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Coronavirus-Related Free and Fair Trade Issue in News

Summary

This paper is a discussion of the article, “Coronavirus: China Yet to Meet Key Phase One Trade Deal Target Due to Covid-19 Lockdown”, which was published on South China Morning Post (SCMP) on April 8, 2020. The article was written by Finbarr Bermingham and Wendy Wu. The article talks about the delayed release of the intellectual property action plan, which China was supposed to provide by mid-March 2020 after the expiry of 30 days when the phase one trade deal with the US came into force. In 2019, the two countries were involved in long-protracted fair trade negotiations, which culminated in the signing of phase one of a trade deal to allow both sides to trade fairly with one another. However, the outbreak and spread of the Coronavirus disease (COVID-19) in China have interfered with the country’s ability to honor its side of the trade deal. China was expected to release a plan on how it would protect intellectual property in its business dealings as part of free trade.

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However, the Chinese economy has been on lockdown following the outbreak of COVID-19 and a “protracted Lunar New Year holiday in late January and February” (Bermingham & Wu, 2019, para. 4). Therefore, the precise definition of the term “working days” has become controversial with China arguing that it is within the stipulated timeline to release the action plan given the surrounding circumstances. The authors reported that given the long-standing lack of trust between the two sides, the delay by China is causing widespread frustration at the Office of the US Trade Representative (USTR). However, experts argue that China will most likely honor its promise to release the action plan because it has started implementing some of the clauses in the trade deal. For instance, part of the agreement was that China would purchase American agricultural products, which it has already started doing.

The Issue and its Importance

At the center of this discussion is the issue of China’s commitment to protecting intellectual property rights when dealing with US businesses. Before this deal, businesses in China were forcing US companies to share their intellectual property (IP) before being granted market access. China has been known for abusing intellectual property rights whereby local companies copy ideas from innovators around the world and make similar products, which is against IP laws. Additionally, such underhand practices abuse the spirit of free and fair trade, whereby businesses are allowed to access markets without restrictions and compete on a level playing ground. Therefore, as part of the trade deal with the US, China was required to commit itself to protecting IP rights. As such, it was supposed to release an elaborate action plan, which it would use to implement such provision of the deal. However, due to the outbreak of the COVID-19 pandemic, China claims it has been inconvenienced, but it will honor its part of the deal.

This issue of IP rights and their protection is important to the global community in different ways. First, innovators invest time and resources to create a certain product, and thus they should be protected against IP theft and misuse of their ideas. Innovation is about business; hence, there should be commensurate rewards that innovators get from their work. The only way to derive value from their products is by owning the associated rights so that they can commercialize their innovations and get monetary gains. However, China has created an environment whereby businesspersons in the country flout IP laws and use ideas from innovators around the world to make products that mimic the originals (Keegan, 2018; Lim, 2019). Therefore, China needs to commit to protecting IP rights by preventing theft and misuse of other people’s ideas by disregarding the existing IP laws. Second, if authorities do not protect innovative ideas, people will be reluctant to create solutions for the many problems facing the world today due to the lack of associated financial benefits. Therefore, advancement in modern times would be derailed because humanity relies on innovators to come up with solutions.

In this case, the outside influences that might help change this issue include the US pushing China to honor its part of the deal. The US could collaborate with its global partners to pile pressure on China through sanctions and imposing trade tariffs on Chinese imports and compel it to uphold IP laws protecting innovators’ rights to their products. Sanctions have worked in other countries, and they could produce similar results in this case. China needs the rest of the world to export its goods and grow its economy. Therefore, any external pressure threatening the exports of goods from China to its major markets around the world would force the government to honor its part of the deal with the US. However, I think China is not willing to protect IP rights because it has thrived on making cheap goods from other people’s ideas without following rules and regulations. I think as a global economy, China has the negotiation power and thus the current trade deal with the US will collapse and the two players will be back on the drawing board to chart a way forward.

References

Bermingham, F., & Wu, W. (2020). Coronavirus: China yet to meet key phase one trade deal target due to Covid-19 lockdown. South China Morning Post. Web.

Keegan, M. (2018). How copycat culture created China’s Silicon Valley. Culture Trip. Web.

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Lim, S. (2019). Can China wave goodbye to its copycat culture? The Drum. Web.

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