2014 68 Figure 2. Special 301 Designations: Comparison of Averages 71 Figure 3. U.S. Exports & Imports—Canada, 2001-2013 77 Figure 4. U.S. Balance of Payments—Canada, 2001-2013 77 Figure 5. Canada: Perceived IP Protection Issues, 2001-2014 79 Figure 6. Canada: ECI and LLI Scores, 2001-2014 81 Figure 7. U.S. Exports & Imports—Chile, 2001-2013 85 Figure 8. U.S. Balance of Payments—Chile, 2001-2013 85 Figure 9. Chile: Perceived IP Protection Issues, 2001-2014 87 Figure 10. Chile: ECI and LLI Scores, 2001-2014 88 Figure 11. U.S. Exports & Imports—Peru, 2001-2013 92 Figure 12. U.S. Balance of Payments—Peru, 2001-2013 92 Figure 13. Peru: Perceived IP Protection Issues, 2001-2014 93 Figure 14. Peru: ECI and LLI Scores, 2001-2014 94 Figure 15. U.S. Exports & Imports—Vietnam, 2001-2013 97 Figure 16. U.S. Balance of Payments—Vietnam, 2001-2013 97 Figure 17. Vietnam: Perceived IP Protection Issues, 2001-2014 98 Figure 18. Vietnam: ECI and LLI Scores, 2001-2014 99 Figure 19. U.S. Exports & Imports—China, 2001-2013 103 Figure 20. U.S. Balance of Payments—China, 2001-2013 103 Figure 21. China: Perceived IP Protection Issues, 2001-2014 105 Figure 22. China: ECI and LLI Scores, 2001-2014 109

Abbreviations

ACTA Anti-Counterfeiting Trade Agreement AI Amnesty International ASEAN Association of Southeast Asian Nations AUSFTA Australia-U.S. Free Trade Agreement BIT bilateral investment treaty DMCA U.S. Digital Millennium Copyright Act ECI enforcement capacity issues EU European Union FoD Friends of Development FTA free trade agreement GATT General Agreement on Tariffs and Trade GIPC U.S. Chamber of Commerce Global Intellectual Property Center IP intellectual property IPRs intellectual property rights KORUS Korea-U.S. Free Trade Agreement LLI lacking legal infrastructure MFN most-favored nation principle MNC multi-national corporation NAFTA North American Free Trade Agreement NGO non-governmental organizations NTB non-tariff barrier PhRMA Pharmaceutical Research and Manufacturers of America PTA preferential trade agreement R&D research and development SOPA U.S. Stop Online Piracy Act TPP Trans-Pacific Partnership TPSEP Trans-Pacific Strategic Economic Partnership TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights USPTO U.S. Patent and Trademark Office USSFTA U.S.-Singapore Free Trade Agreement USTR U.S. Trade Representative WIPO World Intellectual Property Organization WTO World Trade Organization

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“… the State Department today is very clear that economic policy is foreign policy and foreign policy is economic policy. And all of our people – the people of China, the people of the United States, really the people of the world – are looking for their fair opportunities… We are in the middle of negotiating now a bilateral investment treaty… We want to have an intellectual/technology trade agreement. We need to make sure we’re protecting intellectual property rights; make sure we’re creating transparency in the regulatory process; make sure that we are raising the bar for everybody in a sense, in terms of the standards by which we do business.” – U.S. Secretary of State John Kerry, Addressing a CEO Roundtable Discussion in Beijing, China, July 2014

I. Introduction

In the United States, individuals identify social status by the intellectual property they wear, drive, read, hear, and even eat, though very few people think of it in such terms. “These days, for example, one can not even eat a simple breakfast without immersing oneself in intellectual property.” Law Professor William P. Alford quipped during a 1994 speech. “Or, at least, so I am regularly reminded, as I pour what I fear may be genetically enhanced milk over my trademarked bananas and flakes made of hybrid corn and sold in trademarked packages covered with copyrighted advertising blather.”1

Despite the lack of general recognition of its importance, intellectual property is arguably one of the most essential assets for the future prosperity and economic welfare of the

United States.

Recognizing the centrality of intellectual property to the economy, the United

States government has placed the issue high on the trade agenda for the last several decades. Indeed, the U.S. has developed numerous tools to promote greater global intellectual property standardization over the last 25 to 30 years. From the standard-

1 Ibid., 12. 2 In the context of this analysis, ‘Multilateral’ and ‘Multilateralism’ refer to the inclusive systemic-level deliberation and agreement upon issues affecting the way that states interact in the international system.

standard setting multilateral2 TRIPS agreement to bilateral3 TRIPS-plus harmonization agreements such as the Korea-U.S. Free Trade Agreement (KORUS FTA), negotiations regarding intellectual property have continued along a trajectory toward greater harmonization of internal policies between states. As harmonization becomes more acute, smaller forums of like-minded states have become more necessary to gain consensus on trading issues. The United States uses bilateral and plurilateral4 forums to promote its trading interests, carefully assessing the issues that need redress in other states. In order to do so effectively, the United States maintains a number of unilateral5 mechanisms for reviewing potentially damaging practices in foreign countries. These unilateral policies, however, are more than just review mechanisms: they have teeth of their own.

In the late 1980s, the United States created a mechanism that would allow the

Office of the United States Trade Representative (USTR) to (1) unilaterally review the trade practices of each of its trading partners, (2) report issues that could impede the access or value of U.S. goods and services within a given state, and (3) apply enforcement measures as necessary. At that time, the supporting congressional members believed that the trade deficit with Japan and other states could be rectified if those states

2 In the context of this analysis, ‘Multilateral’ and ‘Multilateralism’ refer to the inclusive systemic-level deliberation and agreement upon issues affecting the way that states interact in the international system. Examples include TRIPS, GATT/WTO, the United Nations, etc. Disambiguation: Unilateralism, Plurilateralism, Multilateralism. 3 ‘Bilateral’ and ‘Bilateralism’, in this analysis, refer to joint policies negotiated and adopted by two states. Disambiguation: Unilateralism, Plurilateralism, Multilateralism. 4 In this analysis, ‘Plurilateral’ and ‘Plurilateralism’ refer to negotiation within a forum of three or more states or actors regarding issues that affect those negotiating parties. Regional trade agreements are plurilateral agreements. Examples include, the ACTA, ASEAN, APEC, etc. The WTO defines plurilateral agreements as minority interest agreements among several states that seek greater liberalization. See, World Trade Organization, “Understanding the WTO: The Agreements – Plurilaterals: of minority interest.” Disambiguation: Unilateralism, Plurilateralism, Multilateralism. 5 In this analysis, ‘unilateral’ and ‘unilateralism’ refer to the practice of determining the policies that affect other states exclusively within one state. The term also refers to the enforcement of policies that have been determined on the bilateral, plurilateral or multilateral scale without appropriate utilization of international dispute resolution mechanisms. Disambiguation: Unilateralism, Plurilateralism, Multilateralism.

enacted more open and fair trade policies. Jagdish Bhagwati called this deflection to problems in other states “diminished giant syndrome,” or the “national psychology produced by America’s relative decline in the world economy.”6 Specific issues addressed by the Special 301 mechanism include: government procurement practices, customs authority practices, licensure, regulatory requirements, and intellectual property protection. Twenty-five years later, intellectual property has become one of the most emphasized trade issues for the United States.

Since the implementation of this unilateral policy, the threat to intellectual property from weak regimes has grown significantly. It could be argued that this diminished giant syndrome attitude toward Japan was sidelined by the Asian Financial

Crisis, but has returned in the last fifteen years or so redirected at China. In this instance, the threat to intellectual property protection and its tangible results are actual rather than just perceived, and China’s weak system and non-compliance pose a vastly greater threat than Japan’s prior potential. The diminished giant, seeking to secure its interests even as it declines, looks to the rest of Asia to hedge against China’s rise. Ensuring that U.S. interests are protected both in and by Asia-Pacific states establishes a greater potential for the U.S. to secure its own economic future. The Trans-Pacific Partnership Agreement

(TPP) provides a forum for achieving this.

When the United States submitted a high-standards intellectual property provision to the TPP negotiations, scholars and analysts criticized the USTR for introducing such an alienating issue into such an essential strategic partnership. Their criticisms largely do not account for the broader picture of the Asia-Pacific and fail to consider the politics

6 Jagdish Bhagwati, “Aggressive Unilateralism: An Overview,” in Aggressive Unilateralism: America’s 301 Trading Policy and the World Trading System, edited by Jagdish Bhagwati and Hugh T. Patrick (Ann Arbor: University of Michigan Press, 1990), 11.

behind these negotiations and harmonization efforts. In order to address this analytical gap, I have provided an examination the U.S. perceptions of intellectual property protections in the four members of the TPP negotiations with the weakest IP protection regimes: Canada, Chile, Peru, and Vietnam. I have also included an examination of

China’s system for comparison.

Based on the data that I have accumulated, I will make two arguments. First, contrary to recent criticism, the United States is maintaining a strategic outlook regarding the Trans-Pacific Partnership negotiations, of which intellectual property protection is a vital component. Second, it is not possible to examine the Trans-Pacific Partnership and the relationship between the United States and TPP states without also accounting for the role of China as an external driving factor, for all actors involved in the negotiation.

China’s weak IP protection regime poses a greater threat to the United States than the regimes of any of the TPP states. The U.S. may be attempting to establish a new standard in Asia, surrounding China with trade policies that are in line with U.S. interests. In theory, this could provide a foundation for pressuring China to comply with these standards or risk alienation from key neighboring states.

II. Research Objective and Hypotheses

This is an analysis of intellectual property protection regimes in Trans-Pacific

Partnership (TPP) negotiating countries from the perspective of the United States. Given the opaque nature of the current negotiation process, the depth of current TPP assessments is necessarily limited. Given these information restrictions, fresh insight may be gained by instead examining the U.S. perspective of the IP protection system of

trading partners associated with these negotiations. A more accurate representation of

U.S. goals and motivations may emerge from this approach than could be established based on an unsubstantiated analysis of the closed negotiations.

A. Research Objective

The primary research question of this analysis is whether the United States trade agenda regarding intellectual property, as represented specifically by the Office of the

United States Trade Representative and the State Department, is counter to U.S. strategic interests in the Asia-Pacific region. There is some speculation that the aggressive U.S. agenda regarding intellectual property alienates certain members of the TPP negotiations.

Indeed, for this and other reasons, critics have argued that the intellectual property issue is counter to U.S. interests in the Asia-Pacific. However, these authors examined only the internal dynamics of the parties at the negotiating table rather than the climate of the

Asia-Pacific region as a whole. The primary research objective of this study is to take a deeper look at the motivations behind this issue in these U.S. trade relationships, and provide a more balanced discussion of intellectual property in the TPP.

B. Research Questions and Hypotheses

In order to address the strategic logic of the U.S. commitment to the harmonization of international intellectual property rights in the Asia-Pacific, it is necessary to break down the issue into primary points of analysis for each case. In building a profile for each state, I have asked a series of exploratory questions, examining information provided by U.S. agencies and departments to piece together a general understanding of U.S. foreign policy perspectives pertaining to intellectual property in the Asia-Pacific. These questions are as follows:

• What is the general perception of the United States regarding the protection of

intellectual property rights in this state? What level of threat does the United

States perceive regarding the counterfeiting or piracy of intellectual property in

this state? Does the United States perceive that the state has the legal capacity to

disrupt these practices and deter them?

• Has the USTR assigned the state to a USTR Section 301 list within the last 14

years? Why? Has there been a significant change or improvement in IP

protection over the last 14 years?

• What deficiencies has the U.S. focused upon in assessing this state’s IP system?

Are they related to the enforcement capacity or the legal infrastructure of the

state?

• What negotiations have taken place between the U.S. and this state regarding

these issues? Is there a general perception that this state is willing to cooperate

regarding these issues?

In order to obtain a complete picture of these issues, it would be necessary to examine the relationship of the United States with each of these states in a broader framework that incorporates all aspects of their relationship, including trade, diplomacy, and security.

Though I will provide a general background of the U.S. trade relationship with each case study state, I will not devote a substantial amount of space to establishing a comprehensive background of each state as it is beyond the purview of this analysis. In each case I will address each research question in order to build a relatively complete synopsis of each economic relationship. Following completion of my analysis, I will compare the results for each state in an attempt to establish an understanding of which

states in the analysis have the greatest problems protecting intellectual property. This should lay a foundation for assessing the motivations behind the aggressive policies that the United States has adopted, and advance a new line of inquiry that examines a larger system of interaction than has previously been identified.

I hypothesize that the presence of China gives impetus to the aggressiveness of these policies in the Asia-Pacific. Indeed, I would go so far as to hypothesize that China has significantly greater difficulties protecting intellectual property than any of the party states in the TPP negotiations. I hypothesize that the strategic element of this policy will emerge as the analysis comes closer to the present-day and the new threats of the last decade are incorporated.

C. Caveats and Contextualization

First, this analysis seeks to define the perception of the United States, and is not meant to reflect the actual intellectual property protection process of a state in an objective sense. In other words, this analysis is inherently biased and does not attempt to address the perspectives of other states regarding their own intellectual property protection efforts and problems. The conclusions that may be drawn from this analysis are limited to the U.S. perspective only. For example, New Zealand maintained parallel import allowances in the early-to-mid 2000s that the United States perceived as threatening to U.S. intellectual property right holders’ interests.7 If New Zealand were

7 Parallel imports refers to “imports of goods subject to intellectual property protection which enter a country outside of distribution channels authorized by the holder of those rights.” This practice is problematic because it diminishes the capacity of law enforcement entities to track distributors of IP infringing goods and it provides another avenue for counterfeit and pirated goods to enter the market of a particular state. 2001 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 314-319. 2002 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 299-305. 2002 Special 301 Report, Office of the U.S. Trade Representative, 30- 31. 2003 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 279-283.

included as a case study in this analysis, examination of New Zealand’s rationale behind this allowance would not be fully incorporated. It would be assumed that it is a deficiency in New Zealand’s IP protection regime, though New Zealand has done so in the interest of trade liberalization. These results should not be removed from the appropriate context.

Every actor maintains a specific system of perception that provides the basis for rational decision-making and preference formation. In the case of New Zealand, parallel importation may be a rational policy given New Zealand’s trade relationships. But, I am specifically examining the system of perception of the United States regarding intellectual property protection in the Asia-Pacific.

Second, this analysis is not meant to imply that the Trans-Pacific Partnership is solely about China. Rather, it is meant to introduce the role of China as an intervening variable in the formation of these relationships. This analysis is supposed to lay the foundation for examining the political motivations behind the United States’ behavior.

Finally, this is a research project for the fulfillment of a Political Science Master of Arts requirement. It is, first and foremost, a culmination of my academic progress and an exercise of the skills that I have accumulated through this experience. It is an ambitious project that will most likely fall short of a definitive, persuasive argument.

Indeed, I knew little about intellectual property prior to beginning of this project, which will be evident in my desire to maintain focus on the international relations element of this issue rather than the technical aspects that I am not in a position to address at this

time.8 This has been, above all else, an exercise and learning experience for research and intensive writing skills.

III. Background

Intellectual Property (IP) protection has only been a significant priority of the

U.S. trade agenda for the last several decades, but this prioritization has had a significant impact on trade negotiations from the North American Free Trade Agreement (NAFTA) onwards. As arguably the most legally binding and invasive provision of U.S. preferential trade agreements (PTAs), IP protection is also one of the easiest areas of economic relations in which to cheat. The U.S. IP protection priority offers a unique lens for examining the U.S. projection of influence and the protection of U.S. interests abroad.

The coverage of intellectual property in international trade negotiations is indicative of the movement from a regulatory depth of “dos” to a regulatory depth of “do nots,” as one set of analysts phrased it.9 The invasiveness of intellectual property provisions into partner state sovereignty has remained a significant critique of this shift, though it is more subdued in recent years than it was during the Agreement on Trade-

Related Aspects of Intellectual Property Rights (TRIPS) negotiations and the Uruguay

Round of the General Agreement on Tariffs and Trade (GATT) negotiations in the 1980s and 1990s. In this case, analyzing trade negotiations based upon their spectrum of depth is particularly insightful: “In their least invasive form, agreements can simply require that

8 I will be pursuing a J.D. and Master of Science in Business Informatics at Northern Kentucky University Chase Law + Informatics Institute beginning in the Fall of 2014, where my primary interest at this time is Intellectual Property and Innovation Policy. 9 Charan Devereaux, Robert Z. Lawrence, and Michael D. Watkins, Case Studies in U.S. Trade Negotiations – Volume I: Making the Rules (Washington, D.C.: Institute for International Economics, 2006): 37-38.

governments operate without discrimination and transparently. At the other extreme, agreements can seek full policy harmonization. An intermediate approach sets minimum standards that all signatories must adhere to.”10 The United States has sought the establishment of policy harmonization regarding intellectual property protection in its recent PTAs, a policy that has led to a great deal of debate regarding its effects on trade, development, human rights, and legitimacy.

In order to develop a working understanding of intellectual property issues, it is necessary to build the concept from the most basic level to the relevant complexity it introduces into the international system. As such, I will first define intellectual property, its theoretical foundations in economics, and its recent re-conceptualization as a security issue. Then I will provide a general history of the approaches to the internationalization of the IPR issue. I will first examine the introduction of intellectual property protection to the multilateral trade agenda, culminating in the creation of the TRIPS agreement. I will briefly discuss the debates surrounding this multilateral standardization effort and the resulting concessions given to developing countries. And, finally, I will discuss the movement away from multilateralism regarding intellectual property issues, focusing particularly upon the efforts of the United States. This is a political analysis, and this general overview will only brush the surface of an extremely complex economic, social, and legal issue. However, it should provide the general context for analyzing these issues in the Trans-Pacific Partnership negotiations.

A. Defining the Concept: Intellectual Property

The U.S. Patent and Trademark Office (USPTO) offers the most basic definition of intellectual property, as “creations of the mind – creative works or ideas embodied in a

10 Ibid., 10.

form that can be shared or can enable others to recreate, emulate, or manufacture them.”11

Theoretically, intellectual property rights are supposed to “stimulate innovation and creativity by protecting for various lengths of time the invention or creation from imitation or copying.”12 The USPTO recognizes four different protective mechanisms for intellectual property: trade secrets, copyrights, patents, and trademarks. The World

Intellectual Property Organization (WIPO) assigns intellectual property to two categories: copyrights and industrial property. According to the WIPO, copyright includes “literary works, films, music, artistic works, and architectural designs.”13 Industrial property includes “patents for inventions, trademarks, industrial designs and geographic indicators.”14 The WIPO differentiation is antiquated, however, as it does not account for software and related works that fall within the purview of copyright protection and are not distinguishable from industrial property. Thus, I will be utilizing the USPTO four- component definition. Generally speaking, U.S. agencies use USPTO language when discussing IP protection issues, so this definition is consistent within the parameters of this analysis as well. Intellectual property rights are given to creators “to prevent others from using their inventions, designs or other creations – and to use that right to negotiate payment in return for others using them.”15

Intellectual property protections directly facilitate and protect research and development (R&D), making these rights and protections essential for states that rely

11 U.S. Patent and Trademark Office, Glossary. 12 Charles Clift, “Why IPR issues were brought to GATT: a historical perspective on the origins of TRIPS,” in Research Handbook on the Protection of Intellectual Property under WTO Rules: Intellectual Property in the WTO – Volume I, edited by Carlos M. Correa (Northhampton, MA: Edward Elgar Publishing, 2010), 3. 13 World Intellectual Property Organization, What is Intellectual Property? WIPO Publication No. 450(E), 2. 14 Ibid., 2. 15 World Trade Organization, Understanding the WTO: Agreements – Intellectual Property: protection and enforcement.

heavily on R&D for future economic growth, such as the United States.16 Indeed, in

2012, the USPTO estimated that 40.0 million jobs, or 27.7 percent of the jobs in the U.S. economy relied upon IP-intensive industries. In 2010, approximately 34.8 percent of U.S. gross domestic product could be attributed to IP-intensive industries. Indeed, “Between

2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries. Growth in copyright-intensive industries (2.4 percent), patent- intensive industries (2.3 percent), and trademark-intensive industries (1.1 percent) all outpaced gains in non-IP-intensive industries.”17 The importance of intellectual property to the United States and its economic prosperity is evident.

