US-China JCCT Talks Represent an Inflection Point

posted by in Compliance and Enforcement December 6, 2010
Dec 06

After years of frustration with persistently high rates of software piracy in China, could it be that we are about to see actual improvement in legal software sales there? Having met recently with top officials in the US and Chinese governments, I am guardedly optimistic.

One thing is abundantly clear: Both governments, at the very highest levels, are keenly aware of the issue and are expressing a determination to address it — including in Chinese enterprises, where the problem is especially acute.

China has announced it will launch a series of inspections to ensure that central and local government bureaus are using legitimate software. This is encouraging because it paves the way for fruitful negotiations later this month during ministerial sessions of the US-China Joint Commission on Commerce and Trade (JCCT), one of two major forums where officials from the United States and China come together to address bilateral trade issues.

But a number of commitments have been made over the years to undertake software legalization efforts in China — and yet the PC software piracy rate continues to hover at 79 percent, with a commercial value of $7.6 billion, according to the latest BSA-IDC Global Software Piracy Study. To be successful, these recently announced inspections cannot be undertaken in a one-off campaign; they must mark the beginning of a sustained effort.

The general counsel of 14 BSA member companies and I met earlier this week with the US officials who will lead and support the December 14–15 JCCT talks in Washington, including Commerce Secretary Locke and representatives of the Office of the US Trade Representative, the Treasury Department, the Department of Justice and US Intellectual Property Enforcement Coordinator Victoria Espinel. The really striking thing about our meetings with those top US officials was the degree to which all agree an inflection point has been reached in relations with China on the issue of software piracy. Promises are no longer enough; proof is needed that real progress is being made.

BSA believes the time has come for a new strategy that focuses less on commitments and more on achieving tangible results that we can measure in increased US sales and exports to China — a cut-and-dry metric that is very easy to follow. Government agrees.

I am guardedly optimistic this idea can form the basis for a new accord and a “win-win” for the US and China, not just because both governments fundamentally agree on the need to achieve real results, but also because achieving those results will not be especially complicated or difficult. The experience of neighboring Japan, where the piracy rate fell from 66 percent in 1994 to 21 percent last year, proves it.

UPDATE: Senate Finance Committee Chairman Max Baucus (D-Mont.), Ranking Member Chuck Grassley (R-Iowa), and 30 other Senators have sent a letter to Wang Qishan, Vice Premier of the State Council of the People’s Republic of China, urging China to make verifiable progress on intellectual property enforcement and to suspend discriminatory “indigenous innovation” policies.

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