Request for Public Comment and Notice of Public Hearing: Determination Involving Expeditious Action; Proposed Determination Concerning What Further Action To Take Under Section 301(a) in Response to the People's Republic of China's Unsatisfactory Implementation of the 1995 Agreement on Enforcement of Intellectual Property and Market Access

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-92]

Request for Public Comment and Notice of Public Hearing:

Determination Involving Expeditious Action; Proposed Determination

Concerning What Further Action To Take Under Section 301(a) in Response

to the People's Republic of China's Unsatisfactory Implementation of

the 1995 Agreement on Enforcement of Intellectual Property and Market

Access

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of determination on expeditious action and proposed

determination on further action; request for public comment; notice of

public hearing.

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SUMMARY: Based on monitoring carried out pursuant to subsection 306(a)

of the Trade Act of 1974 (Trade Act) (19 U.S.C. 2416(a)), the Acting

United States Trade Representative (USTR) considers that China is not

satisfactorily implementing the 1995 Agreement on Enforcement of

Intellectual Property Rights and Market Access (1995 Agreement) China

entered into to resolve the intellectual property rights (IPR)

enforcement and market access issues subject to investigation under

Title III, chapter I of the Trade Act. In light of this, the USTR must,

pursuant to sections 306(b), determine what further action to take

under section 301(a) of the Trade Act (19 U.S.C. 2411(a)). The USTR

proposes to take the following action: To impose prohibitive tariffs on

imports of certain products of China to be drawn from the lists of

products set forth in the Annexes to this Notice.

Since the products listed in Annex II to this Notice are subject to

quantitative restrictions and it is essential to prevent surges of

imports into the U.S. market, the USTR, pursuant to section 304(b)(1)

of the Trade Act, has determined that expeditious action is necessary.

Pursuant to section 301(a) and (c) of the Trade Act, the USTR has

directed the Commissioner of Customs, to limit by date of export

entries of the textile and apparel products listed in Annex II, over

the 30-day period (commencing with exports from China on or after May

15, 1996) to 15 percent of the 1996 adjusted level for each category of

product. In addition, the USTR has requested the Chair of the Committee

on Implementation of Textile Agreements (CITA) to amend CITA's relevant

directives dated November 30, 1995, and December 13, 1995, in order to

facilitate Customs implementation of this determination, and to inform

Customs accordingly.

Pursuant to section 304(b) and 306(c) of the Trade Act (19 U.S.C.

2414(b) and 2416(c)), the USTR is seeking public comments and will hold

a public hearing on June 6-7, 1996, regarding the expeditious action

taken and a proposed determination on what further action to take.

EFFECTIVE DATE: Requests to testify at the hearing must be submitted by

noon, Wednesday, May 22, 1996; written testimony is due by noon,

Friday, May 31, 1996; and written rebuttals are due by 5:00 p.m.,

Monday, June 10, 1996. Written comments on the proposed

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determination are due by noon, Friday, June 14, 1996.

FOR FURTHER INFORMATION CONTACT:

Questions concerning the products under consideration for imposition

of prohibitive tariffs should be directed to Irving Williamson, Chair

Section 301 Committee (202) 395-3432, Deborah Lehr, Deputy Assistant

USTR for China and Mongolian Affairs (202) 395-5050, or Caroyl Miller

(202) 395-3026 Deputy Chief Textiles Negotiator; questions about the

public hearing, written testimony and written comments should be

directed to Sybia Harrison, Staff Assistant to Section 301 Committee,

(202) 395-3432. All of the above persons are located at the Office of

the United States Trade Representative, 600 17th Street, NW,

Washington, D.C. 20508.

SUPPLEMENTARY INFORMATION: On June 30, 1994, pursuant to section 302(b)

of the Trade Act, the USTR initiated an investigation of those acts,

policies and practices of China that were the basis for identification

of China as a priority foreign country (PFC) under section 182 of the

Trade Act. See 59 FR 35558 (July 12 1994). On February 4, 1995, the

USTR determined that certain acts, policies and practices of the

Chinese government with respect to the enforcement of IPRs and market

access for persons relying on intellectual property protection are

unreasonable and constitute a burden or restriction on U.S. commerce.

The USTR also determined that trade action in the form of assessment of

increased duties on certain products from China was appropriate. See 60

FR 7230 (Feb. 7, 1995).

On February 26, 1995, the government of China agreed to take

extensive measures to enforce IPRs and provide market access for

persons relying on intellectual property protection. On the basis of

the measures that China agreed to undertake, the USTR decided that the

action taken pursuant to section 301(c) of the Trade Act, to increase

tariffs on certain products from China, was no longer appropriate and

terminated that action. The USTR also determined to monitor, under

section 306 of the Trade Act, China's implementation of the measures it

had agreed to undertake and terminated the investigation. Pursuant to

section 182(c)(1)(A) of the Trade Act, the USTR also decided to revoke

China's designation as a PFC. See 60 FR 12583 (March 7, 1995). The

Agreement setting forth the measures China agreed to take was formally

signed on March 11, 1995.

Since then, USTR and other agencies have worked closely and

consulted frequently with the Chinese government on implementation of

the IPR Agreement. The U.S. government has provided technical

assistance and training on enforcement of IPRs and private sector

interests have worked with individuals and firms in China to achieve

market access for U.S. products and firms.

While some progress has been made in the area of enforcement of

IPRs, particularly with respect to enforcement of copyrights at the

retail level, critical deficiencies are present in China's

implementation of measures to address piracy at the production and

wholesale distribution level. Piracy remains particularly rampant in

Guangdong province. Manufacturers and distributors--primarily located

in southern China--continue to produce pirated CDs, LDS and CD-ROMS in

massive quantities. Due to lax enforcement at the point of production

and at the border, export of pirated computer software, movies, sound

recordings and other products have grown substantially over the past

year. Products pirated in China have flooded Southeast Asia, Russia and

the other Commonwealth of Independent States (CIS) countries. Latin

American and European markets have also been targeted and the U.S.