Generally speaking, however, the protection of intellectual property has long-term benefits and short-term costs that can vary across localities, introducing a significant impediment to the international standardization endeavor. Indeed, intellectual property rights are frequently misunderstood in their social context, the negative potential of the short-term costs usurping the discussion of their potential long-term benefits. By giving the right-holders a temporary monopoly on their creations, competition-motivated lawsuits between behemoth companies flourish. The recent Apple Inc. v. Samsung

Electronics Co. Ltd. series, for example, over design elements such as shapes, colors, user interface, and so forth, appears to be companies using intellectual property protection mechanisms to dominate specific markets.18 So-called “David versus Goliath” stories have emerged regarding aggressive lawsuits by large, influential corporations

16 2013 Special 301 Report, Office of the U.S. Trade Representative, 9. See also, Alford, 12. Economic and Statistics Administration and United States Patent and Trademark Office, “Intellectual Property and the U.S. Economy: Industries in Focus,” March 2012. 17 Economic and Statistics Administration and United States Patent and Trademark Office, “Intellectual Property and the U.S. Economy: Industries in Focus,” March 2012, vii. 18 “Q & A: Apple and Samsung Trial,” BBC News, August 24, 2012.

against individuals. The Monsanto cases against seed-saving farmers have begun to receive more attention as genetically modified organisms (GMOs) have come under greater scrutiny in the United States and elsewhere.19 The JSTOR et al. case against the open-access warrior and technology prodigy Aaron Swartz that led to his suicide in 2013 presented a lot of social questions that intellectual property advocates were not prepared to answer: Is it not true that everyone should have access to academic works that may contribute to the overall progress of society regardless of their ability to pay the exorbitant fees that JSTOR and its confederates require? How far should the protection of these assets go? Was it worth disposing of a brilliant, young mind?20 Recent episodes such as these have framed intellectual property protections in negative shades of moral gray in the public eye in the United States.

The recent U.S. Supreme Court decision in Alice v. CLS Bank International provides limitations for software patents, dictating that an idea cannot be patented. The

Alice Corporation attempted to secure “patent claims … designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary.”21 Basically, the Supreme Court determined that “the method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention” and thus are not subject to the royalties demanded from companies utilizing similar techniques.22 The manner of executing a

19 Monsanto, Why does Monsanto sue farms who save seeds? Press Release. See also, Adam Liptak, “Seed Saving Subjects Farmers to Suits Over Patent,” New York Times, November 2, 2003. 20 John Schwartz, “Internet Activist, a Creator of RSS, Is Dead at 26, Apparently a Suicide,” New York Times, January 12, 2013. See also, Laurie Segall, “Aaron Swartz’s Father: He’d be alive today if he was never arrested,” June 27, 2014. Allison Yarrow, “Aaron Swartz Documentary Steers Clear of Suicide Conversation,” Time, June 28, 2014. The documentary is called The Internet’s Own Boy. 21 Alice Corporation, Pty. Ltd. v. CLS Bank International et al., Syllabus 2014, 1-21, Supreme Court of the United States, 13-298. 22 Ibid., 2.

process is not patentable. The decision leaves a great deal of room for interpretation, but it is still a welcome step toward addressing discrepancies in the current system that the

Legislative Branch has been unable to appropriately address thus far.23 But this distaste is hardly restricted to the United States. Indeed, a number of states, including advanced industrial economies (AIEs) such as New Zealand and Australia, are also attempting to curb abuse by banning certain intellectual property protections or restraining the way that these protections are extended.24

Though there is some validity to these arguments regarding the potentially negative effects of the intellectual property system, it is often overlooked that the digitization of our world has undermined the entire protection regime that is currently in place. Online file-sharing programs, such as Napster, Morpheus, Gnutella, Grokster,

Freenet, BitTorrent, and thousands of others, have proliferated with the spread of Internet usage. Political and legal reactions, and general procedural adjustments to the intellectual property protection regime regarding copyrights have been reluctant. Cases brought against Napster, Morpheus and other Internet institutions have created a decentralized network-client black-market approach to Internet intellectual property theft, circumventing easy-handles, and bringing the slow adaptation of legal mechanisms and approaches to these emergent issues to a glacial pace. Even as these issues of violation and their consequences become more problematic, a lack of understanding at the policymaking-level leaves a widening gap between the laws needed to handle these crimes and the ingenuity of the crimes themselves.

23 Klint Finley, “Supreme Court Deals Major Blow to Patent Trolls,” Wired, June 14, 2014. 24 Sunny Peter, “New Zealand Parliament Bans Software Patents; IT Industry Rejoices,” International Business Times, September 1, 2013. Australia Department of Foreign Affairs and Trade, Australia – Certain Measures Concerning Trade Plain Packaging Requirements Applicable to Tobacco Products and Packaging Dispute, July 23, 2012.

Both of these arguments indicate that the current system of protection in the

United States is in need of restructuring. Indeed, even as the United States has utilized its power to champion the protection of intellectual property rights in the international system, scholars have argued that the U.S. approach to intellectual property rights is untenable. However, the internationalization of intellectual property protection has taken place in response to the internationalization of intellectual property violations.

Globalization has made the procurement of illicit goods more commonplace. With the growing number of Internet users, Internet piracy has compounded the problem, diminishing the capacity of a government to act alone on enforcement. Differentiation of intellectual property protection policies across states create barriers to interstate cooperation on these issues, and contributes to the continued growth of the threat posed by counterfeiting and piracy. Intellectual property violations pose threats to public health, economic viability and long-term growth, governance capacity, and even traditional security. Threats to IP in physical and virtual markets now span copyright, trademark, patent, and design, piracy and counterfeiting efforts go beyond 1990s levels and continue to grow. Public opinion in the United States regarding intellectual property protection is based upon only a small portion of the actual issue. Criticisms of the inadequacies of the

U.S. system often fail to account for the broader political issues that contribute to the shortcomings of the system. It is necessary to re-contextualize the intellectual property protection approach as a governance issue within an international state-centric framework of analysis in order to gain a better understanding of the true nature of the issue.

B. The Internationalization of IP Law: The Multilateral Approach

When intellectual property rights emerged as a substantial issue for advanced industrial economies (AIEs) in the 1980s, concurrent and discordant systems of intellectual property protection emerged between AIEs and their trading partners. The

United States, in particular, began to take unilateral action against trading partners that were non-compliant with U.S. standards and potentially abusing the IPRs of U.S. companies and individuals. The GATT regime was not equipped to address these non- tariff trade barriers, leading to the introduction of the TRIPS Agreement and other agreements to the Uruguay Round of the negotiations (1986-1994).25 As a significant step in the progression of multilateral trade negotiations, the TRIPS Agreement successfully created minimum-standards intellectual property rights measures that all World Trade

Organization (WTO)(previously GATT) member states would be obliged to implement.

The pre-existent WIPO provided the institutional mechanism for monitoring and assisting the implementation process.26

The TRIPS Agreement is a minimum-standards agreement meant to foster greater integration and minimize the potential non-tariff trade barriers regarding intellectual property between WTO countries. Variations in state practices regarding IPRs created tension in the international economic system; thus, the TRIPS Agreement was introduced into the Uruguay Round of negotiations. According to the WTO,

The WTO’s TRIPs Agreement is an attempt to narrow the gaps in the way these rights are protected around the world, and to bring them under common international rules. It establishes minimum levels of protection that each government has to give to the intellectual property of fellow WTO members. In

25 Clift, 4-5. 26 Peter K. Yu, “The objectives and principles of the TRIPS agreement,” in Research Handbook on the Protection of Intellectual Property under WTO Rules: Intellectual Property in the WTO – Volume I, edited by Carlos M. Correa (Northhampton, MA: Edward Elgar, 2010), 146-191.

doing so, it strikes a balance between the long-term benefits and possible short- term costs to society.27

This explanation of TRIPS is useful as a general summary of the intent of the agreement.

The rhetoric utilized by the WTO is also useful. The TRIPS Agreement, like most international economic agreements, is based upon the basic principles of nondiscrimination: national treatment and most-favored nation treatment. The national treatment principle (I, Art. 3) provides that each state should treat foreigners and nationals the same way, legally. The most-favored nation (MFN) treatment (I, Art. 4) stipulates each state should treat all of the nationals of WTO states the same as it would the nationals of its greatest trading partner. These basic principles are very difficult for some states to apply to intellectual property protection. According to Article 7 of the

TRIPS Agreement, “The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.”28 Instances where individual states do not perceive the protection of intellectual property rights as fulfilling these objectives can create friction in trade relations between states.

Though the TRIPS Agreement promotes a balanced approach in rhetoric, pro- development scholars and policymakers have argued that TRIPS employs a one-size-fits- all approach to the protection of intellectual property in practice. Developing countries

27 World Trade Organization, Understanding the WTO: The Agreements – Intellectual property protection and enforcement. See also, “Agreement on Trade-Related Aspects of Intellectual Property Rights,” April 15, 1994, Marrakesh Agreement Establishing the World Trade Organization 1(8)(1). 28 “Agreement on Trade-Related Aspects of Intellectual Property Rights,” April 15, 1994, Marrakesh Agreement Establishing the World Trade Organization I(7).

represented through the Friends of Development of the WIPO (FoD) and development scholars alike have called for flexibilities in the implementation of these trade rules, contending that such an approach is neither realistic nor productive. Flexibilities would, they argue, allow states to use the aid of the WIPO to implement and enforce intellectual property rights as they are capable. Latecomer developing countries to the WTO are finding it increasingly difficult to navigate as they are confronted with cumbersome packages of rules that they are expected to implement concurrently, intellectual property protections being among the most substantial of these.29 This situation is true for many developing countries, regardless of their tenure in the international system; it is simply more accentuated in its intensity for latecomers. In other words, the practical application of TRIPS rules can actually be disadvantageous for the implementation of free trade practices for developing countries. Some development scholars have argued that this disadvantage is intentional, and the internationalization of intellectual property protection is one of a number of tools used for covert economic protectionism by developed countries producing the greatest amount of R&D intensive products.30 These rules are meant to continue the exploitation of developing countries and maintain the development gap, they contend.31 One analysis concludes that such policies intertwined with free trade

29 China, for example, has attempted to keep up with the demands for IP protection, but even as steps are taken to address shortcomings, new demands and issues emerge that the new, weak system is not even remotely prepared to handle. This is evident in the U.S. examination of the Chinese IP regime. For an excellent discussion of these issues, see Rohan Kariyawasam, ed., Chinese Intellectual Property and Technology Laws (Northampton, MA: Edward Elgar, 2011). 30 Eugenia Baroncelli, Ekaterina Krivonos, and Marcell Olarreaga, “Trademark Protection or Protectionism?” Review of International Economics 5(1)(2007): 126-145. Joachim Inkmann, Winfried Pohlmeier, and Luca Antonio Ricci, “Where to Patent? Theory and Evidence in International Patenting,” in Institutional Arrangements for Global Economic Integration, edited by Hans-Jürgen Vosgerau (New York: St. Martin’s, 2000), 122-140. 31 F.M. Abbott, “Protecting First World Assets in the Third World: Intellectual Property in the GATT Multilateral Framework,” in Trade-Related Aspects of Intellectual Property, edited by L. Brown and E. Szweda 165(1990): 183-184. See also, Ozay Mehmet, Westernizing the Third World: The Eurocentricity of Economic Development Theories (New York: Routledge, 1995). Ha-Joon Chang, Kicking Away the

may be considered a new ‘conquest by law’ that paves the way for multilateral corporations of developed state origin to more easily expand into, and influence, trade partner states.32

The TRIPS Agreement, proponents argue, is an aspirational agreement seeking to minimize the barriers to trade by creating a friendlier environment of guarantees.

Contrary to the development argument, these scholars and policymakers argue that the standardization of intellectual property protection rules, and subsequent escalation of these rules, may be mutually advantageous for developing and developed countries.

These scholars argue that these standardized rules ultimately lead to economic growth by opening the domestic economy to investment and international credibility. These views reflect the general sentiment that, “If particular rules are well crafted and promote growth, then shouldn’t those rules be applied to all members?”33

Regardless of where scholars may fall in the development debate, there can be no question about the intermestic nature of the internationalization of intellectual property rights. This term, inter-mestic, was coined by Bayless Manning in 1977 to “capture the notion that new economic issues are ‘simultaneously, profoundly and inseparably both

Ladder: Development Strategy in Historical Perspective (London: Anthem, 2002). Richard Peet and Elaine Hardwick, eds., Theories of Development: Contentions, Arguments, Alternatives (New York: Guilford Press, 2009). 32 Chakravarthi Raghavan, Recolonization: GATT, the Uruguay Round & the Third World (London: Third World Network, 1990). I have taken the term ‘conquest by law’ from the historical analysis by Lindsay G. Robertson, Conquest by Law: How the Discovery of America Dispossessed Indigenous Peoples of Their Lands (New York: Oxford University Press, 2005), which discusses the legal processes utilized early in American history to justify the acquisition of lands upon which Native Americans resided. Given that these legal processes and the very concept of formal ownership were unknown to these indigenous groups, Robertson argues, it was relatively easy to create and implement the legal framework for dispossession. Though I would not necessarily draw a direct parallel between the circumstances, the idea of creating legal justification for extraordinary influence is parallel to what Raghavan argued in his 1990 book. 33 Devereaux, Lawrence, and Watkins, 13.

domestic and international’.”34 By the very nature of the implementation process, requiring changes to domestic legislation and governance, internationalization of IPRs creates the potential for both sides of the debate to be correct. On the one hand, it is useful for all states to hold the same standards; on the other hand, states are at different levels of development, and what may be better for one state immediately may be better for another far down the line.

The spectrum within the development debate surrounding intellectual property protection indicates the complexity of the issue and reiterates the observation that the costs and benefits of implementation may vary by state. As these standards are intertwined through issue-linkages and other negotiation mechanisms that are meant to ensure agreement, it becomes more difficult for developing countries to evaluate the potential impact of these issues or implement them should they agree. It becomes impossible to analyze these issues as separate from the entirety of the WTO agreement, which substantially increases the perceived benefits without diminishing the costs of implementation. The implementing states do not have the same resources, the same governance structures, or even the same cultural values regarding property.

Standardization and its more aggressive counterpart, harmonization, will both impact states differently based upon their capabilities. However, despite the definitive shortcomings of TRIPS, the agreement is in place in order to address growing legal disparities between states that were becoming more evident as trade barriers were reduced and trade flows increased. It is essential to maintain a balanced approach in

34 Bayless Manning, “The Congress, the Executive and Intermestic Affairs: Three Proposals,” Foreign Affairs (55)(1977): 306-324, quoted by Oluf Langhelle, Hilmar Rommetvedt, and Arild Aurvåg Farsund, “Toward the intermestic politics of trade: Institutions, ideas, interests, and actors,” in International Trade Negotiations and Domestic Politics: The intermestic politics of trade liberalization, edited by Oluf Langhelle (New York: Routledge, 2014), 1-22.

examining these interactions at the systemic level, accounting for multiple perspectives for states at different levels of development. Examination of the issue and the system within the framework of international relations theory indicates that the interests of economically powerful states shape the system as well as the manifestation of the issue within the system. Even as development-friendly policies have tempered the multilateral efforts to standardize IP protection in the Doha Round, the aggregate system remains unchanged as powerful actors have begun to circumvent the multilateral system in favor of TRIPS-plus plurilateral and bilateral agreements that have subsequently proliferated.

C. The Internationalization of IP Law: Moving Away from Multilateralism?

Though the TRIPS Agreement maintained the aspiration of creating a standardizing body of rules in order to alleviate tensions in the international trading system, its success, and indeed the success of the multilateral trading system in general, has come to a grinding halt as trade issues have become more intermestic and more difficult to negotiate within a large forum. This trend has arguably been mitigated by the rapid proliferation of regional, plurilateral, and bilateral trade agreements. As one of the most powerful economic actors, the United States never abandoned its aggressive unilateral policies regarding intellectual property protections. Following the concessions to developing countries regarding TRIPS flexibilities in the Doha Round, the United

States and many other countries began to seek alternative means of promoting free trade as the WTO stalemate seemed to indicate that the multilateral system was at its present maximum potential.35 Where states feel that their interests are no longer represented

35 Vinod K. Aggarwal, “Bilateral trade agreements in the Asia-Pacific,” in Bilateral Trade Agreements in the Asia Pacific, edited by Vinod K. Aggarwal and Shujiro Urata (New York: Routledge, 2006), 3-26. Richard H. Folsom, Michael Wallace Gordon, John A. Spanogle, and Michael V. Van Alstine, International Trade and Economic Relations in a Nutshell, 5th Edition (St. Paul: West Law, 2012, 204-205.

adequately within the multilateral forum, they have sought alternative forms for negotiation among like-minded states.

For the United States, trade protection mechanisms and unilateral enforcement tools were never removed from circulation. The U.S. trade agenda in trade agreements has continued along a trajectory of greater harmonization and emphasis on high-standards intellectual property protection. The recent U.S. preferential trade agreements negotiated in the Asia-Pacific region have been the most progressive to this end goal, the most recent being the Korea-U.S. Free Trade Agreement (KORUS)(2012). Whether there can be a successful transfer of bilateral provisions and negotiating power to a plurilateral framework remains to be seen. i. U.S. Unilateralism

In the mid- to late-1980s, government officials in the United States began to attribute the growing trade deficit between the U.S. and Japan to inadequate intellectual property protection in Japan.36 Largely as a result of this, an amendment to the Special

301 provision of the Trade Act of 1974 was added to Section 1303 of the Omnibus Trade and Competitiveness Act of 1988.37 This domestically sanctioned unilateral approach to intellectual property enforcement gave the Special 301 approach tools, or “teeth,” for reprimanding non-compliant states.

At present, the Special 301 Report allows the United States to analyze the intellectual property protection mechanisms in place in all states trading with the United

States and dictate whether changes need to be made. If it is determined that a state is not compliant with U.S. standards, they are placed into one of three categories, dependent

36 Bhagwati, 11. 37 Devereaux, Lawrence, and Watkins, 50-52.

upon their willingness to address the perceived issues. The first category, the Watch List, holds states that have inadequate intellectual property protections or excessive intellectual property threats or abuse that are not being adequately addressed. Non-compliant states are moved to the second category, Priority Watch List, which holds states that are working with the United States to resolve intellectual property protection issues but have yet to satisfactorily implement the necessary protections. These states have been issued a warning that they may face coercive trade measures until satisfactory attention has been given to the issue. A delegation of professionals is often offered (and sometimes requested) to aid the partner countries in the transition process. If a state does not satisfactorily address the IP protection issues in accordance with U.S. requests, it is moved to the list for the most heinous offenders, designated a Priority Foreign Country.

For example, the Ukraine was designated as a Priority Foreign Country in the 2013

Report due to its continuous noncompliance with U.S. requests, as well as its inability to implement the changes that the United States suggested.38 This designation is not often used because states generally attempt to work with the United States rather than lose certain trading benefits or receiving trade sanctions. That being said, the USTR also attempts to remedy the relationship prior to this point as well.39 ii. U.S. Bilateralism and Plurilateralism

The United States currently has preferential trade agreements in place with twenty countries, and is attempting to secure agreements with several more. Since the first bilateral economic arrangement was negotiated in 1985, the United States has incorporated some stipulations for intellectual property rights into its trade

38 The PFC status was suspended in 2014 in light of the political situation in Ukraine. 39 2013 Special 301 Report, Office of the U.S. Trade Representative, 28-57.

relationships.40 The complexity of these provisions, however, has gradually increased from agreements to engage in collaborative negotiations regarding tough IP issues to agreements to harmonize IP protection systems. By pursuing bilateral and plurilateral agreements, the United States has a greater potential of reaching agreement with trading partners regarding these complex issues.

Scholars disagree regarding the impact of regionalism, plurilateralism and bilateralism on the multilateral system. On the one hand, regionalism may address area- specific issues that cannot be accommodated within the multilateral framework.

Plurilateralism and regionalism may both promote coalition-building that could contribute to the overall success of negotiations in the multilateral system. Bilateral trade agreements may allow states to delve much more deeply into free trade issues, promoting the WTO’s overall mantra of globalism. On the other hand, these spheres of influence may simultaneously undermine the international trading system by creating concurrent and disparate systems of standards, competing with one another in a scenario that is far more fractious to the international trade system as trade standard coalitions than individual states maintaining different standards.

The United States has begun to negotiate more bilateral trade agreements in recent years. These trade agreements vary in complexity regarding intellectual property protections, from a one-paragraph statement of continued cooperation in the Israel-U.S.

