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Volume 10
Issue 32
Wednesday, September 13 2006
This issue highlights:
UNITED STATES INTENSIFYING INTELLECTUAL PROPERTY PIRACY SEARCHES
Intellectual property rights, pharmaceuticals and medical technology issues in Asia will receive more attention by the United States due to changes recently announced by the US Trade Representative (USTR) Susan Schwab.
In a September 6 statement, Dr. Schwab announced that the recently established Office of Intellectual Property would have expanded responsibilities and a new name - the Office of Intellectual Property and Innovation.
She said: "Innovation is die lifeblood of American industry and promoting innovation is a key element in the President's [Bush's] competitiveness agenda."
Previously the Office of Southeast Asia and the Pacific handled these issues. But with the reorganisation, that office will be better able to focus its resources on deepening trade relations with Asia - a top priority, according to a news release.
Dr. Schwab's office has also recently hired a Chief Counsel for China Trade Enforcement, Claire Reade. She brings more than 20 years of international trade litigation experience to the US's enforcement efforts related to China.
Currently, the office of Southeast Asia and the Pacific is negotiating free-trade agreements (FTAs) with Thailand and Malaysia, and it recently concluded a trade and investment framework agreement with the 10-member Association of Southeast Asian Nations (ASEAN).
The member countries of ASEAN are Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Addressing the Recording Arts Day in the American capital on September 6, Deputy US Trade Representative Karan Bathia emphasised the US efforts in curtailing intellectual property transgressions. He particularly referred to the US role in the global music market.
The US music industry and the other US copyright industries are at the forefront of US exports growth. From 1991 to 2002, the yearly growth of exports from US copyright industries, which include CDs and DVDs, outpaced total US exports by an average of six percent.
China
The USTR office, recognising both the importance and the difficulties related to rooting out piracy and copyright infringements, has increased staff and funding for intellectual property initiatives. The new steps include protection of copyright. A new Intellectual Property Office, staffed by experienced intellectual property rights experts, has been established, including a Chief Intellectual Property Enforcement Negotiator. Batia added that China is a top enforcement concern for the US. China's intellectual property rights (IPR) regime remains inadequate. Despite anti-piracy campaigns and increasing number of IPR cases in Chinese courts, overall piracy levels in China remain unacceptably high.
Industry sources in 2005 estimated that levels of piracy in China across all lines of copyright businesses are 85 to 93% indicating little to no overall improvement.
The share of infringing product seizures of Chinese origin at the US border, both counterfeit and pirated goods, increased to 69% in 2005 from 63% in 2004. There are more infringing goods from China arriving in the United States than from all other countries combined.
"This is a grave problem - for you [the National Academy of Recording Arts and Sciences], for the United States, and for China, which must shed the label of being a haven for Intellectual Property violators if it is ever to advance up the economic chain," Mr. Bhatia said. He commented the US is bringing the full range of tools to bear, and added:
- We have used our bilateral dialogue to press China for strong and specific actions and commitments that matter to the US music industry, such as:
- Prosecuting infringers and imposing tough penalties, to back up the commitment that China's leaders have expressed to improving IPR enforcement; and
- Putting in place the necessary roles and enforcement mechanisms to ensure that China's emerging Internet market is not swallowed up by piracy the way its CD and DVD markets have been.
Russia
He added that the US is using its annual Special 301 report - ranking countries on how well they are protecting intellectual property - to identify the specific shortcomings that China needs to address and to press for real solutions. Russia is another top priority. A notorious Russian website is "probably stealing from many people in this room," he commented.
This year, the office of the USTR is conducting a provincial-level review to look at China's enforcement system, as it is applied by the local authorities to problems US industries confront, ranging from retail piracy in major cities to pirate manufacturing in key industrial areas.
The USTR office is working with China to improve their enforcement efforts against manufacturers and sellers of pirate CDs and DVDs. Thus far this year, China has taken action against 14 plants that the USTR's office had identified as producing illegal optical disks. A large-scale campaign is underway with the standard aim of cracking down on the market for pirated disks.
LACK OF FOREIGN INVESTMENT IN SUB-SAHARAN AFRICA
A report on foreign direct investment (FDI) predicts that until 2010 China will be the top emerging market for business investment inflows. The report, released by Columbia University and The Economist publishing group, estimates that Africa will not receive much investment soon.
Karl Sauvant, director of the Columbia Programme on International Investment, said that China will attract US$87 billion from US businesses alone in 2006, while sub-Saharan Africa, with 10% of the world's population, gets less than 1% of total foreign direct investment flows.
According to Sauvant, to achieve economic growth a country must do more than reform business regulations. It also must compete to attract investment and provide quality infrastructure and a skilled work force.
US biggest recipient of $1 trillion FDI in 2006
In another statement on foreign direct investment (FID), the Deputy US Trade Representative, Karan Bathia, quoted an Economist Intelligence Unit prediction released on September 5 that the US will be the biggest recipient of FDI in 2006. The Unit predicts that global flows of FDI will rise more than 22% in 2006 - breaking the US$1 trillion level for the first time ever.
