A 2014 paper by a US law professor claims that China has essentially cheated in term of compliance in several WTO cases. For instance on the provision to destroy counterfeited goods, from 2007 case

the panel held that Chinese customs regulations also violated TRIPS. Chinese customs authorities permitted counterfeit goods to reenter the stream of commerce once the infringing elements had been removed. In practice, that meant sellers of counterfeit goods could remove the alligator from a fake Lacoste shirt and then donate it to charity, sell it back to the manufacturer, or auction it off at a public sale. The panel found selling the product after simply removing the infringing trademark inconsistent with TRIPS. [...]

[O]n March 17, 2010—two days before the reasonable period of time expired—the State Council issued a revised set of customs regulations. The new regulations addressed the concern about reintroducing counterfeit goods back into the channels of commerce by inserting one provision into Article 27: “[B]ut imported goods bearing a counterfeit trademark shall not, except in special circumstances, be permitted to enter the stream of commerce upon merely removing the trademark from the goods.”

At first blush, the revised regulation prevents counterfeit goods from reentering the channels of commerce, and thus addresses the United States’ concerns. But a closer reading suggests otherwise. The provision only applies to imported counterfeit goods: ones produced outside of China and then imported into China. The qualifier “imported” narrows the article’s scope and applicability: it does not cover counterfeits produced in China. Since China is the world’s largest producer of counterfeit goods, restricting the article’s scope to imported counterfeit products seems misplaced. Moreover, it is bewildering that the revised regulations include the word “imported” at all. It does not elsewhere appear in Article 27, which deals with the disposal of counterfeit goods, not imports. The only other usage of the term “import” in this chapter of the regulations, on legal liability, references both imports and exports.

In sum, the revised regulations only address one small element of the problem of reintroducing counterfeit goods into channels of commerce: counterfeits imported into China. This deficiency calls into question analyses about China’s WTO commitments. One commentator has argued that the language of revised Article 27 “shows the country’s good faith effort in bringing its laws into conformity with the TRIPS Agreement” and “sends a strong signal to the international community that China takes its WTO obligations seriously.” That seems to be an overly generous interpretation. By inserting the word “imported” into this provision, China dramatically shrank its applicability. Indeed, the revised regulation does not address the substantive problem raised by the panel, instead covering one small subset of counterfeit goods. The revised regulation arguably protects China’s counterfeit industry from imported competition.

[...] The United States disagreed with China’s self-as- sessment of full implementation, but it did not specify those areas where implementation was flawed. The United States also noted it was working “bilaterally” with China to resolve lingering issues.

I have two closely related Qs: is what that passage claims true, that the Chinese only added a provision to destroy imported counterfeited goods to their regulations? A quick check of the relevant WTO pages shows no further formal follow-up from the US at the WTO on that case, so if the US was rather blatantly cheated as that passage implies, why didn't the US pursue the matter further at the WTO? (I did note a change in US administration between the time when the case was filed [2007] vs. adjudication [2010], but does that explain it?)


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