Free Trade Agreement (1985) to thirty-four dedicated pages with additional protections throughout the Korea-U.S. Free Trade Agreement (2007). The negotiation of bilateral trade agreements is a relatively recent phenomenon for the United States, and the U.S. is

40 Though this is not necessarily a phenomenon specific to the United States, it is the focal point of this analysis, the U.S. relationships will be the only ones examined.

far behind other economic powers in the sheer number of trade agreements in place.

These U.S. trade agreements, however, are far more complex in harmonization requirements than comparable agreements between the European Union and external trading partners, for example.41

The United States has successfully negotiated three major plurilateral agreements incorporating intellectual property: the North American Free Trade Agreement

(NAFTA), the Central American-United States Free Trade Agreement (CAFTA-DR), and the Anti-Counterfeiting Trade Agreement (ACTA). NAFTA (1992) is an agreement establishing a regional free trade area between Canada, Mexico, and the United States. Its sixteen-page intellectual property provision has been continuously revised, and remains a source of conflict among these partner countries.42 The CAFTA-DR (2004) is an agreement between the United States, Costa Rica, El Salvador, Guatemala, Honduras,

Nicaragua, and the Dominican Republic. Its thirty-three page intellectual property provision dictates that specific multilateral agreements must be ratified and implemented by each party and that the negotiating states adhere to specific TRIPS-plus standards set by the United States within the agreement, particularly regarding Internet infringement.43

Finally, the ACTA is an ambitious TRIPS-plus, issue-specific agreement that has set the highest standards for intellectual property protection agreed upon in the international system. Negotiated by the United States, Australia, Canada, the European Union, Korea,

Japan, New Zealand, Mexico, Morocco, Singapore, and Switzerland, this Agreement has

41 Anselm Kamperman Sanders, “Intellectual Property, Free Trade Agreements and Economic Development,” Georgia State University Law Review 23(4)(2007): 893-911. See also, Christopher Dent, New Free Trade Agreements in the Asia-Pacific (New York: Palgrave MacMillan, 2006): 27-29. 42 Canada and Mexico have both been Special 301 listed countries for a majority of the 301 Review. General background, Kerry A. Chase, “Economic Interests and Regional Trading Arrangements: The Case of NAFTA,” International Organizations 57(1)(Winter 2003): 137-174. 43 “The Dominican Republic-Central America-United States Free Trade Agreement Summary,” Office of the U.S. Trade Representative, Chapter 15.

not yet been implemented by its eight signatories.44 However, it has the potential to set a new standard amongst AIEs regarding intellectual property protections and Internet governance.45 The ACTA has been particularly important in discussions of the Trans-

Pacific Partnership Agreement negotiations.

The ACTA was proposed in 2007 as an agreement among like-minded actors regarding new IP enforcement mechanisms and protections, particularly on the Internet.

At the insistence of the United States, the negotiations were closed and opaque, similar to a bilateral trade negotiation process. This lack of transparency proved to have severe consequences when a series of draft leaks occurred over the Internet, leading to unwanted speculation and social unrest regarding the potentially adverse impact of the ACTA on citizens’ rights.46 The ACTA was signed in 2012. However, the European Parliament rejected signature and ratification, a decision that had rippling effects across party states.47

Following the somewhat disappointing outcome of the ACTA, though not as a result of it, the United States introduced on exceptional high-standards intellectual property provision into the TPP negotiations.48 Like the ACTA, the TPP is being negotiated in a highly secretive and opaque manner. And, indicative of the era in which

44 The European Union, Mexico, and Switzerland attended the signing ceremony following active participation in negotiations, but did not sign the agreement. 45 “Anti-Counterfeiting Trade Agreement (ACTA),” Office of the U.S. Trade Representative. 46 Sean Flynn, et al., “The Proposal for an Intellectual Property provision in the Trans-Pacific Partnership Agreement,” American University International Law Review 28(1)(2012): 101-202. 47 ACTA: Controversial anti-piracy agreement rejected by EU,” BBC News, July 4, 2012. European Parliament, European Parliament rejects ACTA: Press Release, April 7, 2012. The ACTA did not fail, but rather faced a major setback in its ratification; see 2013 Special 301 Report, Office of the U.S. Trade Representative, 12. The ACTA ultimately failed in achieving the goal of created a standards harmonizing regime incorporating major economic powers in order to achieve eventual relative universality of protective mechanisms. 48 Office of the U.S. Trade Representative, USTR Introduces New Copyright Exceptions and Limitations Provisions of the San Diego TPP Talks: Press Releases, July 3, 2012. Ian F. Fergusson, et al., “The Trans- Pacific Partnership Negotiations and Issues for Congress,” Congressional Research Services Report for Congress, August 21, 2013.

these negotiations are taking place, a series of draft leaks over the Internet have added complications to the negotiation process by opening it to unwanted scrutiny and speculation by excluded groups.49 Scholars and critics of these negotiations have compared the ACTA and the TPP, arguing that the shortcomings of the ACTA can be viewed as an appropriate predictor of the prospects for a successful TPP. In other words, the USTR has not learned from its past mistakes.

However, unlike the ACTA, the TPP is being negotiated amongst a more heterogeneous group of states, differing in development-level, governance structure, and cultural values. Or, put another way, the TPP is a bargaining forum of asymmetrical power dynamics and motivations. The future of the TPP is not so clear. Scholars comparing the ACTA and the TPP in this manner have not appropriately accounted for power differentiation and its impact on the negotiation process. Nevertheless, the ACTA is particularly important in discussing the TPP because six of the eight signatories are now party to the TPP negotiations. Indeed, the primary state instigating the ACTA was not the United States, it was Japan – which is also the depository for the ACTA. Mexico was a negotiating member of the ACTA, though not a signatory. Thus, the predictive power of the ACTA regarding the TPP is actually quite the opposite of scholarly opinion: seven of the twelve parties currently negotiating the TPP have previously negotiated regarding these issues within the ACTA forum. The other five states are Brunei

49 Flynn, et al., 114-116. See also, Lori Wallach and Ben Beachy, “Op-Ed: Obama’s Covert Trade Deal,” New York Times, June 2, 2013. Rachel Armstrong and Masayuki Kitano, “After WTO, expectations grow for Trans-Pacific trade deal,” Reuters U.S., December 9, 2013. Amrutha Gayathri, “New Leaked TPP Documents: WikiLeaks Reveals U.S. Exerting ‘Great Pressure’ for Consensus on Intellectual Property, Other Issues During Secretive Trans-Pacific Partnership Talks,” International Business Times, December 9, 2013. Scrutiny, see Parker Higgins and Maria Sutton, “TPP Leaks Confirms the Worst: U.S. Negotiators Still Trying to Trade Away Internet Freedoms,” Electronic Frontier Foundation, November 13, 2013. Henry Farrell, “Five key questions – and answers – about the leaked TPP text,” Washington Post, November 11, 2013.

Darussalam, Chile, Malaysia, Peru, and Vietnam, the five less developed members of the

TPP negotiations. The dynamics of these negotiations will follow a different course than the ACTA negotiations. iii. The Trans-Pacific Partnership Agreement a. The Trans-Pacific Partnership: What Is It?

The Trans-Pacific Partnership (TPP) is a plurilateral trade negotiation forum between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New

Zealand, Peru, Singapore, the United States, and Vietnam, with continuous involvement from the Republic of Korea, though it is not currently a party. The original Trans-Pacific

Strategic Economic Partnership (TPSEP), the precursor to the TPP, was a liberalization agreement that went into force in 2006 between Brunei Darussalam, Chile, New Zealand, and Singapore. In 2008, the United States, Australia, Peru, and Vietnam joined the negotiation process. Canada and Mexico joined the negotiations in 2012. Japan joined in

2013. There have been multiple formal rounds since negotiations began in 2010, with approximately 29 current chapters under negotiation.50 According to a 2011 statement outlining the broad goals of the TPP, negotiators are seeking to create “a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st century challenges.”51 Five key issues were incorporated into this statement: establishing comprehensive market access, creating a regional agreement, providing resolution to cross-cutting trade issues, addressing new trade challenges, and constructing a living agreement.52

50 Ian F. Fergusson, et al., “The Trans-Pacific Partnership Negotiations and Issues for Congress,” CRS Report for Congress, August 2, 2013, 3. 51 TPP Leader’s Statement, Honolulu, Hawaii, November 12, 2011. 52 Fergusson, et al., 2013.

b. The Trans-Pacific Partnership: Perspectives

As a nascent agreement to which scholars do not have ready access, the TPP is subject to a great deal of speculation and unsubstantiated analysis. In November of 2013,

WikiLeaks published a draft of the intellectual property chapter that had been proposed by the United States, leading to a flood of analyses by scholars and analysts. Dissected from many angles by diverse interest groups, the proposed TPP IP chapter has been criticized from all sides on the basis of human rights, institutional undercutting, development, free trade, and backdoor domestic politics. As the WikiLeaks’ Editor-in-

Chief Julian Assange states in an appropriate summary of these critiques: “If instituted, the TPP’s IP regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons. If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs.”53

1. Human Rights Argument

Assessments from human rights groups condemn the United States and its trading partners for considering standards that would restrict access to health care technologies and pharmaceuticals, claiming that these elements are solely representing the interests of

PhRMA and other corporate groups.54 Amnesty International (AI) USA Executive

Director Suzanne Nossel spoke out against the lack of transparency in 2012, stating, “No one has the right to trade away our hard-fought legal protections for free speech and the

53 “Secret Trans-Pacific Partnership Agreement (TPP) – IP Chapter,” WikiLeaks, November 13, 2013. 54 Christina Bucci, “Responsible Patent Protections: Preserving Public Health Objectives in the Trans- Pacific Partnership Agreement,” Global Business & Development Law Journal 26(2013): 214-234.

right to health, much less to do it behind closed doors.”55 In a briefing submitted to the

Australia Department of Foreign Affairs and Trade (DFAT), a number of nongovernmental organizations outlined the potential impact of a high-standards intellectual property provision such as the one included in the U.S.-Australia Free Trade

Agreement (AUSFTA) on developing countries. The briefing suggested that DFAT provide a voice of reason in the TPP negotiations, advocating flexibilities and a balanced approach to intellectual property protection issues that would reflect the developmental differentiation among the negotiating parties.56 Even beyond medical concerns, the human rights issues attributed to the TPP intellectual property chapter are numerous.

The counterargument to the human rights element of this has been relatively weak, justifying aggressive intellectual property protection as a human rights norm listed in the Universal Declaration of Human Rights (UDHR). But this argument is inherently flawed as it cannot be said that this right should be prioritized above matters of human dignity and welfare. Indeed, it could be argued that the characterization of the TPP IP standards as human rights related is a misinterpretation of the aspirational UDHR Article

27, stating:

(1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancements and its benefits. (2) Everyone has the right to protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.57

55 Sharon Singh, “Trans-Pacific Partnership Trade Agreement Must Uphold Core Principles of Human Rights,” Amnesty International USA Press Release, September 6, 2012. 56 These nongovernmental organizations included: The Public Health Association of Australia (PHAA), the Australian Fair Trade and Investment Network (AFTINET), the Australian Federation of AIDS Organisations (AFAO), Médicins Sans Frontières Australia (Doctors without Borders Australia), the Asia Pacific Network of People Living with HIV (APN+), Palliative Care Australia, and the Australian Medical Students’ Association (AMSA). Deborah Gleeson, “Submission to the Development of Foreign Affairs and Trade: The Trans-Pacific Partnership Agreement, Intellectual Property and Medicines,” October 1, 2013. 57 Universal Declaration of Human Rights, 27(1-2), December 10, 1978.

These two sections of Article 27 together indicate that this is not a clear designation of rights – there is a theoretical line where balance may be found for both the producer and the user. It would be fair to say that this balance has yet to be discovered. In the case of the TPP IP Chapter, the issue of rights is far from simple, and greater attention needs to be given to evaluating the actual impact of this provision on individuals. Looking beyond issues of access, the critique of the TPP IP chapter seems to recede even further into the shadows of repression.

The potential for infringement upon individual rights and liberties is daunting as attempts to curb online piracy indicated in the leaked draft documents would severely restrict freedom of expression and due process, as well as infringe upon the privacy of citizens throughout the TPP party states, if ratified in its alleged form.58 There are some indications from the draft that these policies were not evaluated based on their impact on

Internet users, or created by people who understand how the Internet actually works. The document indicated that many of the policies created by the Digital Millennium

Copyright Act (DMCA) were included in the IP chapter, but they have been stripped of all the safeguards that had been placed in the DMCA as part of the Congressional approval process. In doing so, the TPP IP chapter, as it stands in the draft, would “restrict the ability of Congress to engage in domestic law reform to meet the evolving needs of

American citizens and the innovative technology sectors.”59

One provision within the IP chapter calls for regulation of temporary copies, or treating the temporary copies of material under copyright as IP infringement. The

58 “Article 19 Analysis of the Trans-Pacific Partnership Intellectual Property Chapter,” InfoJustice.org, November 29, 2013. 59 “Trans-Pacific Partnership Agreement,” Electronic Frontier Foundation.

Electronic Frontier Foundation (EFF) critiques this regulatory framework, indicating that

“the language reveals a profound disconnect with the reality of the modern computer, as all routine computer functions rely upon the regular creation of temporary copies of programs and files. As drafted, the related provision carries chilling effects not just on how we behave online, but also on the basic ability of people and companies to use and create on the Web.”60 It is worth noting, however, that this temporary copies issue has been present in discussions of intellectual property protections by the USTR for some time. The regulation of temporary copies actually refers to the ability of enforcement agencies to use the presence of a temporary copy on the RAM of a computer as evidence of reproduction, or copyright violation, in accordance with the Berne Convention, the

WIPO Copyright Treaty (WCT), and the WIPO Performances and Phonograms Treaty

(WPPT).61 This is actually not an unreasonable requirement when appropriately explained and contextualized. Though there is merit to the general argument that the TPP

IP chapter could contravene certain individual rights, it is important not to get carried away.

2. Institutional Undercutting Argument

Similar to arguments against bilateral and plurilateral trade agreements, some scholars have argued that the TPP has the potential to undermine key international institutions and forums. Regarding intellectual property specifically, high-standards non- multilateral agreements could undermine the legitimacy of TRIPS and the authority of the

WIPO system. By creating an exclusive plurilateral forum of differentiated standards, the

TPP agreement would create a group of states diverging from the TRIPS standards,

60 Ibid. 61 2013 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 216.

potentially decreasing the capacity of the dispute resolution mechanism with the WTO for 40% of the global economy.62 Scholars have argued that the United States has far too much invested in the multilateral framework to abandon it now.63 Others have countered that non-multilateral agreements, including the TPP, need not undercut the multilateral forums such as the WTO. Indeed, these agreements can offer an extra layer of regulation and collaboration between like-minded states, building coalitions for greater multilateral effectiveness.64 Both of these perspectives are potentially true, contingent upon how states use their non-multilateral agreements and trade relationships within the multilateral system.

3. Inconsistency Argument

In a CATO Institute panel discussion regarding the TPP IP provision, panelists discussed whose interests were actually being served. K. William Watson, a trade policy analyst at the CATO Institute, argued that the provision is included purely to benefit export-oriented multinational corporations (MNCs) in the United States and that intellectual property should not be considered as a trade liberalization policy. Indeed, he argued, such a provision does more damage to free trade than to promote it.65 This

62 J. Bhagwati and A. Kreuger, eds., The Dangerous Drift to Preferential Trade Agreements (Washington, D.C.: AEI Press, 1995). Amrita Narlikar, The World Trade Organization: A Very Short Introduction (Oxford: Oxford University Press, 2005), 6-7. Hans-Jürgen Vosgerau, ed., Institutional Arrangements for Global Economic Integration (New York: St. Martin’s Press, 2000). 63 Daniel Drezner, All Politics is Global: Explaining the International Regulatory Regimes (Princeton: Princeton University Press, 2007). Brian C. Rathbun, Trust in international cooperation: international security institutions, domestic politics and American multilateralism (New York: Cambridge University Press, 2012). 64 Kamal Soggi and Halis Murat Yaldiz, “Bilateral Trade Agreements and the Feasibility of Multilateral Free Trade,” Review of International Economics 19(2)(May 2011): 356-373. Also, Devereaux, Lawrence, and Watkins, 1-35. Some agreements require the signature and ratification of multilateral agreements as part of the basis for their bilateral and plurilateral agreement, such as the Singapore-Australia Free Trade Agreement, for example, see, 2004 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative. 65Margot Kaminski, Tom Giovanetti, and K. William Watson, Intellectual Property in the Trans-Pacific Partnership: National Interest or Corporate Handout? CATO Institute, March 5, 2014.

argument is consistent with others that define intellectual property protections and internationalization of the issue as a form of protectionism and profiteering. Theories of free trade indicate that policy harmonization is one of the first steps in the progression of liberalization. But, there must be a manner of progression to get to the point of harmonization. It cannot be expedited.

In a complex agreement that encompasses many states at varying levels of development and WTO/TRIPS standardization, this harmonization goal is admittedly problematic and ambitious. There is some question as to where the threshold for harmonization lies. The more intermestic policies are, the more difficult it is to gain a concession and achieve ratification among like-minded states much less diverse ones. I would contend that harmonization of intellectual property protection is not contrary to the

U.S. trade agenda, as Watson states, as it has been a major priority of the U.S. trade agenda for the last twenty-five to thirty years, when the greatest waves of trade liberalization have manifested. Watson has attempted to argue is that aggressive intellectual property protection is contrary to the goals of liberalization. In a sense, this is true. However, liberalization without regulation could have dire consequences for all states involved.

4. Back-Door Politics Argument

Among the most cynical analyses, scholars such as Margot Kaminski have argued that the USTR has gone rogue in its re-interpretation of U.S. laws and the projection of these interpretations into trade agreements. Legislation that has not been adopted in the

United States has been introduced into the TPP. Kaminski argues that a successful TPP, with this intellectual property provision intact, would have an extremely negative effect

on the American public. The qualifiers in this argument, however, are amplified by the fact that Congress has not and most likely will not renew Trade Promotion Authority

(TPA) powers. TPA gives the executive branch greater trading powers regarding trade agreements, removing the potential for Congressional amendment.66 If the TPP is ratified, however, Kaminski argues that the democratic rights that have continuously diminished in the United States would see an even more rapid decline.

5. Introducing a Balanced Analysis of the Unknown

Each of these perspectives conveys that the TPP IP chapter is exceptionally controversial and potentially detrimental to partner states and citizens across the proposed free trade area. There are key points at the most basic level that have yet to be addressed in these analyses that change the context of the agreement, and the context of the provision itself.

First, an issue that has not been broached by scholars and analysts is deliberate issue exaggeration. As this is only a draft and not a finalized document, it is possible that the USTR exaggerated certain controversial issues in order to give the illusion of compromise. This is a common negotiation technique. It allows a state to set the tone on an issue higher than what they would like to achieve in order to make their actual aims seem less controversial. The state that applies this technique may feign attachment to the ridiculous article, reluctantly letting it go in order to gain concessions from other states, and eventually settling on what they had originally set out to achieve. This is just an element of intelligent negotiation. The point is, we do not actually know the negotiation position or strategy of the USTR.

66 Trade Promotion Authority, Office of the U.S. Trade Representative. See also, Alexander Bolton and Vicki Needham, “Reid Shunts TPA onto slow track,” The Hill, January 26, 2014.

Second, scholars and analysts examining the proposed IP chapter of the TPP have yet to indicate what exactly the United States is doing in the Asia-Pacific region. This piece of vital contextual information could provide a great deal of insight into the priorities of the negotiation. In fact, this vital element may be one of the easiest points on which to hypothesize given the dearth of information available regarding the TPP negotiations.

Finally, and related to the second analytical gap, none of these scholars and analysts have addressed the cybersecurity and piracy issue. The discussion of Internet regulation occurs in a vacuum, with no indication of what may have driven this trend.

Considering the significance of the cybersecurity problem, this omission creates the illusion that states are ratcheting up regulations without cause. This should not be completely surprising, as cybersecurity policy analysis is still a relatively uncharted territory. Generally speaking, analysts have yet to examine the larger political picture within which these political changes are occurring.

These last two considerations are the basis of my analysis. Regarding the larger geopolitical framework, I will argue that considering the TPP negotiations without examining the role of China provides an incomplete picture of strategic interests in the region. Relatedly, I will argue that the cyberaggressive behavior of the Chinese

Government in recent years is a driving force behind the upward ratcheting of Internet- related intellectual property protection measures.

