Lessons in US-China Diplomacy: Parsing the Special 301 Report

May 5, 2013

The annual Special 301 Report on worldwide intellectual property protection was recently released by the U.S. Trade Representative’s office. I always look forward to this, not only to see what the China section looks like to catch up on big-picture IP issues, but also to get a snapshot of the bilateral situation between the two countries.

This year, it seems to me that the language shows just a bit of frustration on behalf of the USTR authors, which I find leaking out from between the lines. They tried very hard to be as diplomatic as possible, but perhaps just a little too much. I’ll let you be the judge.

For the past couple of years, I’ve noted that the language in the China section of the Special 301 report reflects the plateauing of progress on IP in China. Perhaps “plateauing” is a bit too harsh; progress is still being made, but it is happening at a slow rate compared to previous years. In my mind, this is not primarily due to PRC government recalcitrance, but rather a product of the “low hanging fruit” being dealt with in the early years, with much harder problems left to be addressed.

I believe that the folks over at USTR have been consistently even-handed, fair and (as far as I can tell) substantively accurate with respect to China. While other parts of the government, particularly the legislative branch, tend to use inflammatory rhetoric when discussing China, the USTR has acted judiciously.

But enough with the generalizations. Here’s the first bit of the China section from this year’s report. I’ve added emphasis to some of the language to better illustrate what I consider to be a too-careful, diplomatic effort to be nice. To me, the diplo-speak is so obvious, I can almost hear the sarcasm.

In the past year, the climate for IPR protection and enforcement continued to reflect efforts toward and opportunities for improvement, as well as challenges for U.S. rights holders. Obtaining effective enforcement of IPR in China remains a central challenge, as it has been for many years. This situation has been made worse by cybertheft, as information suggests that 32 actors located in China have been engaged in sophisticated, targeted efforts to steal IP from U.S. corporate systems.

On a potentially more positive note, China is currently engaged in sustained legal reform efforts, which have resulted in the revision of laws, rules, guidelines, and judicial interpretations across the range of IPR disciplines. This large scale revision of the IPR legal regime presents an opportunity to improve IPR protection and enforcement, and the United States is hopeful that a legal reform effort on this scale signals China’s commitment to achieving major improvements. The United States urges China to continue to give due consideration to concerns expressed by the U.S. Government as well as by private sector stakeholders as these revisions proceed through the system.

At the same time, real world conditions for rights holders have overall seen little significant improvement.

Let me put on my international relations hat for a moment (gotta get some benefit out of that IR degree) and say that the above language could easily have been crafted by a State Department lawyer as opposed to a trade attorney at USTR. These reports from USTR are always written quite diplomatically of course, but I find this language even more careful than usual.

Let’s take that first paragraph. The use of the term “challenges” is not new; it’s a nice way of referring to problems, suggesting that current issues will be dealt with in the future. Added to that, however, is “continued to reflect efforts toward and opportunities for improvement,” which is rather remarkable. It’s all forward-thinking and hopeful, isn’t it? We may not be seeing much progress now, but we’re still moving towards improvement and keep seeing opportunities out there. Well crafted stuff, but keep in mind what it isn’t saying, which is essentially the negative conclusion reached in the third paragraph.

A quick note on this cybertheft item. No doubt you are aware of all the China hacking hullaballoo, and the bilateral tension that has ensued over this. Because reports on this issue never do more than trace attacks to specific geographical locations in China, the authors of this report had to be extremely careful not to blame hacking on the PRC government itself (analysts and folks in Congress have felt no such hesitancy). Hence the non-specific and mysterious “actors located in China.”

The second paragraph, which covers legal reform, continues the theme. Look at the words here: “presents an opportunity,” “hopeful,” “potentially” — sounds great, until you realize this means absolutely nothing is happening right now. But USTR is trying to be as nice as possible, saying that China has a “commitment to achieving” IPR protection and “continue to give due consideration” to issues raised by the U.S. Does this latter bit simply mean that Beijing is still listening? Rather an empty statement, in my humble opinion, but it sure is dressed up to sound nice. I just wonder whether the author winced when writing that sentence.

Let me wrap this up with a qualification: I’m a big fan of USTR and the talented lawyers that work (long hours) there. Their task in drafting the Special 301 report every year is unenviable. It has to be substantive and accurate while being as diplomatically palatable as possible. Not easy, folks. And we know that as soon as the report comes out every year, Beijing pushes back with news articles and Op/Eds that express the government’s “deep regret” over the USTR’s conclusions.

Bleah. To make matters worse, the days of easy progress on IPR enforcement are over, and we’re down to slogging through the difficult issues. I assume these guys would prefer that the China section could be limited to two parts: “Part I – no dramatic progress was made this year; and Part II – here are the items that U.S. corporations complained to us about.” This would make the drafting process much, much easier.

I’d be frustrated too if I had to write this thing every year.