Customs Service has seized pirated CDS and CD-ROMs entering the United

States from China. Finally, no significant progress has been made in

providing market access to U.S. firms and products that rely on IPR

protection.

Based on the results of this monitoring, the USTR considers that

China is not satisfactorily implementing the Agreement that was the

basis for resolving the IPR enforcement and market access issues under

investigation. Consequently, USTR is seeking comments on a proposed

determination on what action to take under section 301(a) of the Trade

Act.

Proposed Determination and Expeditious Action

Pursuant to sections 306(b) and 301(c) of the Trade Act, the USTR

proposes to take the following action: To impose prohibitive tariffs on

imports of certain products of China to be drawn from the lists of

products set forth in the Annexes to this notice.

The decision on what specific products could be subject to

prohibitive tariffs will take into consideration the written comments

provided and any written and oral testimony offered at the public

hearing.

Since the products listed in Annex II to this Notice are subject to

quantitative restrictions and it is essential to prevent surges of

imports into the U.S. market, the USTR, pursuant to section 304(b)(1)

of the Trade Act, has determined that expeditious action is necessary.

Pursuant to section 301 (a) and (c) of the Trade Act, the USTR has

directed the Commissioner of Customs, to limit by date of export

entries of the textile and apparel products listed in Annex II, over

the 30-day period (commencing with exports from China on or after May

15, 1996) to 15 percent of the 1996 adjusted level for each category of

product. In addition, the USTR has requested the Chair of CITA to amend

CITA's relevant directives dated November 30, 1995, and December 13,

1995, in order to facilitate customs implementation of this

determination and to inform Customs accordingly.

Public Comment on Expeditious Action Taken, Proposed Determination and

Hearing Participation

In accordance with section 304(b) and 306(c) of the Trade Act, the

USTR invites all interested persons to provide written comments on the

action take under section 304(b)(1) and the proposed determination.

With respect to the proposed trade action under section 301, comments

may address: (1) the appropriateness of subjecting the products listed

in the Annexes to this notice to prohibitive duties; (2) the level at

which duties on particular products should be set; and (3) the degree

to which imposition of prohibitive duties on particular products might

have an adverse effect on U.S. consumers. Comments will be considered

in recommending any determination or action under section 301 to the

USTR.

The USTR will also consider the written, oral, and rebuttal

comments submitted in the context of a public hearing held pursuant to

section 304(b) of the Trade Act and in accordance with 15 CFR 2006.7

through 2006.9. The hearing will commence at 10:00 a.m. on Thursday,

June 6, 1996, continue on June 7, 1996, if necessary. The hearing will

be held in the Main Hearing Room (Room 101) at the U.S. International

Trade Commission, 500 E Street, SW, Washington, D.C.

Request to Testify: Interested person wishing to testify orally at

the hearings must provide a written request to do so by noon,

Wednesday, May 22, 1996, to Sybia Harrison, Staff Assistant to the

Section 301 Committee, Office of the U.S. Trade Representative, 600

17th Street NW, Washington, DC 20508. Requests to testify must include

the following information: (1) name, address, telephone and fax

numbers, and firm or affiliation; and (2) a brief summary of their

presentation. Requests

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must conform to the requirements of 15 CFR 2006.8(a). After the

Chairman of the Section 301 Committee considers the request to present

oral testimony, Ms. Harrison will notify the applicant of the time of

his or her testimony. Remarks at the hearing will be limited to 5

minutes.

Written Testimony: In addition, persons presenting oral testimony

must submit their complete written testimony by noon on Friday, May 31,

1996. In order to assure each party an opportunity to contest the

information provided by other parties, USTR will entertain rebuttal

briefs filed by any party by 5:00 p.m., Monday, June 10, 1996. In

accordance with 15 CFR 2006.8(c), rebuttal briefs should be strictly

limited to demonstrating errors of fact or analysis not pointed out in

the briefs or hearing and should be as concise as is possible.

Requirements for Submissions: Written comments on the proposed

determinations under section 306 of the Trade Act, written testimony,

and rebuttal briefs must be filed in accordance with the requirements

set forth in 15 CFR 2006.8(b) and are due according to the relevant

deadlines noted above. Comments must state clearly the position taken

and describe with particularity the supporting rationale, be in

English, and be provided in twenty copies to: Chairman, Section 301

Committee, Room 223, USTR, 600 17th St., N.W., Washington, D.C. 20508.

Written comments, testimony, and briefs will be placed in a file

(Docket 301-92) open to public inspection pursuant to 15 CFR 2006.13,

except confidential business information exempt from public inspection

in accordance with 15 CFR 2006.15. Persons wishing to submit

confidential business information must certify in writing that such

information is confidential in accordance with 15 CFR 2006.15(b), and

such information must be clearly marked ``Business Confidential'' in a

contrasting color ink at the top of each page on each of the twenty

copies and must be accompanied by a nonconfidential summary of the

confidential information. The nonconfidential summary will be placed in

the Docket open to public inspection. An appointment to review the

docket (Docket No. 301-92) may be made by calling Brenda Webb (202)

395-6186. The USTR Reading Room is open to the public from 10:00 a.m.

to noon and 1:00 p.m. to 4:00 p.m., Monday through Friday, and is

located in Room 101.

Irving A. Williamson,

Chairman, Section 301 Committee.

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[FR Doc. 96-12572 Filed 5-15-96; 12:19 pm]

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