Policymakers and analysts alike have yet to fully grasp the issues, or the potential solutions to these issues, related to cybersecurity. In their recent book, Cybersecurity and

Cyberwar: What Everyone Needs to Know, Peter Singer and Allan Friedman describe a

number of awkward scenarios where U.S. policymakers and officials displayed a lack of knowledge, understanding, and interest in cybersecurity issues.67 There is a profound disconnect among scholars and policymakers alike regarding the relationship between cyberespionage and intellectual property protection. The USTR has only recently recognized this connection in reports and discussions of the U.S.-China cyber relationship. The growing complexity of the issue from copyright infringements to large- scale trade secret theft does not bode well for the lag in regulatory governance that is so systematic regarding innovation in U.S. history.68 Fears of large-scale cyberaggression are leading states to consider extreme measures that are “converging into a perfect storm that threatens traditional Internet values of openness, collaboration, innovation, limited governance and free exchange of ideas.”69 The rapidity of progression and change gives little room for policymakers with a vague understanding of the issues to adapt or assess the policy implications of their decisions before their policies are made largely irrelevant.

Thus, there is a significant risk that attempts for governments to exert control over this increasingly insecure unknown at the systemic level might negate the positive impact that the Internet has on the human experience at the individual level. That being said, harmonizing the regulation of the Internet has the potential to counter the exponential increase in security risks posed by the Internet on a global scale.

In order to assess the TPP, we must have a contextual foundation for analyzing it.

We must understand why the United States is proceeding as it is prior to criticizing its

67 Peter W. Singer and Allan Friedman, Cybersecurity and Cyberwar: What Everyone Needs to Know (Oxford: Oxford University Press, 2014), 1. 68 Merritt Roe Smith, Harpers Ferry Armory and the New Technology: The Challenge of Change (Ithaca, NY: Cornell University Press, 1980). 69 Rebekka Bonner, “Arms Race in Cyberspace?” Rebecca Bonner’s Blog, Information Security Project, Yale Law Schooll, May 24, 2011.

priorities. Thus, I am going to provide an analysis of the intellectual property protection regimes in foreign countries related to the TPP negotiations. The hope is that by providing this foundation, it will be possible to make a more informed assessment of the

TPP’s potential from the U.S. perspective.

IV. Theoretical Foundations

In order to lay a foundation for my own theory regarding this analytical framework, I will provide a theoretical context for the issue of intellectual property in international relations by examining theories of power, trade negotiation, and cooperation. First, I will define what is meant in this analysis by power and the projection of influence in the international system. A conceptualization of power is essential for understanding the hypotheses that I have created regarding U.S. trade relationships in the

Asia-Pacific. In examining trade negotiation theories, I will provide a baseline for analyzing specific cases in trade, and the impact of power on each aspect of the approach.

Finally, I will examine cooperation theories in international relations based upon different conceptions of the international system. My own nuanced version of current theories will be introduced in the context of these theories. In this general theoretical context, the role of intellectual property as an issue of power projection should become clear.

In every case of trade negotiations, some manifestation of power is present— economic, military and/or political in nature. The motivations during the negotiation process dictate the desired outcome along the Pareto frontier, and are closely related to the power differentiation among states. The manifestation of power indicates what one state may be able to bring to the bargaining table that will tip the negotiations in their

favor. The motivations driving negotiation indicate what one state desires from another, or the perceived utility of the manifestation of power that the other state is bringing to the bargaining table. Each state may have different motivations for negotiations, and these motivations may diverge from the other negotiating state’s perceived point of power. The manifestation of power may occur in any combination, but certain combinations are arguably more coercive than others.70 In an attempt to understand the position of the

United States regarding intellectual property, we must examine the broader framework of the motivations present in the TPP negotiations, including the international context.

A. Power and Transformations

The most important driver of international relations is power. Power is the most pervasive factor in analyzing the international system, from the smallest details to the most comprehensive elements of the system. This assumption regarding power requires a working concept of power as well as an understanding of its impact on the international system. Thus, I will provide a brief examination of theories of power that will be utilized in this study. I will move from the basic social-level to the system-level of international relations, and attempt to link the two in a cogent manner. This approach to defining power is important in discussing the use of intellectual property in the Asia-Pacific, and the potential long-term impact of a successful Trans-Pacific Partnership on the region’s internal norms.

Michael Mann provides a framework for analyzing power by designating four overlapping sources and organizations for power: ideological power, economic power,

70 Stephen Krasner, “Global Communication and National Power: Life on the Pareto Frontier,” in Neorealism and Neoliberalism: The Contemporary Debate, edited by David A. Baldwin (New York: Columbia University Press, 1993), 239-249.

military power, and political power.71 For the sake of this analysis, ideological power, economic power, and political power will be the primary points of investigation. Military power will be held as a constant in this case, the assumption being that the United States remains the dominant military power in Asia for the time being. These conceptions of power could be considered limiting in the sense that power is indistinct and our very understanding of it is framed by our own human limitations that power has placed upon us, as Anthony Giddens purports.

Mann utilizes three sociological arguments to define ideology as a source of power: meaning, norms, and practices. In order to make sense of our interaction with the world, human beings must associate meaning with observation, “we require concepts and categories of meaning imposed upon sense perceptions.”72 Norms are conceptions of morality or what behavior is correct or acceptable in a society. Practices are conceptions of what is expected of the individual in society. If actors can manipulate the sources of ideological power or legitimate their position based upon pre-existing ideological formations, then the power can be wielded to their own ends.73 Giddens provides an additional, necessary complement to this examination of power through structuration theory.

Structuration theory combines structure and agency. Structure simultaneously enables and constrains agency, and the two elements cannot be separated from one another. The collective of individuals and agents assign meaning to structure, creating rules and resources based on this acceptance and conception of structure. This

71 Michael Mann, “From The Sources of Social Power, Volume I,” in Power, edited by Steven Lukes (New York: New York University Press, 1986), 170. 72 Original emphasis, Ibid., 173-175. 73 Ibid., 173-175.

relationship between the structure and the agent is often taken for granted and implicit.

Giddens argues that resources are used to exercise power and that power should not be considered a resource, an observation that contributes to the complexity of this subject.74

This element of ideological power, and the relationship between structure and agency, is essential in understanding the fundamental changes that transformative efforts, such as the TPP intellectual property provision, require. Indeed, it is essential in understanding the fundamental internal differences that currently existent between the

United States and many of its Asia-Pacific trade collaborators. The former prime minister of Singapore, Lee Kuan Yew, addressed the issue of economic development without political liberalization in Asia as a tribute to “the cultural inclination to respect authority and hard work that allows East Asian countries to pursue liberal economic policies without democracy.”75 ‘Asian values’ have been defined as an “emphasis on a consensual approach, communitarianism rather than individualism, social order harmony, respect for elders, discipline, a paternalistic State and a primary role of government in economic development.”76 Singapore, and numerous other Asia-Pacific states, followed Lee Kuan

Yew’s charismatic leadership to create a sense of pride from these Asian values, against the backdrop of the self-indulgent, debt-laden and lazy persona that had emerged in the

West. Authoritarian democracies, such as Singapore, gain legitimacy from the perceived values that they have successfully redefined to encompass new components to support the goals of the political elites. As the United States makes its entrance into the

74 Anthony Giddens, “The Constitution of Society,” in Power: A Reader, edited by Mark Haugaard (New York: Palgrave, 2002), 146-165. 75 Molly Elgin, “Asian Values: A New Model for Development?” Stanford Journal of East Asian Affairs (Summer 2010): 135-145. 76 Alfred M. Boll, “The Asian Values Debate and its Relevance for International Humanitarian Law,” International Review of the Red Cross, No. 841.

regionalization efforts of the Asia-Pacific, democratization and individualism may create a clash of values.77 But, if the United States is ultimately successful in gaining the support of these governments in creating the TPP, it may have a chance at re-defining or altering values.

In international relations, ideological power could be considered one of the most important aspects of state-to-state interaction and state-system interaction. Alexander

Wendt and the loosely affiliated Constructivist school of thought advocate examination of the international system through this lens, arguing that ideological factors hold more explanatory value for how states interact than material sources of power. Indeed, they argue, the material sources of power in the international system are also ultimately a function of ideological power.78 This is a potentially useful method of examination for this particular perception-based analysis.

In this discussion of international political economy, it is essential to define economic power. As conceived by Michael Mann, economic power is distinctively material, where society is divided according to classes created by the distribution of resources. The manifestation of economic power occurs through “circuits of production, distribution, exchange, and consumption.”79 Within society, economic power can be manifested in numerous ways. This structure dictates how individuals interact with one another and how resources are used. Ideological power can manifest itself here as well, as the distribution of resources may allow those with more legitimacy to dictate the position

77 Peter A. Petri, Michael G. Plummer, and Fan Zhai, The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment, East-West Center Working Paper no. 119, October 24, 2011. See “Figure 1: Average scores of provisions on major issues” for a graphical comparison of the ASEAN versus U.S. trade agenda. 78 Alexander Wendt, Social Theory of International Politics (Cambridge: Cambridge University Press, 1999). 79 Mann, 175-177.

of those with less, and frame the understanding of those with less regarding their relationship with those that have more. This has profound implications for the examination of asymmetrical trade relationships within the international system.

Economic power is a fascinating element of the U.S. geostrategic position, and trade relationships are one medium for examining this element. When it comes to negotiating terms of trade, the United States has several forums for negotiation available: multilateral, plurilateral, and bilateral. Forum shopping between them allows the United

States to determine the best approach for obtaining the greatest value for the protection of

U.S. interests. Each approach has significant strengths and weaknesses, and may be selected based upon the objectives that the United States has in entering into the negotiations.80 It has generally been argued that states seek bilateral and plurilateral negotiations when multilateral processes are stalled or unsatisfactory.81 But, it is less commonly argued that certain issues that are more suited to small-scale negotiation forums are the current issues under negotiation in the TPP. In bilateral and regional negotiations, such as the Trans-Pacific Partnership, the United States has greater bargaining power. It can introduce noneconomic measures, expand the trade agenda to more controversial issues, and create issue linkages to ensure ratification.82 Bargaining power could be defined as gaining “the best possible deal in the negotiations – that is, to obtain the most from its opponent while conceding the least, ceteris paribus.”83 The

United States is arguably the dominant economic power in the TPP, though the entry of

80 For an overview of the strengths and weaknesses of each, see Daniel Drezner, U.S. Trade Strategy: Free versus Fair (Council on Foreign Relations, September 2006), 89-105. 81 Drezner, U.S. Trade Strategy, 91. Narlikar, The World Trade Organization, 99. 82 Drezner, U.S. Trade Strategy, 97-98. Narlikar, The World Trade Organization, 54. 83 S. Meunier, Trading Voices: The European Union in International Commercial Negotiations (Princeton: Princeton University Press, 2005), 40.

Japan into the negotiation process has created some viable opposition to some U.S. interests while bolstering others.

Intricately related to ideological and economic power, political power, according to Mann, “derives from the usefulness of centralized, institutionalized, territorialized regulation of many aspects of social regulations.”84 He restricts the definition of political power to the state, arguing that boundaries are what strengthen the influence of power.

This argument identifies the importance of state leaders and institutional dynamics of a state’s internal system, in a way that is similar to a state level of analysis in international relations theory. Political power is essentially the domestic restriction of all of the other sources of power. Networks organize within a system, influencing the governance of the state and the manifestation of other sources of power as much as it may be possible for power to be influenced by those agents.

As non-tariff trade issues become more complex, the liberalization processes require more domestic regulatory changes, and the cost of trade liberalization increase substantially. The TPP is an important forum for U.S. strategic trade interests because the

United States is setting the agenda for IP. The U.S. is arguably providing the template for policy harmonization regarding intellectual property protection, and as such, projecting political influence on each of the states that are currently negotiating the TPP. Should the

United States be successful in its negotiation of the TPP, the policy interests of the United

States regarding intellectual property will be mirrored into the rest of the Asia-Pacific through its trading partners. This is an element of U.S. soft power that cannot be overlooked, and one of the primary bases for my analysis.

B. International Political Economy and International Relations Theory

84 Mann, 178-179.

In discussing international political economy, and international politics in general, it is necessary to provide substantiated assumptions regarding the framework of analysis.

This is a state-centric analysis that assumes that the U.S. perception of security drives its relationships in the international system. As such, this analysis assumes that there has been a broadening of the U.S. conception of security to include non-traditional elements, such as economic prosperity. i. State-centricity

My analysis is based upon the assumption that the state is still the primary actor in the international system when it comes to making economic policy decisions. The decision-making process of states may be influenced by multinational corporations and other non-governmental actors; however, it is ultimately the state that creates and enacts economic policies.85 This is not to say that non-governmental influence is unimportant; on the contrary, analyzing the influence of these entities can provide incredible insight into the motivations of states. Rather, the state is the most powerful voice for any economic interests associated with the state in the international system. Regarding intellectual property specifically, MNCs, and right holders of all kinds, rely upon the state to offer protection for their IP and to negotiate or defend IP in other states where standards may be lacking. The states make and enforce the rules of trade. The United

States has previously enjoyed a great deal of influence over international trade rules and practices. As Daniel Drezner states, “Great power governments remain the most important actors in establishing and enforcing the rules of the global economy.”86

However, in the past several decades, there has been a decline in liberalization policies as

85 Drezner, All Politics is Global, 3-6. 86 Ibid., xxi, 33-39.

they become more intermestic and the short-term costs of adopting such policies significantly increase. The ability of great powers to use their influence to introduce new trade rules in the multilateral system diminishes as new policies become more invasive.

In small-scale negotiation forums, economic powers such as China and the European

Union provide alternative systems of regulation, particularly regarding intellectual property and other controversial issues, to their trading partners. As the U.S. economy seems to be in a decline, and the dynamic economies of the Asia-Pacific grow exponentially, the importance of the TPP to the U.S. projection of economic power and influence becomes clearer.

The state-centric approach is limiting in that it restricts the kinds of questions that can be examined. For instance, a state-centric approach toward the trade policy of a democratic state such as the United States does not account for the potential impact of public opinion on trade relationships. In analyzing certain trade policies, such as the

Jackson-Vanik Amendment (1974) policies, public opinion and the actions of prominent interest groups can add significant depths to the origins of policy.87 But such nuances delve more deeply into the dynamics of domestic politics than is necessary at this point of analysis. ii. Security

87 The Jackson-Vanik Amendment (1974) was passed in response to the Soviet Union’s exit tax levied against Jews seeking to emigrate from the Soviet Union based upon their level of education. The Jackson- Vanik Amendment stipulates that such “actions of nonmarket economy countries make them ineligible for normal trade relations, programs of credits, credit guarantees, or investment guarantees, or commercial agreements.” 19USC2432(a). See Robert G. Kaufman, “Henry M. Jackson: Freedom’s Champion on Soviet-Israeli Immigration Strife Jackson-Vanik Amendment to Trade Act Aided Israel, Tweaked Soviet Union,” Seattle Post – Intelligencer, October 18, 2000, B6. An individual-level analysis of the circumstances leading up to the Jackson-Vanik Amendment may indicate that the collaborative efforts of influential interests groups provided a substantial internal basis for the Amendment, though the state- and international-level analyses of this period may still provide the most persuasive explanation for this policy. See “Task Force Meets with Senator Jackson and Congressmen Drinan and Vanik,” The Task: A Voice of Christian-Jewish Concern 1(2)(May 1973): 1. The American Jewish Committee Virtual Archive.

Defining security has become more difficult in recent years as the post-Cold War era and the post-911 period in particular have led to the particular phenomenon of the securitization of everything. Government agencies vying for scarce resources to redefine the purview of their organization as some crucial element of security. Political scientists seeking to gain greater recognition for, or legitimation of, their work sometimes redefine their subject matter in terms of security. This is more of an indication of the state of affairs and issue prioritization in the United States than a criticism of government bureaucrats and academics. Much of this adaptability to structure is necessary in order to maintain relevance. With this potential vulnerability in mind, I must contend that intellectual property rights should be examined within a security framework. My analysis assumes that some broadening of the definition of security in governance has taken place since the end of the Cold War, and intellectual property threats have permeated every major level of state security. This is not something that is frequently discussed among scholars, despite the obvious implications that this redefinitions has for this discussion.

Indeed, scholars may address particular aspects of this debate, but have yet to pull them all together in a discussion regarding state interests in this area in general. As an emerging state security issue, the importance of intellectual property protection to the

United States, and indeed most states in the international system, is enormous, whether they are aware of it or not.

1. Defining Security

In order to clearly discuss intellectual property rights as a security issue, I must provide a clear definition of security. As previously noted, this is no easy task. One vague

and inclusive definition of security, “the absence of threats to scarce values.”88 I will define security measures in terms of state-level governance, as protection against any phenomena that may threaten the vitality of a state or a state’s ability to govern effectively. These security threats may be military, economic, social, political, environmental, internal, or external. I will specifically restrict this definition to economic, military, and human security, as other potential security threats may be assigned to these three broad categorizations of security concerns. This broad definition is problematic for several reasons. First, the inclusiveness of the definition exacerbates the issue of what is not a security issue. Suddenly, every issue seems to be a security issue that could potentially undermine the legitimacy of the state. In the strictest theoretical sense, however, this is true. There must be a fluid hierarchy of security interests based upon the power of the state. This hierarchy may shift within each state to emphasize different security threats as they pose greater threats to the state’s ability. This concept of security is congruent with and expands upon the balance of threats, or omnibalancing, argument posed by Steven R. David. David argues that state leaders must balance all of the political forces that they are contending with, both domestic and international, where domestic threats are often more pressing than external threats.89

A second drawback to this broad definition is that it relies upon strong assumptions regarding the role of government and the purpose of governance. This is a deep pool of deliberation in political theory that is outside of the purview of this analysis,

88 Graham Evans and Jeffrey Newnham, Dictionary of International Relations (New York, Penguin, 1998), 490. 89 Steven R. David, “Explaining Third World Alignment,” World Politics 43(2)(January 1991): 233-256. For a similar, but less awkward examination of the concept, see Richard Harknett and Jeffrey A. VanDenBerg, “Alignment Theory and Interrelated Threats: Jordan and the Persian Gulf Crisis,” Security Studies 6(3)(Spring 1997): 112-153.

but requires some brief explanation as such an essential component. The basic, simple definition that I will be employing in this analysis is that the role of the government is to maintain order, where order is defined as “routinized sets of arrangements which maintain stability and also provide for change.”90 This cautious definition of state-level governance is meant to leave room for subjective evaluation of what the role of the state is in a society without providing a normative basis for what a state government should look like. Such an assumption would require a much deeper analysis and justification than I am willing to provide at this stage.

2. The Security in Intellectual Property Rights Protection

Intellectual property protection is an emergent security issue in the sense that governments are only beginning to realize that intellectual property abuses threaten their security as well as commercial interests. The case must be made for re-defining intellectual property rights in terms of economic, military, and human security. These broad headings of security are not mutually exclusive, with security issues such as intellectual property protection spanning multiple areas and multiple levels of threat.

Intellectual property rights are considered essential for continuous economic growth and stability, or economic security, for advanced economies that are dependent upon R&D and innovation.91 As Sheila R. Ronis poignantly stated in the preface of her

2011 edited volume,

Economic security is a major element of national security, even as borders are less important than ever. No matter how we look at national security, there can be no question of the need to include the economic viability of our nation. Without capital, there is no business; without business, there is no profit; without profit,

90 Evans and Newnham, Dictionary of International Relations, 209. 91 Joseph J. Romm, Defining National Security: The Nonmilitary Aspects (New York: Council on Foreign Relations, 1993), 56.

there are no jobs. And without jobs, there are no taxes, and there is no military capability.92

Though this causal chain has some contentious links, the overall message conveyed is that economic security is at the foundation of national security for the United States.

Even as military procurement is considered the traditional element of obtaining security, it cannot be obtained and maintained without economic and human security. The abuse of intellectual property rights has the potential to threaten every aspect of Ronis’s causal chain, directly and indirectly, and yet is infrequently examined from this perspective.

Human security, though not a focus of this analysis, is particularly important in discussing pharmaceutical and medical developments in order to foster continuous R&D and potentially contribute to a better quality of life for all. On the other hand, protection of these R&D intensive products can restrict access to these products for those that most desperately need them.93 Indeed, this particular issue is where the heaviest short-term costs to society are located in implementing intellectual property protection measures.