SOUTH AFRICAN ECONOMIC GROWTH CONSTRAINTS
Factors constraining South Africa's growth were underscored in two surveys last week.
At the same time President Vladimir Putin, the first Russian head of state to visit South Africa last week, signed several agreements related to joint ventures between Russia and South Africa. He brought along more than 100 business executives in six aircraft. Russia intends using some of its huge foreign reserves to fund investments in South Africa. A US$1 billion ferromanganese plant at Couga (near Port Elizabeth) appears to be the most likely prospect. Another venture signed by Russian business executives accompanying Putin, included an agreement between Russia's diamond group Alrosa and South Africa's De Beers. A Russia-South Africa business council to promote investment between the two countries was also formed.
World Bank Global Survey
A World Bank global survey on the ease of doing business underlined that South Africa's rankings had slipped although it was still in the top 30 countries providing a favourable regulatory environment. Meanwhile, the International Monetary Fund expects that the South African gross domestic product (GDP) growth will slow down to 4, 2% in 2006 compared to 4, 9% last year. The World Bank's survey revealed it appears that South Africa has missed a wave of regulatory reform in the world.
The World Bank survey also indicated that more than 82% of East European countries and 89% of the Organisation for Economic Cooperation and Development (OECD) members liberalised business regulations in the past year, with Africa now ranking third among regions.
The University of Stellenbosch's Bureau for Economic Research (BER) last week listed South African economic growth restraints which became evidenced in a recent survey.
Accelerated and Shared Growth Initiative
The bureau's survey referred to the South African government's growth initiative, the Accelerated and Shared Growth Initiative (ASgi-SA).
The survey emphasises that the rapid growth of the South African economy over recent years is increasingly exposing key constraints in the economy, which may deter South Africa from reaching even higher economic growth rates over the medium to longer term.
The ASgi-SA initiative identified six broad economic growth constraints, ranging from infrastructure and logistics deficiencies to regulatory constraints and skills shortages.
In order to gain some understanding of the business sector's experience of these identified economic growth constraints, the Stellenbosch Bureau conducted a special survey during the second quarter of 2006. It emerges that - in order of importance - regulatory constraints (labour regulations and official red tape), state leadership and capacity (policy support and local authority services), infrastructure deficiencies and costs (electricity supply problems and communications costs) and labour skills are key issues hampering business activity - and by extension - economic growth in the country. Between 30-45% of all the respondents rated these factors to be serious to debilitating issues in terms of the operation of their business.
Factors constraining growth
The four individual surveyed factors that feature at the top of the list in terms of their constraining impact are labour regulations (45%) rating this as a serious and debilitating constraint, electricity supply problems (42%), official red tape (39%) and government policy support (32%). The breakdown of municipal services (29%), highly skilled labour shortages (33%) and high communication costs (27%) also featured as key problem areas.
A 'second tier' of constraints can be identified, namely the volatility and (strong) level of the exchange rate, lack of competition (e.g. monopoly pricing), tax administration and road travel deficiencies - between 17-22% of all the respondents regarded these factors to be of a serious constraining impact. At the bottom of the list are rail travel deficiencies and port facility bottlenecks; however, specific factors influence the results here (e.g. the composition of the sample, current macro-economic conditions and structural changes in the mode of transport). The government may accord the removal of these constraints on economic growth lower priority; the former-mentioned constraints require higher priority.
The analysis across firm size groups, sectors and regions reveal interesting patterns. Small companies are often at a disadvantage (labour regulations, exchange rate volatility); and large firms suffer relatively more in terms of infrastructure deficiencies and skilled labour shortages. Manufacturing firms report serious problems regarding the strong South African rand and monopoly pricing, building & construction firms suffer extreme skilled labour shortages and services firms have more serious problems with high communications costs and electricity outages.
Given the evaluation by business executives of the listed growth constraints, the intensity of most of the factors is such that any relief in any of these areas is likely to contribute positively to economic growth. It can only be concluded that the SA government is on the right track by addressing these constraint areas in terms of ASgiSA strategy. However, what the overall result suggests, is that great urgency is required, particularly regarding the "government's interface with business". Labour regulations, official red tape, tax administration, government policy support, municipal services, competition policy and infrastructure & logistics deficiencies are all factors holding back the country's economic growth and employment creation potential. Furthermore, a more competitive currency and skills training can go a long way in improving the economic growth rate.
EXCLUSIVE POINTER S
The United States called on Sudan on September 11 to work with the United Nations Security Council to help the suffering people of Darfur. William Brencick, US minister counsellor for political affairs, said the US will submit a draft of a presidential statement "to allow the council to speak for the international community with one strong clear voice to say to the Government of National Unity: Work with us because the situation in Darfur cannot stand."
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