Traditional, military security issues regarding intellectual property protection have become more and more substantial as cyber aggression and Internet vulnerabilities have opened a new vector of threats. Regarding intellectual property specifically, cyber espionage may be conducted to obtain and exploit information at multiple levels, including defense contracting firms, intelligence agencies, and infrastructural

92 Sheila Ronis, ed., Economic Security: Neglected Dimension of National Security? Washington, D.C.: Center for Strategic Conferencing Institute for National Strategic Studies, 2010), viii. 93 Susan K. Sell, “The Quest for Global Governance in Intellectual Property and Public Health: Structural, Discursive, and Institutional Dimensions,” Temple Law Review 77(2004): 363-399. See also, F.M. and J. Watal, “Post-TRIPS Options for Access to Patented Medicines in Developing Nations,” Journal of International Economic Law 15(4)(2002): 913-939. Jerome H. Riechman, “Compulsory licensing of patented pharmaceutical inventions: evaluating the options,” in Research Handbook on the Protection of Intellectual Property Rights under WTO Rules: Intellectual Property in the WTO, Volume I, edited by Carlos M. Correa (Northhampton, MA: Edward Elgar, 2010), 589-622.

enterprises.94 Indeed, it would not be an exaggeration to say that the greatest threat to intellectual property rights stems from the Internet and the world of possibilities that the amazing technologies associated with it present.

Though computers and the Internet have been incredibly transformative innovations in many positive ways, as they have become central to societal functions and order they have also become an incredible threat to national security. In February 2003, the U.S. National Strategy to Secure Cyberspace stated,

our nation’s critical infrastructures are composed of public and private institutions in the sectors of agriculture, food, water, public health, emergency services, government, defense industrial base, information and telecommunications, energy, transportation, banking, finance, chemicals, and hazardous materials, and postal and shipping. Cyberspace is their nervous system – the control system of our country.95

Securing cyberspace has become a chief concern for states across the globe, each state attempting to secure their situation individually in a system where there are no borders. In a 2005 analysis, the International Telecommunications Union (ITU) defined cybersecurity based upon its common usage across the national initiatives to encompass three things:

1. A set of activities and other measures, technical and non-technical, intended to protect computers, computer networks, related hardware and devices software, and information they contain and communicate, including software and data, as well as other elements of cyberspace, from all threats, including threats to the national security;

94 David Levine, “Bring in the nerds: secrecy, national security, and the creation of international intellectual property law,” Cardozo Arts & Entertainment Law Journal 30(2)(2012): 105-152. See also, Eva Andrejcic and Barry Horowitz, “A Macro-Economic Framework for Evaluation of Cyber Security Risks Related to Protection of Intellectual Property,” Risk Analysis 26(4)(2006): 907-923. James A Lewis, “China’s Economic Espionage: Why it Worked in the Past But It Won’t in the Future,” Foreign Affairs, November 13, 2012. Hanson Hu Ji, “Piracy, Prejudice and Profit: A Perspective from U.S.-China Intellectual Property Rights Disputes,” The Journal of World Intellectual Property 9(6)(2006): 727-746. Kenneth G. Lieberthal and Peter W. Singer, “Cybersecurity and U.S.-China Relations,” 21st Century Defense Initiative at the John L. Thornton China Center at Brookings (2012). 95 Senate of the United States, Cybersecurity Act of 2009, April 1, 2009.

2. The degree of protection resulting from the application of these activities and measures; 3. The associated field of professional endeavor, including research and analysis, aimed at implementing those activities and improving their quality.96

This definition of cybersecurity begins to convey the relationship between cybersecurity and intellectual property. As my analysis will show, governments have yet to figure out the best legal mechanisms for handling cybersecurity issues. The protection of intellectual property is one of the few current mechanisms at the disposal of governments to combat cybersecurity threats. Yet, it is difficult for states to determine the best way to utilize or alter the legal mechanisms available. Through policy harmonization among states, intellectual property protection mechanisms could become one of the most powerful legal tools for protecting this incredibly insecure threat vector. At the heart of the cybersecurity threats debate, and indeed the debate surrounding the internationalization of intellectual property threats, is China.

C. International Relations Theory and the Rise of China

The TPP is the newest forum for the intellectual property harmonization trade agenda that the United States has instigated. If the TPP succeeds, the U.S. will have created the most comprehensive plurilateral intellectual property standard harmonization agreement established among diverse states in the international system. Indeed, the intellectual property standards set in recent bilateral agreements and allegedly proposed in the TPP negotiations are even aspirational for the United States. Among Asia-Pacific trade scholars, the TPP is perceived as a vehicle for the consolidation of the Asia-Pacific

‘Noodle-Bowl’ of standards and has arisen as a result of the rapid proliferation of free

96 Myriam Dunn, A Comparative Analysis of Cybersecurity Initiatives Worldwide, International Telecommunications Union, WSIS Thematic Meeting on Cybersecurity, CYB/05, June 10, 2005.

trade agreements in the region.97 By taking part in the TPP, it has been argued, the United

States is attempting to maintain a presence in Asia that will allow the U.S. to cautiously balance the growing influence of China and give the U.S. an economic advantage or stake in the rapid development of the diverse set of ‘middle power’ states in the Asia-Pacific.98

It could be argued that the greatest force for integration and negotiation with the United

States among Asia-Pacific states is an overwhelming desire for a balance of power in the region.99

There is an extensive body of literature available regarding the policies that scholars believe that the U.S. should implement in order to address China’s rise to power.

Among these policy prescriptions, it appears that the United States has implemented the middle-ground strategy of hedging through the current manifestation of the strategic pivot to Asia.100 These theories roughly correspond to a spectrum of aggression that ranges from accommodation to military confrontation, or direct conflict. At the least aggressive end of the policy spectrum, including prescriptions of accommodation (or bandwagoning) or engagement, scholars argue that China’s rapid ascension to power is checked by internal problems such as per capita GDP, an aging population, growing regional and social inequalities, resource shortages, pollution, and so forth.101 They

97 Christopher Dent, New Free Trade Agreements in the Asia-Pacific (New York: Palgrave MacMillan, 2006). See also, Sanchita Basu Das, “RCEP and TPP: Comparison and Concerns,” ISEAS, January 7, 2013. Richard E. Feinberg, “U.S. trade agreements in the Asia-Pacific,” in Bilateral Trade Agreements in the Asia-Pacific: Origins, Evolution, and Implications, edited by Vinod K. Aggarwal and Shujiro Urata (New York: Routledge, 2006), 95-116. 98 Ashley J. Tellis, “Balancing without Containment: An American Strategy for Managing China,” Carnegie Endowment for International Peace, Report, January 22, 2014. 99 Liselotte Odgaard, The Balance of Power in Asia-Pacific Security: U.S.-China policies on regional order (New York: Routledge, 2007), 4-13. 100 Choi Kang, “A Changing East Asia and U.S. Foreign Policy: Current Issues in U.S.-ROK Relations,” Council on Foreign Relations, Report, May 2012. Hillary Clinton, “America’s Pacific Century,” Foreign Policy 189 (November 2011): 56-63. 101 Jeffrey A. Bader and Richard C. Bush III, “Contending with the Rise of China: Build on Three Decades of Progress,” Opportunity 08: Independent Ideas for Our Next President (Washington, D.C.: The

essentially argue that China will be more inclined to implement an omnibalancing strategy than to interact with the international system as a revisionist state.102 The least aggressive strategy, accommodation, employs the assumption that China is not a threat to the current world order and that the United States should welcome China’s rise and enjoy

(or bandwagon on) the prosperity, or absolute gains, that the rise of China brings to the world.103 The greatest advocacy of this policy came before broad recognition of the tense cyberspace relationship between the United States and China.104 Generally speaking, accommodation is an inflexible policy that assumes a positional relationship between the

United States and China rather than accounting for their differences. As such, it does not offer policy alternatives should China’s rise become more aggressive than anticipated.

Advocates of the slightly more aggressive, but still optimistic, engagement policies argue that the United States should encourage China in a direction that favors the status quo. In other words, the United States should urge China to become what former

Deputy Secretary of State Robert Zoellick called a “responsible stakeholder.”105 This policy prescription assumes that the United States and China will hold the same values as

Brookings Institution, 2008). See also, Zheng Bijian, “China’s ‘Peaceful Rise’ to Great-Power Status,” Foreign Affairs 84(5)(2005): 18-24. 102 David, “Explaining Third World Alignment,” 233-256. Harknett and VanDenBerg, “Alignment Theory and Interrelated Threats,” 112-153. 103 Bijian, “China’s ‘Peaceful Rise’,” 18-24.See also, Yiwei Wang, “China’s Rise,” Harvard Business Review 29(1)(Spring 2007): 56-59. C. Fred Bergsten, China’s Rise: Challenges and Opportunities (Washington, D.C.: Institute for International Economics, 2008). 104 Lieberthal and Singer, “Cybersecurity and U.S.-China Relations.” See also, Annie Lowrey, “U.S. and China to Discuss Investment Treaty, but Cybersecurity is a Concern,” New York Times, July 11, 2013. U.S.-China Economic and Security Review Commission, “Roundtable: U.S.-China Cybersecurity Issues,” (Washington, D.C.: July 11, 2013). 105 Bader and Bush, “Contending with the Rise of China,” 5. Evan S. Medieros, “Is Beijing Ready for Global Leadership?” Current History (September 2009): 250-256. Xiaoming Huang and Robert G. Putnam, eds., China and the International System: Becoming a World Power (New York: Routledge, 2013). Pasha L. Hsieh, “China’s Development of International Economic Law and WTO Legal Capacity Building,” Journal of International Economic Law 13(4)(2010): 997-1036. Robert Schweller, “Bandwagoning for Profit: Bringing the Revisionist State Back In,” International Security 19(1)(Summer 1994): 72-107. Kariyawasam, Chinese Intellectual Property and Technology Laws.

current leaders in the international system, an assumption that has been broadly contested.106 The policy relies upon the strength of economic interdependence and international institutions as the root of peace between the United States and China, an assumption that has yet to be proven in instances where interests do not converge and the economic relationship troughs. Like accommodation, engagement policy does not allow enough flexibility to be a viable policy option without bolstering the enforcement capabilities of the international institutions.

At the other end of the spectrum, the most aggressive policies include direct confrontation and containment. As the most aggressive policy option, direct confrontation is not considered an advantageous route for the United States to take without exploring the other policy options first. The U.S. could, theoretically, slip along the spectrum to this point of confrontation. Less aggressive than its direct confrontation counterpart, the policy of containment, or balancing, requires the encirclement of China by diplomatic, economic, and political allies geographically, ideologically, and militarily. This policy is predicated on the U.S. maintaining military superiority over China, an inherently materialistic assumption that does not necessarily account for economic interdependence and its relationship with military power.107 Such a policy assumes that China will challenge the power and position of the United States in the international system, and that

106 Odgaard, The Balance of Power in Asia-Pacific Security. Robert Ross, Øystein Tunsjø, and Zhang Tousheng, eds., US-China-EU Relations: Managing the New World Order (New York: Routledge, 2010). Henry R. Nau and Deepa Ollapally, eds., Worldviews of Aspiring Powers: Domestic Foreign Policy Debates in China, India, Iran, Japan, and Russia (Oxford: Oxford University Press, 2012). It should be noted that most who argue against this assumption of engagement policy do not do so on the grounds that China disagrees with the current international system of norms; but, rather, that the United States has circumvented norms of the international system that China seeks to maintain. This is kin to the argument that the current international system cannot restrain great powers. 107 Odgaard, The Balance of Power in Asia-Pacific Security. See also, John Mearsheimer, “China’s ‘Unpeaceful Rise’,” Current History 105(690)(April 2006): 160-162. Aaron Friedberg, A Contest for Supremacy: China, America, and the Struggle for Mastery in Asia (New York: W.W. Norton, 2012).

it will aggressively project its influence as it acquires more power. This is problematic because this conception of China’s imminent action is based upon Western conceptions and models of systemic interaction. This introduces the conundrum of whether interaction with the westernized international system will transform China into a western-style great power to which these conceptions can be appropriately applied. Though containment policies would have very different effects than accommodation or engagement, the inflexibility of treating China as an immediate enemy as it emerges is just as restrictive to

U.S. foreign policy, if not more so.

Finally, the most flexible, middle ground aggressive policy available is hedging, a policy that the United States has arguably begun to implement. Hedging incorporates elements of optimistic engagement and cautious containment policies. It allows the

United States to engage China and encourage responsible stakeholdership in the status quo system, discouraging China from being a revisionist state by rewarding China through economic relationships and gains from the system. Simultaneously, hedging allows the United States to hold alliances and bolster relationships in the region in order to swiftly react to the implementation of threatening policies in China.108 In summary, hedging allows the U.S. to initiate a concerted effort to restrain China should institutional restraints fail. The flexibility of this policy is also its greatest weakness – it is a delicate balance. If the rhetoric of the United States proclaims policies of engagement, but U.S.

108 Michael Green, “Constructing a Successful China Strategy: Promote Balance and Democratic Ideals in Asia,” Opportunity 08: Independent Ideas for Our Next President (Washington, D.C.: The Brookings Institution, 2007). See also, Christopher Layne, “Kant or Can’t: The Myth of Democratic Peace,” International Security 19(2)(Autumn 1994): 5-49. Min Gyo Koo, “US Approaches to the Trade-Security Nexus in East Asia: From Securitization to Resecuritization,” Asian Perspectives 35(2011): 37-57. Kun- Chin Lin, “Rhetoric or Vision?: Chinese Response to U.S. Unilateralism,” in Northeast Asia: Ripe for Integration? Edited by Vinod K. Aggarwal, et al. (Berlin: Springer, 2009): 63-107. Eul-Soo Pang, “Embedding Security into Free Trade: The Case of the United States-Singapore Free Trade Agreement,” Contemporary Southeast Asia 29(1)(April 2007).

behavior can be designated as containment oriented, the trust between the two states would diminish significantly. Conversely, if the U.S. appeared to be engaging China while employing containment rhetoric, it would appear weak. If this balance can be successfully maintained, hedging is an open-ended foreign policy that allows for the greatest flexibilities in tools and contingencies. In order to pursue a hedging policy, the

United States must build and strengthen relationships with Asia-Pacific states.

Beyond this political need, it has been argued that the United States is rapidly diminishing in power, particularly economically.109 The U.S. does not wish to be left behind in Asian economic dynamism, nor does it wish to follow; the standing position of power for the United States dictates that it should lead. Relative to the states involved in the TPP negotiations, the United States is still one of the leading powers. The question becomes, how does U.S. power manifest itself in the negotiations? Does the U.S. seek to use these states to bolster its own position in the region and the international system?

Given the U.S. need for these relationships in the Asia-Pacific both politically and economically, superficial evaluation of the TPP negotiations make it seem odd that the

United States would include such an ambitious and contentious high-standards intellectual property provision that could so easily fracture the negotiation process. There has been the prediction that the inclusion of such extreme measures as those indicated in the draft leak alienate the U.S. from the other members of the negotiation process. Ph.D.

Candidate Gabriel Michael from George Washington University has provided unique and invaluable visualizations of the TPP intellectual property chapter’s impact, indicating that both the U.S. and Japan, as newcomers to the trade agreements in the Asia-Pacific, do not

109 Immanuel Wallerstein, The Decline of American Power: The U.S. in a Chaotic World (New York: New Press, 2011). Jessica Matthews, “Power Shifts,” Foreign Affairs (January/February 1997). Ian Brenner and Nouriel Roubini, “A G-Zero World,” Foreign Affairs (March/April 2011).

have the same negotiating ties as the other states. Using a multidimensional scaling technique, Michael has provided a graphical representation of the orientation of states to one another on certain issues that indicates the U.S. has drastically different expectations for the negotiations than the rest of the states involved in the TPP.110 When it comes to the question of power, then, it will be interesting to see how much the U.S. is able to pull the other states toward its own position. It remains to be seen whether the security dynamics of the region are enough to cause party states to slide along the Pareto frontier to create value in advancing U.S. interests in the negotiations. It could be argued that the

TPP is a strategic alliance disguised as a trade agreement, making the motivations and factors of negotiation increasingly favorable for the United States.111

This view would be consistent with security analyses of the Asia-Pacific region indicating that these middle power states seek a balance of power in the region.

According to the English-School realist Liselotte Odgaard, the hierarchical international system is comprised of primary states that are major powers and middle powers. The middle powers react to the major powers and are more likely to build coalitions to maintain the interest of the major powers. The major powers, in turn need these middle powers in order to maintain their own position of power and gain compliance in the region.112 Indeed, there is a great deal of evidence to suggest that Asia-Pacific states seek to balance Chinese economic power as much as its growing diplomatic, military and

110 Gabriel J. Michael and Henry Farrell, “Gabriel J. Michael: The TPP is not an agreement among like- minded countries,” Washington Post, December 12, 2013. 111 Das, “RCEP and TPP.” Sophie Song, “Trans-Pacific Partnership (TPP) Trade Agreement Will Force China’s Hand in Domestic Economic Reforms [Analysis],” International Business Times, November 1, 2013. Jane Kelsey, “U.S.-China Relations and the Geopolitics of the Trans-Pacific Partnership (TPPA),” Centre for Research on Globalization, Third World Resurgence 275 (July 1, 2013). Regarding altered negotiation motivations, see Stephen Walt, The Origin of Alliances (Ithaca: Cornell University Press, 1990), 147-180. Glenn Snyder, Alliance Politics (Ithaca: Cornell University Press, 2007), 43-79. 112 Odgaard, The Balance of Power in Asia-Pacific Security, 8-9, 56-58.

ideological influences in the region. In many ways, these states seek an intermediary position between these two states that the middle power states perceive as the most beneficial to stability and prosperity in the region. This is, in some ways, the other side of the equation in containment policy – the reasoning for middle power compliance with such policies implemented by great powers.

One potential criticism of this hypothesis regarding China’s unspoken role in the

TPP negotiations and in the IP provision specifically is that it is overly simplistic. This argument resembles a core-versus-periphery style examination in some ways, potentially dismissing states whose position should not be dictated by their orientation to one another. However, this hypothesis does not preclude the possibility that other forces are simultaneously influencing these relationships and policies in the Asia-Pacific. Rather, I am focusing on this one particular factor in order to determine the extent to which the

TPP IP chapter is so aggressive because of the importance of the issue in the U.S.-China relationship.

V. Methodological Approach

A. Methods

This is a qualitative analysis designed to elucidate the U.S. perception of reintellectual property protection regimes in select foreign countries. I have employed a process tracing approach113 wherein I examine the impact of U.S. foreign policy regarding intellectual property on the protective regimes of selected foreign countries.

113 Alexander L. George and Andrew Bennett, Case Studies and Theory Development in the Social Sciences (Cambridge, MA: MIT Press, 2005), 205-232.

This is admittedly an oversimplification of a very complex issue. The goal is to establish a foundation for understanding the evolution of intellectual property protections in a given state over a fourteen-year period (2001-2014). By doing so, I hope to provide a foundation for examining the U.S. threat perception generated by weak intellectual property regimes of trading partners. The exercise may provide an appropriate foundation for further research.

B. Case Selection

Figure 1. Special 301 Designations Average, 2001-2014

3 2.5 2 1.5 1 0.5 Special 301 Designations 0 Average, 2001-2014 Peru Chile Chile Japan Japan China China Korea Korea Brunei Brunei Canada Canada Mexico Mexico Vietnam Vietnam Australia Australia Malaysia Singapore Singapore New Zealand New Zealand

Given the types of questions that I have posed, it would be most desirable to conduct a comprehensive examination of all TPP and related states. However, given the advanced position of a number of the states following TRIPS implementation, value- added from additional cases is relatively minimal. As an example, I will offer a brief comparison of Chile and Australia. Chile lacks an effective intellectual property enforcement system. Regarding enforcement capacity issues, Chile has a lack of resources and training as well as continuous coordination problems between government agencies, among other things. The legal infrastructure in Chile is unclear, the potential

penalties are non-deterrent, and the laws offer only partial coverage. Right holders seeking redress for violations in Chile may be unable to navigate the legal system to determine their rights much less achieve a desirable outcome from pursuing violators.

These right holders must often bear the burdens of pursuit, making the cost of retributive action greater than the benefit. Australia, by comparison, has interpreted certain intellectual property protection measures in ways that the United States perceives as potentially problematic for specific industries. The legal infrastructure is in place, and the enforcement capacity of the state is sufficient, but the Australian Government has reinterpreted certain laws based on its own interests. Though this provides an interesting point of analysis, the intellectual property protection situation in Australia is vastly different than the situation in Chile. When it comes to determining the threat perceptions from weak intellectual property regimes, it makes sense to exclude those regimes that are not weak. Thus, I have devised a method for examining the most insightful cases among the set.

By examining the Special 301 designations from 2001 to 2014, it is possible to quantify the perception of intellectual property protection problems based upon a state’s designation. This is a simplistic approach, as there may be wide variation between states within one particular category, but it provides a useful starting point for this analysis. I have scored each of the designations as follows:

• 1 – Watch List

• 2 – Priority Watch List

• 3 – Priority Foreign Country

The averages of these scores across the fourteen-year period allow me to make a sensible selection of cases based on the perception of the level of intellectual property protection issues. Figure 1 shows these averages. If a country has an average score of 1 or more, I have included it in this analysis. As a result, my cases in this analysis are Canada, Chile,

China, Peru, and Vietnam. This provides a diverse set of cases, with different levels of development and different relationships with the United States. I will provide a brief overview of the states that were not included as cases in the analysis in the introduction to the case profiles below.

C. Data

In compiling the data, I have specifically examined documents provided by the

U.S. agencies and departments that are associated with the creation and maintenance of trade relationships. As such, I have closely examined the Office of the U.S. Trade

Representative documents and relevant congressional reports. I have included documents from the Department of Commerce, the Department of Defense, and the Department of

State, as necessary. Greater emphasis on these bureaucratic layers would provide a glimpse into the internal conflicts of the United States government as much as a general profile of each state, providing a useful element for further research. But, this goes beyond the purpose of this analysis.

I have restricted this analysis to the years 2001 to 2014, as the TRIPS Agreement came into force for the majority of the developing countries involved in the TPP January

1, 2000. The Special 301 Report designations from 1989 to 2014 compared with the 2000 to 2014 data provide an interesting comparison in Figure 2 below. All of the cases selected for this analysis saw an increase in score from the 1989-2014 averages to the

2001-2014 averages. Though Malaysia and Mexico could be considered close contenders for this analysis, I retained 1 as the cutoff point for the sake of simplicity.

Figure 2. Special 301 Designation Averages Comparison

3 2.5 2 1.5 Special 301 Designation 1 Averages, 1989-2014 0.5 Special 301 Designation 0 Averages, 2001-2014

i. Sources of Data

The majority of my data has been collected from the U.S. Trade Representative annual reports. This was meant to be a cautious approach to the data presented, as it was hoped that there would be a degree of uniformity across reports, allowing for more accurate comparisons. Unfortunately, this was not the case. Trade reports differ in coverage and depth depending upon the Administration and the United States Trade

Representative. This should not come as a surprise. It does not necessarily interfere with the attempted measurement of perception considering that different Administrations and

Trade Representatives may define U.S. trade interests differently. By examining the years

2001 to 2014, I will only examine the Bush Administration and the Obama

Administration. During this fourteen-year period, there were five U.S. Trade

Representatives: Michael Froman (2013- ), Ronald Kirk (2009-2013), Susan C. Schwab

(2006-2009), Rob Portman (2005-2006), and Robert B. Zoellick (2001-2005).

This analysis will only provide an understanding of the U.S. perspective of these issues in trading partners and in the TPP. I have specifically examined the Special 301

Reports from 2001 to 2014, the National Trade Estimate Report on Foreign Trade

Barriers (NTE Report) from 2001 to 2014, the Trade Policy Agenda and Annual Reports from 2001 to 2014, the relevant congressional hearings and reports, and any other relevant documentation. The Special 301 Reports span the reporting year from May of the previous year to April of the year provided. So the 2001 Special 301 includes information regarding May 2000 to April 2001. ii. Coding and Interpreting the Data

In order to make sense of the progression of the intellectual property protection regimes in each state, I have quantified the problems indicated in U.S. reports to create an index of Perceived IP Protection Issues. Within this variable there are two categories of issues: enforcement capacity issues (ECI) and lacking legal infrastructure (LLI). Each of these categories has a series of potential descriptors.

Each descriptor can be given a score of 0 or 1, where 0 indicates no issue within the category and 1 indicates that there is an issue within the category. Following the examination and categorization of each year’s grievances for each country, I combined the scores to create the index value for that particular year. This is an oversimplification of the severity of the issues listed, but allows for an underestimation of protection issues and does not rely upon subjective evaluation of each issue. It may seem odd that lacking adaptability within the system to address new challenges, for example, would be considered equal to no legal infrastructure present to address government infringements of intellectual property. The two issues indicate completely different sets of problems,

one substantially more severe than the other. Appropriately weighting these descriptors based upon their severity would be a positive next step in this evaluation. a. Enforcement Capacity Issues (ECI)

Enforcement Capacity Issues (ECI) indicates that the legal infrastructure for protecting intellectual property rights is in place, but that the enforcement of these laws is lacking. The descriptors for this category of intellectual property protection issues are: implementation inconsistent; inadequate pursuit of violators; inappropriate handling of confiscated goods; lack of coordination; lack of resources and training; lags in registration process; non-deterrent: minimum penalties; poor interpretation; and, protectionism, corruption and bribery.

Implementation Inconsistent can mean two things. 1) The implementation of existing laws does not occur consistently throughout the state. One region may implement intellectual property protections quite heavily, while another has failed to adopt the central laws into the local system. Or, 2) the implementation of existing laws is erratic within the state. The current laws are sometimes used effectively, but sometimes not. Right holders cannot rely upon the system to yield consistent results. This also includes instances where a state engages in a campaign to stop counterfeiting and piracy that leads to a temporary crackdown without lasting impact on enforcement procedures.

Inadequate Pursuit of Violators encompasses all situations where violators in a given country are not sought out, discovered, and disbanded appropriately. This measure is meant to reflect the inability of a country to react to piracy and counterfeiting issues appropriately within their borders.

Inappropriate Handling of Confiscated Goods refers to instances where customs authorities and law enforcement agencies confiscate pirated or counterfeit goods and the equipment necessary to create them and do not subsequently destroy them. In some instances this means that the enforcement authority will remove violating elements and auction the objects back into the hands of the violators. This causes the confiscation of goods to be a cost of doing business for counterfeiters and pirates rather than a deterrent.

Lack of Coordination refers to instances where government entities fail to coordinate regarding the registration or enforcement of particular intellectual property rights. This can mean that government agencies are non-communicative, or that regional government entities are not coordinated with central government authorities.

Lack of Resources and Training means that enforcement authorities are not appropriately equipped to effectively implement the intellectual property protections that are currently in place.

Lags in the Registration Process refers to situations where the agencies are unable to keep up with the pace of registration in a given IP area. These lags in registration are problematic because the clock for intellectual property rights for right holders are often started based upon the date of submission rather than processing. If the registration has not yet been processed, then the right holder cannot follow through on his/her rights, though technically their period of protection has already begun.

Non-Deterrent Minimum Penalties are often awarded intellectual property violators in the form of administrative penalties with minimal fines, or minimal application of current potential penalties.

6 6

Poor Interpretation occurs when a law is reinterpreted by a government body to restrict the coverage of current intellectual property protection laws.

Protectionism, Corruption, and Bribery occurs when state officials engage in practices that allow preferential treatment of actors. Protectionism typically means that enforcement officials are willing to overlook violations of foreign intellectual property if it is useful for the locality to do so. Corruption and bribery refers to situations where enforcement authorities will accept payment to allow non-compliance with national law. b. Lacking Legal Infrastructure (LLI)

Lacking Legal Infrastructure (LLI) means that deficient intellectual property rights laws are in place. The descriptors for this category of intellectual property protection issues are: forced technology transfer; laws pending indefinitely; no data secrecy guarantee; non-compliance: international norms; non-deterrent penalties; partial coverage; and, unclear legal framework.

Forced Technology Transfer is an issue that is very specific to China. It refers to the practice of legally sanctioned protectionism wherein foreign right holders are coerced to share their intellectual property with Chinese firms. It also refers to cyberespionage, wherein government affiliated and non-government affiliated actors may retrieve large amounts of intellectual property and confidential trade information through the infiltration of computer networks.

Laws Pending Indefinitely refers to the situation where a state has promised or attempted to pass laws that will establish adequate protection measures for intellectual property, but continuously fails to draft the legislation or achieve passage of drafted legislation.

No Data Secrecy Guarantee refers to instances where data given to the government registration agency for marketing approval of goods is not adequately protected by the registration agency. The agency may allow other applicants to utilize the same data, or in some cases, it may leak the data so that other entities may pursue research based upon it. This is a particularly acute problem regarding pharmaceuticals and “spring-boarding” generic products prior to the end of the protection period.

Non-Compliance with International Norms refers to inadequate fulfillment of international obligations, whether they are multilateral, plurilateral, or bilateral.

Non-Deterrent Penalties refers to instances where administrative, civil, or criminal penalties are excluded or defined in such a way that they cannot be used as deterrent mechanisms for enforcing intellectual property protection.

Partial Coverage occurs when the legal framework of a state does not provide full coverage of intellectual property rights in a given area. The term of protection may be too short, the eligibility for coverage in a particular area may be limited, etc.

Unclear Legal Framework refers to instances where the legal framework in place is unclear, non-transparent, or unnavigable for right holders.

VI. Case Profiles

A. Canada i. The U.S.-Canada Relationship

Figure 3. U.S. Imports & Exports - Canada 2001-2013

400000

350000

300000

250000

200000 Exports 150000 Imports

Value, U.S. $, millions Value, 100000

50000

0 2000 2002 2004 2006 2008 2010 2012 2014 Year

Figure 4. U.S. Balance of Payments - Canada 2001-2013

2000 2002 2004 2006 2008 2010 2012 2014 0 -10000 -20000 -30000 Balance of -40000 Payments -50000 -60000

Value, U.S. $, millions Value, -70000 -80000 -90000 Year

Canada and the United States have a very close bilateral relationship, both economically and defensively. Militarily, Canada is a member of the North Atlantic

Treaty Organization (NATO) and engages in bilateral strategic initiatives with the United

States through the North American Aerospace Defense Command (NORAD).114

According to the United States CIA World Factbook, the United States and Canada share the largest unfortified border in the world.115

Regarding trade, the Department of State indicates that the depth of the bilateral relationship is “the equivalent of $1.6 billion a day in goods—as well as in people-to- people contact. About 300,000 people cross between the countries every day by all modes of transport.”116 Canada has been the number one export market for the United

States for the duration of this analysis, from 2001 to 2014. According to the Canadian

Department of Foreign Affairs, as of 2009 “the U.S. receive[d] 70.2 percent of [Canada’s exports of] goods and services, and 61.7 percent of Canada’s goods and services imports c[a]me from the U.S.”117 50.6 percent of Canada’s imports in 2012 came from the United

States. In 2012, the share of Canadian exports destined for the United States was 74.5 percent.118 Canada is the largest supplier of energy for the U.S.119 It is estimated that 20 percent of Canada’s GDP is based on trade with the United States.120 Regarding investment, “The United States is Canada’s largest foreign investor, and Canada is the

114 “Canada-United States Relations Overview,” Department of State: Embassy of the United States – Ottawa Canada. 115 The World Factbook 2013-2014 (Washington, D.C.: Central Intelligence Agency), 2013. 116 Bureau of Western Hemisphere Affairs, “U.S. Relations with Canada: Fact Sheet,” U.S. Department of State, August 23, 2013. 117 Canada’s Global Commerce Strategy (2007-2013): United States of America, Department of Foreign Affairs, 2009. 118 The World Factbook 2013-2014 (Washington, D.C.: Central Intelligence Agency), 2013. It is worth noting that the second largest trading partner for Canada is China, at 4.3% exports in 2012 and 11% imports. 119 The World Factbook 2013-2014 (Washington, D.C.: Central Intelligence Agency), 2013. 120 Ibid.

fifth-largest foreign investor in the United States.”121 Canada has been an essential trading partner for the United States, and the trade relationship continues to grow.

Though the United States and Canada cooperate on a number of trade initiatives, their relationship has been strained in recent years, particularly regarding intellectual property.122 It is hoped that ratification of the Anti-Counterfeiting Trade Agreement

(ACTA) may rectify the IP protection discrepancies in Canada’s legal system.123 ii. Perceived IP Protection Issues

Figure 5. Canada: Perceived IP Protection Issues, 2001-2014 55 50 45 40 35 30

Score Score 25 Canada: Perceived IP 20 Protection Issues, 2001-2014 15 10 5 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

121 Bureau of Western Hemisphere Affairs, “Fact Sheet: U.S Bilateral Relations with Canada,” U.S. Department of State, August 23, 2013. 122 This is evident in the Special 301 Reports as well as the National Trade Estimate Reports on Foreign Trade Barriers for the past fourteen years. This issue is also mentioned in the Bureau of Western Hemisphere Affairs, 2013 publication. 123 2014 Special 301 Report, Office of the U.S. Trade Representative, 49-50. 2014 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 47.

The United States generally perceives Canada’s intellectual property protection as being far too lenient for its level of development and governance capabilities.124 Canada does not provide adequate resources for law enforcement entities to pursue and prosecute violators.125 Even as laws are passed to bring Canada into compliance with international norms and obligations, new issues emerge regarding the interpretation and enforcement of these laws.126

Canada has been subject to Special 301 review every year from 2001 to 2014.

Canada was placed on the Watch List from 2001 to 2008.127 Canada was upgraded to the

Priority Watch List from 2009 to 2012 due to its consistent failure to fulfill its reform commitments and promises.128 In 2013, Canada was again placed on the Watch List as a response to the passage of several legislative measures in mid-2012.129 Given that the

United States is awaiting the outcome of implementation, Canada has remained under review on the Watch List in 2014.

124 2005 Special 301 Report, Office of the U.S. Trade Representative, 38. 2007 Special 301 Report, Office of the U.S. Trade Representative, 30. 125 2005 Special 301 Report, Office of the U.S. Trade Representative, 38. 2006 Special 301 Report, Office of the U.S. Trade Representative, 33-34. 2007 Special 301 Report, Office of the U.S. Trade Representative, 30. 2008 Special 301 Report, Office of the U.S. Trade Representative, 39. 2010 Special 301 Report, Office of the U.S. Trade Representative, 29. 2011 Special 301 Report, Office of the U.S. Trade Representative, 33-34. 2012 Special 301 Report, Office of the U.S. Trade Representative, 26-27. 126 2004 Special 301 Report, Office of the U.S. Trade Representative, 23. 2009 Special 301 Report, Office of the U.S. Trade Representative, 21-22. 2010 Special 301 Report, Office of the U.S. Trade Representative, 29. 2011 Special 301 Report, Office of the U.S. Trade Representative, 33-34. 2012 Special 301 Report, Office of the U.S. Trade Representative, 26-27. 127 2001 Special 301 Report, Office of the U.S. Trade Representative, 25. 2002 Special 301 Report, Office of the U.S. Trade Representative, 26. 2003 Special 301 Report, Office of the U.S. Trade Representative, 18-19. 2004 Special 301 Report, Office of the U.S. Trade Representative, 23. 2005 Special 301 Report, Office of the U.S. Trade Representative, 38. 2006 Special 301 Report, Office of the U.S. Trade Representative, 33-34. 2007 Special 301 Report, Office of the U.S. Trade Representative, 30. 2008 Special 301 Report, Office of the U.S. Trade Representative, 39. 128 2009 Special 301 Report, Office of the U.S. Trade Representative, 21-22. 2010 Special 301 Report, Office of the U.S. Trade Representative, 29. 2011 Special 301 Report, Office of the U.S. Trade Representative, 33-34. 2012 Special 301 Report, Office of the U.S. Trade Representative, 26-27. 129 2013 Special 301 Report, Office of the U.S. Trade Representative, 47. 2014 Special 301 Report, Office of the U.S. Trade Representative, 49-50.

Generally speaking, Canada’s IP protection regime has gotten stronger over the last fourteen years. However, more work remains to be done. Border enforcement and internal enforcement issues still remain. Canada has been slow to respond to U.S. requests for changes to its IP regime. It is hoped that the involvement of Canada in the

ACTA and the TPP is an indication of Canada’s willingness of cooperate more fully on new IP issues addressed. However, given the slow ratification of the WIPO Internet treaties, it is unclear whether the desired changes will be forthcoming, especially considering that there is no ratification deadline.

Figure 6. Canada's ECI and LLI Scores, 2001-2014

35 30 25 20 ECI

Score Score 15 LLI 10 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Year

As shown in Figure 6 above, the current perceived weaknesses in the intellectual property system of Canada continue to be based on enforcement capacity. Though

Canada has passed laws in the last twelve months that could strengthen the enforcement capacity of the customs authority and the Royal Canadian Mounted Police (RCMP), it is

not yet clear whether implementation will actually decrease the amount of piracy and counterfeiting plaguing Canadian markets.130

Regarding enforcement capacity, Canada’s largest issues have been resources and training, poor interpretation of existing laws, inaction pursuing and prosecuting violators, and minimum penalties for prosecuted infringers. Regarding legal infrastructure, Canada has been slow in enacting policies consistent with international norms for states of comparable economic development and wealth, as indicated by the breakdown of Special

301 designations. Canada has not provided adequate clarification of laws and protections until the last twelve months or so. This includes granting ex officio authority to customs

130 2013 Special 301 Report, Office of the U.S. Trade Representative, 47. 2014 Special 301 Report, Office of the U.S. Trade Representative, 44-45

Table 1. Canada – Perceived IP Protection Issues, 2001-2014 Enforcement Capacity Issues regarding Patents and Industrial Designs Years Descriptors 2001-2013 Inadequate Pursuit of Violators 2001-2014 Poor Interpretation Enforcement Capacity Issues regarding Copyrights and Related Rights Years Descriptors 2005 Implementation Inconsistent 2001-2013 Inadequate Pursuit of Violators 2001-2013 Poor Interpretation Enforcement Capacity Issues regarding Trademarks and Related Rights Years Descriptors 2001-2013 Inadequate Pursuit of Violators 2002-2013 Lack of Resources and Training 2002-2013 Non-Deterrent Minimum Penalties 2001-2013 Poor Interpretation Enforcement Capacity Issues regarding Trade Secrets and Data Protection Year Descriptors 2001-2013 Inadequate Pursuit of Violators 2001-2013 Poor Interpretation

Lacking Legal Infrastructure regarding Patents and Industrial Designs Year Descriptors 2001-2004 Non-Compliance: International Norms 2001-2014 Unclear Legal Framework Lacking Legal Infrastructure regarding Copyrights and Related Rights Year Descriptors 2004-2012 Laws Pending Indefinitely 2001-2006, 2010 Non-Compliance: International Norms 2008-2010, 2014 Partial Coverage 2006, 2007 Unclear Legal Framework Lacking Legal Infrastructure regarding Trademarks and Related Rights Years Descriptors 2014 Partial Coverage 2005-2013 Unclear Legal Framework Lacking Legal Infrastructure Regarding Trade Secrets and Data Protection Years Descriptors 2001-2006 No Data Secrecy Guarantee 2002-2005 Non-Compliance: International Norms 2007, 2009 Partial Coverage

official. Given this slow rate of progress, Canada is not currently in a viable position to

respond to emerging intellectual property threats such as Internet-related rights and

forced technology transfer. The extensive trade relationship between the United States and Canada makes this maladaptive behavior exceptionally problematic for the U.S. The flow of information and the collaboration between U.S.-Canadian enterprises create a greater source of vulnerability regarding emergent IP threats. It is an additional avenue for the retrieval of trade secrets and critical intellectual property theft. If Canada does not have the legal infrastructure and enforcement capacity to address these issues, then the threat posed by this vulnerability is substantial.

As indicated in Table 1 above, there has been continuous concern regarding

Canada’s enforcement capacity regarding all areas of intellectual property protection. A series of measures and clarifying laws were passed in 2013 that the United States hopes will make the necessary adjustments for the effective enforcement of intellectual property rights in Canada.

The United States and Canada have a number of joint initiatives regarding border enforcement, training, certification and licensing, and so forth. The U.S. and Canada have an extensive cooperative relationship regarding traditional cross-border issues, but little cooperation regarding traditionally internal issues such as judicial and administrative procedural issues regarding enforcement.131 This is a prime example of a relationship that has had difficulty adapting to the increasingly intermestic nature of the international trading system. Canada has not necessarily been hostile to U.S. suggestions, merely complacent regarding the implementation of policies that may be perceived as controversial to the interests of the Canadian public by the Canadian government.

C. Chile

131 Bureau of Western Hemisphere Affairs, “Fact Sheet: U.S Bilateral Relations with Canada,” U.S. Department of State, August 23, 2013.

i. The U.S.-Chile Relationship

Figure 7. U.S. Imports and Exports - Chile 2001-2013

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Figure 8. U.S. Balance of Payments - Chile 2001-2013

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The United States and Chile have a bilateral free trade agreement that came into force in 2004. The agreement “eliminates tariffs and opens markets, reduces barriers for trade in services, provides protection for intellectual property, ensures regulatory transparency, guarantees nondiscrimination in the trade of digital products, commits the parties to maintain competition laws that prohibit anticompetitive business conduct, and requires effective labor and environmental enforcement.”132 Chile is the United States’

29th largest trading partner. In 2013, exports of goods to Chile from the U.S. were $17.6 billion. It is estimated that the number of exported goods has increased 548 percent since

2003 as a result of the free trade agreement. A comparison of 2012 and 2002 trade data for service exports indicates a rise of 180 percent as a result of the free trade agreement.133 As is shown in Figure 8 above, the U.S. trade deficit was turned to a surplus following the implementation of the agreement. ii. Perceived IP Protection Issues

132 Bureau of Western Hemisphere Affairs, “U.S. Relations with Chile: Fact Sheet,” U.S. Department of State, November 21, 2013. 133 “U.S.-Chile Trade Facts,” Office of the U.S. Trade Representative, April 4, 2014.

Figure 9. Chile: Perceived IP Protection Issues, 2001-2014

55 50 45 40 35 30 Score Score 25 Chile: Perceived IP Protection Issues, 2001-2014 20 15 10 5 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

Chile’s implementation of intellectual property protections has been slower than the United States had hoped. The proliferation of the Internet and the growth in the number of Internet users has also posed new problems for Chile’s protection regime. The

U.S. believes that Chile has the internal capacity to handle these issues.

Chile has been subject to Special 301 review every year from 2001 to 2014. In fact, Chile is one of several countries that have always been subject to Special 301 review since its first publication in 1989.134 Chile was placed on the Special 301 Watch List from

2001 to 2006.135 Upgraded in 2007 to the Priority Watch List, Chile would remain there

134 2014 Special 301 Report, Office of the U.S. Trade Representative, 2. 135 2001 Special 301 Report, Office of the U.S. Trade Representative, 25. 2002 Special 301 Report, Office of the U.S. Trade Representative, 27. 2003 Special 301 Report, Office of the U.S. Trade Representative, 19. 2004 Special 301 Report, Office of the U.S. Trade Representative, 23. 2005 Special 301 Report, Office of the U.S. Trade Representative, 38. 2006 Special 301 Report, Office of the U.S. Trade Representative, 34.

through 2014 due to inadequacies data protection, lack of coordination, non-compliance with international obligations, and lack of enforcement.136

There has been some improvement in Chile’s intellectual property law system, but not in enforcement. Chile has improved its coordination efforts between government agencies regarding certain areas of IP protections. The implementation of policies in certain areas has become more consistent, but more work remains to be done.

Figure 10. Chile: ECI and LLI Scores, 2001-2014

35 30 25 20

Score Score 15 ECI 10 LLI 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Year

As shown in Figure 10 above, the majority of Chile’s intellectual property protection issues over the last fourteen years have been enforcement-related, particularly following the conclusion of the U.S.-Chile FTA in 2004. The laws bringing Chile into compliance with bilateral FTA obligations have not been fully enforced or clarified.137 In

2005, Chile passed a law regarding patents and data protection, but its implementation

136 2007 Special 301 Report, Office of the U.S. Trade Representative, 25. 2008 Special 301 Report, Office of the U.S. Trade Representative, 35. 2009 Special 301 Report, Office of the U.S. Trade Representative, 22. 2010 Special 301 Report, Office of the U.S. Trade Representative, 29-30. 2011 Special 301 Report, Office of the U.S. Trade Representative, 34. 2012 Special 301 Report, Office of the U.S. Trade Representative, 27. 2013 Special 301 Report, Office of the U.S. Trade Representative, 32. 2014 Special 301 Report, Office of the U.S. Trade Representative, 44-45. 137 2013 Special 301 Report, Office of the U.S. Trade Representative, 32. 2014 Special 301 Report, Office of the U.S. Trade Representative, 44-45.

has not been successful.138 Generally speaking, Chile has had a difficult time establishing an effective system for intellectual property protection.

Table 2. Chile – Perceived IP Protection Issues, 2001-2014 Enforcement Capacity Issues regarding Patents and Industrial Designs Years Descriptors 2006-2011, 2014 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2002-2014 Lack of Coordination 2001-2014 Lags in Registration Process 2001-2014 Non-Deterrent: Minimum Penalties 2004 Poor Interpretation Enforcement Capacity Issues regarding Copyrights and Related Rights Years Descriptors 2006-2010 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Non-Deterrent: Minimum Penalties 2007 Poor Interpretation Enforcement Capacity Issues regarding Trademarks and Related Rights Years Descriptors 2005-2010 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Non-Deterrent: Minimum Penalties Enforcement Capacity Issues regarding Trade Secrets and Data Protection Years Descriptors 2006, 2008 Implementation Inconsistent 2005, 2008 Inadequate Pursuit of Violators 2001-2014 Non-Deterrent: Minimum Penalties

Lacking Legal Infrastructure regarding Patents and Industrial Designs Years Descriptors 2005 Laws Pending Indefinitely 2001-2014 Non-Compliance: International Norms 2011 Non-Deterrent Penalties 2001-2003, 2007 Partial Coverage 2001-2014 Unclear Legal Framework Lacking Legal Infrastructure regarding Copyrights and Related Rights Years Descriptors 2001-2014 Non-Compliance: International Norms 2011 Non-Deterrent Penalties 2001-2003, 2010, 2012-2014 Partial Coverage 2001, 2002, 2003 Unclear Legal Framework Lacking Legal Infrastructure regarding Trademarks and Related Rights

138 2005 Special 301 Report, Office of the U.S. Trade Representative, 38.

Years Descriptors 2011 Laws Pending Indefinitely 2001-2014 Non-Compliance: International Norms 2011 Non-Deterrent Penalties 2001-2003 Partial Coverage Lacking Legal Infrastructure regarding Trade Secrets and Data Protection Years Descriptors 2005 Laws Pending Indefinitely 2001-2014 No Guarantee of Data Secrecy 2001-2014 Non-Compliance: International Norms 2011 Non-Deterrent Penalties 2002 Unclear Legal Framework 2007 Partial Coverage

Table 2 above indicates the extent of Chile’s specific issues. Chile has shown some improvement in the enforcement capacity area regarding consistent implementation, but continues to have significant problems with patent and industrial design enforcement, and taking appropriate steps to pursue IPR violators. Chile has made great strides in some areas of IP laws, but there are still gaps within the legal framework that must be addressed before Chile can implement an effective IP regime that deters future piracy and counterfeiting.

The U.S.-Chile Free Trade Agreement (2004) intellectual property provision

“provides high levels of protection appropriate for the digital age, including non- discriminatory treatment for U.S. software, music, text, and motion pictures. Protections for U.S. patents, trademarks, and undisclosed information obligate Chile to conform its IP laws and enforcement practices to advanced standards.”139 At thirty-two pages long, the

IP provision provides a detailed overview of U.S. expectations regarding changes to

Chile’s IPR regime, including trademark, domain name, geographical indication,

139 2004 Special 301 Report, Office of the U.S. Trade Representative, 23.

copyright and related rights, and patent rights that would be awarded right holders.140 In addition, the agreement stipulates specific enforcement parameters: civil, administrative, and criminal procedural remedies. States, including Chile, have frequently used civil and administrative remedies, rather than criminal remedies, as fewer resources are required for investigation and prosecution.141

The United States and Chile have continued collaboration regarding intellectual property protections, both in informal bilateral consultations and, now, through the TPP negotiations. Chile has been cooperative with the United States regarding many of these issues, and continues to make promising strides in enforcement of its intellectual property regime.

C. Peru i. The U.S.-Peru Relationship

140 U.S.-Chile Free Trade Agreement, June 6, 2003, 17-4 – 17-21. 141 Ibid., 17-21 – 17-31.

Figure 11. U.S. Exports and Imports - Peru 2001-2013 12000

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Following the 2009 Trade Promotion Agreement, the United States and Peru have seen a substantial increase in two-way trade. The United States is one of Peru’s

largest trading partners. Drugs and narcotics have been given the greatest emphasis in bilateral relations with Peru for the last several years, as has democratization and the rule of law. Peru’s largest export partner in 2012 was China at 19.9%, the United States was the second largest at 15.7%. Peru’s largest import partner in 2012 was the United States at 24.6%, the second largest was China at 14%.142 The United States and China are by far

Peru’s largest trading partners. ii. Perceived IP Protection Issues

Figure 13. Peru: Perceived IP Protection Issues, 2001-2014

55 50 45 40 35 30

Score Score 25 Peru: Perceived IP Protection 20 Issues, 2001-2014 15 10 5 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

Peru has serious counterfeiting and piracy issues. The Peruvian Government has made great strides to provide effective enforcement mechanisms, but has had little success in limiting the transactions. In 2007, “The level of pirated software used by government agencies [was] estimated to reach about 75 percent,” indicating that the

Peruvian government continues to have difficulties enforcing these policies even on a

142 The World Factbook 2013-2014 (Washington, D.C.: Central Intelligence Agency), 2013. Peru also signed a free trade agreement with China in 2009.

closely connected level.143 It is unclear whether Peru has the legal capacity to disrupt intellectual property violators and deter them. Generally speaking, Peruvian enforcement officials lack the necessary training and resources to effectively implement the laws that exist.

Peru has been subject to Special 301 review every year from 2001 to 2014.

Consistently placed on the Watch List, Peru’s perceived issues stem from inadequate enforcement of existing laws, even after the U.S.-Peru Trade Promotion Agreement.

Peruvian officials do not have the necessary resources or training to enforce intellectual property laws, and a general lack of coordination between government agencies makes it difficult to obtain legal protection.

Figure 14. Peru's ECI and LLI Scores, 2001-2014

35 30 25 20

Score Score 15 ECI 10 LLI 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Year

Peru’s greatest perceived weakness regarding intellectual property protection has consistently been enforcement related. Peru has made great strides to bring their legal framework into compliance with international norms. But, as with other areas of Peru’s

143 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 463.

legal system, the rule of law is weak and there are significant issues with coordination between government agencies as well as inadequate resources and training for law enforcement personnel.

Table 3. Peru – Perceived IP Protection Issues, 2001-2014 Enforcement Capacity Issues regarding Patents and Industrial Designs Years Descriptors 2001 Implementation Inconsistent 2005-2014 Lack of Coordination 2009-2014 Lack of Resources and Training 2001-2014 Non-Deterrent: Minimum Penalties 2001, 2005 Poor Interpretation Enforcement Capacity Issues regarding Copyrights and Related Rights Years Descriptors 2004, 2006, 2010-2011 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2008 Lack of Coordination 2009-2014 Lack of Resources and Training 2001-2014 Non-Deterrent: Minimum Penalties 2005 Poor Interpretation Enforcement Capacity Issues regarding Trademarks and Related Rights 2003, 2010-2011 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2010-2014 Lack of Resources and Training 2001-2014 Non-Deterrent: Minimum Penalties 2005 Poor Interpretation Enforcement Capacity Issues regarding Trade Secrets and Data Protection Years Descriptors 2001 Implementation Inconsistent 2009-2014 Lack of Resources and Training 2001-2014 Non-Deterrent: Minimum Penalties 2001, 2005 Poor Interpretation

Lacking Legal Infrastructure regarding Patents and Industrial Designs 2004, 2012-2013 Non-Compliance: International Norms 2011 Non-Deterrent Penalties 2001-2007 Partial Coverage 2001-2014 Unclear Legal Framework Lacking Legal Infrastructure regarding Copyrights and Related Rights Years Descriptors 2012 Non-Compliance: International Norms 2011 Non-Deterrent Penalties 2013 Partial Coverage 2005, 2012 Unclear Legal Framework

Lacking Legal Infrastructure regarding Trademarks and Related Rights Years Descriptors 2011 Non-Deterrent Penalties 2002 Unclear Legal Framework 2012-2013 Partial Coverage Lacking Legal Infrastructure regarding Trade Secrets and Data Protection Years Descriptors 2001-2014 No Data Secrecy Guarantee 2011 Non-Deterrent Penalties 2011 Unclear Legal Framework

At twenty-seven pages long, the U.S.-Peru Trade Promotion Agreement (2006) intellectual property provision covers the expectations for the legal frameworks protecting trademark, domain name, geographical indication, copyright and related rights, and patent rights that would be awarded to right holders.144 Like the U.S.-Chile FTA, the

U.S.-Peru TPA provides an outline of specific enforcement parameters: civil, administrative, and criminal.145 The United States continues to encourage Peru to strengthen its enforcement capacity in alignment with the TPA specifications.

F. Vietnam i. The U.S.-Vietnam Relationship

144 U.S.-Peru Trade Promotion Agreement, April 12, 2006, 16-3 – 16-17. 145 Ibid., 16-17 – 16-25.

Figure 15. U.S. Exports and Imports - Vietnam, 2001-2013

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Figure 16. U.S. Balance of Payments - Vietnam, 2001-2013

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The United States and Vietnam have a rapidly growing trade relationship. As of

2012, 17.8 percent of Vietnam’s exports are destined for the United States. Only 4.3

percent of Vietnam’s imports come from the United States. It is worth noting that 25.8% of Vietnams imports in 2012 came from China.146 As of 2013, Vietnam was the 44th largest export market for the U.S.147 Vietnam and the United States have enjoyed a generally cooperative relationship since the normalization of diplomatic relations in

1995.148 ii. Perceived IP Protection Issues

Figure 17. Vietnam: Perceived IP Protection Issues, 2001-2014

55 50 45 40 35 Vietnam: 30 Perceived IP Protection

Score Score 25 Issues, 20 2001-2014 15 10 5 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

The United States believes that Vietnam is making a good-faith effort to address intellectual property protection issues, but continues to have difficulties due to lack of resources and the enormity of the task. According to reports on the extent of Vietnam’s piracy and counterfeiting problem, the United States seems to believe that Vietnam is

146 The World Factbook 2013-2014 (Washington, D.C.: Central Intelligence Agency), 2013. 147 Bureau of East Asian and Pacific Affairs, “Fact Sheet: U.S. Relations with Vietnam,” Office of the U.S. Trade Representative, February 14, 2014. 148 Bureau of East Asian and Pacific Affairs, “Fact Sheet: U.S. Relations with Vietnam,” Office of the U.S. Trade Representative, February 14, 2014.

capable of countering the internal issues that the state faces, but more needs to be done regarding the intellectual property imported from elsewhere, particularly China. The external influx of pirated and counterfeit goods into Vietnam is very difficult for the

Vietnamese authorities to handle effectively.

Vietnam has been subject to Special 301 review every year from 2001 to 2014.

Like Peru, Vietnam has been placed on the Watch List every year due to enforcement capacity issues. Vietnam has also had difficulties maintaining an appropriate legal infrastructure for effective intellectual property protection. Like China, Vietnam has had difficulties adapting to the rapid advancement of threats to intellectual property. Vietnam has made significant progress strengthening its legal infrastructure since its accession to the WTO in 2004 and the conclusion of the U.S.-Vietnam Trade Agreement in 2000.

Figure 18. Vietnam: ECI and LLI Scores, 2001-2014

35 30 25 20

Score Score 15 ECI 10 LLI 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Year

Vietnam has had considerable difficulties with the enforcement of intellectual property protections. It is difficult for Vietnam to effectively pursue and prosecute IP violators within Vietnam, and the large influx of counterfeit and pirated goods from

China and elsewhere undermine attempted enforcement activities, overloading a system that is already weak. Vietnam lacks the resources necessary for successful implementation. With additional threats from virtual markets rising in importance,

Vietnam’s weak enforcement capacity becomes nearly negligible.

Table 4. Vietnam– Perceived IP Protection Issues, 2001-2014 Enforcement Capacity Issues regarding Patents and Industrial Designs Years Descriptors 2002-2014 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination 2005-2014 Lack of Resources and Training 2002-2014 Non-Deterrent: Minimum Penalties 2008 Poor Interpretation Enforcement Capacity Issues regarding Copyrights and Related Rights Years Descriptors 2002-2014 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination 2005-2014 Lack of Resources and Training 2002-2014 Non-Deterrent: Minimum Penalties 2003, 2008 Poor Interpretation Enforcement Capacity Issues regarding Trademarks and Related Rights Years Descriptors 2002-2014 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination 2005-2014 Lack of Resources and Training 2002-2014 Non-Deterrent: Minimum Penalties 2003-2008 Poor Interpretation Enforcement Capacity Issues regarding Trade Secrets and Data Protection Years Descriptors 2002-2014 Implementation Inconsistent 2003, 2010 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination 2005, 2008-2014 Lack of Resources and Training 2002-2014 Non-Deterrent: Minimum Penalties 2003, 2008 Poor Interpretation

Lacking Legal Infrastructure regarding Patents and Industrial Designs Years Descriptors 2001-2009 Non-Deterrent Penalties 2001-2014 Unclear Legal Framework

Lacking Legal Infrastructure regarding Copyrights and Related Rights Years Descriptors 2001-2009 Non-Deterrent Penalties 2008-2014 Partial Coverage Lacking Legal Infrastructure regarding Trademarks and Related Rights Years Descriptors 2001-2009 Non-Deterrent Penalties 2005 Unclear Legal Framework Lacking Legal Infrastructure regarding Trade Secrets and Data Protection Years Descriptors 2001-2007 No Data Secrecy Guarantee 2001-2008 Non-Deterrent Penalties 2007-2014 Unclear Legal Framework

The United States and Vietnam entered into a bilateral trade agreement (BTA) in

2001. The U.S.-Vietnam BTA “is a comprehensive document covering trade in goods, protection of intellectual property rights, trade in services, investment protection, business facilitation and transparency.”149 Despite Vietnam’s phased approach to implementation of the BTA provisions, the U.S. side of the BTA went into effect immediately with minimized trade barriers and preferential trade status. The BTA is considered as Vietnam’s most comprehensive agreement with another country, though it would be replaced by the TPP if the latter should succeed.150 The intellectual property provision “requires the Government of Vietnam to provide expeditious remedies to provide expeditious remedies to prevent and deter infringement of IP rights, including particular judicial and administrative procedures, prompt and effective provisions measures secured by sufficient evidence, and criminal procedures and penalties for willful trademark counterfeiting or infringement of copyrights or neighboring rights on a

149 “The U.S.-Vietnam Bilateral Trade Agreement (BTA) – Resources for Understanding,” Embassy of the United States: Vietnam. 150 Ibid.

commercial scale.”151 The United States and Vietnam have continuously worked on these and other trade issues.

E. China

The People’s Republic of China has been making a gradual transition from a command economy to a market economy for the last thirty years. As a result, China has become the largest exporter in the world, though it continues to maintain many of its import restrictions as part of the Chinese Communist Party’s gradation approach.152

China is a communist state run by the Chinese Communist Party (CCP). The discussion of China excludes Macau and Hong Kong, as separate analyses of these municipalities are offered by the USTR, and both cities maintain exceptional intellectual property standards despite continuous struggles to maintain an effective system given the influx of illicit goods from the PRC.153

151 2003 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 402. 152 The World Factbook 2013-2014 (Washington, D.C.: Central Intelligence Agency), 2013. 153 For example, see 2001 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 165-167.

i. The U.S.-China Relationship

Figure 19. U.S. Exports and Imports - China 2001-2013

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China is one of the United States’ largest trading partners. In a fascinating remark at a CEO roundtable in China, U.S. Secretary of State John Kerry stated, “China and the

United States represent the greatest economic alliance trading partnership in the history of humankind, and it is only going to grow. So this is a very important meeting and we really look forward to hearing from you your thoughts about how we, in the Obama

Administration, can grow these possibilities, meet your needs, strengthen our countries, and strengthen the security relationships as well, which grows out of the economic relationship at the same time.”154 This linkage in rhetoric between economic and security interests speaks volumes regarding the inclusiveness of present security perceptions.

As China’s laws and economy have become more open, U.S. exports have increased incrementally. U.S. imports from China have grown dramatically. The U.S. trade deficit with China has grown exponentially over the last fourteen years. The United

States is China’s largest export market, and China is the third largest export market for the U.S.155 ii. Perceived IP Protection Issues

154 John Kerry, “Remarks at Opening of CEO Roundtable,” Beijing, China, July 10, 2014. 155 Bureau of East Asian and Pacific Affairs, “Fact Sheet: U.S. Relations with China,” Department of State, August 16, 2013.

Figure 21. China: Perceived IP Protection Issues, 2001-2014 55 50 45 40 35 30

Score Score 25 China: Perceived IP 20 Protection Issues, 2001-2014 15 10 5 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

No doubt as a result of the financial crisis, China began to enact a number of indigenous innovation policies in order to maintain internal growth and stability. Certain intellectual property provisions were relaxed for indigenous innovators only. Stipulations were created for achieving “indigenous innovator” status, making it possible for multinational stakeholders to gain this designation, but only at great cost. According to the 2012 NTE Report, “U.S. companies are describing business situations they confront in which the Chinese government or government-affiliated entities are signaling or requiring that technology and intellectual property be shared with Chinese parties in conjunction with the approval of investments, as well as the granting of licenses, permits and other approvals.”156 As what the United States has begun to call “forced technology transfer,” this particular detail is only a small part of the phenomenon. A particularly disturbing example used by the USTR has been the requirements imposed on automobile manufacturers in order to be eligible for government procurement:

156 2013 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 97.

… automobile manufacturers must invest at least 3 percent of operating revenue on research and development in China and hold the right to modify, improve or transfer relevant intellectual property. Given that foreign automobile manufacturers must establish joint ventures with Chinese partners, and are not permitted to have controlling shares, in order to operate in China, these provisions could require foreign automobile manufacturers to conduct or transfer research and development activities to China and share the resulting technologies with their Chinese partners. These provisions also appear to require foreign automobile manufacturers to transfer the rights of existing core intellectual property to their Chinese partners.157

In addition, there has been an increase in incidents involving government-affiliated actors engaging in cyberespionage, leading to the loss of terabytes of data essential to the viability of U.S. firms.158 These policies are extremely problematic. The United States and other trading partners have been placing more pressure on China to remedy these detrimental practices without success.

Some have argued that the Chinese Communist Party (CCP) draws its legitimacy from the state’s economic prosperity, as one analyst observed: “The modern premise for the CCP is that it delivers economic growth and competent management, while quelling destructive disorder…”159 Though this potential linkage creates a number of problems for the CCP, the main point for this analysis is that “economic security” may mean a great deal more for the Chinese government than it does for a country like the United States.

An element of survival emerges that provides an interesting perspective from the other side of the picture that I am providing.

China is capable of providing a stronger legal framework for intellectual property protection regarding normal protection issues. By normal intellectual property protection issues, I mean those that are consistent with issues faced by other states in this analysis,

157 Ibid., 97. 158 2014 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 59-60. 159 Tim Ferguson, “China’s Communist Party and Lost Legitimacy,” Forbes.com, June 29, 2012.

seeking to adapt the IP protection regime and establish effective enforcement mechanisms against traditional piracy and counterfeiting. However, it would take a great deal for China to be able to effectively enforce these laws. As indicated above, there are unique issues in China that are abnormal in that they are specific to China. China is capable of putting a stop to these abnormal infringements, but whether this is desirable for China in the short-term is unclear. These infringements, which we have labeled forced technology transfer, contribute to the continued growth of the Chinese economy by bolstering the internal innovation of Chinese companies. But, in the long-term, if these policies continue, the Chinese economy could be adversely affected by the removal of foreign industry and investment in the state. This could, in essence, be low-hanging fruit, to use Tyler Cowen’s language, that China can rely upon for a short time, but it is not a sustainable growth policy.160

China has been subject to Special 301 review every year from 2001 to 2014. In fact, like Chile, China has always been subjected to the Special 301 review process since its first publication in 1989.161 Placed on the Priority Watch List every year since 2001, the

USTR has cited every possible problem with China’s legal infrastructure and enforcement capacity over the last fourteen years.

China has been the subject of multiple out-of-cycle reviews, special reports, and congressional hearings regarding intellectual property and other related concerns. Though

China consistently attempted to upgrade its legal system and enforcement agenda to address discrepancies through 2009, new issues have arisen, especially regarding technology and the Internet, and advancement of these issues has consistently surpassed

160 Tyler Cowen, The Great Stagnation: How America Ate All the Low-Hanging Fruit of Modern History, Got Sick, and Will (Eventually) Feel Better (New York: Dutton, 2011). 161 2014 Special 301 Report, Office of the U.S. Trade Representative, 2.

the adaptability of the Chinese regime through 2013. In 2013, new issues introduced in

2009 involving protectionism and attempts to weather the financial crisis came into full force. Indeed, issues included in the 2014 report overshadowed the previous grievances provided by the USTR significantly, creating new problems that are quite unique to

China. Among the most intense of these issues is forced technology transfers from

American firms to Chinese partners. In order for companies to operate in China and receive national treatment, foreign companies must merge with Chinese business partners. These Chinese partners must own the majority of shares in the business. In addition, companies must conduct a mandatory 5% of their research and development within China in order to receive national treatment, without which little-to-no real protection or stake in the system is realistically offered. Simultaneously, evidence suggests that Chinese firms and government entities are collecting vital trade secrets and data through cyberespionage anyway, without impunity, placing U.S. stakeholders in

China in a very uncomfortable position.162

162 2014 Special 301 Report, Office of the U.S. Trade Representative, 16, 30-37.

100

Figure 22. China: ECI and LLI Scores, 2001-2014

35 30 25 20

Score Score 15 ECI 10 LLI 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Year

From the U.S. perspective, China has had significant enforcement capacity and legal infrastructure problems. Table 14 indicates the categorized issues indicated in

USTR documentation; China has greater difficulties in every area of IP law and enforcement than any other country included in this analysis. Though this table provides useful insight into the perceived problems with China’s IP system, the general categories that I have created give the illusion that China has not made much progress in any area of

IP. This is not necessarily true. China has made great strides to create an effective IP system, passing laws and issuing judicial interpretations regarding issues at the level of the central government in order to bolster the IP legal infrastructure.163 China has simultaneously engaged in a number of campaigns against piracy and counterfeiting, run

163 2004 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 72. 2005 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 99. 2006 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 93, 128. 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 79, 107. 2008 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 113.

101

by the central government, in an attempt to educate the public on the issues and pursue violators in areas with high rates of IP violation.164

However, despite these efforts, China seems to take a “one step forward, two steps back” approach to IP protection. The central government passes laws and leads enforcement campaigns in an attempt to address the huge IP problems that plague China.

But, China faces significant problems with provincial and local-level enforcement and coordination. These localized governance entities may issue their own interpretation of laws, or re-interpret issues brought to the regional authorities.165 The localized efforts and the efforts of the central government are not consistent. Furthermore, campaigns led by the central government to educate the public regarding counterfeiting and piracy issues often encourage people not to support such enterprises by not purchasing the products. As

China maintains a stringent set of import barriers on goods and services, a substantial amount of the pirated goods are actually not obtainable by legitimate means.166 This severely diminishes the potential of these campaigns to limit these illicit transactions.

In recent years, China has taken a number of steps that the U.S. and a number of other trade partners perceive as contrary to previous goals. The Chinese government has passed a number of indigenous innovation policies that give preferential treatment to

164 2002 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 57-59. 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 107. 165 2003 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 61. 2005 National Trade Estimate Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 97. 2006 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 124, 128. 2008 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 111. 166 2009 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 100. 2010 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 70. 2011 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 71-72. 2012 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 77-78. 2013 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 80-81.

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domestic firms, and “allow excessive government involvement in determining market winners and losers.”167 The United States and a number of other trade partners have been pressuring China to reverse these detrimental policies.168 The United States has simultaneously been encouraging other trade partners to address the issue with China.169

It is worth noting that internal pressure for greater intellectual property protection has also been rising, which the United States hopes will eventually translate into equal protection of both domestic and international assets.170

Table 5. China – Perceived IP Protection Issues, 2001-2014 Enforcement Capacity Issues regarding Patents and Industrial Designs Years Descriptors 2001-2004 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination 2001-2014 Lack of Resources and Training 2001 Lags in Registration Process 2001-2014 Non-Deterrent Minimum Penalties 2001, 2003, 2006-2007 Poor Interpretation 2001-2014 Protectionism, Corruption, and Bribery Enforcement Capacity Issues regarding Copyrights and Related Rights Years Descriptors 2001-2005, 2011-2014 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination;

167 Quote, 2013 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 98. 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 112. 2008 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 113. 2009 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 105. 2011 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 72. 168 2003 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 59. 2006 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 93, 124. 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 106-107, 111. 2008 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 112-113. 2009 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 74. 169 2006 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 95. 170 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 111. 2008 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 112-113. 2009 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 105.

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2001-2014 Lack of Resources and Training 2001 Lags in Registration Process 2001-2014 Non-Deterrent: Minimum Penalties 2003, 2005-2007 Poor Interpretation 2001-2014 Protectionism, Corruption, and Bribery Enforcement Capacity Issues regarding Trademarks and Related Rights Years Descriptors 2001-2004, 2009, 2012-2013 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2009 Inappropriate Handling of Confiscated Goods 2001-2014 Lack of Coordination 2001-2014 Lack of Resources and Training 2001 Lags in Registration Process 2001-2014 Non-Deterrent Minimum Penalties 2003, 2006-2007 Poor Interpretation 2001-2014 Protectionism, Corruption, and Bribery Enforcement Capacity Issues regarding Trade Secrets and Data Protection Years Descriptors 2001-2004 Implementation Inconsistent 2001-2014 Inadequate Pursuit of Violators 2001-2014 Lack of Coordination 2001-2014 Lack of Resources and Training 2001-2014 Non-Deterrent: Minimum Penalties 2006-2007 Poor Interpretation 2001-2014 Protectionism, Corruption, and Bribery

Lacking Legal Infrastructure regarding Patents and Industrial Designs Years Descriptors 2011-2014 Forced Technology Transfer 2002-2014 Laws Pending Indefinitely 2002-2014 Non-Compliance: International Norms 2001-2004, 2006-2014 Non-Deterrent Penalties 2005-2014 Partial Coverage 2001-2014 Unclear Legal Framework Lacking Legal Infrastructure regarding Copyrights and Related Rights Years Descriptors 2011-2014 Forced Technology Transfer 2001-2014 Laws Pending Indefinitely 2001-2014 Non-Compliance: International Norms 2001-2004, 2006-2014 Non-Deterrent Penalties 2004, 2006, Partial Coverage 2001-2014 Unclear Legal Framework Lacking Legal Infrastructure regarding Trademarks and Related Rights Years Descriptors 2011-2014 Forced Technology Transfer 2002-2014 Laws Pending Indefinitely

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2002-2014 Non-Compliance: International Norms 2001-2014 Non-Deterrent Penalties 2001 Partial Coverage 2001-2014 Unclear Legal Framework Lacking Legal Infrastructure regarding Trade Secrets and Data Protection Years Descriptors 2011-2014 Forced Technology Transfer 2002-2014 Laws Pending Indefinitely 2001-2014 No Data Secrecy Guarantee 2002-2014 Non-Compliance: International Norms 2001-2004, 2006-2014 Non-Deterrent Penalties 2001-2014 Unclear Legal Framework

The United States has adopted a dual-track approach to working with China regarding these issues: bilateral and multilateral. Through this approach,

The United States would continue to seek cooperative and pragmatic resolutions through bilateral dialogue with China including the Joint Commission on Commerce and Trade (JCCT), as well as ad hoc bilateral meetings and a variety of sector-specific dialogues. However, when bilateral dialogue fails to succeed in addressing U.S. concerns, the United States will not hesitate to exercise its WTO rights through the initiation of dispute settlement against China, as it would any other mature WTO trading partner.171

This is quite an interesting statement, because it recognizes China as a “mature WTO trading partner.” It indicates that the United States believes that China is capable of compliance, which is somewhat contrary to some of the evidence that has been offered alongside such statements in U.S. trade documents – particularly regarding inconsistent implementation across Chinese governance bodies. China has not been particularly cooperative regarding intellectual property protection, especially in the last several years as China has sought to minimize the impact of the 2008 financial crisis on the Chinese economy. The United States has filed a number of dispute settlement requests with the

WTO regarding China’s trade practices and intellectual property protection issues. There

171 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 80.

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are several bilateral initiatives that the United States is pursuing regarding intellectual property protection in China.

The Joint Commission on Commerce and Trade (JCCT), noted above, is a bilateral initiative between the United States and China that has led to the signature of a number of Memoradums of Understanding (MOUs) and various agreements regarding trade issues. Created in 1983, the JCCT “is the main forum for addressing bilateral trade matters and promoting commercial opportunities between the United States and

China.”172 The JCCT meetings have been the forum for discussion of many IP related issues and have led to the setting of goals for the United States and China. Many of these goals have not been met, but dialogue continues.173 A number of other forums of dialogue have been introduced in recent years, including the U.S.-China Strategic & Economic

Dialogue.174 According to the Department of State, “The annual Strategic and Economic

Dialogue (S&ED) has served as a unique platform to promote bilateral understanding, expand consensus, discuss differences, improve mutual trust, and increase cooperation.”175 The United States has dedicated a great deal of resources to China’s development of an effective intellectual property protection system. China’s reversion to

172 “Weekly Trade Focus: Joint Commission on Commerce and Trade,” Office of the U.S. Trade Representative, Press Release. 173 2005 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 97. 2006 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 124-126. 2007 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 107. 2008 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 77. 2012 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 78. 2013 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 97. 2014 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 60. 174 2013 National Trade Estimates Report on Foreign Trade Barriers, Office of the U.S. Trade Representative, 81. 175 Bureau of East Asian and Pacific Affairs, “Fact Sheet: U.S. Relations with China,” Department of State, August 16, 2013.

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protectionist policies and indigenous innovation promotion has created a setback in U.S. efforts.

VII. Comparison and Results

Figure 23. Comparison of Perceived IP Protection Issues, 2001-2014

50 45 40 35 30 Canada 25 Chile Score Score 20 China 15 Peru 10 Vietnam 5 0 2000 2002 2004 2006 2008 2010 2012 2014 Years

When comparing the perceived intellectual property protection issues across

Canada, Chile, China, Peru and Vietnam, we can see that China’s perceived issues are significantly higher than those of the other case study states. The state with the greatest intellectual property protection problems next to China is Vietnam. From this portrayal, it seems that the argument that China is a greater perceived threat than the other states with the highest Special 301 designation has merit. It appears as though China’s position is almost incomparable to that of the other cases.

Though this seems conclusive, it is impossible to differentiate between greater scrutiny given by the USTR and greater problems. With the discussion of perception, this

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is not necessarily problematic, but this is the point at which caution in interpretation is especially important. This analysis reflects perception, not necessarily the reality of intellectual property protection in the particular country. As indicated previously, China engages in a kind of intellectual property rights violation that the USTR has not confronted in any other cases. This issue, which I have called lacking legal infrastructure to check government violation of intellectual property rights, is particularly grievous for right holders because there is no method of recourse. There is no potential for remuneration. Right holders are in an untenable position and the only way for them to adequately address the issue is by appealing to their country of origin to represent their interests.

Figure 24. Comparison of ECI Scores, 2001-2014

25 Canada 20 Chile

Score Score 15 China 10 Peru 5 Vietnam

0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

When it comes to enforcement capacity issues, Vietnam and China both have significant difficulties. These are not, however, independent cases. According to the data, many of China’s intellectual property enforcement problems overflow into every other

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country included in this analysis. In the case of Vietnam, the situation is particularly acute because a large proportion of Vietnam’s imports originate in China.

As is indicated in Figure 24 above, even as Canada, Chile, and Peru have made efforts to increase their enforcement capacity, the enforcement capacity of China and

Vietnam has diminished over the last several years. Canada’s enforcement capacity issues have remained relatively constant, while the concerns for all of the other cases have been erratic. Generally speaking, Canada’s IP enforcement issues stemmed from an unwillingness to invest in training and resources for effective enforcement. In the case of

Chile, China, Peru, and Vietnam, efforts to handle intellectual property enforcement issues may indicate the impact of U.S. pressure upon these governments to address these issues. Different campaigns have briefly addressed some of U.S. concerns in these states, but provide only temporary mechanisms for alleviating the issues.

Figure 25. Comparison of LLI Scores, 2001-2014

20 Canada 15 Chile Score Score China 10 Peru 5 Vietnam

0 2000 2002 2004 2006 2008 2010 2012 2014 Year

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In comparing the legal infrastructure scores of Canada, Chile, China, Peru, and

Vietnam, it is evident that China has significant legal infrastructure issues. The increase in legal infrastructure problems in China has grown since 2009 while the legal infrastructure issues of all other case states have generally decreased during the same period. Each of these countries, with the exception of Canada, continues to struggle with data protection and the provision of deterrent penalties. Each state has made great strides over the last fourteen years to strengthen their legal infrastructure, even China.

China’s significant diminishing legal infrastructure stems from the protectionist policies that China has enacted over the last five years in order to maintain China’s

“economic security.” It is unclear whether China will be able to sustain these policies that promote short-term growth. The long-term growth of the Chinese economy could easily be undermined by continued use of these policies.

VIII. Conclusions and Possibilities for Further Research

I have hypothesized that the presence of China provided the necessary motivation for the aggressive U.S. foreign policies introduced in the Asia-Pacific. I hypothesized that

China would be a greater perceived threat regarding intellectual property protection deficiencies than any other state in this analysis, or indeed, in the TPP. Thus, the strategic element of this policy would emerge as this analysis unfolds and the new threats of the last decade are incorporated.

Though this analysis may fall short of definitively confirming any of these ambitious hypotheses, it does provide adequate support to say that intellectual property protection is of significant strategic interest to the United States. It would be necessary to

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delve deeper into these issues and the bilateral relationships between all of the involved parties before a definitive argument would begin to take shape. But, there is an argument that can be made with relative confidence: The U.S. perception of intellectual property protection issues in China are exceptionally higher than the perception of IP protection issues in other states included in this analysis.

Generally speaking, this analysis indicates that there is general support for a high- standards intellectual property provision in the Trans-Pacific Partnership. The states included in this analysis have generally been cooperative with the United States regarding intellectual property protection issues, strengthening their IP regimes in an attempt to curb piracy and counterfeiting within their borders. The biggest issue for these states is enforcement. Even if the TPP is ratified by all negotiating states, enforcement will continue to be a problem for Chile, Peru, and Vietnam. The difference for the United

States following successful ratification would be the presence of five other AIEs with the same legal standards promoting these values within this forum. Those states that struggle with TPP compliance would face a great deal of pressure from the most powerful economic actors within the forum, causing them to seek reform and address the weakest areas of their intellectual property enforcement. This would, ultimately, require these states to address the issue of counterfeit and pirated goods permeating their borders from

China.

Even as these states seek to maintain a cooperative relationship with China, they also seek to advance their relationship with the United States. There is a delicate balance in approaching regional economic and security relationships, and these states seem to pursue that balance. Each of them are aware of the importance of intellectual property

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protection to the United States, and to their own long-term economic interests. By establishing the intellectual property protection standards of the region with these states, the United States may achieve a level of harmonization that will provide a new standard by which China must abide as well. Thus, I still maintain that it is the long-term external effects that provide the most persuasive explanation for the aggressive U.S. behavior in the Trans-Pacific Partnership negotiations. The United States is attempting to establish long-term mechanisms for the protection of U.S. interests in the Asia-Pacific region in an effort to bring China into compliance with international norms or face alienation from its neighbors.

The greatest insight offered by this analysis is recognition that high-standards intellectual property protections are most definitely of strategic interest to the United

States. Though ratcheting up the intellectual property systems in these states would benefit the U.S. in isolation specifically within the TPP forum, establishing these norms within the region offers even greater benefits. The greatest threat to intellectual property, and new age defense systems, stems from China. If the United States is unable to adequately address these issues with China through bilateral negotiations or through the international system, introducing these policies into China’s trading partners as China seeks greater collaboration may provide a way to constrain China’s options, forcing

China to address these issues or face major barriers to attainment of its goals in the region. In this way, the U.S. may be laying the groundwork for a quasi-containment policy if that becomes necessary over time. This argument makes great strategic and theoretical sense. However, establishing firm causal linkages is nearly impossible at this stage in the development of these relationships.

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Appendices—

Appendix 1: Special 301 Designation Charts

In each of the following charts, the Special 301 Designation is displayed, where a score of 1 indicates Watch List; 2 indicates Priority Watch List; and 3 indicates Priority Foreign Country.

Special 301 Designations Average, 2001-2014

Special 301 Designations, 2001

1 Special 301 Designations, 2001